EB5, Vermont Regional Center scandal
Oct 6th 2014, 1:04 pm
#1
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Joined: Nov 2007
Posts: 906
EB5, Vermont Regional Center scandal
VTDigger Exclusive: EB-5 investors question state watchdog's independence - VTDigger
Sounds like investors will be getting a haircut!
Investors in a Northeast Kingdom development question whether a state official was watching out for their best interests. In complaints to the state, they allege that Brent Raymond, the executive director of the Vermont Regional Center, was not playing enough of a watchdog role in his oversight of the Tram Haus Lodge project at Jay Peak.
Oct 6th 2014, 9:06 pm
#2
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Joined: Jan 2010
Location: Florida
Posts: 80
Re: EB5, Vermont Regional Center scandal
VTDigger Exclusive: EB-5 investors question state watchdog's independence - VTDigger
Sounds like investors will be getting a haircut!
Sounds like investors will be getting a haircut!
“And our partners are thrilled,” Stenger said at the time.
Yet the terms of the Aug. 31, 2013, promissory note Stenger and Quiros signed just weeks before specify that investors would receive a 1 percent interest rate and payments on their $500,000 principal over a nine-year period: $21,500 each year for eight years and a check for $343,697 on Jan. 31, 2023.
Oct 7th 2014, 11:07 pm
#3
Grumpy Know-it-all
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: EB5, Vermont Regional Center scandal
Discussion about the complaints, a Fortune Magazine mention, the VTDigger article and a British expatriate forum feature prominently in correspondence between the state and Jay Peak.
“Vermont is the only EB-5 program that covers the entire state of Vermont and is audited by the state of Vermont,” [Gov.] Shumlin says. “We make sure that our EB-5 program offerings are good investments for the investor, and good economic development job creators for the state of Vermont.”
The state has not conducted financial audits of the program, according to John Kessler, the general counsel for the Agency of Commerce and Community Development.
In a statement, the governor’s office said Shumlin recognizes the agency “does not audit these projects, but provides independent oversight.” The governor says the Vermont EB-5 center has been an important tool for Vermont’s economic development and “the agency works hard to ensure projects do not wrongly characterize the state’s role in promotional materials.”
In a June 24 memo, Kessler asks Stenger and Quiros to take the promotional video down to edit out the governor’s “misstatement” and make other changes. Kessler’s email to Jay Peak was a response to a Tram Haus investor complaint about the video.
“I am glad to learn you are removing it from Jay Peak’s web site,” Kessler wrote. “I share Brent’s concern about the portion where the governor says the State audits projects. No matter how many ways one could interpret his use of the term ‘audit,’ we have consistently advised the governor and anyone else not to describe the regional center’s oversight role as involving the performance of financial audits.
“Moreover, you will recall that a couple of years ago we asked you to hire an outside auditor to do just that and you reported to us that it was too much of an expense and that you would rely upon the overall audit done on Jay Peak rather than a separate audit focused exclusively on EB5,” Kessler wrote. “So, the reality is an audit of Jay Peak’s EB5 projects is not performed by the State OR Jay Peak.”
In a statement, the governor’s office said Shumlin recognizes the agency “does not audit these projects, but provides independent oversight.” The governor says the Vermont EB-5 center has been an important tool for Vermont’s economic development and “the agency works hard to ensure projects do not wrongly characterize the state’s role in promotional materials.”
In a June 24 memo, Kessler asks Stenger and Quiros to take the promotional video down to edit out the governor’s “misstatement” and make other changes. Kessler’s email to Jay Peak was a response to a Tram Haus investor complaint about the video.
“I am glad to learn you are removing it from Jay Peak’s web site,” Kessler wrote. “I share Brent’s concern about the portion where the governor says the State audits projects. No matter how many ways one could interpret his use of the term ‘audit,’ we have consistently advised the governor and anyone else not to describe the regional center’s oversight role as involving the performance of financial audits.
“Moreover, you will recall that a couple of years ago we asked you to hire an outside auditor to do just that and you reported to us that it was too much of an expense and that you would rely upon the overall audit done on Jay Peak rather than a separate audit focused exclusively on EB5,” Kessler wrote. “So, the reality is an audit of Jay Peak’s EB5 projects is not performed by the State OR Jay Peak.”
And they've now apparently taken the investor's ownership shares and converted them into unsecured loans - without their consent. Gee, I wonder how much of that money they'll get back?
The real question is what's going to happen now that no-one will invest in it anymore, because (a) no-one will after all this and (b) apparently the EB-5 quota will be exhausted this year so new investors couldn't even if they wanted to.
