Business & Economy

A sense of betrayal: EB-5 investors go public

Jay Peak’s Tram Haus Lodge. Photo by Justin Cash/

Jay Peak’s Tram Haus Lodge. Photo by Justin Cash/

A group of EB-5 investors says they are growing increasingly frustrated with Northeast Kingdom developer Bill Stenger and are speaking out publicly for the first time.

The group of 20 investors in the Tram Haus development at Jay Peak Resort, led by Tony Sutton of Clermont, Florida, questions whether Stenger had the right to change the terms of their original investment and whether the new financial deal imposed by Jay Peak is as good. They also claim Stenger has withheld financial information they say they are entitled to under state law and that state officials are not doing enough to protect their interests.

They say they were blindsided when Stenger unilaterally converted their shares in Tram Haus Lodge into IOUs in August 2013. They didn’t receive documents associated with the transaction until May of this year.

Stenger has said that he was within his legal rights to replace the original partnership agreement with a new deal. He and his partner, Ariel Quiros of Miami, say the new arrangement is a better deal for the investors.

Stenger has also denied in emails to investors that he is keeping them in the dark and withholding information. He has acknowledged, however, that he communicated poorly with the investors and said this summer that he needed to work to gain back their trust.

For some of those original investors, according to interviews and documents reviewed by VTDigger, that trust remains elusive.

Sutton, the spokesman for the investors, says they now not only question whether Stenger had the right to change the terms of their original deal, but they also want the developers to account for how their investment money was spent.

“I want to see actual tracing of where my investment went, what the funds were used for and the financial statements for the partnership during the time I was an owner of the hotel,” Sutton wrote in a letter that was copied to state officials.

The group of 20 disgruntled investors that Sutton leads are among the first 35 to invest $500,000 each with Stenger through the EB-5 federal visa program, which allows foreign investors to obtain a “green card” allowing them to live in the United States.

The number of investors in Jay Peak has grown to 1,089 immigrants who have put up $544.5 million toward a series of projects Stenger and Quiros hope to develop.

The money from the original 35 investors went to build one of the centerpiece projects, the Tram Haus, a luxury hotel at Jay Peak Resort, a ski area and vacation resort near the Canadian border. Other projects in the Northeast Kingdom Economic Development Initiative include AnC Bio, a Newport-based biotech company, and Q Burke, a ski area near Lyndonville.

Tony Sutton, one of 35 Jay Peak Phase 1 investors. Courtesy Photo

Tony Sutton, one of 35 Jay Peak Phase 1 investors. Courtesy photo

The investors’ stories

Many of the investors who Sutton says are unhappy with Stenger come from middle-class backgrounds. A number of them say they sold their homes and scraped together retirement funds to invest in the Tram Haus and a chance to come to the United States.

One investor, who wanted to remain anonymous, ran a carpet cleaning business in the United Kingdom. He said he is financially worse off now than he was before investing in 2008. The investor leases a car, lives in a 1,700-square-foot home and is struggling to pay his mortgage.

“We really do watch how every dollar is spent and when you have two daughters to put through college, every dollar really does count,” he said.

Under the EB-5 program, investors are told there is no guarantee they will get their investment back, but the Tram Haus investors say Stenger personally promised them that they would get back their $500,000, and possibly additional money, as soon as last year.

The investors were shocked when Stenger eliminated their ownership shares in the property and substituted their $500,000 interests with unsecured loans on Aug. 31, 2013.

One investor said the promissory note is “no better than toilet paper.”

Stenger has the authority to change the financial deal with the investors under the limited partnership agreement, but legal sources say to do so unilaterally is unusual and that Stenger had an ethical obligation to protect the financial interests of the investors.

The limited partnership agreement between Jay Peak and the investors says the general partner (Stenger) does not have the authority to amend the agreement in a way that “dilutes the interest of the limited partner.” Dissolving the partnership agreement and replacing it with IOUs could constitute a dilution, according to legal sources interviewed for this story.

