Of course it’s hard to match the impact of the original headlines from Stenger & Quiros’ Jay Peak EB-5 scandal — but two resulting events, largely unnoticed by comparison, will soon impact Vermont’s EB-5 Regional Center.
The first change was set underway when, to prevent future “Ponzi-style” EB-5 scandals, Vermont shifted financial oversight responsibility from the Agency of Commerce and Community Development (ACCD) to the Department of Financial Regulation (DFR). The focus jumped from wooing overseas investors with almost full-time EB-5 boosterism to tightening up financial oversight.
Along with this shift came legislative adjustments allowing the DFR to control charges and enact new fees for those participants in the Vermont EB-5 Regional Center. Additionally the DFR was given authority to invoice EB-5 developers for its oversight and regulation. Moves were also made to rein in the ACCD’s taxpayer support for advertising, out-of-state travel, and other promotional work through the Regional Center on behalf of EB-5 developers.
And recently Peak Resorts /Mt. Snow surprised top state officials by announcing the formation of their own independent EB-5 center. The resort had to struggle with waiting on a payment for an ongoing project from their EB-5 investor funds held in escrow by the state as a guarantee.
By setting up their own EB-5 program, the out-of-state resort owners can happily gather-up their foreign funds through the investment-for-visa immigration program, independent of the Vermont-run EB-5 Regional Center with whom they formerly were partnered.
In fact, Mt. Snow Resorts probably has an inside track on this approach, should it become a trend for other EB-5 developers here in Vermont. In 2015 they hired the director of the Vermont EB-5 Regional Center — grabbing Brent Raymond directly out of the revolving door. As director, Raymond’s duties for the state included both promotional activities and monitoring EB-5 program compliance under state and federal financial regulations. Quite the catch.
So, the Jay Peak financial scandal has forced Vermont’s Regional Center EB-5 Program to change their regulatory responsibilities and funding — and perhaps most importantly, the state-run monopoly on EB-5 regulation and oversight is now threatened. It might even spell extinction rather than evolution for the Vermont ACCD’s Regional Center.
However, here and nationally, independent EB-5 foreign investment-for-visa programs are bound to stick around. Even in the midst of the new President’s immigration crackdowns, access to large chunks of quickly attainable legal foreign investment money is tough for any developer to deny themselves. You could even say it is almost impossible to resist — one New York finance broker said the EB-5 immigrant money racket was so good “[It] sounds like legalized crack cocaine.”