Sep 22nd 2015, 11:17 am
#4
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Re: EB5, Vermont Regional Center scandal
Hi. Despite the scandal they have investors signing up regularly.
Sep 22nd 2015, 1:08 pm
#6
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Re: EB5, Vermont Regional Center scandal
Hi Ian. It's unfortunate, a friend gave them a visit in October and brought back the aforementioned news.
Sep 22nd 2015, 3:19 pm
#7
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 52,448
Re: EB5, Vermont Regional Center scandal
No surprises there then! 
Why can't people see for themselves that if the investment potential of what they are being offered is anywhere near as good as they are being promised then Wall St would be "all over it" and there would be no need for any EB-5suckers investors? 
Why can't people see for themselves that if the investment potential of what they are being offered is anywhere near as good as they are being promised then Wall St would be "all over it" and there would be no need for any EB-5
Sep 23rd 2015, 2:31 pm
#8
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Re: EB5, Vermont Regional Center scandal
Yes, from some of the posts in the forum, seemed sensible that they had stated the EB5 process (albeit passive indirect EB5) is more like "buying" the GC than investig to obtain one.
With Wall Street and their enthusiasm for a good(less bad) project, being an EB5 investor myself, it seems to me that part could partially be explained with lower interest rates offered by regional center as money lender, which is typically around %2. Is the project owner who chooses the RC over the traditional banking system. In turn, the RC is happy with those kind of numbers, because for them the real money comes from the immigrants, in cash and up to $60K per EB5 applicant (as regional center fee).
With Wall Street and their enthusiasm for a good(less bad) project, being an EB5 investor myself, it seems to me that part could partially be explained with lower interest rates offered by regional center as money lender, which is typically around %2. Is the project owner who chooses the RC over the traditional banking system. In turn, the RC is happy with those kind of numbers, because for them the real money comes from the immigrants, in cash and up to $60K per EB5 applicant (as regional center fee).
Sep 23rd 2015, 3:39 pm
#9
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 52,448
Re: EB5, Vermont Regional Center scandal
Yes, from some of the posts in the forum, seemed sensible that they had stated the EB5 process (albeit passive indirect EB5) is more like "buying" the GC than investig to obtain one.
With Wall Street and their enthusiasm for a good(less bad) project, being an EB5 investor myself, it seems to me that part could partially be explained with lower interest rates offered by regional center as money lender, which is typically around %2. .....
With Wall Street and their enthusiasm for a good(less bad) project, being an EB5 investor myself, it seems to me that part could partially be explained with lower interest rates offered by regional center as money lender, which is typically around %2. .....
Investment in the project is invariably split into multiple "tranches", each with different risk and return expectations. The lowest risk tranche is sold to pension funds and insurance companies, then there might be some commercial bank loans which get a higher return and a greater (though still low) risk of default, then there are venture capitalists and hedge funds, and finally, last in line, are the EB-5 investors who are last in line for the profits but first in line to get hit with any losses. ..... The EB-5s can get completely wiped out without the project failing, and the other investors are kept happy and get their investment returns and money back. The "success" of the project has nothing to do with the EB-5s and any return they get.
Sep 23rd 2015, 3:58 pm
#10
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Re: EB5, Vermont Regional Center scandal
The thing I always post on these threads is...
By law there can be no guarantee of return on investment for an eb5.
By law there can be no guarantee of return on investment for an eb5.
Sep 23rd 2015, 4:56 pm
#11
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 52,448
Re: EB5, Vermont Regional Center scandal
Sep 26th 2015, 1:40 pm
#12
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Re: EB5, Vermont Regional Center scandal
The point of disagreement for me is the previous comment, that if these projects were of quality, the Wall Street would be actively involved. Currently there are several such projects (including NY and one in LA) with heavy weight financiers and big name players, but that does not change the fact that by law, EB5 investment for the immigrant must be at risk with no garauntee of return.
Sep 27th 2015, 1:57 am
#13
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Posts: 210
Re: EB5, Vermont Regional Center scandal
Has the EB-5 been renewed yet? Last I heard it was due to expire September 30, and there was some talk that it might not be extended.
Sep 27th 2015, 9:41 pm
#14
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Joined: May 2015
Posts: 42
Re: EB5, Vermont Regional Center scandal
Most articles suggest it will get renewed for an interim period, whilst reforms are considered
More importantly the annual cap of 10k has already been reached.
More importantly the annual cap of 10k has already been reached.
Last edited by Eggx; Sep 27th 2015 at 9:45 pm.
Sep 30th 2015, 11:17 pm
#15
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Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: EB5, Vermont Regional Center scandal
Been continued until December 11th but that doesn't really mean a lot unless there are going to be more visas available, it's just a stopgap.