Jay Peak bombshell

[ss20]

James Candido, the principal overseer of State of Vermont EB-5 projects, stated to me that he inspects Jay Peak’s financial records at least four times per year and that he has not seen any financial irregularities or problems in Jay Peak’s finances.

A multi-million dollar company starts the biggest EB-5 project in the state and you inspect the finances once every three months? Kinda odd to me. What else are they doing at this EB-5 office anyway? I didn't even know there was a whole office for EB-5 till this thread.

[BenedictGomez]

A multi-million dollar company starts the biggest EB-5 project in the state and you inspect the finances once every three months? Kinda odd to me.

That's fine. Quarterly reviews are standard. Not inspecting the finances at all, however, which has been alleged, is not.

Assuming reviews are taking place, however, I do question whether the analysis of Jay Peak's financials (assuming they took place) is full & competent. I just took approximately 25 seconds to look up "James Candido's" profile on LindeIn, and his undergraduate is in Political Science and Psychology, later an MBA. That is not the type of background you want to see for the person in charge of leading a financial review if he is indeed the "principal overseer", as what you linked states. Hopefully by "overseer" it just means he delegates that task to a small team of accountants.

What else are they doing at this EB-5 office anyway? I didn't even know there was a whole office for EB-5 till this thread.

A great question. Sounds like your stereotypical phenomenal government gig. LOL.

Here's a link to their web-page from the State of Vermont. It's way too EB-5 "cheer-leader'ish" for my liking, so if that does indeed flow through to the way they conduct their affairs, the Jay Peak investors may have a point regarding the VT EB-5 office not being interested in their concerns.

This part is a bit odd too, to say the least - the very first thing on their webpage is a "WARNING" about Rapid USA Visas (below).

That's the company if you recall claimed it no longer had confidence in Jay Peak's financials. Regardless of whether Rapid USA Visas is correct or not, it's unusual for a government agency to make such a bold declaration. I'd call it unprofessional; and why is it necessary at all? It certainly gives a clear impression the State of Vermont is actively "taking a side" in the matter.

WARNING: The Vermont EB5 Regional Center is NOT affiliated in any way with the following private business: Rapid USA Visas, Inc. of Naples, Florida or its website "EB5Vermont.com".

http://accd.vermont.gov/business/relocate_expand/eb5

[thetrailboss]

That's fine. Quarterly reviews are standard. Not inspecting the finances at all, however, which has been alleged, is not.

Assuming reviews are taking place, however, I do question whether the analysis of Jay Peak's financials (assuming they took place) is full & competent. I just took approximately 25 seconds to look up "James Candido's" profile on LindeIn, and his undergraduate is in Political Science and Psychology, later an MBA. That is not the type of background you want to see for the person in charge of leading a financial review if he is indeed the "principal overseer", as what you linked states. Hopefully by "overseer" it just means he delegates that task to a small team of accountants.



A great question. Sounds like your stereotypical phenomenal government gig. LOL.

Here's a link to their web-page from the State of Vermont. It's way too EB-5 "cheer-leader'ish" for my liking, so if that does indeed flow through to the way they conduct their affairs, the Jay Peak investors may have a point regarding the VT EB-5 office not being interested in their concerns.

This part is a bit odd too, to say the least - the very first thing on their webpage is a "WARNING" about Rapid USA Visas (below).

That's the company if you recall claimed it no longer had confidence in Jay Peak's financials. Regardless of whether Rapid USA Visas is correct or not, it's unusual for a government agency to make such a bold declaration. I'd call it unprofessional; and why is it necessary at all? It certainly gives a clear impression the State of Vermont is actively "taking a side" in the matter.




http://accd.vermont.gov/business/relocate_expand/eb5

You pretty much hit the nail on the head regarding what they "think" their role should be: lead cheerleader. For a state that loves to regulate other stupid things you'd think that money and finance would be an important area to at least look at. But then again I guess not in "this case".

FWIW if you're bored take a look at the staggering number of embezzlement cases and other financial crimes that occur in Vermont. They seem to be reported almost weekly. Lots of town clerks, administrators, and others who are stealing money and the state does not seem to care. But if you're thinking of building a home or any kind of building you have inches of paperwork to get through.

[VTKilarney]

A follow up story has been posted at VTDigger: http://vtdigger.org/2014/07/29/ethic...deal-scrutiny/

My take: This is a complete spin job. The narrative is that this was a favor to the investors because they are "guaranteed" to be paid back - which was not possible without this change.

If I am reading the article correctly, here is what really happened:
Quiros "bought out" the investors. Sounds good, right? Not so fast. It would appear that the investors were "bought" out by Quiros taking over the company and its assets in exchange for giving the investors an IOU. Oh, and by the way, he made that IOU unsecured at first. So his "favor" to the investors was to take ownership of the assets for himself, strip the investors of their ownership, and give them in return an unenforceable promise to be paid back. Quiros says that the great thing about this deal for the investors is that they are now "guaranteed" to be paid back. I'm scratching my head trying to figure out how they are guaranteed to get their money back if they have an unsecured loan or an inadequately secured loan.

