State regulator: Q Burke developers were short of money - VTDigger

State regulator: Q Burke developers were short of money

Susan Donegan

Department of Financial Regulation Commissioner Susan Donegan. File photo by Hilary Niles/VTDigger

Vermont’s top financial regulator said delays in the opening of a Northeast Kingdom hotel occurred because the developers were running short of money.

Susan Donegan, the commissioner of the Department of Financial Regulation, says developers Bill Stenger and Ariel Quiros are wrong to blame the state for the problems at Q Burke Hotel, one of three large projects the developers are building under the EB-5 program where immigrants make an investment in return for a U.S. visa.

Stenger has said the delays in the hotel opening are because the state has held up approving the payment of construction bills.

In a letter to Stenger, Donegan strongly disputes that charge. She also questions why the developers have not put in more money of their own into the project.

State authorization for construction payments, Donegan says, wasn’t the issue. The real problem, she said in a Feb. 12 letter to Stenger, was that the developers were low on cash.

“You give the impression that the state needs to approve payment” in order to open the Q Burke Hotel, Donegan writes.

Invoice amounts, Donegan said, exceeded the account balance.

“The escrow account does not have nearly enough money to even cover the amounts we did authorize, much less the ______________ you are claiming in your letter,” she wrote. “Any delays in opening are attributable to your lack of capital, not the escrow authorization process.”

Stenger and Jerry Davis, CEO of PeakCM the general contractor for the project, in recent weeks have said the state is to blame for delayed construction payments.

But PeakCM invoices for November were approved on Dec. 23 and payments for December were authorized on Feb. 9, according to Patricia Moulton, the secretary of the Agency of Commerce and Community Development, which, along with DFR, has oversight of the Q Burke project.

Under an agreement with the state, the developers must obtain authorization for payments related to construction costs for the hotel from the Department of Financial Regulation.

Stenger did not return a request for comment on Donegan’s Feb. 12 letter and declined last Friday to comment on a Feb. 16 memo from DFR.

More than 100 EB-5 immigrants were invested in the Q Burke project as of January 2015, according to state documents. Each investor put up $550,000, or roughly a total of $55 million.

In July 2015, the state required the developers to put new immigrant investor funds for Q Burke and AnC Bio Vermont, a planned biotech plant in Newport, in escrow. The requirement is part of conditional approval for the projects, which were both suspended in August 2014, pending a financial review by the Department of Financial Regulation.

Money collected before July 15, 2015, was not subject to state oversight.

Stenger was recently in Vietnam and South Africa to solicit more EB-5 immigrant investors for the hotel and the resort expansion. Information about how much the developers have raised in new investor funds over the past nine months has been redacted from state documents.

Construction management fees 15%

Donegan said in documents released last Friday that the Q Burke developers have not accounted for “millions of dollars in construction management” fees.

In a communication from Feb. 12, Donegan wrote that the “project sponsors,” Stenger and Quiros, charged 15 percent in construction management fees for the $50 million hotel.

The 15 percent construction management fee is on top of payments to the general contractor for administration of construction, according to Stenger.

Secretary Moulton said in an email to VTDigger, “it is my understanding” that Stenger and Quiros charged a 15 percent construction management fee for the Jay Peak Resort expansion, which was also paid for with EB-5 immigrant investor funds.

In all, the developers used $282 million in EB-5 investor funds to build six projects at Jay Peak.

They plan to use $110 million in EB-5 monies for AnC Bio Vermont, a planned biotech center in Newport. The $120 million in projects at Q Burke include the hotel and conference facility, an aquatic center, a biking center and indoor and outdoor tennis courts.

The 15 percent fee is substantially higher than the industry average for construction management fees, which was 5.6 percent in 2014, according to a survey by the Construction Management Association of America. The range was 0.6 percent to 18 percent that year, the association says.

In an email to VTDigger, Stenger explained that construction management fees are “paid [to] the developer for managing, organizing and fulfilling the creation and completion of the facilities. Interacting with all aspects of the project, contractors government officials, to facilitate its completion. The construction management fee’s [sic] are paid to the general partners as they are responsible for providing these services.”

Donegan mentions the construction management fee in her letter as part of an argument that the developers should use their own money to pay for certain costs associated with the project.

