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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Following RadioShack’s surprise announcement Thursday that it could not come to an agreement with its lenders that would not allow it to close 1,100 stores, it can’t sell more than 200 per year. The company had retained Melville, N.Y.-based A&G Realty Partners to manage the disposition of RadioShack closing 1,100 stores back in March and still plans to sell a number of outlets in an attempt to staunch the flow of red ink.

The company’s credit agreement allows it to close only 200 stores a year and up to 600 over the life of the agreement. RadioShack had been negotiating with its lenders for approval to close nearly twice that total number.

In a document filed with the Securities and Exchange Commission on Thursday, the company said that its lenders were demanding terms that it could not accept, and that was why it would scale back the reorganization.

RadioShack’s strategy had been to proliferate, and therefore to be convenient for consumers.

But that strategy is no longer viable given the growing convenience of online shopping and heavily discounted items at big-box and other retail stores. In its last fiscal year, RadioShack reported a loss of $400 million, a substantial slide from its loss of $139 million the year before.

Joseph C. Magnacca, the company’s chief executive, was hired last year to revitalize the faded brand, which has a total of 4,300 stores in the United States.

“Not being able to get the necessary waivers from their banks effectively sends RadioShack management back to the drawing board on formulating a turnaround plan — and time is increasingly not on their side,” Anthony Chukumba, an analyst at BB&T Capital Markets, said in an email. “That said, this is also a bit of a game of chicken — if the banks play hardball too much. RadioShack may end up being forced to file for Chapter 11 bankruptcy, which will leave the banks fighting over the scraps.”

The company’s stock, which has plummeted over the last several years, rose slightly on the news in after-hours trading, to $1.50.

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 for the day will be.

The Dow Jones Industrial Average fell 54.33 points to close at 15,413.33. The Standard & Poor’s 500 index fell 8.29 points to 1,746.38. The NASDAQ composite fell 22.49 points to close at 3,907.07 on Wednesday, Oct. 23rd.

Benchmark U.S. crude for December delivery fell $1.44 to $96.86 a barrel in New York.

CONSTRUCTION UNEMPLOYMENT DECLINES TO 8.5% LOW
Construction employment rose by 20,000 in September and the industry’s unemployment rate fell to a six-year low of 8.5%, while construction spending increased for the fifth consecutive month in August, according to an analysis of new government data by the Associated General Contractors of America. Association officials cautioned that the data does not address any potential impacts from the recent federal government shutdown. (Full report to be published tomorrow)

TUCSON APPROVES CHANGES TO PRIMARY JOBS INCENTIVE PROGRAM
TUCSON – The mayor and City Council unanimously approved changes to its Primary Jobs Incentive Program to make it easier for more businesses to qualify for building-fee exemptions and to temporarily retain sales taxes for their own benefit at Tuesday’s meeting. The program was launched in August 2011 to encourage businesses in the primary sector to expand, and in doing so, boost the economy. “A primary job is one that exports a product and imports dollars into the economy versus retail, which just re-circulates dollars,” said Chris Kaselemis, Economic Initiatives Program director. “The average wage is a little lower and more in line with what we pay here in the Tucson area,” Kaselemis said. “By lowering the threshold, it will make more firms eligible.” Since it began, only two companies, American Tire Distributors and B/E Aerospace have successfully applied for the program. The changes lower the minimum wage businesses must pay some workers in order to get the incentive.

WEYERHAEUSER TO USE REVERSE MORRIS TRUST VALUED AT $2.7 Billion
NEW YORK (Reuters) – Tri Pointe Homes Inc (TPH.N), a homebuilder backed by Barry Sternlicht’s Starwood Capital Group LLC, is in advanced talks to buy Weyerhaeuser Co’s (WY.N) homebuilding division for about $2.7 billion, according to people familiar with the matter. Taylor Morrison, which went public in April and Alberta, Canada-based Brookfield Residential Properties are among those prospective buyers, but the most serious are between Tri Pointe Homes (NASDAQ:TPH). Weyerhaeuser announced in June it was reviewing strategic options for the homebuilding and real estate development unit, is trying to finalize a sale to Tri Pointe as soon as in the next two weeks, sources told Reuters this week. Under the proposed terms of a deal, the two companies are using a structure known as Reverse Morris Trust – a transaction that allows a parent company to sell its subsidiary in a tax-efficient manner, the people said.

ASIA’S RICHEST MAN SCRAPS PLAN TO SELL PARKnSHOPS
Oct 18 (Reuters) – Hutchison Whampoa, controlled by Asia’s richest man, Li Ka-shing, has scrapped a plan to sell its Hong Kong supermarkets business, ParknShop and will instead focus on expanding in China, it said on Friday. The sale of ParknShop, which operates 345 stores in Hong Kong, China and Macau, had been expected to fetch between $3 billion and $4 billion, with prospective bidders including prominent retailers, such as state-owned China Resources Enterprises, Japan’s Aeon Co Ltd and Australia’s Woolworths Ltd.

