EB-5 Impact

eb5BURKE - The past few months have featured countless reports from Burke Mountain Resort as hotel delays turned into one of the largest alleged ponzi schemes in the state.

Accusations of EB-5 fraud have left a paper trail of questions and frustration across the Northeast Kingdom.

The investigation has left those with ties to Jay Peak and Burke Mountain wondering how thwyey got to this point.

Governor Shumlin and his administration have also done similar inner searching of what should’ve been done or what could have been done differently.

The numbers are staggering--with fraud allegations dating back eight years.

50 million dollars in funds were misappropriated for personal gain as well as a total of 200 million dollars in misused funds, which is more than half the money that was raised for the three projects.

Michael Goldberg, the receiver in charge of the resorts, says that it’s obvious where the money went, because the company has an operating hotel that’s running profitably.

The investors who provided the cash are wondering what happens next.

One investor, Felipe Viera sacrificed a lot in hopes that the program would be successful.

“To tell the truth, I don’t have money. I basically depleted the money I had. I sold my farm in Brazil. I sold my apartment in Rio,” says Viera. They need to put some kind of controls in place to prevent what’s happening now. You know everyone is scared to death.”

Viera isn’t the only one who is fearful.

The contractors in charge of building projects at Jay Peak and Burke Mountain are also in limbo.

Jerry Davis of Peak CM says he feels the state hasn’t been upfront.

“They put myself and these subcontractors at risk,” says Davis.

Last September, an independent report outlined the fraud risks within the EB-5 program. According to the U.S. Government Accountability office, the nature of the investments “can create fraud risks tied to unscrupulous regional center operators and intermediaries.”

It appears the warning may have come too late to the Northeast Kingdom.

According to Shumlin he does regret letting the program go to this.

“I think all of us have tremendous regret that we are standing here today in a program that had so much promise and having to outline these allegations,” says Shumlin.

Despite the bad circumstances, the new management is optimistic it can turn things around.

“Once we kind of grab our footing again and get settled, you know, the idea is obviously to continue to grow things and to attract more people to come enjoy what we have,” says Burke Mountains marketing director Jessica Sechler.

But the damage has been done, receiver Michael Goldberg is actively seeking a hotel buyer and says that it will be ready to go by this fall.