Under the limited partnership agreement with Q Burke investors, Donegan says the developers have an obligation to put their own money in the Q Burke Hotel — not take money out. “To date we have seen no indication of such contributions,” Donegan said.

Stenger replies in a Feb. 16 response that “developer proceeds” have been curtailed and “our ability to ‘just pay things from elsewhere’ just doesn’t exist.”

In an invoice provided to VTDigger by an investor, Stenger, president of Jay Peak, billed the general partner of Jay Peak Penthouse Suites (himself), for $2.8 million in construction supervision fees. The general partner is, under state securities laws, obliged to protect the interests of investors. The Jay Peak Penthouse Suites limited partnership is one of eight such agreements that Quiros and Stenger formed to fund projects in the Northeast Kingdom.

The Agency of Commerce and Community Development has oversight of the EB-5 program in Vermont. In January 2015, the agency asked the Vermont Department of Financial Regulation to conduct a financial review of the Q Burke and AnC Bio Vermont projects.

Donegan has said the developers have not provided DFR with basic financial information for the review, such as general ledgers.

The Jay Peak, AnC Bio and Q Burke projects have been under investigation by the Securities and Exchange Commission for nearly two years.

‘You are not performing your duties as a fiduciary’

Quiros and Stenger want to use new investor funds to pay $1.28 million to PeakCM in unspecified “administrative fees,” travel expenses, delay fees and “anticipated/estimated” legal fees. The developers also ask Donegan to authorize payments from the escrow accounts they say are attributable to delays caused by DFR.

Donegan has refused to approve the invoices because she says they are not directly related to construction.

“For you to include items like ‘anticipated’ legal fees and attempting to bill for equipment that has already been paid, suggests that you are not performing your duties either as a construction manager or a fiduciary,” Donegan said.

Under the limited partnership agreement, Donegan says the developers are required to use their own money for the construction of the hotel and conference center, utilities and common area infrastructure.

Donegan has said the remaining $1.28 million in invoices for PeakCM would not be approved “until you have addressed these issues satisfactorily.”

On Tuesday, Stenger told VTDigger that by Friday he would provide “DFR with a complete accounting of the entire project which will show every expenditure.”

In mid-November, Stenger told Moulton that “all financial review materials” for Q Burke would be sent to DFR. He made similar promises to the state about providing financial documentation for Q Burke, AnC Bio and Jay Peak projects as early as July 2014.

‘Rome is really burning’

The problems at the hotel started shortly after the July 15 agreement requiring state approvals for Q Burke construction. There were disagreements over whether equipment could be paid for with new investor funds and dissatisfaction over how long the approval process took.

In a series of texts released by the state, Stenger puts pressure on Moulton to authorize payments.

On Oct. 17, 2015, he wrote to Moulton: “I am fighting for survival here.”

“If we don’t finish in time and get to promote the opening correctly we are headed for financial disaster for the project and for the partnership,” Stenger writes in a text. “Please help me with this August payment, at least the portion you have no issue with.”

When Stenger asks for approval of equipment, such as IT equipment and TVs, Moulton says he should contact DFR. The state has said equipment is not part of the construction authorization agreement.

On Dec. 11, the day the Q Burke Hotel was originally slated to open, Stenger texted Moulton.

“Pat I realize your team is busy,” Stenger wrote. “But Rome really is burning. Hundreds of hotel employees can’t work and critical equipment is not available to us. IT especially. 250k needed and without payment not delivered. 3,7 million [sic] is in the escrow account. More than enough to get us where we need to be. Please if you can authorize some payment today we can get some progress here.

“It is a real crisis,” Stenger continued.

A few months later as he was negotiating an agreement with PeakCM over the certificate of occupancy, Stenger texted Moulton again on Feb. 3, demanding authorization of funds.

“The contractor will release the CO to us but only if the retainage funds that are in this last pay app are authorized to be released,” Stenger writes. “I have been told that the pay app is at your agency now and was just sent yesterday. If that pay app can be authorized then I believe the CO will be released.

