The headline says von Trapp Brewery so far unaffected by closure of Vermont EB-5 center but how about 900 jobs they promised?
Last week the United States Immigration Customs Service (USCIS) handed down their decision to shut down and terminate the Vermont EB-5 Regional Center, which is run by the Vermont Agency of Commerce and Community Development (ACCD). The closure comes as a direct result of the EB-5 Jay Peak Ponzi scheme. Bill Stenger and Ariel Quiros defrauded millions of foreign investors while under the ACCD’s and Vermont EB-5 Regional Center’s oversight.
But there are other Vermont businesses participating in the Regional Center’s EB-5 program, and as the Jay Peak dust settles those programs are getting some attention.
The EB-5 program is designed to provide capital investment by foreign investors and stimulate the U.S. economy through job creation. Approved participating businesses present the Regional Center with plans on how they would create a certain number of new jobs with their foreign investor funds — but as with so many other business incentives programs there’s little follow-up verifying actual results.
From Vtdigger.com’s article as published in The Stowe Reporter — von Trapp’s hometown paper:
Sam von Trapp said he’s seen no indication that his company will need to refund any investors.
He doesn’t know how many of those investors have received their permanent resident status, but says most of them have achieved “early levels of approval.”
“We’ve had an effective project, and our people are not at risk, but it is going to be a distraction and an annoyance if we indeed have to move to a different regional center,” von Trapp said.
It may all feel like a “distraction” for von Trapp, but for immigrant investors it is quite a blow. They trusted the Vermont Regional Center, investing millions expecting they’d actually get green cards as promised; now many are out of luck along with losing their investments.
And the promised new local job creation used to create positive buzz and sell EB-5 projects? The von Trapp Family lodge pitched EB-5 jobs angle as Jay Peak and other businesses did. And like them the von Trapp organization made pretty BIG promises about new job creation.
The Wall Street Journal reported: In [2013] offering materials, Mr. von Trapp’s economist asserts the finished project will not only preserve 200 jobs at the lodge, but also will create 904 new jobs within three years – 66 jobs at the Trapp Lager brewery and restaurant, and the rest “indirect” jobs as the capital spending ripples through the economy.[added emphasis]
Following the 2008 recession The von Trapp Family lodge qualified as a “troubled business” under EB-5 regulations. The reasoning was that some investor funding could be used to help maintain existing jobs, not spent on creating new ones.
Stowe Reporter: von Trapp Brewing and Bierhall used investments from 40 immigrant investors.
von Trapp wouldn’t say how much funding was used from those immigrant investors, though a 2013 Wall Street Journal article states Johannes von Trapp had a goal to raise $22 million from 44 investors by June of that year.
By March 2013, the brewery had raised $2.5 million from five immigrant investors, according to the Journal.
More than 50 jobs were created during construction and operation of the brewery and the Bierhall, von Trapp said, although only brewery jobs count toward the green-card program.
Rather than sending “ripples through the economy” as von Trapp promised the EB-5 funded brewery comes up flat on job creation with something less than fifty jobs — and that hardly rates even a good belch. Calling Doug Hoffer …