The recent charges brought by the Securities & Exchange Commission (SEC) and the State of Vermont against Bill Stenger and Ariel Quiros came as a shock to many in the EB-5 industry. This article is meant to provide an examination of what lead to the recent SEC and State of Vermont actions and what lessons can be learned by an industry which has only recently become aware of the necessity of project due diligence, verification, oversight and compliance with U.S. securities laws and capital market best practices in the process of recruiting and reporting to foreign investors. It is in this spirit that I offer my perspective gained from having witnessed the events unfold almost from the beginning.
Anyone who spent any time reviewing the Jay Peak offerings would have seen long ago that this day was inevitable. This is an excerpt from an interviewpublished in April of 2012:
My concern is that Stenger's alleged schemes were not unique to him or confined to the State of Vermont, rather, upon examination of several hundred projects, I feel that fraud and misrepresentation is more common in our industry than is generally acknowledged. The lack of transparency starting with the agency charged with administering the program, USCIS, down to the lack of oversight, disclosures, audits and investor reporting by the Regional Centers and project managers is unparalleled in all of U.S. capital markets and creates an unsupervised breeding ground for fraud. This is what I told The Real Deal in an interview last month:
There are multiple projects being sold in the market today which are just as undercapitalized and have as little hope of becoming operational on time or within budget as the Jay Peak entities. They have low commercially viability, no ability to create the required number of jobs or return capital, and yet unscrupulous immigration attorneys, finders, agents and brokers are actively promoting, misleading and misrepresenting the risks and probabilities of success to potential investors. The Regional Centers sponsoring these projects are using the trade and member associations to gain legitimacy without incorporating any best practices, oversight or compliance measures that might help detect and deter the potential fraud.
What concerns me most of all, however, is the ease with which Bill was able to hide his activities from knowledgable, experienced professionals in our industry, investors, politicians and the public. Even though the trade association had published guidance on best practices which had excellent recommendations and suggestions, Stenger easily ignored those for nearly a decade.
Bill Stenger was awarded with the highest recognitions our industry has to offer. These awards, in addition to a long term IIUSA Board appointment, resulted in a seemingly unassailable reputation and status which I feel directly contributed to his successful capital raises. He was often referred to as an example of good project stewardship and frequently appeared before the House and Senate, law and EB-5 conferences as an industry role model. The adulation of Bill Stenger continued even after a string of negative news concerning his treatment of his Limited Partner investors came to light:
and his mismanagement of the funds he was responsible for overseeing:
Yet he continued to be lauded and awarded:
and just last month this announcement:
Again, this situation is not unique to Bill. Dozens of other Regional Centers are under Federal and State investigation for potential fraud and securities violations yet their principals currently serve in leadership and Board positions in a number of associations. The failure to adequately vet these principals and their past and present activities could result in additional scrutiny by Congress and the regulators should actions be brought against them. There seems to be little current accountability by the associations in their selection of leaders and Board members.
I first visited Jay Peak and met Bill in 2008. He was very warm, generous and gracious in showing me around the property and explaining his vision. As he described his plans I began to question the economic feasibility of such a large expansion for an independent operator in such a remote part of the U.S., far from the lucrative East Coast markets. Moreover, I was aware based on market research that the ski industry had been in a downward spiral since the 1990s and independent operators (not tied to national time share or reservation systems) were particularly vulnerable to financial losses and bankruptcy. A compelling description for why investments in ski resorts are extremely risky is presented in this reference book:
Excerpts: p. 18: The ski industry is dying. The number of skier days in the United States has remained flat from 1979 through 1999 because of the aging of the Baby Boom generation, the decline in leisure time due to economic growth, and the increase in leisure choices. Without snowboarding, which came of age in the 1980s and accounted for 26% of lift tickets sold in 1999, skier days would have declined by double digits since the 1970s. Skiing is poised for a long decline.
p. 22: "All sports that are difficult [to learn] are suffering from a decline in core participation" due to the decline in leisure time.