“Wearing my ski operators hat if I don’t get that hotel open for presidents week we will have a very difficult time,” Stenger writes. “The past few pay apps you were able to turn around quickly. I am asking consideration here. If we don’t get CO this week we will need to begin canceling presidents week vacations which are 250k worth of business that is urgently needed for that property and the partners who invested thinking the property would be open by now. We are 2 months late. Missing presidents week would be a huge blow.”

Stenger’s texting intensified over Feb. 4, 5 and 6, as he demanded approval of the December pay application. Moulton on that Saturday said she needed “to connect with DFR and the AG’s office. Tried yesterday but couldn’t. I will know more Monday.”

On Feb. 8, Moulton and Stenger spoke by phone and the texts ended. The requisition for December was approved the next day.

Stenger paid PeakCM for November invoices (which were approved in December) last week. Payment for December is still pending, according to Davis.

PeakCM has filed a $5.4 million lien against the hotel.

Anne Galloway

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  • Amie Hammer

    Really hoping these bureaucrats are sent packing in the next election cycle! Their lack of abilities has severally hurt Vermont small businesses, as well as Vermont families in the Northeast Kingdom. They lack a basic understand of the construction/development business, as clearly displayed in this article. We need businesses in Vermont to thrive and capital is needed to get this done. We will continue to stay stagnate as a state, if the quality of our appointed officials stays as par.

  • Michael Deuso

    The state should do what it does best leave the private sector to create jobs, and for the state to tax the ” working”.

    • Julia Purdy

      Any clown can come along and promise to create jobs. What Susan Donegan has done is exposed the flim-flam behind that promise. Ever heard of an employer not being able to meet payroll and skipping town? Think these developers could possibly ever do that? We are not so down and out that we will lap up every empty promise, only to be left holding the bag. And if it’s only the state out there protecting us . . . well, that’s the state’s job. The EB5 program is a disaster for the very reasons outlined here. It’s attracting every shyster in the world. These so-called “immigrants” don’t need to buy their visas at $550,000 a pop, then have their developers come begging to the state to rescue them from their own incompetence and deceit. Scrap it and finance local Vermonters to start their own businesses and succeed!

  • Clara Schoppe

    I sent this letter to the editor of the Caledonian-Record in St Johnsbury,more than two years ago, and it was published, but without the links. The links are very appropriate, given today’s situation with QBurke.

    To the Editor:
    I am quite worried about the already thriving local industries that have always provided hospitality jobs in our local community being able to survive the effects of QBurke’s all inclusive resorts. Also, I’m worried that the jobs QBurke will provide may not be good jobs that support our community, but the low pay part time kind that require our subsidizing them by increasing the area’s client population. Please see the two links below.

    During the time that other industries have been experiencing somewhat of a depression in our country and world wide, one industry in particular has been enjoying tremendous growth and prosperity. Tourism worldwide has never seen such a boon. People are travelling to and from all over the world, and a particular type of travel has seemed to have taken over. All inclusive destinations are considered the norm. Whether it be 2,-3,000 passengers on a cruise ship with several movie theaters, restaurants, department stores, gift shops, even amusement parks, which lands in a port with its own private beach, freeing the “tourist” to “visit” an area without ever having to be troubled with seeing the people who live there, or an all inclusive resort which does the same on a mountain or on the ocean front, desert, or jungle. The first link is an analysis from the United Nations regarding the effects of this kind of tourism on small, impoverished regions outside of the more developed nations. The second link pertains specifically to small towns in our own country. The first link uses a term I had never heard of before, ie “leakage”. With QBurke’s international owners, maybe we should be looking at “leakage”, too.
    I have been worried for some time about the Jay Peak/Burke Mountain development’s possible negative impact on the communities involved, and the fact that Bill Stenger says that QBurke “couldn’t afford” to keep the four local residents who had already been employed. Before our tri-county love affair with QBurke’s Bill Stenger leads to our anointing a new king in the NEK, as he promises to bring many hundreds of jobs to our local area, we need to ask just what kinds of jobs these will be and whether they will be the kinds that allow the employee to buy a home and raise a family (as were the four that were just eliminated), or whether they will be the kind of jobs that depend on the presence of illegal immigrants and which need to be “subsidized” by welfare assistance to the employees. If it’s the latter, then QBurke will have succeeded in stealing tourist dollars from already established local businesses that count on being able to house and feed visitors to our area at the same time that it increases the “client load” on our area. Are we buying a pig in a poke here?

