How a bizarre $300M ‘Chinatown’ scandal played out in Ypsilanti, Beijing, and Wayne State

Apr 9, 2018 at 1:01 pm
click to enlarge Rendering of International Village. - Courtesy photo
Courtesy photo
Rendering of International Village.

Surveillance photos from a Michigan First Credit Union camera on Wayne State University’s campus reveal the answer to a question that’s at the heart of a scandal that played out over the last seven months: Who paid for four Ypsilanti officials to travel to China for 12 days?

The officials — Ypsilanti Mayor Amanda Edmonds, Economic Development Director Beth Ernat, Mayor Pro Tem Nicole Brown, and Police Chief Tony DeGiusti — took the trip after Troy-based, Chinese-American developer Amy Xue Foster pitched a $300 million mixed-use development for land near downtown Ypsilanti that would cater to wealthy Chinese students. She first billed it as a “Chinatown” but later amended that to “International Village.”

The trip turned into a scandal after our Sept. 27 report revealed that a WSU student group hadn’t funded the trip, as city officials and Foster claimed. The surveillance photos that show the real funding source are part of a report released on Friday to the city by attorney Ed Plato of Plato Law. The Ypsilanti City Council hired him to conduct an independent investigation and determine who paid for the trip.

Metro Times obtained a copy of Plato’s summary through a Freedom of Information Act request. Plato — who city council granted subpoena power — reviewed 1,500 pages of documents, bank records, emails, text messages, and bank surveillance photographs, and gathered approximately 20 hours of sworn testimony from city officials, developers, and WSU students.

A detailed 26-page timeline of events that Plato produced reads like a screenplay to a bad crime movie, and illuminates the lengths to which the scandal’s players — specifically, the developer and Ernat — underwent to cover up the funding source. Between airfare and other expenses, the cost is estimated at around $40,000.

The story also spotlights the type of cozy relationships that exist between developers and government officials at all levels, and not just in Ypsilanti. Though the report exposes the city officials' and developers' ineptitude, it’s not hard to see this playing out differently in more competent hands, or in the absence of strong local media.

Plato’s report also puts economic development director Ernat’s hubris on display; offers definitive proof that she repeatedly lied — including under oath in interviews with investigators and city council; and shows that she misled city officials and the public during the months leading up to the trip. Plato also proves that Ernat drafted four “scholarship” letters that she and the development team pretended came from WSU students, and accepted a jade bracelet from Foster.

Though Plato doesn’t provide definitive proof that mayor Edmonds lied about her knowledge of the funding source, he casts serious doubt on her claim that she was unaware that Foster paid for the trip, writing “Mayor Edmonds’ testimony is questionable...

He also writes that her motivation in getting to the bottom of the funding question had to do with optics and nothing to do with a genuine concern to ensure that she was acting appropriately.

“Mayor Edmonds testified that she [attempted to learn the funding source] not because she was concerned about where the funding had come from, but because she anticipated public scrutiny on the issue,” Plato wrote.

Throughout the investigation, Foster and her associates tried to prevent students ensnared in their scheme from speaking with Plato's office.

In the wake of the report and scandal, economic development director Ernat is no longer employed by the city, and the career of Edmonds — once a rising political star in Washtenaw County — appears to be seriously damaged. She recently announced she won’t seek re-election, and she isn’t running for state office, as many believed she would.

The $300 million International Village plan died a slow death in the final months of 2017, after the Metro Times September report. Foster, as we've previously reported, is a real estate agent with no apparent experience with large-scale developments in the U.S. Plato's report confirms that.

It’s worth noting that the idea of dropping a Chinese city in the middle of Ypsilanti was fairly ludicrous
in the first place. At multiple levels — from funding it through the shady EB-5 Visa program to simply moving thousands of rich Chinese people into a working-class American city with no Chinese ties — International Village appeared to be unfeasible.

Ultimately, the project that officials trumpeted as the solution to the city’s deep financial struggles is now nothing more than an embarrassing spectacle for those who bought into Foster’s plan, pushed it over loud objections from residents, and ultimately wasted the city's time and resources over the course of a year.

click to enlarge Rendering of International Village. - Courtesy photo
Courtesy photo
Rendering of International Village.