But these protections for investors were overridden by other clauses in the agreement. Bill Kelly, legal counsel for Jay Peak, says that the agreement includes “clear language authorizing” Stenger to dissolve the partnerships.

Stenger has said he followed the terms of the agreement and that the only thing he did wrong was poorly communicating with his investors, which he called a mistake and apologized for repeatedly. For example, it was May before Jay Peak sent the documents — the redemption agreement and an unsecured, 10-year promissory note with a large balloon payment at the end — to investors, even though the transaction was executed in August 2013.

In an email he sent investors, Stenger said: “Even though your approval was not required, common courtesy dictated that communication take place at the time of the transition. This has created mistrust and I regret this very much.”

Maurice Price, an investor from England who lives near Sarasota, Florida, said Stenger’s apology does little to assuage the sense of betrayal the investors feel. He says altering the agreement without the partners’ consent is reprehensible.

“… if they had presented it the way they’ve done it, I can’t believe anyone would have put their money in.”

“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,” Price told VTDigger.

It was not the first time Stenger amended the original partnership agreement. In 2008, the developers amended the agreement to move money out of an escrow account. They amended it again in 2010 so that Stenger’s partner, Ariel Quiros, could purchase shares of the property to compensate him for covering cost overruns on the Tram Haus project.

Then, in 2013, another amendment eliminated the original investors’ Class A shares and transferred their assets to the new Class B holder, Ariel Quiros, representing Jay Peak Inc., the resort owner, which then issued the promissory notes.

Stenger and Kelly say the limited partnership agreement gives the general partner the legal right to make amendments without the consent of the limited partners. Jay Peak has yet to provide the amendments to investors.

Sandra Chau, 31, an investor from Hong Kong who lives in Phoenix, says the investors in the group don’t have the money to put up a legal fight against Jay Peak, which she describes as “a big company.”

“They are very clever in protecting themselves legally,” Chau says. “They look at holes and gaps in the agreement. I would say it’s a very unequal transaction.”

Now, in addition to the earlier concerns about changing the terms of their original investment and when they will be paid back, Sutton says the investors also want to see an accounting of how their money was spent by Jay Peak. They say financial reporting from the company, consisting of K-1 tax forms and one-page summaries, has not been sufficient.

“We have never received accounts that comply with generally accepted accounting principles in any form,” Sutton said.

Stenger told Sutton in a July email that he has “exhaustive accounting records on all the items you requested and nothing, nothing exists that we wish to hide or conceal.” He also referred Sutton to a federal filing known as the I829 that “shows where ALL the investor funds were spent.” In another email, he wrote “many other things you requested are operational and will require pulling the statements, invoices, checks, etc.”

Kelly, legal counsel for Jay Peak, wrote in an email to VTDigger that the resort has provided documentation to support a USCIS I829 petition, “which includes the details of every one of the $23,000,000 of expenses that the project paid out to vendors.”

Jay Peak insists on gag order for audit

Sutton says the I829 plan does not give the investors “basic” financial information that would be “a clear, concise audit trail.”

“Under Vermont statutes, we’re entitled to see all the transactions in the books of accounts, … which includes all bank statements, journal entries and balances,” Sutton says.

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.

This month, Stenger asked Crain and Sutton to sign confidentiality agreements ensuring that the information would not be disclosed. Kelly said Crain doesn’t have rights to “any of the material we hold on behalf of private investors.”

“… we are not going to release Mr. Sutton’s information to anyone without his permission and without an agreement that information will not be released to anyone else without ours or Mr. Sutton’s permission.”


“Mr. Sutton had asked us to share his files with Dr. Crain, which we are more than happy to do — in fact we agreed on multiple occasions to accommodate Dr. Crain at the resort — but we are not going to release Mr. Sutton’s information to anyone without his permission and without an agreement that information will not be released to anyone else without ours or Mr. Sutton’s permission,” Kelly wrote in an email to VTDigger.

Sutton and the investors have refused to sign the confidentiality clause. Sutton says Stenger doesn’t have the ability to “gag” the investors. It’s possible that “Crain will go in there and find that Jay Peak has done everything in accordance with best practices and the limited partnership agreement,” Sutton said.