  • Stan Hopson

    A giant red flag here is the lack of any private equity into Stenger’s projects. Sure he can hoodwink EB-5 investors desperate to get into the USA, but why can’t Stenger attract real estate investors from entities within the US?

    As I’ve said previously, this whole Shumlin supported boondoggle is how pyramid schemes end.

  • Jamie Carter

    “You give the impression that the state needs to approve payment” in order to open the Q Burke Hotel, Donegan writes.”

    This is ridiculous, but it gives Digger some great coverage. Unfortunately their “investigating” in this seems to stop at the Jay side of things. Otherwise they might as Ms. Donegan about the $1.2M they refuse to authorize and to which Peak CM is refusing the CO until they get…

    It’s not an impression, it’s what it is. What’s more ridiculous is that Donegan, refuses to authorize payments because they are “anticipated legal fees” (like to file a lien when you don’t get paid) and late fees when it takes several months for payment and authorization… Basically fees her department cost the project, she is refusing to pay, which in turn is holding up the CO, which in turn is holding up the employment of people. She will be gone soon enough, if only Moulton was leaving with her things could go back to normal.

    Perhaps in Mondays daily trashing of Jay could include why funds were approved by the state if there wasn’t enough money in escrow to pay them? What were Ms. Moulton’s response to the Mr. Stenger’s text messages? What expertise Ms. Donegran has in being a project manager, and why she thinks she knows more/better then a person who has overseen a 250M project successfully, without state oversight? Also a clarification to this statement would be helpful, especially

    “Donegan said in documents released last Friday that the Q Burke developers have not accounted for “millions of dollars in construction management” fees.”

    How is it not accounted for? The state apparently knows those fees were used, they even know the percentage being charged?

    Maybe we could get a story on how a $250M project at Jay Peak was successfully completed. And despite a terrible winter the resort was still extremely busy, in large part due to this project that was carried out and implemented via a private developer and private investments. Maybe contrast that with a $50M project done by the same developer (who clearly has a successful track record) that can’t get off the ground with the real difference being the State has decided to intervene.

    • Joe Perry

      Lets try this again, EB-5 money is administrated by the state.

      From above link

      Pre-approval of Projects — VRC officials must review and pre-approve each and every EB-5 Project to utilize the Vermont State Regional Center designation. Upon approval of each EB-5 project, VRC requires the business to enter into a “Memorandum of Understanding” with the State which imposes strict covenants and obligations upon the business.

      Therefore Q-Burke and company are using EB-5 money and NOT in accordance with the MOU that they signed to continue the project. Nothing to hard to understand here, the house of cards is coming down.

      I would also not call Jay Peak successful, over 90% of the EB-5 money is still owed to the investors, and I bet the lawsuits will be starting with in 12 months for non-payments. Also where is the 8,000 to 10,000 new full time permanent (not construction) jobs from Jay Peak? No one seems willing to ask that question.

      • Neil Johnso0n

        It was all set up with a wink and a nod. Does it say there is a risk you can lose your money? Since when did real estate ever guarantee you’ll get all your money back. I’m dealing with 10-65% losses on normal vacation homes. Anything else has an inherently higher risk. What about time shares.

        The EB5 program is clearly approving projects that no sane person would enter for money alone, it’s for citizenship and job creation.

        • Julia Purdy

          Let’s just say Vermont is being sold down the river and leave it at that.

      • Jamie Carter

        I’m not sure what your post has to do with mine?

  • Bob Stannard

    What a great job of reporting! It’s in everyone’s best interest to resolve all issues and complete this project. Vermont can ill afford to let this project fail. On the other hand our state cannot be bullied

  • Frederick Woekner

    Something doesn’t smell right here. The article suggests that the developers are grabbing too big a piece of the pie for their own developer fees. The E-5 visa program nationwide is turning out to be a convoluted money pot for self serving developers. The program has been a target for federal and state investigators throughout the country and many of these projects in other states have been exposed as frauds. I guess the state should get some praise for actually demonstrating oversight.