p. 23: The ski industry has been consolidating, with the big ski areas growing at the expense of smaller ones. The standard of the products and services offered to skiers has gone up as resorts have tried to take customers from one another.
p. 220: The author's thesis in a nutshell: "The cost of the ski industry's fling during the 1990s with the publicly traded corporate resort model has been high. Although some individuals have benefited, Vail, Intrawest, American Skiing Company, and their imitators have brought enormous disruption to ski towns across North America. They have accelerated the on-mountain arms race and jacked up the cost of skiing, helping to force other ski areas out of business. They have made the sport increasingly unaffordable, drying up the pool of new skiers. They have done all this in the search for greater wealth and profits--yet their shareholders have fared poorly at best, and at worst have lost their shirts."
Although Bill is a very charming and likable person who clearly wanted to improve the economic conditions of his County, I felt that there was little chance that such an expansion would prove to be profitable for anyone except the developer as they were charging such high fees (millions of dollars and at rates of 15-20% of the development cost: 4x+ the industry standard).
Here is a description of the fees Stenger and Quiros would collect through their development companies (which are part of the SEC and Vermont actions):
It began to make sense that even under the most optimistic projections, there was no way that investors would be repaid, particularly not on the heels of an economic recession that shut down nearly every time share and vacation condo sale in America, their major source of projected revenue. To my eye, the only people who would profit from these investments were Stenger and Quiros. The probabilities based on the low market demand for the asset (unproven in the case of AnC Bio) challenging environmental conditions (warming temperatures) as well as the high development fee structure meant that there was little chance that the assets would produce sufficient revenue to cover expenses and remain as viable concerns with the end result being a draining of all working capital from future investors to pay for current operations, hence the alleged Ponzi scheme.
When I also learned that the method in which Jay Peak was raising the capital involved what I perceived to be violations of U.S. securities laws I became very concerned. It is one thing to make senseless investments that only benefit the developers, another matter entirely to violate State and Federal securities laws.
It appeared to me that Jay Peak’s capital raise involved the payment of finder's fees to immigration attorneys and other U.S. based non-registered persons. If that were the case then the exemptions on their offerings would have been violated and the investors could sue for rescission, in other words, ask for their money back. This could terminate the development and operation of the asset much sooner than the dilution of the working capital and invalidate the two key provisions of the EB-5 visa program: (1) job creation and (2) the sustained investment of capital which would lead to a denial of the investor's I-829 petition to remove their conditions. In other words, the violations of the law could have triggered a denial of the immigration petition and a subsequent loss of capital investment through a liquidation of the asset to a third party.
Years later, because of my work in publishing news, analysis, articles and information on the industry through our sites EB5Info.com and EB5News.comand as one of the few persons in our industry who had been registered with theFinancial Industry Regulatory Authority (FINRA) and was familiar with managing risk and standards and procedures for raising capital lawfully, I was elected to the Board of Directors of the IIUSA.
While I was concerned as to how Jay Peak was raising capital through thepayment of fees to immigration attorneys and other U.S. based non-registered persons, I learned that this was a common practice in the industry. Bill and Douglas Hume, the owner of Rapid Visas, were frequent sponsors at the immigration attorney and other industry conferences spending investor funds lavishly on promotions and marketing. There were also a host of other member "consultants" and "finders" promoting their services in exchange for a share of the administration or subscription fees.
I hoped that by being on the Board and later as Chair of the newly formed Best Practices Committee I could help educate not only the Board members, but the membership at large on the way institutional capital markets operated (having worked to measure and reduce portfolio exposure and risk for one of the largest banks and broker dealers in the U.S.) and the proper (legal) way to raise capital. But here again Stenger and Hulme made their presence known at all of our trade association gatherings which countered my efforts to promote best practices in the industry.
After a number of posts to my fellow Board members, uploaded articles, reportsand conversations (here, here and here) it became clear to me that not only was the senior leadership and Board not interested in following the securities guidance I was posting but told me to be quiet or leave. There was one exception:Tom Rosenfeld (CanAm Enterprises) who listened, consulted with a well established securities law firm, and at considerable time and expense became a registered Broker Dealer.
