Foreign investors in fizzled development are at wit’s end
MONTPELIER, Vt. (AP) — Foreigners who had been banking on their investments in a biomedical research facility and a hotel and rental cottage project in Vermont to get green cards are scrambling to find a backup now that the project’s developers are accused of misusing hundreds of millions of dollars in what investigators called a “massive eight-year fraud scheme.”
Wei Wang and his wife, who are from Beijing and living in Houston after graduate school, had hoped their investment of more than a half-million dollars would lead them down the road to starting a restaurant.
“We were doing our business plans for the restaurant when this came up, so we have to change everything,” Wang said. “It’s hard to accept that we may lose all of our almost 600K.”
Wang said he recently contacted about 30 other Chinese investors, of the 166 foreigners who chipped in a total of about $83 million in the biomedical research project, to see if they might be able to work together to protect their immigration status and money.
The federal Securities and Exchange Commission and the state of Vermont last month accused Ariel Quiros — owner of Jay Peak, a large ski resort in the state — and the resort’s president of misusing in “Ponzi-like fashion” more than half of nearly $400 million raised from foreign investors for developments through a special visa program. The EB-5 program offers foreign investors a chance at residency for investments in projects that create jobs.
Quiros also is accused in the civil complaints of “pilfering” $50 million of investor funds for his personal use, including to buy the Jay Peak and Burke Mountain ski resorts, a Trump Place luxury condo in New York, and to pay personal income taxes. Both Quiros and Jay Peak president Bill Stenger have said they will be cleared of wrongdoing.
The case is one of several around the country in which the EB-5 program was allegedly used to defraud hundreds of investors out of tens of millions of dollars.
One investor filed a class-action lawsuit Tuesday in Miami, where Quiros is based, against Quiros, Stenger, the Raymond James financial firm and Quiros’ then-son-in-law, who was working at the firm. The lawsuit seeks to recover funds the investor says were misused, commingled and stolen.
The status of investor funds related to the litigation ultimately will be decided by the courts, the state of Vermont said. The federal receiver overseeing the projects amid the fraud allegations said he is attempting to protect both the investors’ immigration status and the investments.
Five of the eight projects connected to Quiros and Stenger have been completed and are operating, including the Jay Peak Hotel, indoor water park, ice arena and golf course; the Jay Peak Golf and Mountain Suites; and the Jay Peak Lodge and Townhouses.
But the biomedical research plant, which was expected to bring 450 jobs, is unlikely to happen, Democratic Gov. Peter Shumlin said last month.
Federal receiver Michael Goldberg expects both Jay Peak and Burke Mountain resorts, including a new hotel at Burke that has not yet opened, to be sold.
Mirna Alcalay, whose husband, Antonio Azcarate, invested in the biotech project, described in an email to the AP about being stateless until her teens and then living in Italy for years without legal residency. Her father was a Jew who escaped the Nazis, and her mother escaped the Soviet regime, she said; her husband’s father lived in exile from Spain because he was against the dictator Francisco Franco.
“In spite of all our current passports, and in spite of our middle age, my husband and I decided to live in the US because we believe that meritocracy, justice and general fairness are unique characteristics of this country,” wrote Alcalay, 53. “We sold more or less everything we had in Europe to move here.”
Now, she said, they face the risk of losing their green cards and their money.
While EB-5 investors can hope for a return on their investment, there’s no guarantee they will receive one, according to U.S. Citizenship and Immigration Services. The state has since changed the structure of the EB-5 regional program to provide more financial oversight.
Felipe Vieira, of Brazil, said he decided to invest in Jay Peak to create a more secure life for his small family. He said he made the decision after vacationing in Stowe, Vermont, when his then-8-year-old daughter said she wanted to stay.
He sold a small farm about two hours outside of Rio de Janeiro and an apartment in the city and moved with his family to Stowe. Now he worries they may not be able to stay.
He said he is in contact with other investors so they can communicate their main concerns to officials as a group.
Some investors have expressed interest in chipping in more money to make sure the projects are completed and jobs are created, said Michael Goldberg, the federal receiver.
Vieira, who works as a business analyst, said he can’t because of expenses for lawyers, moving, housing, and next year, his daughter is going to college.
“To tell the truth, I don’t have money,” he said.