The Vermont Agency of Commerce and Community Development made material misrepresentations to investors and the Federal government.
Tuesday, July 10, 2018, NewEnglandSkiIndustry.com
The United States Citizenship and Immigration Services (USCIS) has terminated the Vermont Agency of Commerce and Community Development Regional Center, according to a document obtained by VTDigger.
The Vermont Agency of Commerce and Community Development Regional Center facilitated the EB-5 immigrant investor program that was misused at Jay Peak and Burke Mountain. As the result of over $200 million in misused investor funds, the Securities and Exchange Commission raided the ski areas in 2016 and put them in receivership. Later that year, the USCIS issued a request for information to the regional center. In August 2017, the USCIS issued a Notice of Intent to Terminate.
The USCIS alleges the state run Vermont Regional Center:
1) Failed to provide adequate and proper oversight, monitoring, and management of its projects.
2) Did not address concerns about diversion of funds.
3) Made material misrepresentations to the USCIS and investors.
4) No longer serves the purpose of promoting economic growth based upon negative factors relating to the Vermont Regional Center.
Former Jay Peak and Burke Mountain owners Ariel Quiros and Bill Stenger reached a civil settlement with the United States Securities and Exchange Commission earlier this year, "without admitting or denying the allegations." Quiros surrendered the properties and agreed to a $1 million fine, while Stenger agreed to a $75,000 fine.
To date, no criminal charges have been filed.
Mt. Snow has formed its own EB-5 regional center "to divorce Mount Snow's projects from the state's EB-5 troubles."
Background
Stenger, a political science major at Syracuse University, started working at at Jay Peak in 1985 and in 2008 recruited Ariel Quiros to purchase the resort from Mont Saint Sauveur International. Following the acquisition, the group's EB-5 immigrant investor proposals expanded throughout the Northeast Kingdom with a planned price tag of $500 million. Meanwhile, Stenger and Quiros started a massive campaign of contributing to politicians, paying for their international junkets, and arranging press conferences and committee appearances to boost investor interest.
A Federal program created by Senator Ted Kennedy and championed by Senator Patrick Leahy, EB-5 allows immigrants to obtain a green card in exchange for investing $500,000 in a government endorsed business that creates ten jobs. In the case of the Jay Peak program, 20% to 25% of the investment was taken by developers and agents as fees.
The SEC took control of the properties on April 13, 2016, alleging that Quiros and Stenger were running a Ponzi scheme that was defrauding investors. The businesses were placed in receivership under Michael I. Goldberg, with Leisure Hotels and Resorts of Kansas City appointed to run the resorts.
A cornerstone of the SEC's lawsuit is the allegation that margin loans were taken out with EB-5 funds as collateral, a strategy that Quiros described in detail. Quiros and banker Joel Burstein both stated that Stenger participated in margin loan conversations.
The resorts remain under control of the government appointed receiver.
