McAuliffe’s overstated production levels for GreenTech mar business-savvy image

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The green car company co-founded by Virginia gubernatorial nominee Terry McAuliffe has fallen woefully short of its original projected job creation and production levels while becoming ensnared in two federal investigations.

But even if it had met its goals, the company’s 2009 projections called for producing nearly double the predicted worldwide demand for such electric vehicles.

In the course of pursuing investors, GreenTech Automotive Inc. projected 100,000 “subcompact” cars being built annually by 2017. According to Navigant Research, Neighborhood Electric Vehicle sales were predicted to increase worldwide that year to 55,000. The 2011 study for Navigant was conducted by Pike Research, a market research and consulting firm that provides in-depth analysis of global clean technology markets.

Counting all classes of cars — subcompact, compact, midsize and SUV — GreenTech planned a full annual production volume of 1 million cars by 2017, according to the 2009 offering.

The investment offering was couched with disclaimers, including warnings that production of different models would depend on demand.

“Although GreenTech’s products are designed with world-class business partners implementing advanced technologies that substantially reduce emissions and fuel consumption, there however can be no assurance that market acceptance may be slow, and lower than anticipated,” the offering reads.

GreenTech now estimates producing about 30,000 vehicles per year and defends the company’s failure to meet earlier expectations.

“It takes time to build a brand new company in a capital-intensive industry like electric vehicles, and we will not cut corners on quality or safety as we progress. We have a plan. The plan is working. We’re sticking to it,” GreenTech said in a statement to The Associated Press.

The beleaguered car company was intended to solidify Mr. McAuliffe’s credentials as a businessman, but it has left him vulnerable to questions about judgment as the business and his role in it becomes a central point of attack from his Republican opponent, Kenneth T. Cuccinelli II.

Mr. Cuccinelli has seized on Mr. McAuliffe’s decision not to locate a car-producing plant in Virginia but instead to build the facility in Mississippi.

Mr. McAuliffe has defended the move by saying he had a fiduciary responsibility to shareholders, but he recently has appeared to be trying to distance himself from the company. He left GreenTech in December but did not publicly reveal his departure until April. Since then, two federal agencies have announced investigations into the company’s operations.

The Securities and Exchange Commission is exploring whether the company guaranteed returns for its investors, and the Department of Homeland Security is investigating whether a federal immigration official inappropriately helped company officials attempting to secure a visa for an investor. Under the federal EB-5 visa program, foreign investors can put up at least $500,000 for job-creating U.S. companies in exchange for legal status.

U.S. Citizenship and Immigration Services Director Alejandro Mayorkas, President Obama’s pick to be the next No. 2 at Homeland Security, rammed through an investor visa on behalf of Gulf Coast Funds Management LLC, even after an application was denied and an appeal rejected. Gulf Coast processes the visas on behalf of GreenTech.

It later emerged that Mr. McAuliffe personally lobbied Mr. Mayorkas and Homeland Security Secretary Janet A. Napolitano to accelerate the visa-approval process for his company’s investors.

Sen. Chuck Grassley, Iowa Republican, wrote Friday to Mr. Mayorkas saying that the nominee sent him a letter July 25 explaining he “had not used [his] position to benefit any particular party or individual.”

But Mr. Grassley, citing “whistleblowers” at U.S, Citizenship and Immigration Services, wrote that in the summer of 2011, while the agency’s appeals office was drafting an opinion on a visa application from the Gulf Coast, “you went beyond merely monitoring or influencing the process, seeking to personally take control of the opinion. In a meeting of agency employees, including [appeals office] staff, you allegedly said: ‘Give it to me, I’ll write the fing thing myself.’”

An internal email also has a Citizenship and Immigration Services employee writing that the appeals office “had discovered some add’l dirt on [Gulf Coast] and that the decision was probably not going to play out as Ali had hoped given his political pressure to overturn the previous draft. The add’l dirt had something to do with $ changing hands in a non-EB-5 compliant way but [redacted] did not get into specifics.”

The employee goes on to voice his concern about the potential of putting politics above the law in the case.

“If there are new aspects of this situation that we are unaware of, and unresolved material issues that we are aware of, then we are setting ourselves up for a fall by pushing to approve these cases,” the employee writes. “We simply cannot approve based on politics instead of eligibility under the law.”

Mr. McAuliffe has expressed dissatisfaction with the pace at which federal officials process the visa applications but denied that he expected any preferential treatment.

“Like many business leaders and political officials from both parties, I was among those who expressed frustration on several occasions to multiple individuals. I never asked for any preferential treatment, nor did I ever expect to receive any,” he said this month in response to the announcement of the SEC investigation.

But the car company continues to provide daily fodder for Republicans, with even Mr. McAuliffe’s former business partner expressing regrets about the origins of the venture.

“I learned a lot of things,” GreenTech co-founder Charles Wang told The New York Times in his first interview since Mr. McAuliffe announced his gubernatorial bid. “Politicians or people with political backgrounds are dangerous to business.”

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