Tag Archives: Vermont EB-5 Regional Center

Could Vermont’s EB-5 Regional Center wither away?

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Of course it’s hard to match the impact of the original headlines from Stenger & Quiros’ Jay Peak EB-5 scandal — but two resulting events, largely unnoticed by comparison, will soon impact Vermont’s EB-5 Regional Center.

buriedEB5 3The first change was set underway when, to prevent future “Ponzi-style” EB-5 scandals, Vermont shifted financial oversight responsibility from the Agency of Commerce and Community Development (ACCD)  to the Department of Financial Regulation (DFR). The focus jumped from wooing overseas investors with almost full-time EB-5 boosterism to tightening up financial oversight.

Along with this shift came legislative adjustments allowing the DFR to control charges and enact new fees for those participants in the Vermont EB-5 Regional Center. Additionally the DFR was given authority to invoice EB-5 developers for its oversight and regulation. Moves were also made to rein in the ACCD’s taxpayer support for advertising, out-of-state  travel, and other promotional work through the Regional Center on behalf of EB-5 developers.

And recently Peak Resorts /Mt. Snow surprised top state officials  by announcing the formation of their own independent EB-5 center. The resort had to struggle with waiting on a payment for an ongoing project from their EB-5 investor funds held in escrow by the state as a guarantee.

By setting up their own EB-5 program, the out-of-state resort owners can happily gather-up their foreign funds through the investment-for-visa immigration program, independent of the Vermont-run EB-5 Regional Center with whom they formerly were partnered.

In fact, Mt. Snow Resorts probably has an inside track on this approach, should it become a trend for other EB-5 developers here in Vermont. In 2015 they hired the director of the Vermont EB-5 Regional Center — grabbing Brent Raymond directly out of the revolving door. As director, Raymond’s duties for the state included both promotional activities and monitoring EB-5 program compliance under state and federal financial regulations. Quite the catch.

So, the Jay Peak financial scandal has forced Vermont’s Regional Center EB-5 Program to change their regulatory responsibilities and funding — and perhaps most importantly, the state-run monopoly on EB-5 regulation and oversight is now threatened. It might even spell extinction rather than evolution for the Vermont ACCD’s Regional Center.

However, here and nationally, independent EB-5 foreign investment-for-visa programs are bound to stick around. Even in the midst of the new President’s immigration crackdowns, access to large chunks of quickly attainable legal foreign investment money is tough for any developer to deny themselves. You could even say it is almost impossible to resist — one New York finance broker said the EB-5 immigrant money racket was so good “[It] sounds like legalized crack cocaine.”

After all, even Donald Trump is tapping EB-5 funds for one or more of his gang’s projects. If it’s good for the President, it must be good for the country, right? … Right? … Amiright?

EB-5 “ponzi” brokerage Raymond James: Flashing blue lights in the rear view mirror

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The Vermont Commissioner of the Department Financial Regulation, Susan Donegan, has announced a $5.95 million agreement with Raymond James Associates, a Florida-based securities broker-dealer. brokerwhacking

This is the brokerage firm implicated in the massive Jay Peak EB-5 ponzi scheme allegedly perpetrated by partners Bill Stenger and Ariel Quiros. The pair face a variety of federal and state lawsuits and are accused of misappropriating $200 million EB-5 immigrant investor economic development funds.

Federal and State lawsuits allege the brokerage house broke securities regulations by arranging illegal access to EB-5 immigrant investor funds.  Quiros’ ready access to these funds played a pivotal role in the complicated illegal eight-year scheme to flow money away from the mandated EB-5 targeted development at Jay Peak, Burke Mountain Resorts (formerly Q-Burke) and other NEK EB-5 job creating projects.

In a press release announcing the settlement Vermont DFR Commissioner Donegan explained: This agreement provides for the payment of $4.5 million to the appointed federal receiver in the case SEC v. Quiros for the purpose of reimbursing possible claims by investors. Additionally, $200,000 will be paid to DFR for the cost of the investigation and $1.25 million will be paid to Vermont’s general fund as an administrative penalty.

The broker agreed to the settlement terms but is not required to admit to or deny the department’s allegations. DFR’s Donegan has said the brokerage had “inadequate written supervisory procedures” for collateralization of margin loans. The Commissioner pointedly notes the firm ultimately profited from the Jay Peak EB-5 fund transactions.

