By Eric Freedman
Capital News Service
A bogus scheme to build an eco-friendly “green energy” waste processing facility in Detroit defrauded lenders and investors – including Chinese investors hoping to qualify for U.S. visas – of $4,475,000, according to a federal grand jury in Milwaukee.
Project promoter Ronald Van Den Heuvel promised the victims that his Green Box-Detroit would build and operate a facility to recycle paper, process other waste and produce synthetic fuel, the indictment charged.
The Detroit scheme was disclosed in a broad indictment accusing Van Den Heuvel of fraudulently obtaining more than $9 million in investments and loans in Wisconsin and Michigan between 2011 and 2015. He promised to “turn post-consumer waste from sources like fast food restaurants completely into usable consumer products and energy,” the U.S. Attorney’s office in Milwaukee said in announcing the indictment.
As part of the Detroit fraud, he sought approval from the Michigan Economic Development Corp. (MEDC) to issue $95 million to $125 million in tax-exempt bonds toward the project’s $200 million price tag, legal documents said.
In a related civil suit against Van Den Heuvel and Green Box-Detroit, the Securities and Exchange Commission (SEC) said, “He claimed that he had developed a breakthrough recycling process that could turn post-consumer waste into usable products. He represented that the Green Box process would be both environmentally friendly and profitable, and would allow Green Box-Detroit to repay investors.”
But it was a scam because Van Den Heuvel never acquired the promised facility or equipment and used the money for other purposes, the indictment said.
“As represented by Van Den Heuvel, the Green Box business plan was to purchase the equipment and facilities necessary to employ a proprietary process that could convert solid waste into consumer products and energy, without any wastewater discharge or landfilling of byproducts,” the indictment said.
Van Den Heuvel, who lives in De Pere, Wisconsin, diverted more than $3.9 million of the $9 million for personal uses, the indictment and SEC suit said. Among them: $44,000 for Green Bay Packers football tickets; $57,000 for court-ordered support for his ex-wife; $89,000 for a new Cadillac Escalade; $16,570 for his children’s private school tuition; and $33,000 for his wife’s dental work.
He also falsified financial statements that “grossly inflated his personal wealth and his companies’ assets,” the indictment said.
His defense lawyer, Robert LeBell of Milwaukee, didn’t respond to requests for comment.
The primary victims of the Detroit project were nine investors from China who poured $4,475,000 into the failed endeavor. They’d hoped to become permanent residents – green card-holders – by investing at least $500,000 each under the U.S. Citizenship and Immigrant Services EB-5 Immigrant Investment Program.
Van Den Heuvel worked through Green Detroit Regional Center, which is owned by a Georgia law firm that is authorized to operate in Wayne, Livingston, St. Claire, Lapeer and Macomb counties, court documents said. The center finds “foreign clients, mainly from China and South Korea, to invest in large alternative energy projects,” according to its website.
The Green Box-Detroit project was portrayed as creating 35 direct and indirect jobs per each Chinese investor.
“Green Detroit Regional Center promoted the EB-5 investments in Green Box Detroit based on Van Den Heuvel’s representations,” the SEC suit said. It said the chief executive officer of the Green Detroit Regional Center, Georgia lawyer Simon Ahn, marketed the project to investors through immigration consultants in China. Neither Ahn nor Green Detroit Regional Center have been charged or sued by the SEC.
Ahn said, “If the charges are true, it is completely shocking to learn about the extent that Ron Van Den Heuvel hid the truth from me,” the center and investors.
“All of us visited the plants in Wisconsin many times, including the potential site in Detroit, and everything checked out fine. All the financials from a recognized accounting firm indicated that everything was proceeding on track, Ahn said.
The SEC suit said Van Den Heuvel falsely told investors that the MEDC had approved tax exempt bonds for the project. However, the MEDC rejected the request after discovering five tax liens, one construction lien, two state tax warrants, four civil judgments and three civil lawsuits, according to court documents.
“Van Den Heuvel did not satisfy MEDC’s concerns. He did not provide additional information to the MEDC, and did not provide a satisfactory explanation for the issues that it had raised,” the SEC suit said.
MEDC vice president of marketing and communications Emily Guerrant said “Yes, they did approach us. No, we never engaged with them.”
Ahn said it is likely that a receivership will be established to help Chinese investors recoup their money. He said it is “hard to determine at this point” whether they will qualify for green cards.
The grand jury accused Van Den Heuvel of wire fraud and illegal financial transactions. If convicted, he faces a maximum penalty of five years in prison and a $250,000 fine. In addition, the federal government is seeking to recoup the proceeds of the alleged fraud.
Earlier this month, Van Den Heuvel pleaded guilty under a separate 2016 indictment in a bank fraud conspiracy case. That guilty plea does not directly affect the new indictment, according to Dean Puschnig, a public affairs officer at the U.S. Attorney’s office. A Horicon Bank loan officer in that case has pleaded guilty, and charges against Van Den Heuvel’s wife were dismissed on Oct. 16, according to court records.