“We’ve said we want to put our minds at rest, we want transparency, we want access to information we are entitled to have, and he’s done everything he can to stop us getting access to the information,” Sutton said. “It’s gone on for months and months and months now and we’re a bit concerned that there is something that they don’t want us to have.”

State on the defensive

In addition to frustration with Stenger, the investors say help from the state has not been forthcoming.

Sutton says, for example, that Brent Raymond, the director of the Vermont EB-5 Regional Center, has not responded to a letter he sent asking Raymond to put pressure on Jay Peak to release certain records.

Raymond told Sutton in May that he would help him obtain financial documents. Raymond also told Sutton that it is Stenger’s “fiduciary responsibility” to provide the financial information. However, in 260 pages of email communication between state officials and Stenger obtained by VTDigger, Raymond did not ask Jay Peak to send financial information to the investors.

Raymond has said that he is looking out for the investors’ best interests and has denied his relationship is “cozy” with the Jay Peak CEO. Yet in email correspondence he called Stenger a “great man,” and coordinated with him on strategy to win back investors’ confidence.

In May, Stenger apologized to Raymond for the delay in getting “detailed materials” about the finances to one of the investors. Raymond replied: “Don’t be sorry. His intent is obvious.”

Under state securities statute (11 VSA 3405), investors are required to be notified if the terms of their partnership agreement are changed and they must be allowed access to tax returns and other information, including contact information for each partner. Sutton says Stenger hasn’t provided that information. Stenger says he doesn’t remember being asked.

Patricia Moulton, the secretary of the Agency of Commerce and Community Development, which oversees the Vermont Regional Center, said the state is watching out for the investors. The state has responded to repeated requests for information from the investors, she said, but “the Regional Center can only push Jay Peak to produce financial records in accord with the Limited Partnership Agreement.”

“EB5 Investors know from the start that their investment is (and must be) at risk. This is one of the conditions of participating in the EB5 program.”


“It is essential to keep in mind that our role as a Regional Center is not to regulate the relationship between the investors and the Limited Partnership, nor is it to guarantee the security of any investment in an EB5 Project,” Moulton said. “EB5 Investors know from the start that their investment is (and must be) at risk. This is one of the conditions of participating in the EB5 program.”

In a Oct. 13 commentary published by VTDigger, Moulton wrote that the dissolution of the Tram Haus partnership “was within the authority of the agreement entered into and signed by each limited partner. Mr. Stenger’s action was not in conflict with any federal law or regulations enacted for the EB5 program.”

“We haven’t found anything to suggest illegal behavior, there just has not been good communication, and that’s a problem,” Moulton said.

Sutton says in a counter commentary that Moulton is “far more preoccupied with publicly resuscitating the tarnished reputations of her subordinates, Mr. Stenger and Jay Peak” than she is in helping “the investors get to the bottom of exactly what transpired at Jay Peak.”

The investors say Moulton’s “public exoneration simply adds insult to the injury that years of the Vermont Regional Center’s idleness and failed oversight have already inflicted on the States EB-5 investors, who invested in Vermont’s EB-5 program in good faith and only because of the Vermont Regional Centers assurances of the program’s integrity.”

Moulton said her agency is not defending Jay Peak’s action.

Patricia Moulton, secretary of the Agency of Commerce and Community Development. Courtesy photo,

Patricia Moulton, secretary of the Agency of Commerce and Community Development. Courtesy photo

“Our interpretation of the document appears to allow the General Partner to terminate the limited partnership as long as it did so in a way the fulfills the GP’s fiduciary responsibly and does not violate the covenants of the limited partnership,” she wrote. “We have no evidence from any investor of any covenant violation despite our repeatedly asking for evidence. That is why we have stated to investors they should hire a trusted advisor and/or attorney if they feel Jay has done something that is not authorized.”

After the controversy this summer, in which Stenger acknowledged poor communication, the regional center stepped up oversight of EB-5 projects in the Kingdom. The center is now demanding quarterly reports that were part of the original memorandum of agreement with Jay Peak, but that the center previously never requested.