Well, the $5.95 million payout that Vermont DFR got may sound like tidy sum money, but look at it this way: it is less than what Raymond James pays their CEO Paul Reilly. His total pay package for 2015 is estimated to be $7.8 million (up 37.7%) and all four top executives at the firm made over three million each in 2015. Last year the company recorded an annual income of $502.1 million, up 7 percent, not exactly proportional to the boost its CEO got.

The firm also has a long trail of fines paid out over the years. Lax supervisory procedures, such as those mentioned by Commissioner Donegan, appear to be a feature — not an aberration — at the brokerage house Ariel Quiros chose to help build his complex web of alleged financial fraud.

In 2007 Raymond James was fined $2.75 million by the National Association of Securities Dealers for failing to maintain an adequate supervisory system to oversee the sales activities of over 1,000 producing branch managers working in offices throughout the United States.

And in May 2016 the Financial Industry Regulatory Authority Inc.(FINRA) fined them a record-setting $17 million for widespread compliance failures in the brokerage firm’s anti-money laundering programs.

(FINRA, the Wall Street funded industry watchdog, is the successor to the National Association of Securities Dealers, Inc. [NASD]. It is a non-governmental organization that regulates member brokerage firms and exchange markets.)

 Raymond James Associates reportedly is pleased that a guilt-free settlement was reached with Vermont DFR. No doubt they are happy to be clear of this latest little bit of unpleasantness — and it must seem a bargain price at only $5.95 million! moneygo1

The amount will likely not satisfy the EB-5 immigrant investors seeking green cards, and it won’t do a thing to put the NEK economy back together again.

The settlement is simply the cost of doing business for a brokerage firm like Raymond James — on the level of a speeding ticket for the rest of us. And there is no admission of “wrong doing,” so no points accumulated on their brokerage “driving licenses.”

Given the firm’s history, there’s no evidence that such a penalty will even make its managers wary enough to look in their rear-view mirrors for flashing blue lights.

EB-5 funded snow making job proceeds

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Well that didn’t take long, just a few short weeks after Bill Stenger and Ariel Quiros’ EB-5 ski resort scandal broke, a similarly funded Vermont project  is on track to proceed like nothing happened.

snowgunsPeak Resorts Inc. (NASDAQ:SKIS), the Missouri based company that owns Mt. Snow (no connection to Jay Peak/Burke Mt.) announced that a $52 million EB-5 funded snow making system expansion will continue now that the Federal government has agreed to release immigrant investor funds held in escrow.

The flow of funds was halted while the United States Citizenship and Immigration Services (USCIS) reviewed the EB-5 immigrant investor funded project.  The Federal review process is somewhat mysterious as reports note no further information is available from USCIS because “as a matter of policy, we cannot comment on specific EB-5 projects.

The release of funds is welcome as the resort says they had invested millions of its own money in the expansion project. Mt. Snow is reportedly running short on cash. The resort attributed its need to lay off workers to the snow-starved winter.

Peak Resorts CEO Timothy Boyd commented on the snow making upgrades and expansion projects: “The master plan for Mount Snow is expected to enhance the overall visitor experience at the resort by bolstering snowmaking capacity and adding a new three-story, state-of-the-art ski lodge.”

I suppose it is just standard rah rah boosterish language but Peak Resort’s Timothy Boyd might want to temper his tone so as to avoid sounding so eerily similar to Jay Peak’s alleged fraudsters Stenger and Quiros.

Mt. Snow resort representatives always stress that they have no connection at all with Jay Peak but they do enjoy a very close relationship with state government.

President Dick Deutsch stressed: “It’s important to know that we are in good standing with the state of Vermont,”

No doubts there. Mt. Snow is in good standing with the state. In fact in some cases they are standing so close you could hardly slip a piece of paper between them. You see, in 2015 Mt. Snow hired Brent Raymond — the former head of State of Vermont EB-5 Regional Center —  to run their EB-5 funded expansion. In his job for the state, Raymond was tasked with promoting and monitoring compliance of Vermont’s EB-5 programs, including Peak Resort Mt. Snow’s $52 million upgrade.

However, Patricia Moulton, head of the Agency of Commerce and Community Development (ACCD  runs VT’s EB-5) characterized Raymond’s departure through the revolving door to the resort business as nothing more than “standard turnover, nothing out of the ordinary.” Raymond parted ways with the agency “amicably and respectfully,”she said.

Oh and ACCD’s Moulton added the reassurance that her brother David Moulton, director of operations at Mt. Snow, was “not involved in hiring Brent,”

Oh well, nothing out of the ordinary, nothing to see here — and the EB-5 snow-making job continues.