Tom took the concept of compliance and best practices to heart and should have been the role model for the industry, but even today is the exception rather than the rule. At the time there was no incentive and considerable effort for him to change his procedures, register and come into compliance.
Due to the near complete lack of interest and expressed annoyance from the Board and leadership over my attempts to educate and inform, I eventually decided to resign rather than waste anymore of my time trying to change an industry that was not interested in compliance. I suggested at that time that the actions of those who continued to violate the law would cause the industry harm in the long term, but this was met with skepticism and indifference.
We are now beginning to harvest the fruits of this complacency. I am concerned that unfortunately this will only be the first of many actions against other Regional Center principals despite any changes, oversight or "Integrity" measures that Congress or USCIS may impose in the near future. In fact, those measures and increased audits may only increase the number of such actions as regulators being conducting inspections into industry practices (past and present) and investors complain on the denials of their I-829 petitions and/or loss of capital invested. For investors and attorneys who are conducting due diligence on EB-5 projects it is crucial to ask the Centers if they are under any Federal or State investigation or review as that may jeopardize the viability of your client's petition should the investigation turn into an action and possible Regional Center termination by USCIS.
Shortly after resigning I was engaged by an attorney in Houston to conduct project due diligence on behalf of his client into the Jay Peak offerings. Beyond the economic and job creation projections which did not make any sense, I was concerned about the continued use of Rapid Visas to market and solicit to investors:
Here is an event that appears to be sponsored by the Governor of Vermont, Peter Shumlin and is hosted by Jay Peak and Rapid Visas. Such ties to the unregistered broker firm now appear to be problematic for both Democrats and Republicans who did not seem to question the means by which capital was raised.
Rapid had prepared all of the marketing material, website contact and conducted solicitation and marketing events both here in the U.S. as well as overseas and were being compensated for successfully recruiting and subscribing investors, allhallmarks requiring Broker registration:
Most disturbing to me was that all of this activity was being overseen by the state agency tasked with providing oversight and compliance with Federal and States laws and regulations, the Vermont Agency of Community and Corporate Development (VACCD), not only without question, but it appeared was actually being encouraged and promoted. I sent my concerns and questions to the VACCD in a number of emails covering four years of time:
From: Michael Gibson firstname.lastname@example.org>
Date: Tue, Nov 8, 2011 at 11:21 PM
Subject: VACCD Oversight
I hope that this finds you well. We are preparing an article for our investors on the role that VACCD plays in monitoring the activities of the projects under your control. In particular with reference to the statements made here:
Could you explain the process involved here in more detail? "Accountability - Formal written reports required by Vermont Agency of Commerce and Community Development every 90 days upon activities of the project."
Are you actually conducting an audit as is stated in the website? An audit is a term that I understand has certain meaning within the accounting profession. Is this the same meaning as is being applied in the promotional material?
It is stated here again http://eb5greencard.com/eb5-programs/state-operated-regional-centers.php:
"Critics will be quick to tell you the State Operated Regional Centers do not guarantee the EB-5 investment and they are correct, a fundamental requirement of an EB-5 investment is to be at-risk. However, the State affiliation provides many benefits including credibility, state oversight, monitoring and regular audits, continual EB-5 compliance and more...."
Would you be able to help shed some light on what is involved in the audit process as they are correct, your credibility is on the line. It would be helpful if we could better understand what is meant by:
- State Oversight
- Regular Audits
Do you engage a CPA or accounting firm to actually conduct an audit as we understand, or is it a non-accounting audit? What steps are you actually performing to conduct oversight and monitoring to ensure that fraud is not being committed? Is there an actual examination of the cash flows and expenditures by your accounting department?
Since they are the only ones claiming that the State is doing the due diligence on these projects, we just wanted to better understand what is exactly meant since we are not getting any responses from the project managers. Would you be able to provide an independent accountant a sample of one of these reports? Your guidance on these statements would be very helpful in our understanding of how you actually do monitor the capital expenditures and job creation for each VACCD project, thanks!
