Jay Peak bombshell

[HowieT2]

All schadenfreude aside, the saddest part of this tale is its impact on the ski industry as a whole. Projects like the Balsams resort may very well be crippled by Jay Peak's example. Several other ski resorts were trying to get EB-5 programs up and running. While the merits of EB-5 money is a matter of debate, it's always nice to see infrastructure improvements to ski areas - and perhaps even the revival of a closed ski area. Thanks to Mr. Stenger and Mr. Quiros, that may be much less likely to happen now.

That may be so, but the investors should have been aware of the risks of the investment going in if they had done any kind of due diligence. I mean as just a casual observer with no money on the line, I was baffled that they were putting that kind of money into Jay. I understand "if you build it, they will come" but there has to be some connection to reality and 250M is a lot of money.

 

[Steve@jpr]

Schadenfreude Of The Devil

While I can't comment so much on the wherefore/why of EB-5 manifestations, (some days it's all I can do to push past P in the old alphabet) I can shine some light on the festival--some facts that you can take or leave. We sold just under 2000 tickets to the two day event (some 1 day some 2). Of the 2, Saturday was a bit better attended and, even then, the main acts saw more folks fill in (many were in the lots prior to those folks coming in.) as the night(s) moved on. Stateside Hotel (and it's 80-ish rooms) were sold out both Friday and Saturday (we buried tickets into the rooms so all of them held concert goers). Hotel Jay and its 176 rooms were 80% occ thanks to three weddings (mostly) and Tram Haus Lodge (and its 57 rooms) was about 70% full due to 1 wedding, 2 small conferences and general waterpark goers. The Golf and Mtn Cottages were roughly 50% occ with concert goers and general vacationers. All in, the weekend was at 74% occ which, although only one weekend, is an awfully big win. There was no 'promoter' of the event as rumor may suggest; JP fronted the costs for everything and, post pro forma which is still being forma'd, my guess is a mid-5 digit profit which, although smallish when compared to, say, 6 digits, is not so bad for a first time music event in the middle of, as some would say, nowhere. All of this to say that while it's easy to look at a fraction of a fraction of a photograph and lay enough claim to comment, the broader view is, generally, more revealing. Hopefully some of you made it to the event--it was fun. Lyle Lovett 9and his large band are up on Friday August 15th and while VIP tickets are about gone, there are great seats available.

The Jeezum Crow promoter just posted 25 photos of the event to the Jeezum Crow facebook page. Out of 25 photos posted, all but three were stage shots. The three crowd shots they posted are these:
View attachment 13046
View attachment 13047
View attachment 13048

And for those of you who think that this was just a daytime problem...
View attachment 13049

 

[VTKilarney]

For the record, the photos posted here were posted in their entirety. 74% occupancy on Saturday night is indeed good news. Is it safe to assume that's the highest occupancy rate of any night so far this summer?

 

[Steve@jpr]

Sorry, not sure what you mean by 'in their entirety.' I'm only saying that the pictures you posted were from a guest (who commandeered the JC logo), some of which were before the show started or in between sets (the last one). Looking at those pics, I can definitely see how it looked like a ghost town. Yes, 74% is the high water mark thus far though we have a few weekends coming up with major hockey camps and tournaments, combined with both a 4 and 5 wedding weekend, that will prob push past 80; it's getting that on a more regular basis that's the trick.

For the record, the photos posted here were posted in their entirety. 74% occupancy on Saturday night is indeed good news. Is it safe to assume that's the highest occupancy rate of any night so far this summer?

 

[VTKilarney]

I just meant to clarify that I had not cropped any of them. That could have been inferred from your prior post.

 

[Steve@jpr]

I see that. Sorry, I didn't mean that.

 

[mbedle]

I would guess that is because Rapid USA Visas, Inc. is a scam or at the least, making money off of people's backs trying to work with the EB-5 program. It is funny that they claimed it no longer had confidence in Jay Peak's financials, when its website (riddled with grammar and spelling errors) states that they are not authorized to provide investment advice. Just saying that I wouldn't take anything they say to serious. Hell, the EB5vermont.com website is not longer active.

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

 

[thetrailboss]

Good to see Steve chiming in....don't be a stranger and take good care of Burke for us!

 

[VTKilarney]

Yes! Burke update please!!!!!!

 

[VTKilarney]

Perhaps not coincidentally, a couple of new crowd shots were just posted to the Jeezum Crow Facebook fan page.

 

[AdironRider]

I would guess that is because Rapid USA Visas, Inc. is a scam or at the least, making money off of people's backs trying to work with the EB-5 program. It is funny that they claimed it no longer had confidence in Jay Peak's financials, when its website (riddled with grammar and spelling errors) states that they are not authorized to provide investment advice. Just saying that I wouldn't take anything they say to serious. Hell, the EB5vermont.com website is not longer active.

