CASA GRANDE, AZ (CBS5) – The Rose Law Firm is reporting The US Attorney’s office, FBI, Securities and Exchange Commission, and the US Customs and Immigration Service are investigating possible abuses by officials from PhoenixMart, for its involvement in a program that trades foreign investment for US “Green Cards.”

In November, the FBI raided the PhoenixMart headquarters. Most of the investigation is under seal, but documents filed in case PhoenixMart officials brought against the US government in an effort to retrieve confiscated computers sheds some light on the government’s accusations against the company.

PhoenixMart is a development in Casa Grande, which is billed as a product sourcing center, where manufacturers, wholesalers, and retailers will be able to connect to buyers. The development is advertised as creating between 8,000 and 10,000 jobs.

The developers are funding the project with money from from foreign investors who are taking part in the government’s EB5 Visa program. Under EB5 guidelines, foreign nationals can invest $500-thousand in a program that creates a certain number of jobs in the US, in exchange for up to 10 “green cards.”

According to the court documents CBS 5 Investigates obtained from US District Court, PhoenixMart’s parent company, AZ Sourcing, LLC, collected $150-million from 303 foreign investors. The developers are said to have already spent more than 25-percent of that money.

The documents allege, “Other than a ground-breaking ceremony in 2013, clearing of open land, construction of a minor entryway in 2014, and recent pouring of multiple concrete footers, virtually no significant construction has taken place. In other words, despite receiving nearly $40-million between 2010 and 2014, the movants (developers) have made no significant progress in constructing the Phoenix Mart project which was originally slated to be completed in 2013.”

The documents reference an SEC subpoena for financial documents, as well as a US Customs and Immigration Service “Notice of Intent to Terminate” PhoenixMart’s involvement in the EB5 program, which was filed under seal.

The documents indicate the developers are believed to have “altered many of the seized documents” in violation of federal law.

PhoenixMart and AZ Sourcing officials declined several interview requests, but released the following statement tom CBS 5 Investigates:

“PhoenixMart is working closely with all governmental agencies that have an interest in the project. PhoenixMart is an important project for Pinal County and Arizona. Construction spending alone has, to date, led to the creation of 220 jobs on our 21st century global commerce center. PhoenixMart has the continued support of local and regional governmental leaders who all understand the significant economic impact the project has had and will continue to have on the local and regional economy. Late last year, the City of Casa Grande approved permits for our 585-acre project to begin pouring slab-on-grade foundation for the main building and moving forward on the underground utility work. We continue to work diligently to bring this landmark development to completion.”

A spokesperson for PhoenixMart also forwarded a detailed list of expenses that the development has incurred.

Phoenix Mart, LLC Investment in Economy (as of October 31, 2015):

Total EB-5 Funds placed into Phoenix Mart LLC
$40,500,000

Capital Contributions from AZ Sourcing
$2,313,935

Escrow and Security Deposits
$1,916,000

Inter Company Advances (AZS and CAzRC)
$1,080,924

Account payable and other payables
$1,057,703

Phoenix Mart Total Sources of Funds
$46,868,562

Project Vendor Payments
$13,790,744

All other Capitalized Project Costs (including Land)
$9,502,047

All other Assets
$5,942,425

Operating Expenses Prior Years (2009-2014)
$11,733,227

Operating Expenses Current Year to 10-31-15 *
$5,900,119

Phoenix Mart Total-Use of Funds
$46,868,562

During a US Senate panel hearing last week, Senators heard testimony about problems with the EB5 program, which has become a popular method for developers to gain access to capital for building projects. The program is up for renewal later this year.

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Phoenix, AZ – Valley Partnership has named Carrie Martin as its new Vice President of Membership and Events.

Martin joins Valley Partnership from the Arizona District Council of Urban Land Institute, where she served as Manager and then Programs Coordinator the past four years. Martin previously worked at DMB Realty and SunCor Development Company.