In addition, Moulton says the center will require project owners to annually self-certify that there have been no material changes made to limited partnership agreements. Any material changes under consideration must be filed with the state in advance, she said.

Kept in the dark

Sutton and the others are speaking out reluctantly, they say, and only after a difficult time trying to find each other and whether they shared the same concerns about their investment.

Sutton and the other 19 dissatisfied limited partners in the Tram Haus, including Sandra Chau, Angie Mann and Maurice Price, say basic information they are entitled to has been withheld by Jay Peak, including contact information for investors they say was requested and not provided.

In January, Sutton said he pieced together the email addresses of the investors from a 2008 email from Jay Peak, got in touch with the 35 investors and eventually worked with 20 of the limited partners to form a coordinated group response to Stenger and state officials.

In addition to Sutton, VTDigger spoke with Chau, Mann and Price for this story. VTDigger also spoke with three additional investors who wished to remain anonymous.

Bill Stenger stands before the future Stateside Hotel at Jay Peak in September 2013. File photo by Hilary Niles/VTDigger

Bill Stenger stands before the future Stateside Hotel at Jay Peak in September 2013. File photo by Hilary Niles/VTDigger

Stenger has said neither he nor his staff recall receiving requests from investors to be put in touch with one another. He disputes the claim that information has been withheld. Kelly, COO and general counsel for Jay Peak, says categorically that “there is no pattern of non-dissemination of information to limited partners.”

Sutton also claims Stenger will not communicate about the finances for the Tram Haus in writing, instead “insisting on private telephone conversations,” and refusing to produce documents “known to exist, which, we the investors, are unquestionably entitled to review.”

Stenger replied in an email that he would be “happy to connect” with Sutton and his “willingness to talk … on the phone is not a strategy or some sinister technique.”

The investment

Some of the investors question whether the new deal is better or worse than the original one.

Ariel Quiros stood briefly after the opening of Jay Peak Resort's Stateside Hotel to announce he had purchased the company bringing light plane manufacturing to the state-owned Newport State Airport. Photo by Hilary Niles/VTDigger.

Jay Peak principal owner Ariel Quiros. File photo by Hilary Niles/VTDigger

According to Ariel Quiros, Stenger’s partner and the owner of Jay Peak Resort, the investors went from an investment with no guaranteed payback to one that now is. Quiros said the promissory note the investors now hold is backed by the assets of the resort.

The notes, essentially a loan, however, are not secured by the Tram Haus or any other real estate or hard assets, according to Kelly. “It’s not a collateralized note,” Kelly said. “It’s not a secured note, but the note is guaranteed by the assets of Jay Peak, Inc.”

The investors maintain the IOUs are “worthless” because the documents refer to Jay Peak Resort, which is not a business entity tied to assets. Twenty have refused to sign the new deal Stenger offered. They say the original deal was better because they could have realized profits from any future sale of the hotel, while they say the promissory note is a fixed amount.

“Stenger and Quiros have taken the investors’ right to profits and have stuck those rights into their own pockets,” Sutton said. “However they dress this up … it is still dealing in self interest.”

Trust is paramount, according to another investor, Price, who said if Stenger and Quiros were willing to secure the loan against a tangible asset, “all this rubbish would go away” and they could “send that message around the world.”

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Anne Galloway

About Anne

Anne Galloway is the founder and editor of VTDigger and the executive director of the Vermont Journalism Trust. Galloway founded VTDigger in 2009 after she was laid off from her position as Sunday editor of the Rutland Herald and Times Argus. VTDigger has grown from a $16,000 a year nonprofit with no employees to a $2 million nonprofit daily news operation with a staff of 25. In 2017, Galloway was a finalist for the Ancil Payne Award for Ethics, the Al Neuharth Innovation in Investigative Journalism Award and the Investigative Reporters and Editors FOIA Award for her investigation into allegations of foreign investor fraud at Jay Peak Resort.

Email: [email protected]

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