Michael Gibson, Managing Director
From: Michael Gibson email@example.com>
Date: Sat, Nov 26, 2011 at 4:43 PM
Subject: VACCD oversight of EB-5 projects
I hope that you had a good Thanksgiving. I did want to follow-up with you regarding the oversight and audit functions that VACCD imposes on it's projects as there are claims being made which we would like to make sure are accurate:
Located in the State of Vermont Regional Center, the Trapp Family Lodge EB5 project is backed by the oversight work of the Vermont Agency of Commerce and Community Development. “Many investors are worried that most EB5 projects do not face a close government scrutiny, and are free to do what they want with their money,” continued Jeffers. “With the Vermont Agency of Commerce and Community Development oversight of EB5 projects in the state, investors should feel safer about investing in Vermont.”
When you have a few moments we would like to understand exactly what your oversight process is and what it includes, excludes, so that we are better educated, thanks!
Michael Gibson, Managing Director
Registered Investment Advisor CRD #157403
From: Michael Gibson [mailto:firstname.lastname@example.org]
Sent: Wednesday, March 14, 2012 10:22 PM
To: Candido, James
Subject: Jay Peak Issues
Our principal concern as expressed in our article, is that Jay Peak knowingly engaged the services of an unregistered Broker Dealer to market, promote, solicit and distribute U.S. securities to potential investors who contacted them through the Rapid Visas seminars, web sites and introductions from immigration attorneys and were paid commissions for acting as broker and finder while this project and activity was under the supervision of VACCD.
We are continuing our investigation and would like to know if you could provide us with the following:
1. Form D fillings for the Jay Peak Reg. D offerings detailing the level of commissions paid and who they were paid to.
2. The Master Agent Agreement between Jay Peak & Rapid Visas (ie. the contract detailing what Rapid Visas would perform and how they would be compensated).
We would like to establish the way compensation was paid in return for services provided, specifically the timeline in which that compensation was paid to Rapid from Jay and what services Rapid was engaged to provide.
Both Jay and Rapid were constantly promoting the Jay offerings to immigration attorneys, and the State of Vermont accompanied them both to several promotional events, both here in the U.S. and overseas, I have brochures from many of their promotional activities at the AILA and IIUSA events. Could you please describe what arrangements were made to compensate attorneys and other "finders" who referred their clients to the Jay offerings and what role Rapid and the State had in those transactions? What steps did they take to determine whether those finders were registered or not with a securities regulator? Is the State concerned with any potential issues of rescission should there be an action by investors to recoup their investment and the offerings found to have lost their exempt status due to securities violations or failure to disclose material information regarding the payments of fees to unregistered persons (or failure to file the Form D)?
Last, you mentioned that VACCD due diligence on the projects soliciting investors from Vermont is among the highest in the program / Nation, could you detail what steps the Department takes to ensure that fraud or securities violations are not incurred by the project developers under your supervision, whether they are intentional or not? Did I capture the essence of your comments concerning the level of inspection and due diligence that you perform on the operations of the projects under your supervision? If not, could you please correct my understanding of the role that VACCD plays in monitoring the activities of the project developers and those that they engage to help market and promote their projects both here in the U.S. and overseas?
Is there anything else that you would like to mention or address which you feel are important for us to cover in our reporting?
Michael Gibson, Managing Director
Registered Investment Advisor CRD #157403
On Mar 15, 2012 8:58 AM, "Candido, James" James.Candido@state.vt.us> wrote:
Thanks for the email. I am taking this to our agency council this morning for review, and will plan a course of action in terms of addressing these concerns. Thanks, and I will make sure to let you know of the developments.
James W. Candido
Vermont Agency of Commerce and Community Development
National Life Building
Montpelier, VT 05620-0501
(802) 598-8043 CELL
(802) 828-3258 FAX
Date: Fri, Mar 16, 2012 at 9:49 AM
To: "email@example.com" firstname.lastname@example.org>
Cc: "Candido, James" James.Candido@state.vt.us>
It’s been a while since your travels brought you to Vermont. Hope all’s well.
