Tag Archives: Jay Peak

EB-5: the tar baby of Vermont politics

I was wondering when a candidate would dip his hand into the EB-5 cookie jar. It’s easy pickin’s if you want to criticize Democratic leadership of state government. And here we go, Phil Scott’s dug in for some sweet treats.

After positing his support for EB-5 “with proper oversight,” he laid into the Shumlin administration on a specific point:

I was disappointed to learn… that the Shumlin Administration enabled the owners of the EB-5 projects in the Northeast Kingdom… to continue to solicit investors for months after the SEC had suspended that permission for Jay Peak. … By the Administration’s own admission, it was a ‘calculated risk.’  Yet, they’ve not yet explained why they took this risk or why they allowed the problem to continue to grow.

Now, here’s the problem.

The Shumlin administration made that decision in the spring of 2015. (More on that in a moment.) In June of that year, VTDigger’s Anne Galloway broke the news that federal authorities were investigating Jay Peak.

For months after that, Lieutenant Governor Phil Scott expressed his wholehearted support for Jay Peak. Indeed, in November he criticized the administration for inserting itself into the process, thus delaying payments to contractors.

Despite the issues at Q Burke, Scott says he still supports Vermont’s EB-5 program. He added that he sympathizes with [Jay Peak contractor] PeakCM, as he owns his own construction company.

So, hypocrite. But wait, there’s more.

Continue reading

Advertisements

Breaking Up Is Easy To Do (When You’re Under Indictment)

Ever since the Securities and Exchange Commission brought the hammer down on the Jay Peak/Northeast Kingdom EB-5 developers, there have been plenty of Vermonters hoping that local hero Bill Stenger will turn out to be nothing more than a dupe in a massive fraud scheme by Ariel Quiros. That’s certainly the tale that Stenger’s been anxious to tell.

Well, now it’s Quiros’ turn to throw his partner under the bus. VTDigger’s Anne Galloway reports that Quiros has deployed an interesting defense — one that tacitly acknowledges wrongdoing on a significant scale.

The Miami businessman was not responsible for offering documents and did not communicate with investors, defense attorneys said. They allege that Stenger was the one who made misrepresentations to investors.

Oh, ho, ho, ho, ho. Cute.

Continue reading

Scott Milne’s shotgun attack

Too-coy-by-half Senatorial candidate Scott Milne has come out firing with both barrels on the EB-5 program, hoping to use it as a wedge issue against perpetual incumbent Pat Leahy. Some of his criticisms are valid; others reveal a profound misunderstanding of Leahy’s role in the program.

Either misunderstanding or rank political opportunism. You make the call.

Milne is on solid ground when he accuses Leahy of being a prominent advocate of EB-5, and for being a vocal cheerleader for Vermont developers taking advantage of the program. Leahy has basked in the glow of ribbon-cuttings and high-profile announcements for years; he deserves his share of the heat from the collapse of Jay Peak and the involvement of his “good friend” Bill Stenger in an alleged fraud scheme.

It’s also fair to criticize Leahy for pushing a program with a fundamentally problematic premise: selling green cards to high rollers.

However, I don’t expect Milne to hit too hard on that point, considering that he himself toyed with the notion of soliciting EB-5 investor funds. Seven Days’ Paul Heintz reports that Milne traveled to China and South Korea in 2009 with Bill Stenger and then-Governor Jim Douglas, and came back an EB-5 enthusiast:

“To me, it is the perfect storm of government policy capturing the best of entrepreneurial spirit,” he told the Valley News a week after returning from Asia. “I was pleased beyond my expectations.”

“Perfect storm,” hahaha. There’s a malapropism that turned out to be horribly apropos.

Milne goes off the rails when he accuses Leahy of “mismanagement,” and lumps the Senator in with Governor Shumlin for “the way the EB-5 program has been structured and managed.”