Foster informally proposed the project in early 2017 before bringing it to city council on May 23. Council approved a letter of intent to sell 28 acres of city-owned land called Water Street just east of downtown Ypsilanti to Foster’s International Village LLC. As part of that effort, she suggested that she fly city officials to Beijing to learn about Chinese culture and see the architecture that would be replicated in Ypsilanti.

When Ypsilanti City Attorney John Barr told city council the next day that it would be “illegal and unethical” for the developer to pay for a trip to China, it appeared that officials wouldn’t go.

But on Sept. 11, Ernat and Edmonds told city council that the Wayne State University Chinese Scholar and Student Association would fund the trip. That immediately raised red flags — how could a student group that its members say exists to help students buy groceries afford to fly city officials to China to help close on a $300 million development deal?

The Metro Times Sept. 27 article debunked that claim, but gaps in the story remained, and no one knew who really paid for the trip — until now.

Photos caught on Sept. 8 at Michigan First Credit Union’s Wayne State University branch and bank records show that a Foster associate named Jingmang Liang deposited $16,800 into WSU’s Chinese Scholar and Student Association bank account around 2 p.m. About 3:30 p.m., he returned to Michigan First with a former student association treasurer and had her pull a cashier’s check for $16,800. Liang then left with the student group’s check.

Among several reasons that’s odd is because, before this day, Liang had no known involvement with the student association. But credit union records show that Liang and the treasurer had the student association’s check made payable to Youngs Travel, the agency that bought airline tickets on Sept. 6 for Ypsilanti officials’ China trip at a cost of $16,800.

The investigation reveals Liang was at the credit union because he’s Foster’s neighbor and employee. He and Foster attempted to make it appear that the student association had paid for the airfare.

It did not. Foster’s company deposited the cash in the student association’s account, the investigation shows, and she said under oath that her son paid for officials’ other travel expenses.

But before diving deeper into the specifics of Plato’s investigation, it helps to first recap how it played out in view of residents and city officials who weren’t part of the scandal.

click to enlarge Rendering of International Village. - Courtesy photo
Courtesy photo
Rendering of International Village.

'Illegal and unethical'

In a May 24 email obtained by Metro Times as part of its own investigation into the funding source, Ypsilanti City Attorney John Barr wrote his opinion of the trip’s legality.

“Members of city council have traveled overseas in the past, but only at their own cost,” Barr wrote. “If a city employee or mayor or council member wanted to go to China, it would be OK if they paid for it themselves, but if the developer paid, it would be unethical and illegal under the city code.”

The issue appeared settled, but on Sept. 11, Ernat sent out an email to council members and staff notifying them that WSU’s CSSA would fund the trip.

“After talking with other agencies about funding opportunities, staff was contacted by Wayne State's Chinese Students and Scholars Association asking how they could assist in facilitating travel,” Ernat wrote in the email, obtained by Metro Times. “The CSSA determined that they would provide four full scholarships to the city of Ypsilanti for the purposes of traveling to China.”

Mayor Edmonds also repeatedly told other council members and the public that the CSSA was funding the trip.

On Sept. 19, council was to vote on a purchase agreement to sell the city-owned property to Foster. With the travel ticket in hand, Edmonds and council approved the measure by a 4-1 vote. On Sept. 21, the officials left for China.

However, on Sept. 20, David Strauss, WSU’s dean of students, told Metro Times that the CSSA had no money in its accounts, and never appeared to have the kind of funds needed to cover such a trip.

On Sept. 26, Ypsilanti City Manager Darwin McClary told us that the student group hadn’t funded the trip — the Chinese consulate in Chicago provided the money. That represented the first change in the story of who paid for the funds. It’s worth noting that the consulate later denied Ypsilanti officials’ repeated claims that it funded the trip in a statement to Metro Times.

Our story revealing inconsistencies in Ernat's and Edmond's stories ran on Sept. 27, while officials were still in Beijing.