  • bruce wilkie

    So the cost of the 3 projects will be 512 million.
    Bill and Ary take 15%, 76.8 million/2=38.4 million each for construction management fees.
    Plus the $50,000 “administrative” fee per investor that Bill charged for greasing the EB-5 skids.
    Pretty lucrative.
    How come Bill and Ary couldn’t come up with the 5 million to pay off Peak Construction and open the hotel?

    • Neil Johnson

      Of course it’s very lucrative. What I find interesting is the charges of 15%; are clearly laid out in the disclosure agreement, the original agreement. Everyone knew about it. Yes it’s more than industry average, so what. It was disclosed. Anyone with any business understanding can clearly see somebody is making money, they weren’t trying to hide it. The state approved it.

      With out question this program needs to be investigated and tweaked for the rampant abuse, But I’m not hearing that the developers didn’t build or ask for things that weren’t in the original agreement.

      Now in the future perhaps we should review this documents ahead of time. Holding contractors and not allowing business to open isn’t solving any issues. The bully doesn’t appear to be the contractor in this case. The big take away will be that EB5 investment projects will now be very risky for any company to take on.

      Way to make it harder for Vermont citizens.

      • bruce wilkie

        The question was: “How come Bill and Ary couldn’t come up with the 5 million to pay off Peak Construction and open the hotel?”
        The question was based on the fact that their return on investment has been quite substantial, and that they certainly have the resources to pay their bills without getting into a urinating contest with the state.

        • Neil Johnson

          If he’s over budget don’t pay him more than due, but I haven’t heard that. We should pay him what he’s due.

          Because I have $100 in my pocket you don’t have to pay me the $20 for mowing your lawn? Takes two to be in the yellow fluid contest.

          So far I’ve yet to see or hear any numbers that say he didn’t do what he said he was going to do. I’ve even asked, was he over budget? If he’s over budget too bad for him, if not why the fuss? He even asked to pay the subs, people working, leave out the rest? So who’s playing tough guy? If you stiffed me for mowing your lawn do you think I’d come back? If EB5 stiffs people on money do you think they’ll come back?

          Do you think this enhances our business image?

          • bruce wilkie

            Again, the question I posed is:
            How come Bill and Ary couldn’t come up with the 5 million to pay off Peak Construction and open the hotel?”

    • Neil Johnso0n

      So my question. Did the build the project for the amount they said it would cost? Yes or No? If they did come in on or under budget, why haven’t they released all the money?

      Are they not allowed to keep any extra if they were able to do the project under budget? That’s what most bid contractors are allowed. This didn’t appear to be a cost plus job.

  • George Coppenrath

    Perhaps if the state regulators had paid as close attention to the Health Connect fiasco (which used taxpayers $$) as they have with the QBurke construction (which used private $$) the citizens of Vermont would have been better served.

    • Joe Perry

      EB-5 money is not private money, our taxes support the administration of this program. Private money refused to even discuss these projects.

      I do agree the Health Connect is a fiasco, but a totally different kettle of fish.

      • Neil Johnso0n

        An investor would surely be looking for more than 2.9% return on their money. This is private money, from outside of our country. Oversight of the program should be a minimal expense when compared to the actual investment. It is what the state is arguing about. EB5 money is clearly a way to bring rich people into the united states, and clearly a way for developers to get vast sums of money for things no sane investor would tread. But it does bring jobs and projects….which are currently shut down. This has been going on for some time.

        The question should be, where did he break the agreement sanctioned by the state? Is he out of compliance? I haven’t heard that. I’ve heard, he’s making too much money. So state shuts down project and citizens, future citizens and contractors take the real hit, along with prospects of seriously damaging the whole EB5 project.

        With higher risk comes a need for a higher rate of return on anyone doing an E5 project. 15% oversight may prove too low for anyone in the future to take on any eb5 projects.

      • Jamie Carter

        EB-5 is private money Joe. A private person signs a contract with a private company to invest in a private business venture. The state inserted themselves into the EB-5 program, and in fact is the only state to have done so (surprise surprise).

        But make no mistake about it these are NOT public funds. Heath Connect is a different kettle, there the state was actually using public funds.

    • David Dempsey

      Great comment.

    • Bill Hayman

      Right to the point, the state is the more inept party here.