Of the 7 different controllers and CFO's I've worked under before becoming one myself only two had business or finance undergrads. To get a CPA you have to get an MBA or a Masters in Acct, where you learn pretty much everything of importance anyways.

Dont be that old guy, this isnt the 50's where your major automatically was your career.

That being said, I completely agree with you that whoever is running this show does not know what he's doing. No argument there.

EDIT: this is directed to Benedict, quoted the wrong guy.

 

[thetrailboss]

Bill Stenger was on Mark Johnson's show on WDEV today. You can listen to it here:

http://markjohnsonshow.podbean.com/e/73014-bill-stenger-jay-peak/

 

[WWF-VT]

What’s the big deal here ? It looks like there is only an issue with $17.5 million of the $312 million in EB-5 investments and 20 disgruntled investors. Stenger and Quiros seem like honest and ethical businessmen and it’s just a matter of time before Intrawest, Boyne or some other company comes in and buys Jay Peak for billions of dollars.

 

[AdironRider]

Is that sarcasm? I'm hoping yes.

But your end game is spot on, Jay Peak will be sold, most likely through bankruptcy or very close to it, ala ASC. I would guess within the next five years.

 

[xlr8r]

Okay time to rant.

This could be seen coming from at least 4 years ago. Its obvious to me at least that you don't get 100's of millions of dollars for free. There has got to be consequences, the math just doesn't add up.

So they have spent over 200 million dollars of EB5 investor money on projects that will not be able to pay for themselves. If these Hotels, Ice rink, and Waterpark were making money, they would either be able to spend their profits and invest in the mountain and skiing infrastructure, or they could start paying back their investors. But neither of which has happened. Besides the Taxi quad chair, it seems like they have not spent much money at all on the mountain. They have been talking about the west bowl expansion for 20+ years now, and the Bonaventure 6 pack for over 5 years, and neither has happened, or will happen soon. This shows they don't have any money invest in their primary product, the skiing.

The troubling thing is that they must have known about these problems for a couple years now. Instead of taking a break from using EB5 money, and taking some time to figure out their return on investment. They instead tried to ramp up EB5 projects across the board, and have now gotten Newport and Burke involved with this mess. Its as if they could see their window closing very soon. So they have ramped up construction to get as much built as soon as possible because they knew people were about to figure out the problems with all this.

About the job aspect of the EB5 money, the math on this also doesn't make sense. If each 500 thousand is supposed to create 10 full time jobs. Than there should be thousands upon thousands of full time jobs created by now. Even the article states that the combined Hotel Jay, Waterpark, Ice arena and Penthouse created 2800 jobs. Really I don't believe that even if the majority of them are indirectly related to the resort. Also it states that the Stateside hotel and lodge created 1340 jobs. Again now way do I believe that. It doesn't add up. And where are they getting all this money to pay these thousands of new full time employees?

The one thing I can't seem to figure out is how did Stenger and Q guy Sr. think this was going to end up in the first place. Did they really think all these projects being built in such a short time frame would be successful enough to repay their investors Or were they doing it as a scam from the start. The fact remains is that Stenger and Q guy cannot be trusted, Stenger is Liar , and they have been scamming people for years over this mess. I am sad it took so long for everyone else to realize it.

 

[VTKilarney]

Bill Stenger was on Mark Johnson's show on WDEV today. You can listen to it here:

http://markjohnsonshow.podbean.com/e/73014-bill-stenger-jay-peak/

No surprises here. Stenger's talking points:
1) He is sticking to the narrative that the investors are now "guaranteed" to be paid back thanks to the change that was made.
2) He is insisting that the investors are upset because of poor communication. He brushed aside any idea that the investors are upset at the substantive changes.
3) If Jay can't repay the $17.5 million to the original investors, they can get financing to do so.
4) The delay in informing investors of the change was largely the result of it taking several months to prepare documents that were to be presented to the investors.
5) The change was not done to court new investors.
6) One awkward moment: Right after waxing poetic about how transparent Jay Peak is with its financial matters, Stenger was asked what his financial arrangement is with his partner. (Specifically, what does "equal partners" mean from a financial perspective.) He fumbled somewhat before eventually saying that this was "private."

Short version: This was yet another stop on the Stenger damage control whistlestop tour that began when Pomerleau went public. Stenger was doing his best "aw shucks" act. His speech boiled down to this: "Nothing to see here. We are growing and the future is bright." In other words, the ends justify the means.