After the council launched its investigation, Edmonds made her first public statement on Oct. 6, admitting that the funding source was not the student association, as she previously allowed officials and the public to believe. Edmonds wrote in the statement that she knew before the trip that the Chinese Consulate in Chicago funded it. That represented the second major change in the story, but that version was also not true.

Emails released by city attorney Barr later in the day on Oct. 6 showed that Ernat received the tickets from Foster, and Edmonds was aware of that fact. Those emails contradicted Ernat's and Edmond's earlier claims.

Then, on Oct. 10, as part of its investigation, council convened a rare investigative hearing during which it issued subpoenas and questioned under oath the four city officials who traveled to China, along with city manager McClary.

At the hearing, Edmonds admitted that she knew before leaving for China that the funds for the trip allegedly came from the Chinese Consulate in Chicago and passed through the developer. The latter detail marks the third major change in the story.

When asked why she never told the public or other city officials about her knowledge of who bought her ticket, Edmonds replied that she didn't have time between learning about it on Sept. 19 and leaving on Sept. 21.

click to enlarge Rendering of International Village. - Courtesy photo
Courtesy photo
Rendering of International Village.

During the questioning, Ernat expressed little remorse and appeared a bit defiant. She told council that the CSSA paid for the tickets on Sept. 10 "to the best of my knowledge." But multiple emails released on Oct. 6 showed that to be untrue. Records show that Ernat received multiple emails revealing that the developer purchased the tickets.

The city announced on Friday that it would not renew Ernat’s contract.

As the investigations continued through the end of 2017, the project fell apart. A closer look at Foster's past by Metro Times and Defend Affordable Ypsilanti found that she had little experience relevant to the proposed project. Her "development team" abandoned her in November, and council member Pete Murdock declared on November 14 that the project was in "a death spiral."

It officially died with the expiration of the purchase agreement on Dec. 31.

The independent attorney’s investigation

Still, even as the project died in late 2017, no one knew who paid for the trip. In his 26-page timeline and six-page summary of the scandal, Plato filled in nearly all the gaps.

What follows is a summation of his timeline and synopsis. Segments in quotations have been pulled directly from Plato’s report and other segments are paraphrased.

May 2017

Plato notes that Edmonds knew early on that Foster owned Global Capital Group, a company that also was involved with developing International Village. Edmonds concedes in interviews that she received emails from Foster with a signature block showing Global Capital. That’s important because a student later tells Edmonds that Global Capital paid for the trip.

May 23

Council approves a letter of intent to sell the property to International Village LLC, and Foster suggests a trip to China. Plato writes that city manager Darwin McClary immediately found Foster’s offer of a trip inappropriate, which prompted him to seek an opinion from city attorney Barr.

May 24

Barr sends an email to city personnel and city council explaining that it is illegal and unethical for a developer to pay for the China trip.

June 22

“[Builder Spence Brothers’] Wayne Hofmann tells Ernat that he had ‘looked into all the entities’ associated with Amy Foster and did not find much on her, except unpaid credit card debt for $20,000 and a related action in the Oakland County Circuit Court, case no. 11-122906-CK.”

Aug. 4

"Foster transferred $20,000 from the International Village bank account to Global Capital Group. On this same day, she wrote to Ernat that she ‘got 4 visa with passport today, Monday will get one more.’"

This is notable because it shows the trip was being planned before a student group ever allegedly stepped forward to pay for it.

Around Aug. 21 to 23

“Edmonds and Ernat exchanged several text messages regarding the mayor’s [visa] and the dates the mayor was able to travel. At this time the mayor also exchanged text messages with Foster discussing the delay of receipt of the mayor’s passport and visa. These exchanges were all, of course, before anyone had come forward with an offer to pay for the trip.

“Shanrong Chou, owner of Young’s Travel, testified that Foster paid for the visas for the trip. According to Ms. Chou, the visas cost $180 per person. Because Foster did not want the visas to get lost in the mail, she picked them up from Youngs Travel and personally delivered them to Ms. Ernat, with the exception of the mayor’s which was delayed.”