“I am very excited to join the Valley Partnership team and look forward to continuing to serve the real estate and development communities,” Martin said. “Valley Partnership’s mission of advocacy for responsible development and ULI’s mission to provide leadership in the responsible use of land are both centered on the goal of creating and sustaining thriving communities in Arizona, something I’m very passionate about.”

Martin’s responsibilities will include membership development and expansion, planning and coordination of all Valley Partnership events and support to the leadership of the organization and member committees.

“Valley Partnership partners closely with ULI Arizona on a number of initiatives,” said Cheryl Lombard, President and CEO of Valley Partnership. “Adding Carrie to our team strengthens our relationship even further, and ensures we are optimally equipped to best serve our members and will continue to offer the highest level of programing possible.”

Real Estate Daily News Buzz is designed to give news snippets to readers that our (yet to be award winning) editors thought you could use to start your day. They come from various business perspectives, real estate, government, the Fed, local news, and the stock markets to save you time. Here you will find the headlines and what the news buzz of the day will be.

Tuesday, the Dow Jones industrial average gained 222.57 points, or 1.4%, to 16,196.41. The Standard & Poor’s 500 index added 30.80 points, or 1.7%, to 1,895.58. The NASDAQ composite index rose 98.44 points, or 2.3%, to 4,435.96.

U.S. crude lost 40 cents, or 1.4%, to $29.04 a barrel in New York. It jumped 12% Friday, its biggest gain in years. Brent crude, a benchmark for international oils, gave up $1.21, or 3.6% cent, to $32.18 a barrel in London.

Wholesale gasoline fell 7.2 cents, or 6.9%, to 97.1 cents a gallon. Heating oil fell 4.2 cents, or 4%, to $1.027 a gallon. Natural gas slid 6.3 cents, or 3.2%, to $1.903 per 1,000 cubic feet.

US homebuilder sentiment slips in February — U.S. homebuilders are feeling less confident about their sales prospects ahead of the spring home-selling season, though they remain positive overall that the housing market will continue to improve this year. The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday slipped to 58 this month, down three points from a revised reading of 61 in January. The index had been hovering in the low 60s since June. Readings above 50 indicate more builders view sales conditions as good, rather than poor.

Hedge Fund Losses Drive AIG Shift to Commercial Mortgages, Bonds “American International Group Inc. is expanding bets on property lending and safe fixed-income securities after hedge-fund investments soured. ‘We are reallocating roughly 50 percent of our hedge-fund portfolios,’ Sid Sankaran, who is taking over as the insurer’s next chief financial officer, said in a conference call Friday. The shift will be ‘primarily into investment-grade bonds and commercial-mortgage loans, which we believe will free up about $2 billion in additional capital.’” (Bloomberg)

Big Banks Are Fleeing the Mortgage Market “When it comes to residential mortgages, big banks are waving the white flag. Banks originated 74% of all mortgages in 2007, but their share fell to 52% in 2014, the most recent data available from the Mortgage Bankers Association. And it could go even lower. But even at these levels, the big bank backtrack is reshaping a lending landscape that’s already undergone seismic shifts since the housing bubble burst.” (MarketWatch)

ADT being purchased by Apollo Global for $6.94 billion — Home security services company ADT has agreed to be purchased by affiliates of Apollo Global Management for about $6.94 billion. ADT shareholders will receive $42 per share. That’s a 56 per cent increase from Friday’s closing price of $26.87. The companies said that ADT will be merged with a subsidiary of Prime Security Services Borrower LLC, which is also owned by Apollo. The combined business will operate primarily under the ADT brand and be based in Boca Raton, Florida.