  • Dan Flanagan

    Not clear where all the money is going that is being skimmed off the top in the form of 15% management fees? Might want to to check the Panama Papers. Stenger’s ploy to blame the State is the reason why the hotel is not opening is wearing thin. I commend the State for doing their job and not caving in to his boisterous demands for payment without providing proper documentation.

    • Neil Johnso0n

      He did suggest that they pay the subcontractors no? Pay the people doing the work no? State refused? Yes?

      • Julia Purdy

        The state is, for once, refusing to take the fall for a developer’s greed, dishonesty and con job. An escrow account is set up to enforce performance under an agreement. It’s used all the time in everyday real estate transactions. Stenger and Queiros are con men who thought they could get the state to cover their backsides and it isn’t working. The subcontractors should be filing mechanic’s liens right now.

  • This EB-5 program looks like a giant sieve with incredible opportunities for money to be skimmed off or to simply disappear. The article indicates that the Vermont developers received $282 million from investors. Now, where did all this money go?

    The EB-5 program has been around for more than 20 years and has had a checkered record. In Canada, a similar program was terminated because it was deemed to be bad deal for Canadians, while a host of lawyers and consultants skimmed off millions of dollars.

    So who at the federal or state level is responsible for monitoring, from the very start of a project, the billions of dollar that are collected by essentially selling citizenships in the United States? Who’s responsible?

    It seems that the State of Vermont was a very late arrival in monitoring this operation and this only occurred after significant problems were bubbling up. At that point it may have already been too late to doing anything of consequence.

    So is anyone fully monitoring the flow of billions of dollars of cash or are things simply left in the hands of the developers?

    In most, if not all situations where money is raised either as equity or debt, there is tremendous oversight either by the SEC, state securities regulators or bankers lending money. But in the case of EB-5, this oversight appears to be missing.

    It seems appropriate that a complete forensic audit of all money that has gone into the Vermont projects needs to be done.

    If no federal agency has statutory jurisdiction under the EB-% program for such a task, then maybe this is case for the IRS.

    Where did this money go and were all required income taxes paid?

    • David Dempsey

      The EB-5 Vermont Regional Center was originally responsible for oversight of all the EB-5 projects in the state. The executive director of the regional center, Brent Raymond, had a close personal relationship with Stenger. When the investors expressed concerns about Stengers projects in 2014, Raymond sent a an e-mail to Stenger that called him “a great Man.” Stenger was suppose to send financial statements to Raymond as the EB-5 rules require. That never happened and Raymond never did anything to hold Stenger accountable for not providing the information. That is why the state stepped in to oversee the project, because the Vermont Regional Center wasn’t doing it.

      • Neil Johnson

        This goes back to the ethics in Vermont and the rampant nepotism. It needs to stop, it’s why we got a D-.

        But if the deal was set, it should be honored, what is the big picture, did he deliver, was it on budget? Perhaps don’t do the deal again like this….please. There needs to be more coverage on this story….something is very amiss. How much have we paid out on the project, that should be easy right? How much was the budget? Is it completed? Release funds accordingly, that’s typical in a construction deal. Is there a hold back? How much?

        I guess the good thing about this, is any EB5 project from here on out will be viewed with serious caution. Guess that could be the bad thing too. We need more detailed reporting on this.

    • Julia Purdy

      This looks like another Shumlin leap-before-you-look deal. As usual the little guy is left holding the bag. Let’s hope his successors will not be so foolish. Vermonters have traditionally been skeptical of too-good-to-be-true assurances; now it’s time to take a page from the old-timers’ book.

  • Very little discussion of the underlying ethics of the EB-5 boondoggle, which allows wealthy oligarchs and their families to buy their way into the U.S., while Republicans debate how best to drive out 11M working poor. Please.

    • Neil Johnso0n

      But how can you tax the rich if they live in a different country? 🙂 If we play the red team/blue team scenario, we’ll (the citizens) will always lose.

      • Julia Purdy

        Why would we be taxing the rich who are foreign nationals living in their own country? Why are we so afraid to close the loopholes and tax our own rich, rather than handing more and more wealth over to them? The house of cards was falling in 2008, propped up only by taxpayer dollars. There are more crooks–legal and otherwise–out there than you can shake a stick at.