Aug. 28

“According to Beth Ernat, around Aug. 28, she was contacted by Jinpeng Xue of the WSU CSSA asking her how many people were going to China and what the cost would be. Ernat claims Xue also asked for help in preparing the CSSA scholarship letter at this time.”

Sept. 6

However, it is revealed that Ernat drafted the scholarship letters herself, and Plato appears to catch Ernat lying under oath about who wrote the letters.

“On Sept. 6, Ernat sent an email to Foster and [International Village LLC associate] Hal Edwards, attaching a form scholarship award letter, which she drafted, to be used by whichever student group was ultimately going to fund this trip to China. Notably, Ernat did not produce this email or her draft scholarship letter to us or the city council as a part of this investigation. However, this Sept. 6 email and form letter from Ernat seriously calls into question Ernat’s testimony that she was working with Jinpeng Xue of the CSSA to draft this letter because Ernat’s draft letter nowhere mentions the WSU CSSA and was not sent to Jinpeng Xue, but only to Amy Foster and Hal Edwards."

"It also seems to contradict Ernat’s sworn testimony that she could not explain why she would have received the WSU CSSA’s scholarship letter through Foster and [builder] Wayne Hofmann, rather than directly and only from the CSSA.

"Ernat also sent a text message to the mayor to let her know that a 'U of M student union' was going to give the city scholarships for the trip. The mayor responded, asking how much and “where does that $$ come from?” Again, this written statement by Ernat calls into question Ernat’s testimony that she worked with Jinpeng Xue of the WSU CSSA to draft their offer letter beginning in August. As of this date, Sept. 6, Ernat apparently believed that the funds were coming from a University of Michigan group rather than the WSU CSSA.”

Also on Sept. 6

International Village issues a check to Youngs Travel, the travel agency that booked the flights, for $16,800. But Youngs owner Chou said under oath that Foster asked the travel agent not to deposit the Sept. 6 check, and wait for a second check. That’s because the second check would come from the CSSA. Chou tells Plato under oath that the $16,800 covered the flights, but not lodging or other expenses.

“Foster would not admit paying for the lodging directly, saying, ‘My son paid, not I.' However, she later conceded that International Village is a ‘family run’ business, although she claims her son does not get paid for his work.”

Sept. 7

Plato further explains how Ernat falsified “scholarship” letters, and how Edmonds should’ve known that the developer paid for the trip.

“Edmonds received an email from Ernat attaching the scholarship letter from WSU’s CSSA. Notably, Ernat received the scholarship letter through Wayne Hofmann of Spence Brothers, via an email that explained he received it from Foster. It would seem that this should have alerted both Edmonds and Ernat to an issue as to the origin of the funding.”

Plato then explains how Ernat lied under oath.

“Ernat explained that the CSSA was aware of Foster’s involvement with this trip and was in communication with her to understand the ‘cultural nature of the trip.’ Ernat testified she now sees how this email from Hoffman and Foster attaching the letter from the CSSA should have been a ‘red flag.’

"However, Ernat’s entire explanation of this issue is questionable as she failed to mention that she drafted the scholarship letter during either of her sworn interviews or her testimony before the city council.”

Sept. 8

Plato introduces Bingwen Wang, the person whose name is on the cashier’s check that is used to pay for the airfare. She’s a former student association treasurer who quit the organization in 2015. She gets roped into Foster’s scheme because even though she’s no longer the treasurer, her name is still on the CSSA’s debit card and bank account.

Student association members Peifeng Li and Jiingpen Xue first contact Bingwen Wang about using the CSSA’s account to fund the trip to China, although Bingwen Wang claims she didn’t know the check’s purpose until learning from Plato’s investigation.

After an initial call from Peifeng Li, Jiingpen Xue contacts Bingwen Wang to set up a time when they could go to Michigan First together. That was before Sept. 8, and Bingwen Wang assumed she would meet Jinpeng Xue or Peifeng Li at the credit union.