Shouting “ethics” in a crowded revolving door

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Last July the longtime director of Vermont EB-5 Regional Center Brent Raymond resigned abruptly to lead Mt. Snow/Peak Resorts Inc. $52-million EB-5 funded expansion program. The Mt. Snow program is one that as State EB-5 director, Raymond  would have had oversight of.

A great gnashing of teeth over the possible conflict of interest followed causing Governor Shumlin to go so far as to  cry “ethics” aloud as Raymond exited from his administration out the revolving door.

A spokesman for the governor said then: “The governor has concerns about the potential for a conflict of interest in this decision. […] We fully expect all appointees and former appointees to comply with the Executive Code of Ethics,” spokesman Scott Coriell said in an email.

Later with questions over possible conflicts of interest in the legislature and executive mounting Shumlin publically endorsed plans already underway for an independent commission to handle ethics complaints.

In the meantime back at the Mt. Snow’s $52-million EB-5 project, if you hunt around on mountsnoweb5.com, a press release pdf that lists Brent Raymond as an employee can be found. However Mt. Snow’s webpage (shown below)more prominently pimps out their new hire Raymond  as a Vermont State Employee – image tagged : Support of government officialsscshotsnow

Some steps have been taken in the last year to address growing questions of ethics and conflict of interest in Vermont government .Secretary of State Jim Condos continues his tireless campaign for a transparency and an ethics commission for the executive and legislative branches. The Vermont House adapted a formal code of ethics and the Vermont Senate Rules Committee will likely continue their recent series of skirmishes, err, hearings to discuss formal ethics and financial disclosure guidelines.

Oh by the way, the other VT EB-5 Regional Center employee seen in that image on mountsnoweb5.com is Specialist Becky Fu. She left the state Regional Center in 2015 — not long after Brent Raymond. Specialist Fu left her state Regional EB-5 Center job to help shepherd along the Von Trapp Family Lodge $22-million EB-5 program.

So go ahead, shout as loud as you want. For now, I doubt anyone wants to hear “ethics” while passing through Vermont’s revolving doors. Nah, it’s business as usual.

AnC Bio Vermont – Sports and Entertainment

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Jay Peak has developed a new hotel and  Disney-esque water park, financed largely with private funding through the Federal EB-5 program. Much more is promised for the next phase. A jaw-dropping six hundred million dollars of EB-5 fueled foreign investment may transform the area: more lodges, hotels, condos and a new state-of-the-art hi-tech bio-tech medical factory are planned, which will, of course, bring jobs. The project is likely to produce change fast and furious enough to stir fears of its overall impact on the community.

The proposal by AnC Bio Vermont chairman Ariel Quiros stands out among the hotels and condos. Land and buildings for the hi-tech medical facility have been purchased, and reports say they will invest $110 million dollars; when completed the factory will generate “in excess” of 3,000 direct and indirect EB-5 jobs.

In support of the project a couple slickly produced promo videos, one featuring Governor Shumlin and Senator Leahy, can be seen online. Some PR releases can be found too, and one from 2011 mentions a new AnC Bio facility in China.

According to a 2011 business report AnC Bio of South Korea …

owns a state-of-the-art cGMP cell culturing facility for stem cell therapies including research, development, and manufacturing of biomedical devices and therapies.

In January 2011 as part of a $4 million investment, AnC Bio Holdings’ Ariel Quiros was given a seat on the board of Bioheart as part of a subscription agreement (early stages of a merger) deal between the two companies. Three months later he was removed from the Bioheart board due to AnC Bio Holdings’ failure to meet its payment obligations. AnCBio had made only one payment of $400,000 of the agreed installments.The tsunami that struck Japan that year was blamed.

Incidentally, AnC Bio’s Vermont chairman also owns G.S.I., a clothing and consumer electronics importing firm based in Dade County, Florida.

Since an actual “brick and mortar” bio=tech manufacturing facility is planned for Vermont, I was hoping to find an old-fashioned image of a sleek AnC-owned factory with manicured lawn and company sign pictured online, but there is none. Yet AnCBio.com is still interesting. At the R & D Center you can click any of the three categories – Cell Therapy, Artificial Organs, and Digital Researches – and you will find that the pages linked to are blank, apparently labeled In preparation for the Vermont project. The latest information in the News Release area is from April 2008. With the ongoing PR push here in Vermont it looks like either bad planning or ineptitude to not keep this section current.

[But wait, there’s more!]

