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Mexican violence spurs wealthy toward U.S. investments

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Posted: Monday, April 25, 2011 12:00 am

MCALLEN — Rosendo Gonzalez sought a way for his family to leave Mexico when his wife was robbed at gunpoint.

A self-made businessman with a close-knit family, Gonzalez, 47, is one of a number of wealthy Mexican nationals looking to escape a violence-torn country who are taking advantage of a U.S. immigration program that promises green cards in return for investment.

Gonzalez intends to spend up to $5 million opening an Hidalgo County-based plastics factory that will complement the one he founded in Monterrey when he was 27. The investment will help Gonzalez, who has had permanent residency here since he was a child, bring his family to the United States.

“My heart is still over there with my family,” Gonzalez said April 15 during a trip to look at a warehouse he is considering purchasing. “I have to do something to get my family out.”

Intrigued by the EB-5 program, dozens of Mexican families are traveling across the border to a nondescript McAllen office building.

Marketed throughout Mexico as USA Now, the office is one of six regional centers in Texas for the EB-5 investor visa, an immigration program launched two decades ago to stimulate economic activity by encouraging foreign nationals to invest at least $500,000 and create at least 10 jobs. U.S. businessmen with bold plans are using the program to raise capital for ventures ranging from construction of an NBA basketball arena in Brooklyn to expansions of Vermont ski resorts.

But in McAllen, rich Mexican nationals are lured more by the potential for a green card than for profit.

The USA Now Regional Center has secured $83 million in commitments from Mexican investors since it received a license to operate in late March, said Marco Ramirez, the company director who is ambitiously seeking $150 million for his fund within its first year of operation. Ramirez declined to discuss the specifics of his investment opportunities but said he offers funds for health care, property management and green energy.

An energetic entrepreneur who says he never would have discovered the EB-5 program if his floor covering business hadn’t closed in the recession, Ramirez’s schedule is packed each day pitching his program to Mexican families seeking legal residency in the U.S. away from the routine violence that continues to plague Mexico.

Targeted because of their wealth and community stature, most of his families have paid street taxes to operate their business. Others have been robbed at gunpoint in their homes or prepaid ransoms to prevent kidnappings.

Ramirez recounted the story of a businessman who drove four hours each weekend to stay in McAllen, risking running across highway checkpoints armed by cartel gunmen.

“He told me, ‘I would rather pray the rosary for four hours on my way to McAllen than to pray it all weekend staying home,’” Ramirez recalled in between investor meetings this week. “He was living in fear.”


Drive past rows of homes in Hidalgo County’s wealthiest subdivisions and count the cars with Mexican license plates. Quantifying the exact impact of foreign investment in the Rio Grande Valley’s economy is a daunting task, economic development officials say. But Mexican shoppers have always generated activity in local retail, housing and entertainment markets.

But with violence continuing unabated in the fifth year of President Felipe Calderon’s war against the drug cartels, more Mexican nationals than ever are seeking legal residency here.

Rio Grande Valley immigration attorneys are swamped by requests for an alphabet soup of work, student and investment visas. And McAllen-based attorney Pollyanna Molina said there is growing interest in the EB-5 visa, which requires a hefty investment but can result in permanent residency.

Under the EB-5 program, candidates are screened for infectious diseases and undergo criminal background checks, and their $500,000 investment is carefully vetted to ensure it was obtained legally. If investors make good on a promise to create 10 jobs within two years, they – along with their spouses and children — are granted green cards.

The intent of the EB-5 program was to attract successful foreign businessmen like Gonzalez who wanted to expand into the U.S. But regional centers like USA Now that operate effectively as a private equity fund are a growing option for passive investors with no interest in scrutinizing how the money is spent.

“It’s a large amount of money, but some families aren’t concerned about it,” Molina said. “They just want to secure their green card.”

It’s difficult to ascertain whether that is a local or nationwide phenomenon. Because U.S. Citizenship and Immigration Services does not survey individual investors, any evidence on what spurred their interest in the program is purely anecdotal, agency spokeswoman Luz Irazábal said.

However, increased interest in the program’s U.S. side undoubtedly has been used as an alternative means to raise capital in tight lending markets. When the recession began in 2007, there were only 11 active regional centers in the country. When USA Now received its license last month, there were 125.

More regional centers seeking to raise capital for their own projects allows foreign investors to selectively choose where they put their money. But Irazábal said time will tell whether more regional centers will increase the 4,200 EB-5 visas issued last year — twice as many as previous years — toward the 10,000 allotted each year.

“When the economy wasn’t doing well, this was still a stable country with opportunity for growth,” Irazábal said. “The EB-5 is a vehicle to help the U.S. economy but at the same time, it’s a way for someone who is interested in this country to take advantage of the many opportunities that are available here.”


