EB-5 and Its Impact on Q-Burke
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- Created on Friday, 15 April 2016 14:05
- Written by Skyler Dixon
BURKE- The Federal investigation in Q-Burke regarding the EB-5 program may be leaving some with questions as to what EB-5 actually is. The investor program was initially passed to help with the creation of jobs and the promotion of tourism. The EB-5 Immigrant Investor Program is a way for immigrants to become eligible for a green card, which grants them residence in the United States. Though the program was initially created by Congress in 1990, Vermont began using the program in 1997. Foreign investors would have to pledge $500,000 to a commercial enterprise in the United States, as well as plan to create or preseve 10 permanent full-time jobs. After that, they could then apply for the EB-5 Visa. If approved, they were granted a green card for two years. The Q-Burke Ski Resort first became invested in the program four years ago.
In early 2012, Bill Stenger and Ariel Quiros finalized the purchase of Burke Mountain, and began asking for EB-5 funds. Later that year, Stenger announced that EB-5 donors raised an investment of $180 million, and promised an addition of four new hotels at Burke Mountain over the course of three years. At the same time, it was also announced that a grand total of nearly $600 million in EB-5 funding would be spent across Burke Mountain, Jay Peak, and Newport Center.
Two years later, in July of 2014, construction crews began working on the concrete for the $55 million hotel project at Burke Mountain. The project was expected to be fully completed by December 2014. Over time, Burke officials realized deadline could not be met, and construction for the project was at least one year behind schedule.
Spirits appeared to be high on October 28th 2015, where Q-Burke held a job fair with the intention of filling 300 new positions. The following week, however, a threat came in from the president of the construction management company working on the EB-5 hotel project, Jerry Davis of PeakCM. According to Davis, payments for the construction had not been received, and he threatened to shut down the entire project should they not receive compensation. The following month, on November 7th, late payments to Davis had been approved by the state. However, they refused to authorize any money towards hotel fixtures. A week after, Stenger was convinced that the hotel would achieve it’s December 2015 opening, despite the numerous delays. An email from the resort shortly after pushed the opening back to January of 2016.
Jump ahead to March 2016, and the EB-5 hotel project was still not open to the public. Paperwork from the state then revealed a big problem; Q Burke owed PeakCM $5.5 million. PeakCM proceeded to file a lien against Q Burke, meaning the property belonged to them until the debt was payed. By the end of the month, the resort laid off almost 200 employees, and has since given an opening date of June 2016.
Just yesterday, following the investigation, Governor Peter Shumlin announced that Stenger and Quiros have been charged with fraud, after allegedly misusing hundreds of millions of EB-5 dollars in the coverage of old debts or, for Quiros, personal expenses. Officials from the Security and Exchange Commission announced that all assets of the EB-5 program were to be frozen, and appointed an outside company to oversee the operations of Jay Peak and Q Burke as the investigations go forward. Leisure Hotel and Resorts, based in Kansas City, was appointed to the task.
“Mr. Quiros allegedly used these funds for a variety of purposes, including his purchase of the Jay Peak and Burke Mountain ski resorts, the payment of millions of dollars of his income tax obligations and the purchase of a New York City Trump Place New York Luxury Condominium”, Vermont Attorney General William Sorrell says.
Senator Patrick Leahy was initially a supporter of the EB-5 Program, but announced Wednesday he is calling out for a program reform. A congressional hearing took place on Wednesday, in which Leahy explained how wealthier parts of the nation are benefiting more from the program rather than rural communities, the intended purpose.
“The really important thing here is making sure the program is maximized in its effectiveness of attracting capital and creating jobs in this country”, Leahy said, “That means getting the investment levels right-- as I discussed in my written testimony and it also means addressing the comacity problem that we have.”
The United States Senate has agreed to make revisions to EB-5 legislation by September 13th, 2016.
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