Brooklyn’s ‘Once in a Lifetime Deal’ Said to Draw Top Investors “Vornado Realty Trust, one of the biggest owners of Manhattan office towers, and Silverstein Properties Inc. are among potential bidders for real estate offered by the Jehovah’s Witnesses in an area of Brooklyn that’s in high demand by developers. The companies have expressed interest in at least one of three properties for sale, including the Brooklyn Heights complex that’s been the religious movement’s headquarters for almost half a century, according to people with knowledge of the matter.” (Bloomberg)

Report Says Airbnb Fudged Data to Hide Illegal Hosts “Airbnb is just a cool Internet place where regular people rent out their extra rooms to make some cash on the side, right? Well, a new report by an activist claims that lodging platform Airbnb manipulated the numbers it released about its New York City hosts to hide how the site is being exploited by commercial landlords acting as ‘illegal hosts.’ Last month, a report from the Penn State School of Hospitality Management also alleged that Airbnb has a large number of professional landlords who operate multiple and full-time listings on the site.” (CNBC)

What New York City’s Cutthroat Commercial Real Estate Environment Taught Us about Failure “When we at TheSquareFoot ultimately pivoted our business model from from a subscription-based listings platform to a commission-driven real estate firm, I finally began to understand what my old boss meant when he said ‘this industry is cutthroat. You eat what you kill.’ We would call building agents (to try to set up property tours for our clients, for example) and often they wouldn’t even pick up the phone.” (Forbes)

Israeli Bond Boom Continues “U.S. developers, seeking easy access to equity to finance projects, continue to turn to the Israeli bond market with its lower interest rates. At least 14 companies have borrowed over $2 billion since 2008, primarily Manhattan-based real estate firms. REIT Strawberry Fields, which owns Alzheimer care facilities in the Midwest, is the latest to turn to Israeli market for financing, borrowing 265 million shekels, or around $67.8 million.” (The Real Deal)

Investor Puts His Posh Manhattan Properties on the Block “A low-key Irish investor with high-profile Manhattan properties has quietly embarked on a selling spree. Aidan Brooks, 47, the London-based founder of Tribeca Holdings Ltd., is in the process of unloading several glamorous retail buildings, sources tell Realty Check. Tribeca’s Manhattan portfolio includes the Rhinelander Mansion at 867 Madison Ave., the Ralph Lauren Polo flagship which Brooks and his Tribeca partner JP McManus bought in 2005 for about $80 million, and Bloomingdale’s Soho home at 504 Broadway.” (New York Post)

How a Real Estate Exec and an Entrepreneur Will Change DC’s Co-Working Spaces “Startup companies’ pressing need for office space has driven innovation in co-working spaces and incubators like never before. Yet commercial real estate often seems to be slow to respond to evolving needs of growing startups. But D.C.-based SwingSpace is eager to prove that commercial real estate’s reputation for being behind the tech and startup curve doesn’t always have to be true.” (DCInno)

City Quadruples Fines for Serious Construction Violations Following Fatal Crane Collapse “Mayor Bill de Blasio and the city Department of Buildings Commissioner Rick Chandler announced stricter rules for construction sites Friday, including quadrupling fines for serious safety violations. Despite advances in technology and new laws, working on a New York City construction site has become more dangerous during the past decade. After a string of accidents over the past two years, including a fatal crane collapse last week, the de Blasio administration has come under increasing pressure to address the problems.” (Crain’s New York Business)

How Crowdfunding Has Made Flipping Houses a Lot Easier “Although crowdfunding is closely associated with tech start-ups, the practice has found a niche in real estate and in house flipping in particular. Between September 2013, when equity crowdfunding was first permitted under new Security and Exchange Commission rules, and September of last year, investors pumped $870 million into crowdfunding platforms tracked by New York data provider Crowdnetic.” (Los Angeles Times)

The Big Uh-Oh: Global economy shaky and cavalry may not come — Eight years after the financial crisis, the world is coming to grips with an unpleasant realization: serious weaknesses still plague the global economy, and emergency help may not be on the way. Sinking stock prices, flat inflation, and the bizarre phenomenon of negative interest rates have coupled with a downturn in emerging markets to raise worries that the economy is being stalked by threats that central banks may struggle to cope with. Meanwhile, commercial banks are again a source of concern, especially in Europe.