Jay Peak bombshell

[BenedictGomez]

How Brent Raymond still has a job is beyond me. As long as he does, nobody should park any money in a Vermont EB-5 program.

That bit's astounding. Until you think about two things:

1) He's a government employee, which is almost like being in the mafia. They're impossible to get rid of.
2) If Raymond gets fired, State of Vermont is de facto admitting their negligence & guilt in the matter. Not gonna' happen.

This gets worse from here before it gets better.

 

[BenedictGomez]

“I’ve been shafted by a well-calculated system that was well-known from the outset because if they had presented it the way they’ve done it, I can’t believe anyone would have put their money in."

I'm not a lawyer, nor do I play one on TV, but I imagine Stenger is at risk here if the investor's allegations regarding his commentary can be proven.

Stenger... also referred Sutton to a federal filing known as the I829 that “shows where ALL the investor funds were spent.”

Oh, he "showed" a Federal filing form? Oh,,,,,well,,,,clearly nothing to see here then! ROFL.

 

[noreasterbackcountry]

Oh, he "showed" a Federal filing form? Oh,,,,,well,,,,clearly nothing to see here then! ROFL.

The "I-829 filing" is not a form. It is a form with supporting evidence. In this case, it requires detailed invoices, receipts, tax returns, audited financial statements, bank statements, quarterly tax return filings, etc - over a three year period to show that there has been an ongoing commercial enterprise. This application is filed on behalf of the investor. This means they have had access to all that information all along and haven't been able to come up with any fraud.

So, yeah.... Nothing to see here except a bunch of folks getting trolled by investors who are trying to extort a better result for themselves at the expense of Jay, Burke and future business investment in VT.

 

[noreasterbackcountry]

You are in the top 10 for longest posts.

And now because you quoted my post, so are you.

 

[BenedictGomez]

The "I-829 filing" is not a form. It is a form with supporting evidence.

No. It's a total joke; and it would be considered absolutely worthless from an audit trail perspective here.

Which leads to the most interesting part of the entire article:

Sutton and the investors have pooled their resources and hired a forensic accountant. They have insisted that Stenger allow Dr. Michael Crain to review the books. In August, Stenger said accounting staff was on vacation when Crain wanted to visit Jay Peak, and in September, Stenger told the investors they were in the middle of tax season.

Certified Fraud Examiner. I wish he had a team of people though, this is going to be a pretty big job.

 

[VTKilarney]

This will eventually happen if Jay Peak makes more money. And making more money is ultimately the reason behind all of this EB5 thing.

I'm not convinced that Jay is turning a profit when all of the business up there are combined - at least enough of a profit to pay back investors. I hope it is, but there is a MASSIVE amount of overhead to keep the new infrastructure going. The key is the off-season, and I'm skeptical that the off-seaon is at the level that they need. To be fair, it seems to be improving. Just the other day there were tons of families up there for a hockey tournament, for example.

From what I've heard, winter reservations are at an all-time high.

They should be with everything open now. I have no doubt that Jay is doing very well in the winter. No doubt at all. But the question is if increased winter revenues justifies the increase in year-round operating expenses.

Again from what I've heard, West Bowl is slowly (very slowly) moving forward.

Good news if true.

Bottom line: If the financials painted a good picture for Jay, Stenger would have been chomping at the bit to release them - if for no other reason than it would reassure potential future investors. But he hasn't done that. Ask yourself why.

 

[MadMadWorld]

No. It's a total joke; and it would be considered absolutely worthless from an audit trail perspective here.

Which leads to the most interesting part of the entire article:



Certified Fraud Examiner. I wish he had a team of people though, this is going to be a pretty big job.

He might get that team but they will be working for the Vermont State Police.

 

[BenedictGomez]

I'm not convinced that Jay is turning a profit when all of the business up there are combined - at least enough of a profit to pay back investors. I hope it is, but there is a MASSIVE amount of overhead to keep the new infrastructure going. The key is the off-season, and I'm skeptical that the off-seaon is at the level that they need.

Pay attention to the golf course, that should be the canary in the coalmine given how expensive they are to maintain. I cant tell you how many times I've seen the tell-tale 3" diameter star-shaped weeds in the fairway at a beautiful course where there were none before. That's often an indicator. I've only played Jay's course once, about 2 years ago. Gorgeous layout.

 

[fbrissette]

Pay attention to the golf course, that should be the canary in the coalmine given how expensive they are to maintain. I cant tell you how many times I've seen the tell-tale 3" diameter star-shaped weeds in the fairway at a beautiful course where there were none before.

Well, I played the golf course last Sunday and did not see any weeds.

 

[thetrailboss]

He might get that team but they will be working for the Vermont State Police.

One would hope but I don't think so.


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[deadheadskier]

Pay attention to the golf course, that should be the canary in the coalmine given how expensive they are to maintain. I cant tell you how many times I've seen the tell-tale 3" diameter star-shaped weeds in the fairway at a beautiful course where there were none before. That's often an indicator. I've only played Jay's course once, about 2 years ago. Gorgeous layout.

Not always a tell tale sign. Killington's course sees very little use and isn't tremendously well maintained according to friends and family that play there often. I assume Killington makes some money.

 

[mbedle]

Based on a corporate record search, there appears to be a lot of different entities that operate at the Jay Peak Resort. So, failure of one, does not necessarily mean the downfall of the entire resort.