Much of AnC Bio Vermont’s hopes hinge not only on the federal EB-5 program-supplied funding but on the FDA granting approval for its artificial heart device used in surgery. Aha! Well now this is what makes the next category on AnCBio.com interesting.

In the about us section under intellectual property are found seventeen medical process and device patent application notices. Who needs “ brick and mortar” if AnC bio holds useful issued patents and procedures? This “intellectual property” is where the investment value may reside.

The list of intellectual property consists of seventeen items dated from 2001 to 2007. One is listed as issued in three countries; Republic of S. Korea, USA, and Singapore. Okay, maybe this website just hasn’t been fluffed, dusted, or updated lately, which probably isn’t unusual; surely more detailed reports must be available elsewhere.

Company history could be considered as a measure in terms of future performance. AnC Bio was once called The Sports Seoul 21 Company Ltd., and is located at 10th Floor, H&S Tower 119-2 Nonhyun-Dong, Gangnam-Gu, Seoul, Korea. It has been there since 2009 when Ariel Quiros (now chairman of AnC Bio Vermont) arrived at the ten-year-old Sports Seoul 21 Ltd., along with the new name.

Business profiles done at the time of the name change and some recent profiles online describe AnCBio like this:

Company overview

The company publishes and prints daily sports newspapers which contain news contents covering various sports including baseball, football, golf and basketball as well as entertainment news. It also offers both printed and online content, and provides links to community-specific information sources for shopping, travel and real estate on its Website. In addition, the company is involved in sports and entertainment related event businesses in South Korea. […] Sports Seoul 21 LTD was incorporated in December 1999.

Dozens of foreign investors are still needed to plunk down their $500,000 green card investment [fee] to kickstart construction of AnC Bio’s Northeast Kingdom medical manufacturing plant. Once the plant is completed and operating in the US, AnC hopes to leverage that fact to speed  FDA approval of their artificial heart device.

So, a foreign-based firm that was mostly involved in clothing, consumer electronics, and “sports information” suddenly plans a major factory in a low-income area in hopes of getting federal approval of its apparently not-yet-patented-in-the-US surgical devices. As an investment for EB-5 folks looking for some return beyond their green cards, this sounds more like two-thirds of The Music Man’s seventy-six trombones plus one third Dr. Frankenstein.

Or just maybe it is fast-track EB-5 boosterism. When speaking to a Vermont newspaper about AnC’s bold plans Ariel Quiros said, the company [AnC bio] will “write new history,” , and also noted “They called me a mad scientist, but what the world sees as a risk, I continue to pursue it, and pursue it and pursue it.

Watch out NEK – and Vermont! Make sure you’re not selling the family cow for magic beans, only to run into a mean and hungry giant.

Price Points of Citizenship

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The Federal EB-5 Visa program may be made permanent in 2012 and the move faces limited opposition. Some whining from Senators Charles Grassley and Lindsey Graham and testimony by the Center for Immigration Studies, an anti-immigrant “think tank,” were the few remarks not leveling praise at the early congressional hearings. A New York Times editorial, while generally kind to EB-5, however has serious reservations about its implementation:

But the program has spawned cynical practices that are stretching the rules and violating the spirit of the law.

 

For those not familiar with it, 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 creates 10 full-time (often low-wage) jobs for American workers will yield citizenship for the wealthy immigrant and family.

For a second year, Vermont and the state’s administrators overseeing the program received the EB-5 Regional Center of the Year Award from a group they oversee. This award was given by the Artisan Business Group, a brokering firm that assists American business owners in capturing investment opportunities (potential immigrants of means) in China. Estimates by the state are that Vermont received $100 million in 2011 for EB-5 visa investment. When Vermonters hear about the EB-5 Visa program at all, it often involves Jay Peak and its years-long expansion into a four-season destination resort, complete with a $25 million year-round indoor water park, funded in part through government-initiated EB-5 investor cash.

This cash-for-visa program has certainly helped Jay Peak’s infrastructure, boosted the owner’s bottom line and lastly supplied some low-wage employment for the Northeast kingdom (see trickledown theory).

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. However, questions about the oversight ability of the consistently overburdened and understaffed SEC have surfaced: from EB-5’s inception until 2010, the USCIS had decertified only two regional centers.

It shows some kind of strange disconnect that can allow one arm of our immigration policy to go piggybacking on a development scheme and actively court the wealthy to invest  cash in private business enterprises, while another arm works aggressively to deport hundreds of poor immigrants unable to buy their way to a better life. When all is said and done we may soon have a permanent structured system for marketing American citizenship for cash. Strip it all down and it does follow the money.