James Candido and I have discussed your March 14th email regarding Jay Peak Resort’s EB5 project. As you may recall from your visit to our Agency’s offices here in Montpelier, we, as EB5 Regional Center administrators, provide promotion, administrative support and oversight related to EB5 projects going forward within ACCD’s Regional Center. When the need arises for expertise we don’t possess, we secure it from outside ACCD. So, as you can understand, we wouldn’t possess any forms or records related to securities laws and regulations.
With respect to your other request for certain records you described as the Master Agent Agreement between Jay Peak and Rapid Visas, we do not have a copy of that document. With respect to other information you identified in your email related to the Jay Peak Resort EB5 Project and Rapid Visas, I would suggest you contact those parties directly.
As I’m sure you can imagine, we are proud of our EB5 Regional Center and have worked hard to earn the high regard we enjoy among all EB5 programs. We remain optimistic that Congress will continue the EB5 program – a tool that has helped us bring jobs and exciting new economic development projects to Vermont.
Thank you for your correspondence. Let us know if you’ll be back in Vermont again someday.
John W. Kessler
Agency of Commerce and Community Development
National Life Bldg., 6th Floor
Montpelier, VT 05620
The emails go on in this vein for several years trying to get an answer to our questions on the role that the State played in its oversight of these projects. The State’s complete inability to repsond is only one of the reasons my firm has no clients invested in any Vermont project.
Brent Raymond later replaced James Candido and was responsible for oversight of the EB-5 projects for the VACCD. Here are his comments shortly after assuming that position:
Brent himself is not without controversy and his decision to leave VACCD to work for a project he was supervising raised issues of potential conflicts of interest and ethics within the State of Vermont and how closely the project managers and regulators may have colluded to raise as much capital as possible regardless of the methods they employed.
Immigration Attorneys Promoting Jay Peak
During the course of the offerings several immigration attorneys went to visit Jay Peak to do their "due diligence." Immigration Attorney Larry Behar's visit to Jay Peak on Sep 5, 2012 produced these insights:
Number One - Skilled and Knowledgeable Management, and here at Jay Peak there is no doubt that the skilled management of having operated this mountain for over 30 years is very clear and apparent.
The third component is the Exit Strategy - how will the investors be able to get their funding back at the end of their 5-year cycle. Here once again, Jay Peak has proven it is without a doubt the quintessential regional centre project in The United States, for it is now projected that the first cycle of investors will be receiving their funding back to them at the end of the 5-year cycle through a buy-out structure that the partners are looking to develop in January 2013.
"To my left you’ll also see, the conference centre, which was built subsequently by a group of 150 investors well over $75 million. It comprises of 150 condo-hotel apartments as well as a pump house, which has a gigantic a Water Park located adjacent to hotel and which receives well over a thousand visitors per day. Both those units are a major attraction to the market places in Boston, Montreal, Philadelphia and New York, all within driving distance in the area.
(note: I have created this graphic to demonstrate driving distance and times to Jay from the destinations mentioned in the video, to our knowledge they were not contained in an investor report to his clients):
The objective and the vision of Bill Stenger and his partner’s was to create a Four Season Destination and with this beautiful sunshine in the State of Vermont you can see that we are really blessed with an unique opportunity."
In addition, the Jay Peak Resort partners will receive over 600 investors in its new phases over the next two years and we dare say that they will be very successful in this development. We congratulate the partners and the investors in the EB-5 program at Jay Peak Resort and we look forward to many years of successful development of this magnificent project.
the full transcript can be found here
here is an excerpt of that interview:
Keith McGilvery: Did you have any reservations at the get go?
Anthony Korda: No this was early days of the EB-5 program. I went to Jay Peak to meet with Bill Stenger. You know he struck me at the time of very genuine and trustworthy person. And indeed you know until today I have no reason to suspect otherwise. I had dealings obviously with Jay Peak. When I came to this country, I focused my practice on EB-5 immigration and I had a number of clients go for the process, they’ve all been successful when it comes to obtaining their conditional residence. They’ve been successful in so far as the earlier projects are concerned in having their conditions removed. And you know while there was I think a problem with phase – 1 last year when the partnership was dissolved in a way that, everybody agrees wasn’t a right way to do it, without informing the investors. Apart from that it’s really been absolutely no hint of any kind of doing wrong part on Jay Peak or anybody there.