It's clear from the article that Jay was having problems finding new investors based on their failure to pay back the original investors This scheme seems to have been designed to address that problem. I suppose if the details never became public it might have still worked.

So at the end of the day Quiros now owns the hotel, the actual investors are stripped of their ownership, and Quiros may or may not deliver on his promise to pay for what he received. Who is the fool now?

[HowieT2]

I dont understand why there seems to be this expectation that the VT eb-5 office is charged with overseeing the financial returns of the foreign investors. The program explicitly requires that there be no guaranteed ROI. Whether the investment turns out to be good or not, is not the responsibility of the govt. It is a private investment. The eb-5 office oversees that the requirements of the program are being met, i.e. that the foreign money is from legal sources, that the foreigners are otherwise eligible for the visas and that the investment created the local jobs envisioned. Whats happening at Jay will likely hurt their ability to entice future capital investment but that isnt the Vt councils responsibility.

[thetrailboss]

I dont understand why there seems to be this expectation that the VT eb-5 office is charged with overseeing the financial returns of the foreign investors. The program explicitly requires that there be no guaranteed ROI. Whether the investment turns out to be good or not, is not the responsibility of the govt. It is a private investment. The eb-5 office oversees that the requirements of the program are being met, i.e. that the foreign money is from legal sources, that the foreigners are otherwise eligible for the visas and that the investment created the local jobs envisioned. Whats happening at Jay will likely hurt their ability to entice future capital investment but that isnt the Vt councils responsibility.

The concern is not that the VT EB-5 Office "is charged with overseeing the financial returns of foreign investors." The issue is if the funds are being properly used and how they are being managed by JPR. It's no different than a publicly traded company reporting to the SEC and its investors as to the financial wellbeing of the company. That's the concern here.

And yes the office does help to ensure that the projects meet the EB-5 investment qualifications.

[thetrailboss]

From that latest article:

Quiros bought out their equity stakes, he said, thereby ending their limited partnership in the firm. The transaction effectively meant they were no longer EB-5 investors, Quiros said, which in turn freed him up to guarantee repayment. Such a guarantee would not have been permissible within the program’s strict confines, he said.

“We took something that was not guaranteed and made it guaranteed,” Quiros said in an interview Sunday. “How can you possibly call that wrong?”

Huh?

And this was my concern as well:

Turning an equity investment into a loan is a big deal, according to Ronnie Fieldstone, a securities lawyer who served on the best practices committee of the Association to Invest in the USA, an EB-5 trade group of which Stenger is a board member. Fieldstone is not familiar with the details of the Tram Haus arrangement; he spoke broadly about EB-5 investments in general.

“But there’s nothing inappropriate about having that right, as long as you tell people about it,” Fieldstone said.

And:

Quiros said the decision to execute the investors’ exit strategy in August 2013 was prompted partly by some investors who had asked for it, and also by an approaching promotional trip to recruit investors for pending EB-5 projects — namely, the AnC Bio biotech research and manufacturing facility in Newport, and buildout of Q Burke Mountain ski resort in Burke.

He wanted Stenger and Jay Peak representatives, as well as Gov. Peter Shumlin and other state officials, to be able to say on a trip to Asia that his first batch of investors were being paid back.

My understanding was that the latest deal pushes OUT the repayment to 2023. So the payment has still NOT been completed. It may be underway.....

“It shows the world of EB-5 that I’m giving money back to investors,” Quiros said. “OK, over time, but at least now you know you’re going to get your money back.”

Yeah...over time is right!

[thetrailboss]

And I've never known someone like Pat Moulton who held pretty much every state professional job and bounces around the state. Her performance I think is meh at best. This comment is pretty much BS:

Pat Moulton, Shumlin’s newly appointed secretary of Commerce, said Monday her staff will take the Tram Haus situation into consideration as it looks at new memoranda of understanding with future EB-5 projects. “Yes, we would expect a higher level of communication,” Moulton said. “It’s a good business practice, whether it’s required or not.” The regional center is rigorous in its oversight of all projects, Moulton said, but the issue of the transaction itself — converting an investment to a loan — is between Jay Peak and investors alone. It’s not an agreement to which the state’s regional center is a party.

And this is a good point...hopefully this was a stupid mistake and is nothing more.....

But news of dissatisfaction among some investors, Poore said, “does cause us to pause.”

[VTKilarney]

It was much ballyhooed that Vermont's EB-5 center was the only state sponsored center. That was supposed to be a good thing. We are now seeing the ugly side of this arrangement. It stands to reason that a state sponsored EB-5 center would be more inclined to protect local developers than foreign investors who live out of state. I'm not saying that they did anything wrong. I'm just saying that state government has its own priorities.

[VTKilarney]

Quiros said. “OK, over time, but at least now you know you’re going to get your money back.”

Yeah...over time is right!

You missed a part. Quiros said that they know they will get their money back. Can someone explain to me how they know this?