New England Jay Peak/Burke: It is finally hitting the fan.

[Erik Timmerman]

https://mobile.twitter.com/WCAX_Jennifer/status/720375434697834496

 

[Tony S]

https://mobile.twitter.com/WCAX_Jennifer/status/720375434697834496

Can you summarize the basic background situation?

 

[Erik Timmerman]

Burke bought by Bill Stenger of Jay Peak (with Florida real estate developer Ary Quiros as a partner). EB-5 funding used to build a $55 million dollar hotel. Hotel completed in December but has not opened due to failure to pay at least 5 million (maybe 7) of construction costs. State says millions of dollars are unaccounted for. Feds have shown up today and changed the locks. Supposedly they are at Jay and in Miami too. Press conference tomorrow with AG, Governor (who is very friendly with Stenger, btw), etc.

 

[Erik Timmerman]

http://vtdigger.org/2016/04/13/breaking-investigators-on-scene-at-q-burke-resort/

 

[Josh Matta]

http://jaypeakresort.com/eb5-visa/in-the-news/ more background info.

Cronyism at its best. I feel bad for the Jay and Burke locals.

 

[James]

This was from last December.

 

[Eleeski]

Does every American investment guarantee a return of investment? Especially in a recreation based industry?

Maybe the guy is a Bernie Madoff (or has Bernie Sanders hostility to wealth?). Maybe the market collapsed (remember 2008?). Maybe it is a house of cards that can't justify the investment (anyone nervous about Vail stock?). So many variables bring the rate of business success very low. Not all failures are criminal. Good fodder for investigative reporters (used to be called muckrakers 100 years ago). At least the guy complaining to NPR got a green card.

I'm not ready to throw somebody who saved a ski resort under the bus for overselling an investment to foreigners seeking green cards.

Eric

 

[James]

The Federal govt EB5 program does not say pay $500,000 and get a green card.
The SEC has been looking into it since last summer.

 

[Erik Timmerman]

Looks like Jay Peak has also officially hit the fan too. Press conference soon.

 

[Philpug]

Looks like Jay Peak has also officially hit the fan too. Press conference soon.

Cue Vail coming in and buying Jay? They have no resorts in the east.

 

[Josh Matta]

I hope they buy Burke as well if they take Jay.

 

[Erik Timmerman]

SEC freezes assets, up to 50 million spent on personal expenses.

 

[Philpug]

SEC freezes assets, up to 50 million spent on personal expenses.

Oh, thats not good.

 

[SBrown]

$50 million is a lot.

 

[Lorenzzo]

Cue Vail coming in and buying Jay? They have no resorts in the east.

Vultures gonna vulch.

 

[tball]

Good news for the locals is somebody will pick up the pieces on the cheap and make a business out of it. The substantial infrastructure improvements will remain. It's the investors (and possibly taxpayers?) that will be screwed in the end.

Good context for this fascinating drama:
http://vtdigger.org/2015/11/03/q-burke-contractor-threatens-to-walk-off-job-blames-state/

A side comment from a westerner: "Northeast Kingdom" is really cute, and so old world. I've never heard that before.

 

[Erik Timmerman]

http://www.sec.gov/litigation/complaints/2016/comp-pr2016-69.pdf

 

[James]

"Northeast Kingdom" partly because nobody's there so it's a fairy tale to everyone else.

But there you go. From the above link.

Looks like the SEC is doing some muckraking of its own. The SEC accuses them of systematic "looting".

"1. This is an emergency action the Commission is bringing to stop an ongoing, massive eight year fraudulent scheme in which the Miami owner and the chief exeecutive of a Vermont ski resort have systematically looted more than $50 million of the more than the $350 million that has been raised from hundreds of foreign investors through the U.S.. Citizenship and Imigration Service's EB-5 Immigrant Investor Program.

2. The fraudulent scheme spans seven limited partnership securities offerings all connected to Jay Peak, Inc., a Vermont ski resort that is wholly owned by Miami based Q Resorts, Inc., which in turn is owned by Miami businessman Ariel Quiros. Quiros and William Stenger, the president and CEO of Jay Peak, are primarily responsible for the fraudulent scheme.

3. Among other things, Quiros, Stenger, and the companies they run that have overseen the development and construction of the Jay Peak resort have misused more than $200 million —more than half of all money raised from investors. Quiros orchestrated and Stenger facilitated an intricate web of transfers between the various Defendants and Relief Defendants to disguise the fact that the majority of the seven projects were either over budget or experiencing shortfalls. These shortfalls were due in large part to Quiros pilfering tens of millions of dollars of investor money for his own use." ...

 

[Tominator]

From the AP via the Boston Globe:
http://www.boston.com/news/business/2016/04/14/sec-and-vermont-allege-ski-resort-mishandled-millions

 

[SkiNurse]

Sad.