So what did happen between Jay Peak and Rapid Visa USA? The show pony for Vermont’s Federal EB-5 investment funded expansion has hit a bit of controversy or “flappette” as one local report called it. Some principal players are unavailable to the media, and the story coverage in state has mostly consisted of assurances from Jay Peak’s owner and a State of Vermont Commerce Agency official. However, what is known is that EB-5 broker Douglas Hulme of Rapid Visa USA terminated his longtime lucrative business relationship with Bill Stenger and Jay Peak, writing that he  “no longer has confidence in the accuracy of representations made by Jay Peak.”

Rapid Visa USA had a long association with Jay Peak and had successfully brokered $200 million in investment from 400 green-card-seeking investors for the ski-becoming-destination resort.

  Assuming that figure [$200 million] to be correct, the fees paid to agents and attorneys involved with the sale of these securities offerings (the subscription fee used to be $65,000 but is now $50,000) would be well over $20 million.

The sudden departure of a business associate set off speculation in the EB-5 world about Jay Peak’s financial wellbeing.

Several other EB-5 financed projects are underway in Vermont, including a bio-tech business in the Northeast Kingdom.

Eyes wide shut?

It remains just a “flappette” locally. The EB-5 program (explained below in detail) in Vermont is a big deal, and to date it has worked well for Jay Peak. But in other areas nationally it has been criticized for spawning cynical practices that are stretching the rules and violating the spirit of the law.

Here are some numbers from the online blog EB5Info.com that examined the arrangement that existed between Jay Peak and Rapid Visa USA and brought in the funds. These amounts have been questioned but it gives an idea of the scope of a partnership that likely wouldn’t have been severed lightly or on a snarky personal whim.

  …a compensation arrangement that was very profitable for Hulme’s firm, Rapid USA Visas, earning well over $25,000 per investor once the I-526 had been approved. Rapid USA Visas and Jay Peak had an additional clause in the subscription agreement that provided both parties with compensation of $10,000 even if the investor did not pursue the investment after the 30-day review period ended, making Jay Peak one of the few EB-5 regional centers that charged (and still charges) a document fee.

The media – unable to talk to Rapid Visa’s Hulme or the online EB-5Info’ s analyst Michael Gibson – have relied on reassuring remarks from Jay Peak owner Bill Stenger and James Candido, the Commerce Agency’s Economic Development Specialist who found “no issues” regarding Jay Peak. Candido and the State of Vermont have an active role promoting  EB-5 and, like Stenger himself, are hardly neutral observers. Before this unpleasantness began Vermont’s Candido made an interesting point in a January interview with EB-5 expert Norman Oder when he spoke of the state’s responsibilities to investors:

“everything points to them getting their investment back” but stressed “that’s not under the jurisdiction of the government.” Because Jay Peak did not start getting investors until 2008-09, none have seen their investment periods reach maturity, so they haven’t had a chance to get their money back, Candido said. The investment is a private transaction, he said, “unless a company we see is blatantly or intentionally trying to deceive investors.”

An observer might wonder if at a minimum a “flappette” might be elevated to the level of “flap” or higher when more information becomes available. Until then the State and Jay Peak will no doubt refer often to their  “great track record”- however something caused longtime business associate and stakeholder Rapid Visa USA to bolt Jay Peak and that might tarnish the track record.

About the program: The EB-5 program allows immigrants wishing to obtain US citizenship to invest in approved private businesses ventures. A $500,000 investment in a US business that indirectly creates 10 full-time (often low wage) jobs for American workers will yield citizenship for the wealthy immigrant and family. The program has aspects of both immigration and investment so the U.S. Citizenship and Immigration Services (USCIS) and the Securities and Exchange Commission (SEC) handle oversight nationally.