Keith McGilvery: So I know you watched the press conference today where allegations of hundreds of millions of dollars in a fraud. What was your gut reaction?
Anthony Korda: Shocked. Absolutely shocked. I mean these are allegations obviously they say are yet to be proved. But I mean if there is any truth to these allegations, absolutely it’s a shock to me. And I mean it’s a great concern for people I know who are still in the system who are waiting for their conditions to be removed people who are here on conditional green card on who in the future have to have their conditions to be removed. I mean it’s going to be a massive problem for those people.
The full transcript can be found here
John Roth visit to Jay Peak March 23-25, 2012:
"James Candido, the principal overseer of State of Vermont EB-5 projects, stated to me that he inspects Jay Peak’s financial records at least four times per year and that he has not seen any financial irregularities or problems in Jay Peak’s finances. He noted that Jay Peak Resort was selected as the first Vermont EB-5 project because of Bill Stenger’s “30 years of demonstrated business acumen.” He emphasized that the State of Vermont is particularly careful in overseeing Jay Peak projects because it is hoping to leverage Jay Peak Resort’s success with development and job creation into promoting additional EB-5 projects in Vermont, several of which are in development or already online. Candido noted that the State turns down or discourages 95% of Vermont businessmen pitching projects to the Vermont Regional Center."
Here is the longer version of my concerns as was reported in this article by Vermont Seven Days reporter Paul Heintz in 2012:
Vermont's EB-5 program trades cash for visas — fair deal or shady business?
The End of a Partnership
Jay Peak has been a perfect poster child for EB-5 investment, and Stenger is one of the program’s strongest advocates. He has testified about EB-5 before congressional committees three times and argues it should be extended or made permanent before it expires in September.
So it came as a shock when one of Jay Peak’s closest associates, Rapid USA Visas, recently disparaged Stenger and his company by publicly severing its ties with the resort and questioning its financial health.
For five years, Rapid USA had worked closely with Jay Peak to attract foreign investors. The company advertised the project internationally and helped investors navigate the byzantine process between investment and expedited visa.
That changed last month, when hundreds of immigration attorneys around the world received an email from the firm that announced, “Rapid USA no longer has confidence in the accuracy of representations made by Jay Peak, Inc., or in the financial status of and disclosures made by [it].”
Rapid USA CEO Douglas Hulme turned down repeated media requests to elaborate on his company’s claims. But his silence fueled speculation about Jay Peak’s ability to deliver on promises to investors and led one critic to claim that Jay Peak and Rapid USA were violating federal securities laws.
“Overall, we have significant concerns about [Jay Peak’s] ability to operate as a going concern,” says Michael Gibson, an EB-5 financial investment adviser who has tangled with Stenger in the past and who posted Hulme’s email on his industry blog. “We’ve had our suspicions for years. We don’t believe Jay Peak is making money.”
Stenger disputes the allegations and provided documentation showing that sales for the season are up 38 percent — or $5.7 million — over last year’s, despite the mild weather. Lift-ticket sales are down $400,000 from last year, Stenger says, but an increase in lodging options on the mountain — 1000 more beds this year alone — has more than made up the difference. For example, sales during the last week of March reached $891,000, compared with $589,000 for that same week in 2011.
State officials also have confidence in Jay Peak’s financials.
“We, of course, wanted to take a closer look, so we spent the entire day at Jay after that letter,” says James Candido, who directs the state’s EB-5 program at the Agency of Commerce and Community Development. “There was absolutely nothing that was out of the ordinary.”
Stenger acknowledges that his relationship with Hulme and Rapid USA ended badly but declines to provide a full account of what transpired.
“It came as a shock to me,” he says. “I was very disappointed in the tone.”
As for Gibson’s allegations that Jay Peak is in trouble, Stenger is less reserved.
