A federal appeals court on Wednesday turned down a bid to revive a lawsuit accusing former Gov. Terry McAuliffe of Virginia and Hillary Clinton’s late brother, Tony Rodham, of swindling Chinese investors out of $17 million they plowed into an electric car company through a program that promised residency in the U.
S. and the possibility of American citizenship.The Fourth U.S. Circuit Court of Appeals, based in Richmond, Va., upheld a ruling from a federal judge in Alexandria who said the suit wasn’t specific enough about how allegedly misleading and false statements from McAuliffe and Rodham induced the Chinese nationals to invest in the project, known as GreenTech Automotive.
However, while McAuliffe and Rodham prevailed in the decision, the court’s opinion expresses strong disapproval of the claims the men made in promoting the company, which eventually went belly-up without ever launching mass production of the small, lightweight electric vehicles they planned.
“In toto, defendants’ statements ran in front of the facts on the ground,” Judge J. Harvie Wilkinson III wrote, joined by Judges Paul Niemeyer and Allyson Duncan. “There are no laurels in this case, no accolades to be bestowed. … False information is not useful to the market, and may lead investors to commit their resources in ways that will prove harmful.”
“Far from building investor confidence, misstatements like those alleged in this case undermine public trust. We decline to whitewash the alleged misstatements here,” Wilkinson added.
Despite that criticism, the court noted that the investors should have been well aware of the risks of the investment since they received and signed detailed written disclosures about it. In the suit, the Chinese citizens claimed they never read the documents, which were provided in English.
Under U.S. law, foreigners can receive green cards through a program known as “EB-5” if they invest $500,000 in approved projects in distressed or rural areas. Critics have said much of the money has been used to subsidize projects in downtown areas not struggling economically.
McAuliffe resigned from the green car company before he was elected governor in 2013. He has described the venture as a legitimate startup that hoped to create much-needed jobs in America while promoting environmentally friendly transportation. Aides have blamed McAuliffe’s political opponents for the lawsuits he has faced relating to the company’s failure.
McAuliffe toyed for a time with joining the crowded 2020 Democratic presidential field, but announced in April that he’d decided against a run. POLITICO reported last month that he is considering running for Virginia governor again in 2021.
Hillary Clinton announced on Twitter over the weekend that Rodham, the younger of her two brothers, died Friday at age 64. No cause of death was given. A footnote in the court’s opinion noted Rodham’s passing, but said it didn’t affect the case because the judges decided to keep in place the lower-court decision tossing both McAuliffe and Clinton from the suit.
Rodham testified at a deposition in a child-support dispute that he was hired by McAuliffe at Clinton’s request. Rodham’s work on GreenTech included traveling to China and pitching the project to wealthy Chinese. Promoters of EB-5 projects often try to boost investment by emphasizing links to famous figures.
A lawyer for the Chinese investors, Scott Abeles, said last year that the suit was not completely extinguished because a Chinese citizen who organized GreenTech, Charles Wang, was never served and appears to be living in China. Abeles did not immediately respond to a request seeking comment.
All three judges who sat on the Fourth Circuit panel are Republican appointees: Wilkinson was appointed by President Ronald Reagan, Niemeyer was nominated by President George H.W. Bush, and Duncan is an appointee of President George W. Bush.
The investors could ask the full bench of the appeals court to rehear the case or could ask the Supreme Court to take up the case, but such reviews are rarely granted.
Article originally published on POLITICO Magazine