 

[thetrailboss]

I read that article expecting something new but it was essentially an interview with the investors' attorney basically regurgitating the same old allegations and arguments that have been made before.

Tony Sutton is an investor in the Tram Haus, not their attorney. They only say that about four or five times.

The investors recognize that this is an at-risk investment, but Stenger apparently "promised" them a return on their investment. T

 

[thetrailboss]

A response from the investors offering more info on who they are and what they were allegedly promised:

http://vtdigger.org/2014/10/22/tram...il&utm_term=0_dc3c5486db-7ec16ae848-405558657


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[56fish]

To Noreasterbackcountry - thanks for the sanity

 

[Masskier]

Umm, So only four out of 35 investors are willing to go on record about this. They put the bulk of their net worth into an investment with no guarantee of getting a cent back. They don't acknowlege the PPM's, disclousures, and other operatring documents they agreed to and signed, that governs the way the entity operates.

Vt Agency of Commerce and Community Development corrects several inaccurate statements in an Oct 5th article that appeared in the VT Digger here;

http://vtdigger.org/2014/10/13/patricia-moulton-vtdiggers-eb-5-story-inaccurate/

And Sutton's responds here,

http://vtdigger.org/2014/10/22/phase-1-eb-5-investors-respond-moulton-commentary/

 

[Masskier]

I read that article expecting something new but it was essentially an interview with the investors' attorney basically regurgitating the same old allegations and arguments that have been made before.

1. Investors sign contracts clearly stating they are investors and not creditors, and that they are limited partners whose interests can be changed at any time.
2. Hotel and other projects successfully completed.
3. Investors get their greencards.
4. Their unsecured limited partnership interests are converted to unsecured note holders and the investors aren't notified for five months of the change (that they had no ability or right to stop).
5. Investors claim that they were originally told this was a loan (despite the fact the rules of the program, their contract, and a simple google search of "EB-5" clearly lay out that it was not..) and also claim that Stenger told them they would get their money back right away. They also make unsupported allegations of fraud.
6. Investors are offered a chance to look at the finances but refuse because they don't want to sign a confidentiality agreement. (And it would possibly defeat their unsupported allegations of fraud- And its not what they wanted anyway)
7. Investors are offered a security guaranty on their converted note interests-- but demand a better security agreement (that would likely violate other security/loan agreements held by Jay on their equipment/facilities)
8. VT Digger presents one sided articles that parrot the investor's claims while relying on letters to the editor to get the other side of the story. They examine 400 pages of documents provided by Jay to the center--- and the most damning evidence of impropriety they can come up with is that the center treats Stenger with respect. In the process they get a bump in readership because naysayers who want the center and EB5 program to fail due to their own political or personal agendas are eager for stuff to repeat at dinner parties.
9. Investors become harder to obtain because of increased competition in the market (more EB-5 centers), slowdown in the world economy, and the stink raised by the investors trying to extort a better deal.

Same story, different day. If anything, the fact the investors balked at reviewing the financials because they didn't want to sign a confidentiality agreement (a standard business practice when examining financials) is telling as to their real motives.

Agreed, It is sounding more and more like you are correct.

 

[VTKilarney]

Umm, So only four out of 35 investors are willing to go on record about this. They put the bulk of their net worth into an investment with no guarantee of getting a cent back. They don't acknowlege the PPM's, disclousures, and other operatring documents they agreed to and signed, that governs the way the entity operates.

Vt Agency of Commerce and Community Development corrects several inaccurate statements in an Oct 5th article that appeared in the VT Digger here;

http://vtdigger.org/2014/10/13/patricia-moulton-vtdiggers-eb-5-story-inaccurate/

And Sutton's responds here,

http://vtdigger.org/2014/10/22/phase-1-eb-5-investors-respond-moulton-commentary/

Well, I guess everything is fine then and the remaining EB-5 projects are on schedule.
/sarcasm

 

[thetrailboss]

Agreed, It is sounding more and more like you are correct.

Umm, So only four out of 35 investors are willing to go on record about this. They put the bulk of their net worth into an investment with no guarantee of getting a cent back. They don't acknowlege the PPM's, disclousures, and other operatring documents they agreed to and signed, that governs the way the entity operates.

Vt Agency of Commerce and Community Development corrects several inaccurate statements in an Oct 5th article that appeared in the VT Digger here;

http://vtdigger.org/2014/10/13/patricia-moulton-vtdiggers-eb-5-story-inaccurate/

And Sutton's responds here,

http://vtdigger.org/2014/10/22/phase-1-eb-5-investors-respond-moulton-commentary/

Yet another example of why it's a good idea to read and comprehend the article. These folks all consistently said that Stenger made a promise to repay their investment WITH a set interest rate. Of course the EB-5 program says that it is supposed to be "at risk", but if the head of the project looks you in the eye and makes that kind of promise it could be a major red flag. Again, these folks and this issue is not going away it appears.

 

[VTKilarney]

Masskier,

I keep coming back to the fact that it is not Vermont values to have high esteem for someone who engages in dishonesty and/or deception. You can believe that it was a mere "communications error" to take nine months to tell investors that their equity interest was wiped out. I don't. And we shall see what other shenanigans, if any, are uncovered.

But I think what we are seeing here is a difference between Vermont values and Massachusetts values. I hope people keep the apparent difference in values in mind when they decide whether or not other people are trustworthy enough to do business with - especially when someone is offering an investment worth hundreds of thousands of dollars.