The 35 investors in the Tram Haus Lodge at Jay Peak Resort are immigrants from Europe, Canada and Asia who sought permanent residency in the United States.
Most of them, according to Tony Sutton, one of the investors, are middle- and upper-middle-class people who sold their homes and pulled together savings to make a $500,000 downpayment on a green card and what they believed would be a profitable investment.
They don’t fit the stereotype of foreign investors with excess disposable cash.
One of the investors, who wanted to remain anonymous, is dismayed by public comments about the investors posted on VTDigger.
“One of the most common misconceptions I’ve read is that we are all millionaires who got stung by an investment that didn’t perform the way we wanted and are now stamping our feet,” the investor wrote in an email to VTDigger. “This really couldn’t be further from the truth. I should categorically state that most of those in our group are most certainly not millionaires. For myself, my investment represents the bulk of my life savings obtained through years of hard work and as a result of selling my home back in the UK.”
The seven investors interviewed for this story, four of whom were willing to talk on the record, tell a similar story. While they knew the Tram Haus was an at-risk investment, they believed that the state would carefully monitor the finances of the project and they would receive the return of their $500,000 investment after five years, along with a share of the profits from the sale of the hotel.
Neither assumption turned out to be true. The state did not require Jay Peak to file quarterly reports, and Jay Peak converted their equity shares in the property into unsecured loans in 2013, eliminating the possibility of sharing in any profits from the future sale of the hotel.
The investors also say Stenger promised them a 6 percent annual dividend after the hotel opened. In reality, the rate of return was closer to 1.56 percent on average over the four-year period from 2010 through 2013, according to Tony Sutton, one of the investors.
Stenger has said the Great Recession made it difficult for Jay Peak to provide investors with higher dividends.
Sutton says, like the other investors, he is now worse off financially than he was when he lived in the UK.
“You very rarely will find anyone who has become richer now than they were when first got here,” Sutton says.
Angie Mann and her husband lived in east London before they moved to the states. Angie was a teaching assistant and he was a telephone engineer. They had been to visit relatives in California on vacation several times, and when they met Bill Stenger at a trade show they were captivated by the idea of moving to the United States, obtaining residency here and making what sounded like a profitable investment in Jay Peak.
Angie Mann recalls Stenger told them they could expect an annual dividend of $25,000 to $30,000, along with the return of their $500,000, and a $150,000 profit after five years.
The Manns banked on that promise. They sold their house and lived with Angie’s brother-in-law for 13 months while they waited for the immigration paperwork to go through. Once their application was approved, they tapped their life savings to become immigrant investors and moved to California in 2008.
Angie Mann is now a caregiver for the elderly and her husband works as a maintenance engineer at a local hospital. She and her husband bought a house with a large mortgage. Their daughter has had to borrow money to attend college. Visiting family in England is a thing of the past, she says.
“We are financially broke now because obviously we moved to California, and we bought a house presuming we’d receive profit payments each month,” Mann says. “We didn’t receive a third of what we anticipated.”
Angie Mann says in the beginning they believed there was “never any doubt” they would get all of their money back, she says.
When their equity stakes were converted into loans they were “very shocked.”
’We went in with rose-colored glasses’
Maurice Price and his wife were married on the west coast of Florida 23 years ago and they always wanted to move “somewhere with a climate better than England.” Price grew up in government rental housing, and he worked his way up the social ladder in the UK, but longed to live in Florida.
Like several other investors, the couple heard about Jay Peak at a trade show in the United Kingdom where Price recalls that Stenger gave an “extremely slick presentation.”
“We went in with rose-tinted glasses,” Price recalls. The investment was presented “almost like a savings plan,” he says. “You put your money in and you will get a 6 percent return for five years. At the end of five years, they would sell the investment.”
There are very few opportunities for foreign nationals to obtain permanent residency in the U.S., he said, and “we thought we’d take a chance.”
The Prices pooled their retirement funds and the proceeds from the sale of their house to invest. Unlike the other investors who lost their livelihoods when they moved to the states, they were able to continue their work remotely as textile distribution consultants, but their cushion is gone.
“We never, ever got 6 percent. It was more like 1.5 percent,” Price says. “There was always a reason — the economic climate, the cost of fuel, a million reasons. But it was still higher interest than a bank, so most people stayed quiet waiting for five years time to pass.”
When the Tram Haus ownership was transferred to Jay Peak Inc., which is owned by Ariel Quiros, he was taken aback.
While Price says he recognized the investment was not guaranteed, once it was constructed and the hotel started to turn a profit, he believed he would benefit.
“I feel grieved that the loan is not secure,” Price said.
Sutton, who is originally from a suburb outside London and now lives in Clermont, Florida, has become the unofficial spokesman for the disgruntled investors.
Sutton grew up in government rental housing. He had a knack for business and worked his way up in the automobile sales industry. After a successful 19-year career in the business, he sold his dealership in 2006 to start a new life in the United States.
“I felt there was a much bigger opportunity for me to a get a job and eventually become a store owner in the U.S.,” Sutton said in an interview.
When he heard about the EB-5 immigrant investment program and the Tram Haus project at Jay Peak, Sutton was intrigued. He liked the fact that EB-5 offered green cards and permanent residency, and he was further swayed by the business plan for the hotel and the idea that the state would monitor the project.
In January 2008, Sutton liquidated his assets and flew with his family to Florida where he hoped to start over in the car business. At about the same time, the Great Recession began.
“The timing was awful,” Sutton says. “I’d had a successful career in business, and from a financial point of view, when we made the transfer from the United Kingdom to United States, that was a huge piece of bad timing, it could not have been any worse.”
In Britain, Sutton had built a good reputation in the car business. Here in the states, he had to start over. “No one knew me, I was just another English guy who got off a plane,” he says.
He was competing for jobs in a high unemployment market, and he couldn’t get job interviews. Eventually, he went back to selling cars, and then he got a call from a Czech firm that needed a consultant to help with restructuring a large car sales operation.
Sutton left his family behind for months at a time while he worked in the Czech Republic and then later for a 14-month stint in Russia. More recently, Sutton has taken work in Virginia two out of the past three years.
“I was in demand in Europe because people knew me,” Sutton said. “I had to prove myself all over again in the U.S. The most difficult thing is, I have had to leave my family because of the jobs I’ve accepted, because I wanted to work.”
Sandra Chau, 32, is a pharmacy school student in Phoenix. She first came to the United States from Hong Kong in 2000 as an international student and, after graduating from the University of California San Diego, she wanted to stay in the states.
“I like this country, it has a lot of freedom,” Chau said. “I don’t like the lifestyle in Hong Kong. There is more opportunity in this country.”
While other investors are in “financial distress” (one family had to move back to England, for example) the money is not “life or death” to Chau. But she, too, expected a $30,000 annual dividend over the five-year investment period and a full pay-back in 2013.
“I think they overpromise and underdeliver, and I am kind of disappointed about the financial return,” she says. “It’s not nearly close to what they promised.
Chau 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.”