Continue reading

This is how a judge gives the one-finger salute

Pity Ariel Quiros. Our least favorite dark-skinned flatlander is a nine-figure millionaire, but his assets are frozen due to his (alleged) massive fraud in the Jay Peak case.

He claimed monthly expenses of $250,000, which I’m sure we can all agree is the absolute minimum required to sustain human life. He asked that the court unfreeze all but $50 million of his estimated $200 million fortune.

For those who failed elementary school math, he wanted to get his hands on $150,000,000.

The judge’s response: 

The court granted Quiros access to three Merrill Lynch accounts containing $41,308.69.

And that’s how a judge, acting officially, gives someone the middle finger.

Update from the Free Press: “Never Mind”

Earlier today, the Burlington Free Press posted an alarming story on its homepage. It quoted Michael Goldberg, the attorney currently operating Jay Peak and Q Burke, as saying the resorts were almost out of money and might permanently close.

I saw that, had the predictable “WTF” reaction, and wrote a post immediately.

The Free Press’ story was a stub, the industry term for a short urgent item that will be updated when more facts become available. And boy, what an update.

The full story confirms that the two resorts are cash-poor — but there’s still plenty of potential for their future, and Goldberg says he will “find a way to keep Jay Peak open, and open Q Burke Hotel in the fall.” He adds that there are already two high-profile hotel chains sniffing around Q Burke.

Well, that’s kinda different.

Continue reading

This would be very bad.

In case you thought the Stenger/Quiros/EB-5 mess couldn’t get any worse, take a look at this from the Burlington Free Press:

Jay Peak ski resort could shut down; Q Burke Hotel may never open.

Those are the dire conclusions reached by Michael Goldberg, the attorney who has taken over the Vermont properties as receiver…

Goldberg says the two resorts have very little cash on hand “and numerous upcoming expenses that…

… will quickly use up available cash and, if additional money is not obtained, force the Receiver to shut down operations at Jay Peak and eliminate any possibility of Q Burke opening.”

Goldberg notes, with an air of understatement, “This is a very different situation than the one claimed by Ariel Quiros in his sworn investigative testimony before the SEC.”

Dare I say, the worst possible scenario is now on the table? Dare I say also, Goldberg’s findings make Stenger and Quiros’ denials of wrongdoing seem that much less credible?

Whatever you think of ski resorts — their environmental impact or quality of jobs — this would be a severe blow to the Northeast Kingdom. It would also add a new dimension to the political fallout from this scandal.

Chances are, this won’t happen. Jay Peak in particular would be an attractive bargain-basement purchase, since it’s chock full of EB-5-funded amenities. Q Burke has a new hotel ready for occupancy. But the mere possibility of complete closure has to send shivers down the spines of everyone in the Northeast Kingdom, and everyone in Vermont politics.

Were the Newport projects just a bait-and-switch?

Over the weekend, VTDigger’s Anne Galloway posted a detailed history of the Stenger/Quiros scandal entitled “Jay Peak’s Path to Fraud.” It’s a must-read for those wanting to get a good summary of the affair; the reporting is backed up by Digger’s two-plus-year investigation of the story.

And it raises a huge question in my mind: Did Stenger and Quiros ever seriously intend to build the megaprojects in Newport, or were they nothing more than flashy promises designed to dazzle the politicians and the public, and pave the way for what they really wanted — the transformation of their ski resorts?

In September 2012, Stenger and Quiros announced a bold initiative including major improvements at the resorts, a new terminal at Newport’s airport, and a suite of ambitious projects in Newport itself, including a window-manufacturing plant, a five-story office building, a hotel and conference center, and a marina, as well as a biotech facility in the works since 2009.

The numbers were mind-boggling: over half a billion dollars invested in the perennially impoverished Northeast Kingdom, and a rebirth for the city of Newport. Up to 10,000 new jobs.

Today, many of the ski resort improvements are complete or largely so, while nothing much has happened in Newport except for the demolition of some historic downtown buildings, leaving a hole in the cityscape. And now it looks like nothing will ever happen.

Continue reading