CLEVELAND – (January 10, 2014) A group that attracts international investment to Greater Cleveland, having survived a scandal that sent its founder to jail, is being cited as a national model.
The Cleveland International Fund was named the EB-5 Regional Center of the Year for 2013 by Artisan Business Group, which serves as a consultant to such funds nationwide.
Founded four years ago, the fund takes advantage of a federal program that allows wealthy foreigners to gain expedited visas to America in exchange for job-creating investments of $500,000 or more.
Its representatives seek out immigrant investors and connect them to projects in Cuyahoga County that need financing. That effort has helped to build a hotel and of fice tower in the Flats and fund expansions at University Hospital.
The private, for-profit company was founded in 2010 by A. Eddy Zai, a flamboyant entrepreneur who went to prison last year for defrauding the St. Paul Croatian Federal Credit Union in Eastlake out of millions of dollars.
After investigators determined the fund had not been misused, the fund’s executives took ownership of the company. n 2012, and with the support of Cleveland business leaders, they gained federal approval to resume matching investors with local opportunities.
The fund’s renewed efforts to boost a Heartland economy with international money impressed the consulting group. So did its growing portfolio.
In 2013, the Cleveland International Fund attracted about $40 million from overseas, money that will be used finance the second phase of the Flats East Bank development, the new Westin Hotel downtown and the Uptown development in University Circle.
Steve Strnisha, the fund’s chief executive officer, said that’s only the beginning. The fund has commitments for $90 million worth of local projects in 2014, “and it’s only January,” he said.
Fresh capital is slated to go toward The 9 project in downtown Cleveland, the American Greetings headquarters project in Westlake, and other projects that Strnisha said he couldn’t yet divulge.
While his team is seeking investors from Eastern Europe and South America, most of the interest comes from Chinese businessmen. Strnisha said Cleveland is offering the kinds of opportunities they want: projects that offer a secure investment and projects that will create jobs, thus securing a permanent U.S. visa.
“They want that green card,” he said. “In truth, China is still the major market and the major focus of our efforts.”
In terms of dollars raised, Cleveland’s EB-5 program is more active and effective than most. If it tops $100 million this year, as Strnisha expects, it would rank as one of the most productive funds in the country.
Not bad for an economic development strategy once thought in peril.