The Mark Johnson Show: Stenger blames delay in document creation for lag in communication with EB-5 investors - VTDigger

The Mark Johnson Show: Stenger blames delay in document creation for lag in communication with EB-5 investors

Mark Johnson, the popular talk radio host for WDEV, interviewed Bill Stenger, CEO and president of Jay Peak Resort, on Wednesday regarding allegations from a group of 20 unhappy immigrant visa investors who say their stake in Tram Haus Lodge was converted into unsecured loans without their knowledge.

Each of the 35 limited partners in the project invested $500,000 through the EB-5 program.

Jay Peak converted the equity holdings into nine-year loans on Aug. 31, 2013. Investors say they were not informed of the change until January and did not receive the promissory note until May.

Stenger said there was “no gain to be had by Jay Peak” as a result of the change in the terms of the agreement with the Tram Haus investors. Earlier this month, Jay Peak offered an accelerated, five-year loan schedule.

“We’ve improved the payback cycle and they’ll be paid back 100 percent in 2018,” Stenger said.

Investors say they have lost faith in Jay Peak and have not been appeased by the new offer.

Stenger told Johnson that he is working to regain the trust of the investors, and he regrets his delayed communication.

“I can’t und0 the fact that there was a lapse in communication,” Stenger said. “That was wrong, and I can’t say anymore than we did a poor job in communicating in a timely way. Much of it was a delay in document creation but nonetheless, we should have communicated better and for that I am sorry.”

Johnson asked, “How do you have noncommunication when we’re talking about this level of money and really a relatively small number of investors?”

“Mark, it was an error,” Stenger said. “We were traveling, we were doing a lot of things, we were completing construction. I was also waiting for documents to be created, so that the exhibits that were going to be part of this, there was a delay in the creation of the exhibits. I just should have pushed harder. It took a few months to get the documents created and look at the price we’re paying for it.”

Johnson: “So why not delay the change?”

“In hindsight, I wish I had,” Stenger said. “Believe me, I have second-guessed myself why didn’t I communicate better. It was an error. I’ve accepted full responsibility for it. There was no gain to be had by delaying communication, none whatsoever.”

Johnson: “How do you pay back $17.5 million of an investment out of the current property?”

“We’re a growing company with growing income, growing proceeds,” Stenger said. “We will have the ability to do this, and we’re at a point in our evolution where we’re capable of meeting the obligations we have.”

Johnson: “Are you allowed to use investment money you get today to pay back initial investors?”

Stenger: “No, we wouldn’t do that ever.”

“What we do have is a resort that is growing in value, and we have a resort that’s growing in attendance and operating proceeds. It’s a substantially bigger and better operation than it was six years ago.”

Johnson: “You’re kicking off enough profit that you can pay back $17.5 million in five years?”

Stenger: “Yes, we’ll be able to do that. Or we’ll be able to finance the property to do that if we need to.”

Johnson: “OK so one option would be to increase the debt at Jay Peak?”

Stenger: “Yes, we could easily do that if we need to.”

Anne Galloway

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  • Fred Woogmaster

    Excellent interview; excellent article.

    The unraveling of the EB-5 program will provide material for a most interesting study.

  • Randy Koch

    I don’t know about the rest of you, but the picture seems murkier than ever after this interview. I had thought this EB5 program was a strictly quid-pro-quo deal: rich foreigner buys green card for $500,000. End of story. Now it sounds like the rich foreigner regarded the $500k as an investment which they risked losing but which they could hope to sell for a profit one fine day.

    But no, wait, Stenger turns the stock into some kind of loan! What? Didn’t the “investors” have to sign loan papers? How come he can change the term of the loan just like that? Was there collateral? Did the rich foreigners actually receive their green cards?

    In the end, 2 big questions remain: is this a legitimate immigration policy? Why should we prefer rich foreigners? Why can’t, for instance, some of those enterprising Honduran children borrow $500,000 somewhere and lend it to Stenger? Maybe these poor but resourceful foreigners have more to contribute to Vermont society and the economy than the rich EB5- type foreigners.

    And finally, is this Stengerism, so redolent of a Ponzi scheme, any good basis for the economy of the Northeast Kingdom?

    • Are you suggesting there is “any good basis” for an economy in the Northeast Kingdom?

      Mystery meat might be preferable to starvation, here.

    • Jamie Carter

      “I had thought this EB5 program was a strictly quid-pro-quo deal: rich foreigner buys green card for $500,000. End of story. Now it sounds like the rich foreigner regarded the $500k as an investment”

      This is exactly what the deal was… you invest 500K and you get a green card and any return on the investment (if there is one, no guarantee).

      “How come he can change the term of the loan just like that? ”

      That was part of the original contract investors signed when they came on board. Jay Peak had the legal right to unilaterally change the terms.

      “Did the rich foreigners actually receive their green cards? ”

      That’s ulitmately a Customs and Border Patrol question. They were certainly eligible.

      Here’s the long and the short of it, Investors got the green card they were promised AND they get all their money back plus interest. The fact they are balking at it is because the economy of Jay Peak is booming and they want a bigger cut of the pie. If they get their money back plus interest and the green card… well heck they made out pretty well as is, a minority want more.

