Today I sat down to write a story on Jay Peak and the situation on their tram. If you have never been to Jay Peak, it sits on the Canadian border of Vermont and is a great place to ski. It gets some of the largest amounts of snow in the east coast and is known for having some of the best glades as well. I am aware of them having issues with their tram being inoperable and this was a big headache for Jay Peak since it is their main lift. But, major repairs were made in June making it operable and some major work will be done in spring 2017. But, that’s not where this story went goes to.
While researching Jay Peak, I came across an article by Bloomberg BusinessWeek titled “Foreign investors were promised green cards if they put $500,000 into Vermont’s poorest region. Now they’re wondering where the money went.” That’s a pretty long title, but it only partially touches on the many things going on behind the scenes at Jay Peak.
The story touches on a special immigration program called EB-5. This program which was started in 1990, allows foreign investors to put up an investment $500,000 in a poor area and receive a temporary visa. If the investment creates 10 or more jobs, then the investor can receive permanent residency. This allows governments to develop poor areas with little to no taxpayer money.
Bill Stenger, the chief executive of Jay Peak Resort, and Ariel Quiros, a Miami businessman who owned the property, used this program many years ago to help expand Jay Peak resort and turn it into a 4 season resort by adding hotels, restaurants, and an indoor waterpark. They then decided to promote a new $600 million biotechnology center in the nearby town of Newport using the same program. Unbeknownst to the new investors, Stenger and Quiros were being investigated by the Securities and Exchange Commission for almost two years prior along with state of Vermont.
In April 2016 the federal government lawyers seized Jay Peak resort and halted work on the biotech project for fraud with plans of going to court. The accusations fall as a Ponzi scheme in which Quiros switched the $20 million seed money from immigrants to build the Tram Haus Lodge to help him buy the resort in 2008. They are accused of using the money collected for the third phase, penthouse suites atop the Jay Hotel, to pay for the second phase. This Ponzi-scheme trend has continued into the BioTech investment. Along the way, Quiros was given a 20% “management fee for each investment from foreign investors.
This whole situation affects more than half of the 731 foreigners and leaves them vulnerable to deportation. It also may kill the $83 million investment in the biotech project. Currently, Stenger has settled the federal case, without admitting or denying culpability, and is cooperating with the SEC. Quiros is denying the allegations.
This complicated situation will no doubt have a huge impact on Jay Peak. As a fellow skier, it’s a shame to see all of this since Jay Peak really is great place to ski. I skied there in the early 1990’s and as recently as 2015. I have seen dramatic improvements in the resort for the better and with the creation of 1,850 new jobs in this region, it has been a great thing to see. From what I have read, I feel Stenger is a good person who tried to do something good for his town since no money could be traced to him. As for Quiros, that’s another matter. Allegations amount up to $200 million in “ill-gotten gains”. It appears the greed of one person has again ruined something good that had a positive impact on many people.
Aside from this case, it is expected that Jay Peak will be sold next summer. It is currently appraised at $42 million. Looks like the tram issue might not be such a big deal anymore.