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Chinese national extradited to US to face multimillion-dollar money-laundering charges

A gavel cracks down. (Airman 1st Class Aspen Reid/U.S. Air Force)

More than a decade ago, Chinese national Jianjun Qiao gained entry to the United States on a special visa program designed to create local jobs and his purported wife later bought a five-bedroom home in Newcastle.

But after years on the run as one of China’s most wanted fugitives, Qiao, 56, was extradited from Sweden to Los Angeles on Friday to face charges he committed fraud on immigration documents while using U.S.-purchased properties as part of a multimillion-dollar money-laundering scheme. His supposed wife, Shilan Zhao, 56, already pleaded guilty to immigration fraud in 2017, telling federal authorities she and Qiao had actually divorced years before applying for EB-5 immigrant investor visas as a married couple.

Qiao pleaded not guilty in a Los Angeles courtroom Monday. A trial date has been set for July 28.

The case spotlights a federal EB-5 job creation program that has become a popular path for immigrants seeking U.S. green cards. Up to 10,000 permanent residency visas can be allotted annually to foreigners and their immediate families if they invest in a U.S. enterprise that creates at least 10 U.S. jobs; the vast majority of recipients have been from China.

Invest In The USA, an EB-5 trade association, has estimated the program funded more than $2 billion in recent Puget Sound region development projects. Approved investors, spouses and children get provisional residency visas that can be made permanent if they demonstrate the required job creation.

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But critics have likened it to immigrants buying their way into the country, with a cottage industry of corporations regularly traveling to China to make pitches to lure investor capital. Among them: The sister of President Donald Trump’s son-in-law and special adviser Jared Kushner, whose family connections were touted during one such overseas visit.

In her guilty plea, Zhao admitted using a phony marriage certificate and false documents indicating the money she planned to spend had been legally obtained through her partial ownership in two flour companies.

The cash-for-visas program used to require a minimum investment of $1 million, or $500,000 in designated Targeted Employment Areas. The Trump administration recently raised those investment thresholds to $1.8 million and $900,000, respectively, and has faced pressure from Republican lawmakers to suspend the program as part of an expanded immigration crackdown.

Thom Mrozek, a spokesman for the U.S. Attorney’s Office in Los Angeles, said the case involving Qiao, Zhao and the Newcastle home is one of only a handful to be prosecuted since the EB-5 program began in 1990. Sweden’s high court last summer rejected an extradition request to return Qiao to China on grounds he might be persecuted there because he’d joined a banned political party before fleeing that country in 2011.

Once the Swedish court freed Qiao, U.S. officials had him rearrested in Stockholm days later before its own extradition bid. The extradition was granted and Qiao was escorted by U.S. Marshals on a flight that arrived in Los Angeles on Friday.

A joint investigation by the Department of Homeland Security and the Internal Revenue Service alleged Qiao (aka Feng Li) used his decadelong position as director of a grain storehouse in China to embezzle millions of dollars from 2008 to 2011 and launder it through properties purchased in the United States. One of those properties was the 3,660-square-foot Newcastle residence, purchased in 2012 for $525,000 by his then-ex-wife Zhao; Zillow estimates the property is now worth $1.2 million.

A federal grand jury indictment in July 2014 alleged Zhao in 2008 used phony documents to claim marriage to Qiao despite their having divorced in China in 2001. Provisional visas were approved for the couple and one of their sons a year later, after she had indicated plans to spend $500,000.

By mid-2011, Zhao applied for a permanent visa.

In early 2012, according to the indictment, the couple had $2.2 million in money Qiao had stolen from the grain storehouse deposited in a Canadian bank account and used some of it to buy the Newcastle home under a company called S&O Investments LLC. The indictment said documents showed Zhao owned 98% of the company and her son 2%.

China’s government alleges Qiao embezzled a total of $11 million and has more aggressively targeted officials said to have fled the country with stolen money since President Xi Jinping came to power in 2012. The federal agencies in the United States, assisted by the Chinese police and prosecutors in their investigation, allege the trail of Qiao’s illicit withdrawals from the grain storehouse began in 2008 after Zhao applied for the couple’s visas.

A Swedish television station reported Qiao had been living in Sweden under a different name since the grand jury indictment against him was unsealed in March 2015 and his ex-wife arrested.

It doesn’t appear Qiao lived in the Seattle area at any point — he became a citizen of the Caribbean nation of St. Kitts and Nevis in 2012 and the indictment alleges he also bought three residences and several parcels of land near Los Angeles, plus a condominium in New York — though Zhao still resides here. She faces up to six months in prison as part of a plea deal to cooperate with authorities and forfeit the Newcastle home and other properties.

Sentencing is set for Aug. 17, and the Newcastle home and other properties will be sold once that takes place.

Zhao’s lawyer, Kirk Davis, said his client had been unaware of the other properties beyond the Newcastle residence. Davis said she accepts responsibility for her role and has cooperated fully, as agreed.

“From our perspective, she’s indicated she is responsible for her conduct and she’s been waiting patiently for whatever needs to happen next,” Davis said.

Davis added, “She was the wife. She was not involved in his transactions. She wasn’t the main mover in that thing. But certainly she became aware of certain facts as things went on.”

A superseding indictment against Qiao in December 2018 alleged he conspired to commit immigration fraud and internationally laundered millions of dollars through banks in China, Hong Kong and Singapore. If convicted on all counts, he faces up to 55 years in federal prison.

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© 2020 The Seattle Times