“He does not know what he’s talking about,” Stenger says. “I’m very resentful of the way he’s conducted himself. I don’t think it’s been fair. I don’t think it’s been ethical. He is not an expert on Jay Peak or anything we do.”
Gibson has also suggested that Hulme and Stenger may have violated federal securities laws, arguing Jay paid a commission to Rapid USA for each investor recruited, though Hulme is not licensed to sell securities. Stenger argues that Hulme got an “administrative fee” — 85 percent of the extra $35,000 to $50,000 Jay charges each investor for advertising, processing and legal expenses — not a commission. “There is absolutely no foundation to that,” Stenger says. “They do not have to be a licensed dealer-broker, because we’re not paying them a commission.”
According to Stenger, Gibson is merely retaliating against Jay Peak because the resort has refused to share proprietary information with Gibson’s firm or participate in his various business ventures. “There is no problem,” Stenger said. “We got a kick-ass business here, and it’s because of the things we’ve done.”
Here was our report outlining the Rapid Visas partnership dissolution with Jay Peak:
The sad part of this entire tragedy is that it was completely avoidable. Had proper steps been taken at the VACCD the alleged fraud would have been discovered on the first audit. Or if Bill had played by the rules and used the capital raised simply to build what he had promised then even if the investors lost money they probably would not have cared so long as they got their green card.
The good news is that the industry and our trade association has improved its adoption of and adherence to U.S. securities laws either due to fear or recognition that it is vital for the program to become mainstream and avoid being terminated by scrutiny from the legislators, regulators, the press and public. The action against Jay Peaks has set off shock waves, but it, and many of the current investigations are due to legacy operations. In other words, the way things were done in the past are for the most part not the way things are being done now. For instance, most Centers now recognize that paying finders fees to unregistered persons in the U.S., or paying a phony offshore corporation or relatives of the agent through offshore accounts, may not be a great idea given the ability of the federal government to trace the flow of funds from the source regardless of who the ultimate recipient is.
As a Registered Investment Advisory firm we have continued to grow as investors, their immigration attorneys and advisors recognize that the selection of a compliant investment is more difficult than simply taking the often self-serving word of the issuers. We have spent years developing our pre-subscription Due Diligence and issuer Verification and EB-5 risk assessment methodology based on quantitative analysis of the market demand for the assets, the feasibility that the managers will be able to achieve their objectives through careful planning and accounting for contingencies and feel that it has helped all of our clients make better and more informed decisions. Here is a graphical depiction of our due diligence / verification process and some of the contractors that we use:
Last, a number of issuers have recently adopted our comprehensive ongoing investor asset monitoring and reporting. This reporting includes regular updates on the progress of the construction, development and operation of the asset until exit and includes site visits and reviews of budgets, timelines, milestones and financial statements to ensure that the Job Creating Enterprise (JCE) is performing as outlined in the business plan and offering documents. These reports can be attached to the filing of the I-829 to ensure compliance with all current and proposed compliance and integrity measures. Here is a graphical depiction of this process:
A number of Regional Centers and Direct issuers have adopted what is the highest level of transparency, compliance and oversight in the market and we will be sharing those reports with interested investors, attorneys and advisors on an ongoing basis so that they can make the most informed investment decision based on verifiable evidence rather than third party assurances from less than reliable sources as was the case with Jay Peak.
- Vermont EB5 Regional Center
- Bill Stenger
- Ariel Quiros
- UNITED STATES SECURITIES AND EXCHANGE COMMISSION
- Jay Peak - AnC Bio Vermont
- Jay Peak Resort - Hotel Jay & Conference Center
- Jay Peak - Q Burke Mountain Resort, Hotel and Conference Center L.P.
- Invest in the USA (IIUSA)
- FINRA - Financial Industry Regulatory Authority
- CanAm Enterprises, LLC
- Tom Rosenfeld
- State of Vermont vs Bill Stenger & Ariel Quiros
- UNITED STATES SECURITIES AND EXCHANGE COMMISSION vs Ariel Quiros & Bill Stenger
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