Someone is always coming through the doors of USA Now, where Ramirez’s staff handles paperwork, arranges business meetings and pitches proposals. Since the company was approved as a regional center last month, a group of about 10 investors — with the potential for more once USA Now begins an $80,000 advertising blitz for Holy Week — learn about the company’s various investment options each day.

Ramirez said discussing the specifics of proposals could break up acquisition offers or spoil pending tax break incentives, but he said Mike Irby’s proposition for investors is similar to USA Now’s array of options.

Irby has worked daily since the beginning of the year to raise $15 million from Mexican investors to finance the acquisition of a wholesale gas company he couldn’t name. A Mercedes native who grew up in his grandfather’s gas station and has spent his life in the oil and gas business, Irby formulated an idea for a clean energy proposal last year but struggled to get commercial banks to buy into his plan.

He’s had better luck raising capital from USA Now’s investors, including employees of the Mexican state-owned petroleum company Pemex who he sells on the need for alternative fuel sources as gasoline prices continue a steady climb.

“It’s really difficult to go out and find the money to do an acquisition like this on your own,” said Irby, who convinced Ramirez to include his proposal in USA Now’s fund. “But there’s a new wave coming on as far as clean fuels, and that’s where we’re trying to position ourselves.”

USA Now’s business model is tilted toward its own ventures, where it stands to make the greatest profit. Most of the $10,000 it collects in required fees from EB-5 investors will go toward expenses for promoting the regional center, tracking the investors’ job creation and completing the mountain of paperwork required by an intricate bureaucracy.

But the USA Now staff often operate as fixers who help industrial heavyweights — about 16 manufacturers like Rosendo Gonzalez are contemplating an EB-5 visa here — navigate the process of establishing their own business in the U.S. Since Gonzalez committed to the EB-5 program, Ramirez has accompanied him to look at warehouses with local realtors and discuss tax abatements with Hidalgo County cities.

Gonzalez founded FAMA Technology, a plastics processing company based in Monterrey, when he was 27, eventually patenting a plumbing mechanism that uses less water when flushing toilets. Today, the company employs more than 350 people and ships its products throughout Mexico, Central and South America and other undeveloped countries with low water pressure.

Despite his company’s success, Gonzalez was never interested in penetrating the U.S. market until criminal gangs accosted his plant manager and his wife. Gonzalez, who is already in the U.S. and does not intend to return to Mexico, plans to invest anywhere from $4 to $5 million in the Valley, creating about 25 jobs initially as he ramps up operations.

In return, Gonzalez wants to obtain visas for his wife and seven children, and he’s considering bringing other key personnel from his Monterrey operation.

“We really see this as a very good opportunity because we were not considering the U.S. market,” he said. “It’s another option that was triggered by what is happening in Mexico.”


But for every heavy hitter like Gonzalez, there are three to four investors like the Ramirez family.

Mr. and Mrs. Ramirez, who do not want to be identified by their first names for fear of being targeted, put aside money their whole careers as educators in Reynosa to build a nest egg for a retirement they wanted to enjoy in Mexico.

But in the past three years, the family has been robbed twice, once when traveling to San Fernando and again when thugs broke into their home. With their 20-year-old son nearing the age where he wouldn’t qualify under his parents’ EB-5 visa (children over the age of 21 require a separate investment), the Ramirez family decided now was an opportune time to invest in the U.S.

Their retirement savings will cover most of the $500,000 investment. The rest will come from investment properties they plan to liquidate.

“It’s almost everything that we have,” said Mrs. Ramirez, a 48-year-old high school teacher.

“If we remain there, we’ll always feel insecure,” said Mr. Ramirez, who will retire this year from a university job. “Nowadays, it’s not safe to have money there, so we couldn’t think about enjoying it.”

Moving away from the only home they’ve known, even if it is just across the border, was a difficult decision, especially knowing that other relatives will stay behind, said Mrs. Ramirez. But she said even though USA Now’s objective is to bring capital to the United States, the company treated her family like “people” and not like a contract representing a specific dollar figure.

Marco Ramirez says the biggest investment USA Now will make is in the safety of its investors.

For the 60 percent of investors like the Ramirez family who will participate in his fund, he wants to structure their investments in asset-based programs to protect the principal. For the 40 percent of investors like Gonzalez who are bringing their own businesses, he offers what business advice he can and helps them develop connections here.

When his application for a regional center was stalled in the government bureaucracy, he solicited letters from investors he already had lined up detailing the kidnappings, extortions and other threats against them.

“Sometimes hope is the only thing that gets us through the day,” he said. “Their hope is to be in a place where they can sleep at night and think tomorrow will be better.”

Jared Janes covers Hidalgo County government, Edinburg and general assignments for The Monitor. He can be reached at (956) 683-4424.

El Nuevo staff writer Martha L. Hernandez contributed to this report.

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