One thing that was troubling is that Stenger repeatedly stressed that Jay is under no legal obligation to pay back its EB-5 investors. Methinks he is planting a seed for the inevitable.

One very interesting fact he disclosed is that less than 25% of investors in their program are Chinese. This is in stark contrast with the overall numbers - and I wonder why. To see why this was a somewhat shocking revelation, just take a look at this chart:



Keep in mind that this problem involves just the first investors. The pressure is going to get MUCH worse for Jay as more and more investors are going to be demanding a plan for a return on their investment and Jay's capacity to do so is going to be exposed.

 

[VTKilarney]

Another VT Digger article recapping Stenger's interview with Mark Johnson.
http://vtdigger.org/2014/07/31/mark...nt-creation-lag-communication-eb-5-investors/

I'm surprised that this is not getting much traction in the media. The Caledonian Record is reprinting the VT Digger articles in their entirety, but I haven't seen too much else - and certainly nothing that could be called investigatory journalism. The investors are clearly not wanting to be named, which may be a factor.

 

[bobbutts]

Another VT Digger article recapping Stenger's interview with Mark Johnson.
http://vtdigger.org/2014/07/31/mark...nt-creation-lag-communication-eb-5-investors/

I'm surprised that this is not getting much traction in the media. The Caledonian Record is reprinting the VT Digger articles in their entirety, but I haven't seen too much else - and certainly nothing that could be called investigatory journalism. The investors are clearly not wanted to be named, which be a factor.

People are more interested in violent crime and probably even petty crime. This type of stuff is far too confusing.
We had our entire economy crashed by frauds in the finance sector and that basically blow over.

 

[BenedictGomez]

I would guess that is because Rapid USA Visas, Inc. is a scam or at the least, making money off of people's backs trying to work with the EB-5 program. It is funny that they claimed it no longer had confidence in Jay Peak's financials, when its website (riddled with grammar and spelling errors) states that they are not authorized to provide investment advice. Just saying that I wouldn't take anything they say to serious.

That's of no consequence, they're not allowed to give investment advice. To the best of my knowledge, none of them are overseen by the SEC.

Of the 7 different controllers and CFO's I've worked under before becoming one myself only two had business or finance undergrads. To get a CPA you have to get an MBA or a Masters in Acct, where you learn pretty much everything of importance anyways. Dont be that old guy, this isnt the 50's where your major automatically was your career.

That being said, I completely agree with you that whoever is running this show does not know what he's doing. No argument there.

EDIT: this is directed to Benedict, quoted the wrong guy.

Not really sure what your point is then if you agree with me. He doesn't have a CPA either, isn't an accountant, and frankly, an MBA alone is not adequate for the work I'm referring to. I have an MBA too, and I know I really shouldn't be in charge of the type in-depth investigation this would require. Working on the team of investigators? Sure. Being in charge? No.

And frankly, I'm the one using the word, "team", on an assumption, but from what we've seen, the public statements have been, "I've looked at" sort of statements (i.e. one guy), which, if true, is also alarming.

VTDIGGER needs to ask:

1) Precisely WHO (singular or plural) has reviewed the financials?
2) WHEN and how often has this review(s) occurred (give dates)?
3) Did the review ONLY refer to the first $17.5M or the full $300M+?
4) Repeat question #2 for the response to question #3
5) Don't allow wiggle room Bill Clinton responses

Someone really needs to pin Jay Peak, AND the State of Vermont's EB-5 board (who I trust 0%) down on this ASAP. I wasn't familiar with "VTDIGGER" before this, but they seem like pretty competent reporters, so I'm pretty shocked they've gone down this road for so long without asking the above, which frankly, the biggest potential part of the story in my mind.

 

[thetrailboss]

Another VT Digger article recapping Stenger's interview with Mark Johnson.
http://vtdigger.org/2014/07/31/mark...nt-creation-lag-communication-eb-5-investors/

I'm surprised that this is not getting much traction in the media. The Caledonian Record is reprinting the VT Digger articles in their entirety, but I haven't seen too much else - and certainly nothing that could be called investigatory journalism. The investors are clearly not wanting to be named, which may be a factor.

You have too much faith/confidence in the Cal Rec. No offense to them, but over the past few years they have let some good staff go and don't really have the resources (or motivation) to do this kind of digging.

I'm surprised that WCAX has not done more.

As to the BFP, they've really downsized. I've stopped reading them because their reporting really started having a political bias.

Rutland Herald/Times Argus: good papers, but also have cut their staff. They also focus on I-89 south.

VT Digger has recruited the good journalists and provides good content IMHO. They also have been reviewing the EB-5 projects all along.