(Bloomberg)—The Lucky Dragon casino in Las Vegas was pitched to foreign investors as a way to make money and score permanent residence in the U.S., but the now bankrupt project could leave them with neither.
The $165 million resort, which opened in November 2016, was billed as the first Las Vegas casino designed specifically for Asian customers. It was built, in part, with $98.5 million from 179 foreign investors, who backed the project under an immigration program, known as the EB-5 visa, that lets immigrants who create jobs in the U.S. stay here permanently.
The casino closed in January, however, and is expected to be sold at a bankruptcy auction on Sept. 10. That means the foreign backers each could lose their $550,000 investment, as well as their shot at a green card, according to a bankruptcy court filing by the investors. Their attorney, Ryan Works, said his clients would like to see a new buyer who lets them retain some of their interest.
“I’m hopeful we can preserve some equity for these folks, but also I’d like to see the immigration process succeed for all the investors,” Works said in an interview.
Samuel Schwartz, an attorney for the Lucky Dragon, disputes the investors’ claims, saying all of them received preliminary approvals for green cards, and at least one has obtained a permanent one.
Michael Bars, a spokesman for the U.S. Citizenship and Immigration Services, said that while he couldn’t comment on the Lucky Dragon, generally visa applicants who have preliminary approval will not automatically lose their shot at a green card based on the sale of a property, provided that other job and investment criteria are met.
The EB-5 visa has been around since 1990 and was designed as a way to create jobs in areas with high unemployment. Many projects have been funded through the program, although there have also been disappointments.
Investors who put some of the $398 million of EB-5 funds into the SLS Las Vegas Hotel sued when that property was sold, alleging, among other things, that crucial documents were only provided in English. In 2013, the Securities and Exchange Commission warned investors about potential EB-5 scams, including promises of certain returns and false statements about the status of permits and partners.
Chuck Grassley, the Iowa Republican who chairs the Senate’s Judiciary Committee, has pressed President Donald Trump for changes to the program, which he said has become “riddled with fraud.”
The Lucky Dragon had some high-profile names behind it, including William Weidner, a former president of Las Vegas Sands Corp. The 203-room hotel featured signs in Chinese, a multilingual staff and restaurant dishes such as Australian greenlip abalone. Table games popular with Asian customers and a tea garden added to the ambiance.
The lack of a frequent-customer database and a location on a side street at the north end of the Las Vegas Strip proved challenging, however, particularly once other casinos upped their Asian-targeted marketing after the opening.
The hotel remains open while the investment bank Innovation Capital LLC represents the company in negotiations with potential buyers.
© 2018 Bloomberg L.P