The Vermont Department of Financial Regulation ordered Vail Resorts last week not to issue refunds to about 30 EB-5 investors in Mt. Snow as it intended, because the refunds would violate Vermont securities law, potentially resulting in tens of thousands of dollars in fines.
Vail purchased Mt. Snow from Peak Resorts in 2019, inheriting the EB-5 projects and investors the ski resort initiated in 2012 and 2014, said Michael Pieciak, DFR commissioner, on Friday. Mt. Snow raised $52 million from 104 foreign investors under the federal EB-5 program to build snowmaking capacity and improve the ski lodge at Mt. Snow.
Pieciak said the foreign investors in the Mt. Snow projects were motivated largely by the pathway to U.S. citizenship the EB-5 program offers for investing $500,000, plus a $50,000 administrative fee, in economic development projects in rural and economically depressed areas of the United States.
If Vail Resorts does issue refunds to the Mt. Snow investors who have not yet completed the process to receive their green cards, those investors will lose the opportunity to become U.S. citizens as a result of their investment in the resort, violating a promise made when they signed up for the projects, Pieciak said. The investments have to be “at risk” until a green card is issued, according to EB-5 regulations.
“When there’s a representation saying this thing of value will not be interfered with, that’s a pretty important representation,” Pieciak said. “Those are affirmative statements made to the investors. You can’t turn around and violate those representations.”
‘It has been less engaging with Vail’
Vail told DFR they intended to issue the refunds by Jan. 15, hence the urgency of the cease and desist order issued by the Vermont regulator on Jan. 7. Pieciak said Friday his department has received no response from Vail.
Vail did not respond immediately to a request for comment from the Burlington Free Press.
Pieciak said when Peak Resorts was in charge of the EB-5 investments at Mt. Snow, it was a model of compliance and cooperation, in stark contrast to the EB-5 fraud that was playing out at Jay Peak ski resort at the same time.
The principals at Jay Peak — Ariel Quiros and Bill Stenger — carried out a “Ponzi-like scheme,” according to federal authorities, which resulted in the misuse of $200 million of investor money.
“We had a great working relationship with (Peak Resorts),” Pieciak said. “It has been less engaging with Vail. We’ve been trying to figure out a way to get a resolution for these investors.”
Pieciak said DFR heard from worried investors, not from Vail, that the resort company intended to issue the refunds.
“Once we found out that this repayment plan was happening we reached out to Mt. Snow to confirm, then did an analysis from an EB-5 perspective and a securities perspective, looking at what was promised to investors,” Pieciak said.
After negotiations with Vail in November and December failed to result in an agreement, Pieciak said the only option left was to issue the cease and desist order. He said he expects to hear back from Vail regarding the order before Saturday, and expects the company to comply with the order.
Contact Dan D’Ambrosio at 660-1841 or firstname.lastname@example.org. Follow him on Twitter @DanDambrosioVT. This coverage is only possible with support from our readers.