But neither show up at the credit union. Instead, Foster associate Jingming Liang, whom Bingwen Wang has never met, contacts her on the WeChat app, and lets her know he’ll be at the credit union. Unbeknownst to Bingwen Wang, Liang would be at the credit union depositing money into the CSSA account 1.5 hours before meeting her.

Plato then explains how Liang deposited money in the student association’s account before returning 1.5 hours later to withdraw it with Bingwen Liang.

Plato also explains how he knows the money came from Foster’s two companies, International Village and Global Capital Group. Foolishly, Foster made it clear in the notations that she was cutting checks for the CSSA.

“The records received from Huntington Bank regarding the accounts for International Village LLC and Global Capital Group LLC demonstrate that the $16,800 cash deposited into the CSSA’s account on Sept. 8 came directly from International Village LLC.

“Amy Foster withdrew $1,500 from the International Village account on Sept. 7. Then, on Sept. 8, Foster wrote the following checks from the account: 1. One check for $8,888 made out to “Cash” with the notation “cover check # 8001 WSU-CSSA”. Exhibit HH. 2. One check for $6,200 made out to Jingming Liang with the notation “cover check #8001 WSU-CSSA”. Exhibit II. In addition to these clear references to the WSU CSSA on these checks, these transfers ($1500, $8888, and $6200) total $16,588.

"Therefore, there can be little question that the funds for the cash deposited into the CSSA’s bank account on Sept. 8, originated from Amy Foster and her International Village LLC.”

Later that day, Ernat gets a copy of the cashier’s check, and she asks no questions.

“Beth Ernat received a text message from the CSSA with a copy of the cashier’s check for the trip. Ernat does not know where the funds came from for the cashier’s check, does not know who Bingwen Wang is (although her name appears on the check) and did not question the fact that the check was a cashier’s check and not from a WSU CSSA account."

Sept. 9

Plato shows how Ernat attempted to deceive city manager McClary about who paid for the trip.

“Beth Ernat emailed [city manager McClary] explaining that she contacted a number of state and local agencies about funding for the trip, but that the WSU student group contacted her first, rather than city personnel reaching out to them.

“This fact should have raised suspicions as to how the CSSA learned of the trip and the need for funding.

“Ernat also forwarded an email from Spence Brothers to [McClary] that attached the WSU CSSA scholarship/invite letter. As she had in the past, Ernat deleted the note that the email had originally come from Foster before forwarding the message.”

Sept. 10

“Edmonds sent an email and a LinkedIn message to the CSSA asking where the funds for the trip ‘scholarships’ originated. Edmonds testified that she sent these emails not because she was concerned about where the funding had come from, but because she anticipated public scrutiny on the issue."

Sept. 11

Ernat informs city council that the CSSA was providing four full scholarships for the China trip.

Sept. 12

"Peifeng Li replied to Edmonds’ LinkedIn message that the funding for the trip came from Global Capital Group, LLC, a group that Edmonds already knows is run by Foster."

The mayor would claim that she never saw the LinkedIn message before leaving for China, but Plato points out why that’s unlikely.

“Edmond’s testimony is questionable because on Sept. 13 she emailed Jennifer Healy, the city’s FOIA coordinator, indicating that no response had yet been received from the CSSA or Peifeng. However, Edmonds should have been searching for the response from the CSSA when gathering the documents to respond to the FOIA request.

"In any event, Edmonds should have been expecting and looking for a response to this inquiry before leaving for China on Sept. 21. On Sept.18 to 20, the city’s purchase agreement with International Village was approved and signed. Notably, the mayor testified that — just before this city council meeting — she learned … that CSSA groups often receive funds from the Chinese consulate.

"The mayor stated in her written response to the council’s questions that she ‘learned that they (the Chinese consulate) were funding the trip through (her) directly asking Foster and Hal Edwards from International Village on Sept. 19.

“However, Foster has testified that the Chinese consulate did not provide any funding for this China trip.”

February 2018

“According to emails produced by Foster and Foster’s testimony, Foster and Ernat met in February 2018 to discuss this investigation in preparation for a meeting with a Chinese investor who was coming into town.”

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