BLACKSTONE PREPARING BRIXMOR IPO
As Blackstone Group LP prepares an initial public offering for shopping-center landlord Brixmor Property Group Inc., investors and analysts are watching the deal to see what tone it sets for other Blackstone-led IPOs waiting in the wings. Blackstone is expected to take as many as four real-estate companies public over the next year; three of them were purchased by the private-equity firm before the real-estate downturn. First up, shopping-center landlord Brixmor could raise up to $905 million. The company said late last week in a regulatory filing that it expects to offer up to 43 million shares of common stock for between $19 and $21 a share, potentially raising up to $905 million.

INVESTMENT CROWDFUNDING ABOUT TO GO BIG TIME
WASHINGTON (AP) —  For years, filmmakers, artists and charities have used the power of the Internet to generate money for projects. But in the coming year, with the blessing of Congress, startups will be allowed to raise money this way by selling stock to small-time investors.  For those investors, it’s a chance to make a small profit and possibly get in early on the next Twitter or Facebook. But it’s also extremely risky, given that a majority of startups fail. And critics warn that investment crowdfunding is ripe for fraud.  The Securities and Exchange Commission on Wednesday took a step toward implementing the law by proposing how much people could invest and how much companies must divulge. The SEC voted 5-0 to send the proposal out for public comment. Final rules could be approved next year.

EUROZONE DEBT BURDEN ROSE AGAIN Q2
BRUSSELS (AP) — The eurozone’s debt burden rose further in the second quarter, official figures showed Wednesday, despite years of austerity that one prominent European Union economist says intensified the financial crisis. Eurostat, the EU’s statistics office, said debt across the 17 countries that use the euro rose to 93.4% of the eurozone’s annual gross domestic product from 92.3% the previous quarter. Though countries across the region, such as Greece and Spain, have made great strides in reducing their borrowing through spending cuts and tax increases, they’re still running budget deficits that add to their stockpile of debt. The eurozone’s economy also isn’t growing fast enough to help lower the debt figures measured relative to total GDP — a sustained period of strong growth would help reduce the debt burden figures.

FEDEX EXPECTS HOLIDAY DELIVERIES TO INCREASE
MEMPHIS, Tenn. (AP) — FedEx expects that holiday shoppers will be more nice than naughty this year, with shipments rising from 2012.  The company said Wednesday that it expects to carry more than 22 million shipments on the busiest day of the season, which it believes will be Monday, Dec. 2.  FedEx predicts that shipments in the first week of December will rise 13 per cent over last year’s peak week, to more than 85 million shipments, driven by online shopping and retailers stocking up on electronics, apparel and other goods.

STARBUCKS OPENING ‘TEA BAR’ IN NYC
NEW YORK (AP) — Starbucks is trying to make tea trendy, with plans to open its first “tea bar” in New York City. The Seattle-based company says Teavana Fine Teas + Teavana Tea Bar will serve sweets and other food including flatbreads, salads and small plates ranging in price from about $3 to $15. Drink prices will range from $3 to $6, and include novelties such as a Spiced Mandarin Oolong tea and carbonated teas. The menu of food and freshly made drinks is a switch for Teavana, a chain of about 300 stores that sell boxed and loose tea and accessories. Teavana stores are mainly in shopping malls, but Starbucks CEO Howard Schultz said he plans to expand the footprint to include more locations in urban areas. The company plans to add brewed tea and food to more Teavana stores. The opening of the New York City store on Thursday comes after Starbucks bought Teavana last year. The company has said it plans to use the acquisition to make tea a bigger part of American culture, as it has with coffee.

700 IRS CONTRACT WORKERS OWE $5.4MILLION BACK TAXES
WASHINGTON (AP) — Nearly 700 employees of Internal Revenue Service contractors owe $5.4 million in back taxes, said a report Wednesday by the agency’s inspector general. More than half of those workers are supposed to be ineligible to do work for the IRS because they are not enrolled in installment plans to pay the taxes they owe. Unlike other federal agencies, the IRS requires employees and those who work on agency contracts to comply with federal tax laws. That means they have to file returns on time and either pay all the taxes they owe or enroll in a payment plan.

TRIAL STARTS; IS DETROIT ELIGIBLE FOR BANKRUPTCY?
DETROIT (AP) — An attorney representing Detroit urged a judge Wednesday to allow the city to fix staggering financial problems through bankruptcy, arguing that without it nearly 65 cents of every tax dollar eventually would be gobbled up by debts and other obligations. The extraordinary trial, expected to last days, brings the bankruptcy case to its most crucial stage since Detroit in July made the largest public filing in U.S. history. If a judge finds certain legal requirements were met, the city would get the green light to restructure $18 billion in debt and possibly slash pensions for thousands of people, the most controversial target so far. Hundreds of protesters walked in a circle outside the courthouse with signs that said, “Bail out people not banks.”