    • In 2011, the Obama administration began making changes to the EB-5 program to increase the number of applicants willing to invest. By the end of 2011 under program changes instituted by Obama, the number of wealthy foreign investors increased very dramatically. The Obama easing of standards resulted in the program reaching its capacity in 2014 requiring it to be closed down until the next fiscal year.

      With Obama, such a move is apparently taken as smart economic development by the left as no concern with his actions have been heard.

      However, if the same out come is perceived to have been the work of Republicans, it’s apparently pandering to wealthy oligarchs and their families by the very same left.

      The view of the world is so different and usually incorrect when observed through a narrow pipe and political prism.

  • Barry Kade

    I think in Bill Stenger, Donald Trump may have found his VP mate?

  • Judy Bunde

    Question- If the EB-5 program consists of an extra 50K over the 500K investment for “administration”, who is getting the “administration $$” ? The developer? The State of VT?
    The federal gov’t?

    • The developer.

      • Neil Johnson

        Anne, Do you know if the project was over budget or on budget? Did they meet their projections?

  • George Cross

    There is no way this debacle can be laid at the doorsteps of the Shumlin administration. Shumlin inherited this problem when he took over as Governor. The EB-5 program was set up and the state’s involvement put into place long before the current administration came into office. Along the way there have been many EB-5 cheerleaders, many in elected offices both state and federal. There is enough blame for all. The main problem now is to ensure that Vermont taxpayers do not get stuck with any costs associated with EB-5 projects, completed, under construction or future. What Susan Donegan and others are currently doing is trying hard to protect Vermont taxpayers. Frankly that is what I care about.

    • Kim Fried

      Shulman took full credit for thousands of jobs
      ,I listened to his speech at the Burke reception. He also traveled over seas helping to sell the program to investors. I call that real involvement and he should be working to resolve these final issues and get this hotel open Maybe he can find a million dollars, like the present he gave Global Foundaries.
      Bill Stenger is a benefit to the area.

    • John Devino

      Am I the only one who feels that it s unethical for those willing to invest $500,000 or more to enter the U.S. through the back door while others wait for years? Does anyone else wonder how these wealthy businessmen in other countries made their money? Do you suppose those who are employers pay their workers a fair wage?

    • Neil Johnson

      What taxpayer money? I didn’t see any contributions from the state of Vermont in that prospectus. The Eb5 oversight would be in place with our without this Burke project.

      • George Cross

        While no Vermont taxpayer money has been provided as an “investment” in EB-5 projects, one can not be so sure about taxpayer money being involved in other ways. The EB-5 program in Vermont was established in 1997 under Governor Howard Dean and actively continued through the complete Governor James Douglas administration. The part that scares me is this quote from the website,, “”state run, statewide regional center.” If an EB-5 project fails and the state runs the program, I wonder who the lawyers for the investors would go after?

        • Neil Johnson

          They like to pull as many as they can to make as much money. The ones with the biggest pocket would be the state of Vermont. So once again we’ll have to pay the tab for the state closing down a company.

          It would be rather difficult to sue people who aren’t citizens of the us. The developer will go bankrupt along with the subcontractors. Litigation will go on for several year and the property will decline rapidly along with the surrounding community. It’s happened in more than one area. It’s happened before in Vermont.

          Oh, there are two roads this could take, the formerly mentioned could easily be avoided…..but here we go……way to go Vermont! If the lack of snow didn’t hurt enough……our lack of business climate will put the final nail in the coffin.

          The state has already made the company lose what winter business they could get. It’s good to note the business this company is based upon skiing!

  • Lydia Cale

    Just out of curiosity… am I alone in thinking it odd that the Burlington Free Press posted this on the front page of their website today as a news story… a story written by Jessica B. Sechler a marketing manager at Q Burke Mountain Resort?

    • Jeff Nichols

      I know, really? I read the article, a full section in yesterday’s Free Press, and saw the name and job title of the “reporter” at the end. Should have been paid advertising, not something disguised as a story. Digger rocks, Free Press not so much….

    • Julia Purdy

      Any editor worth his/her salt knows that you don’t publish a promotional piece masquerading as news. If they want to promote themselves, they can buy an ad like ev everyone else. BFP must have been asleep at the wheel .. .