  • Bill Peberdy

    In hindsight it is worth remembering what started all this.
    Stenger and Quiros were motivated to change the status of these investor funds by the ongoing need to impress and gain confidence with even more EB-5 investors.
    You might say AnC Bio, Q-Burke and Jay Peak have to keep impressing them 200% or the investments slow and the pyramid falls.

    • Henault Judith

      Well said, Mr. Perbedy.
      Another question is: How long will Newport area residents and elected and unelected officials be mollified by slick public relations apologies rather than cold, hard facts.

      • Jamie Carter

        What are the cold hard facts? That a substantial amount of money has been funneled into a low income area? That 1000’s of jobs have been created (some temporarily and some low paying but work and income nonetheless)? That investors are not happy with a 1% return on their investment, the project is enough of a success they feel they should be getting more? That significant upgrades to the airport have been and are being made? That high wage, high tech jobs are within site at ANC.

        What exactly are the cold hard facts?

  • Rob Pforzheimer

    Have to wonder what Leahy and Shumlin get out of their efforts to promote this ponzi scheme?
    How do the rest of us get to sell green cards?

    • Re: “Ponzi schemes,” you may have missed this salient passage:

      Johnson: “Are you allowed to use investment money you get today to pay back initial investors?”

      Stenger: “No, we wouldn’t do that ever.”

    • I am quite sure that Stenger and Quiros are maxed out contributors to the Shumlin and Leahy “war chests”! A little more pay-for-play. Nothing to see here folks, now move along!

  • Jim Christiansen

    Another wag the dog, nothing burger of a story.

    Please, please stay focused on the Shumlin administrations complete ineptitude on VHC and it’s obfuscation with the financing of single payer.

    You know, issues that actually impact Vermonters lives and the fiscal solvency of our State.

    • Ann Meade

      One or two stories a day isn’t enough? I would say this program, you know, impacts Vermonters lives.

  • Bill Sims

    Everyone needs to have faith. The development of the NEK will be beneficial to the area and its residents… it’s also in your best interest. Stenger has done an incredible job, and will continue to deliver on his promises. Look at what he has done already? Ultimately it will be good for investors, and good for the people of the NEK. Everyone needs to stand behind him rather than cast doubt. Don’t fuel the fear and greed spread by a few disgruntled investors, who honestly should be grateful that they even have a path into this incredible country of ours. Citizenship for $500,000? Damn good deal. Even if there were no payback. Investors need to stop quibbling over the terms, and be grateful. Look at what you are getting.

  • Mike Waters

    Mr. Sims,

    I have to disagree with you. The jobs created at Jay Peak are minimum wage. I know for a fact several employees have not seen a pay raise in years, not too mention no health care. This foreign investment does not work for the average Vermonter. This is a rich mans scam breaking the backs of our people.

    • Henry Sims


      That’s an apt observation. You have to consider that stagnant wages aren’t just an isolated phenomenon, but actually something which has been occurring throughout our country since the 1970’s. Expenses have gone up, but wages have remained stagnant. To equate the foreign investment at Jay solely with a few minimum paying jobs is to miss the larger picture. Sure, if that was the only impact, I would agree with your statement–but this is far from the truth.

      The planned developments involves several hundred individuals. Consider just those involved directly in the development itself, from builders, to engineers, social planners, designers, truck drivers, electricians, inspectors (the list goes on and on). All of these individuals are earning income and then spending it locally. You can imagine that some percentage of this income will remain in circulation within proximity of the development sites. Even if some of these individuals are brought in from outside of Vermont, much of their income will be spent locally.

      I’ll try to break the argument down in a simple way. Developing buildings requires hundreds, potentially thousands of temporary workers that will be spending money locally in Vermont. Even if these workers do not take up residence in Vermont, they are likely to spend in the areas they are working. Once the buildings are developed–and let’s use bio tech firm, and the what might have been marina, hotel and conference center, as an example–it is likely to result in more people coming to the area, which includes the necessary staff to maintain and operate developed facilities. These people are likely to have money and spend it locally, whether they are here for a new position, like a worker at a biotech firm (likely to be a post-grad student with a good salary), or simply someone spending a few days because of a conference. Having all of these individuals spending money locally is a good thing. It is likely that the demand for all local goods and services would increase by some percentage, opening up further opportunities for job creation and growth. How is this bad?

      It’s easy to be skeptical of rich people investing money, especially when the fairly confusing EB5 program is involved. You have to have some empathy though–if you were in his position, you would only invest your money if you had the possibility of making some money. I’m sure you hold to the same principles in your own finance. You risk looking ignorant by throwing around the word scam so loosely. You might not realize this, but your reply sort of reinforces my point. Men are breaking their backs, presumably, because they are working. Hopefully there are a lot of them working, and in turn, spending money. Where there’s a broken back, there’s a back surgeon or chiropractor making and spending money locally. It’s difficult to find a legitimate economic argument against supporting foreign investment into areas of Vermont like newport. Perhaps what you really desire is to keep Vermont the same, to resist the change that comes along with inflows of big money and people. That type of cultural argument probably has many valid points, but these points become invalid when they are shrouded by poor economic reasoning.

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