  • Judith Henault

    Let’s not forget, please, the effects of all this mess on the City of Newport. Too much unverified trust is bad politics, at the very least, and will leave this once scenic and serene city forever scarred. Know please that there was little imput from the citizenry and vocal opposition from the start. Virtually unquestioned, our elected officials bought the boondoggle from the start. In fact, our Mayor hung a sign on the municipal building door reading “Thank You Bill Stenger”. I wonder if it’s still there.
    Newport does need change and growth but this could have been accomplished without turning us into a corporate paradise for the money men.

  • Jim Ackerman

    This is a disgraceful, poorly planned state run health plan that was hastily put in place by an Egotistical Governor that could never survive in such a small state with such little tax resources outside of tourism & homeowners.
    As a small biz person, we were hit with overnite increases to our stand alone plans that forced many of us to abandon company funded polices, and since its inception, there have been 3 increases.. The only ones who benefit from this plan as usual, are those who get subsidies.. Which due to the out of control of taxes in Vermont, is also increasing due to the lack of 2 income families being able to “make it” on their own.

    The expenses of this pipe dream, along with the problems are multiplying.. Shumlin needs to admit failure, and pull the plug NOW!!

    But I guess again, Ego trumps common sense..

  • todd spayth

    Does anyone know what, if any, money the “developer” has put INTO the project(s)? They seem to have taken a significant amount out. If the developer is so worried that they are missing revenue, then maybe they should re-invest “profits” [already taken] in order to get this EB-5 funded gizmo running. I submit, and this is just a guess, that the ROI is so far in the toilet that the developer doesn’t want to “risk” any of his hard earned money. Like many have proffered, it is only a matter of time before this thing blows up. I am glad I am a mere spectator and NOT an investor.

    • Neil Johnson

      The company cant’ even open, there are only losses at this point. A company can only make money when customers pay them money. THERE IS NO PROFIT.

      Did they build the project and make money off the building? They might, but they need to get paid first.

      The company, investors, employers, employees, owners and state of Vermont will continue to lose money until it’s open. This will have a severe negative effect upon the value of the building, which will reduce the assessed value and taxes collected by the state of Vermont. This is the absolute worst thing that could happen to a new start up business.

    • Bill Hayman

      OK todd and every other naysayer, I don’t know the answer to question of how much money Stenger put into the project, but my guess it is little or none as it should be. His investment is the time and expense to pull the project together, a project that will benefit the Burke area that no other Vermonter would undertake as a developer and without the help of foreign investment, it would not happen because no one other than the foreign investors getting green cards would invest in Vermont. If Stenger had the money, why should he risk his money to guarantee an foreign investor’s return on a real estate investment where he might not have any ownership interest himself? If this does “blow-up”, the DFR will share much of the blame.

  • The title “construction management fee” seems to be mis-named. What is described is a developer fee. This is the compensation for the cost to develop financing, sales, marketing and manage the other aspects of the project plus profit through the pre-development, construction and operation phases. The cost alone are typically 5% with another 10% to 20% for overhead and profit depending on the risk and investment by the developers. With EB5 the cost may be much larger with international investor recruitment. Construction management fee is paid to the construction company not the developer.

    • Bill Peberdy

      It’s helpful to realize that Stenger and Quiros “own” part of an awful lot of all the Jay/Q-Burke/EB-5 funded businesses in the NEK EB-5 scheme.
      They can move funds around and charge fees forward and backward from one business to the next for weeks on end. I’d guess Peter can pay and borrow from Paul almost at the same time.
      Just look at this business wiki of Q World Services associated with 29 companies-

  • Julia Purdy

    You go Susan Donegan! It’s high time Vermont stopped being played for a sucker by high rollers. Remember the old saying, “Beware the naked man who offers the shirt of his back.” Stenger’s pleas smack of bullying and the last thing anyone should do is give a bully what he wants. I don’t know where Stenger and Queiros are from, but they are dealing with a VERMONTER!

    • Neil Johnson

      Hi Julia, I’ve read your posts. No doubt the EB5 is a treasure trove of money for developers, you seem to know the parties involved. Do you know if the project is over budget? How much is being held back? How much of the project is completed? Mechanics liens doesn’t mean they’ll get paid. It also means the project is closed, nobody makes money.

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