A Cold Day in the Northern Kingdom


April 14, 2016, The SEC announced today the filing of fraud charges and the freezing of assets of Jay Peak Vermont’s principals Bill Stenger and Ariel Quiros. The charges and other actions were related to alleged fraud and misappropriation with respect to the more than $350 million in EB-5 capital raised by Stenger for Jay Peak and related projects. A copy of the SEC press release can be found at this link:


SEC actions in the EB-5 arena have become relatively common and the nature of the charges as essentially that of fraud. What is notable in this case is that it is the first against a truly sizable defendant. This has the potential for dramatic effect on the EB-5 industry at large. Firstly, it may signal that the SEC is finally moving forward to truly clean up the muck in the EB-5 industry. The last half dozen or so actions were against relatively small players. They allowed the SEC to learn about the industry and understand how to go after well capitalized defendants such as those behind Jay Peak. Other of the original large EB-5 sponsors have acknowledged being under SEC investigation. This action may very well mean that the others will soon face formal charges. It is somewhat surprising given the number of investors and amount of money in question that the Justice Department did not file concurrent criminal charges.

The next question is whether this will send similar shock waves across China like what occurred after the SEC filed charges against the Chicago Convention center sponsors. In many ways, this case should be even more unnerving to potential investors than the Chicago case. In this, more money was involved. It also implicates the reputation of the Vermont Regional Center. No one is accusing Vermont Regional Center of anything untoward, but investors must surely question what they were doing to prevent the abuses from happening. The Vermont Regional Center tell investors that they in fact to monitor the projects. If that is the case, how did a fraud of this scale happen for so long? Now, how will investors trust the Regional Center Pilot Program? In many ways, the current popularity of the entire EB-5 program can be attributed to the early efforts of Jay Peak and the Vermont Regional Center. They count their I-526 approvals and I-829 approvals in the hundreds. But was it all built on lies? Will the only winners end up being the Chinese migration agents who drove investors to Jay Peak by the hundreds? How could the investors in China trust the largest agencies any longer?

This is truly a sad day for the EB-5 program. Yesterday, I attended the Senate Judiciary Committee hearing on reforming the EB-5 program. The first panel included, Chairman Goodlatte and Ranking Member Conyers of the House Judiciary Committee. They spoke passionately and elegantly about the need for reform. They were echoed by Chairman Grassley and Ranking Member Leahy (of Vermont). It was a beautiful display of bicameral bipartisan support of needed reforms to the Regional Center Pilot Program.

This must be the day for a new beginning of the Regional Center Program. If USCIS and/or Congress does not act to fix the ‘fraud’ being committed upon the American public in shape of TEA policy abuse and the frauds being committed upon the foreign investors, then before long, they will not have to act as the investors will vote with their feet and choose among the dozens of other nations’ immigrant investor programs.

This must be a call to arms. There are good Regional Centers out there. There are good sponsors of Direct EB-5 investments. All must act to support immediate and meaningful EB-5 reform to save the program from the fury that should be reserved for the bad actors in our midst.

© 2016 Matt Gordon. Reprinted with permission.

About The Author

Matt Gordon Matt Gordon's career spans business operations, finance and law. Mr. Gordon is a noted expert in the EB-5 field and is an authority on structuring EB-5 investments. He is the editor of the EB-5 Book, the legal treatise on the EB-5 program and a frequent lecturer to immigration attorneys. Mr. Gordon has participated in policy events, including those hosted by the White House and Harvard University’s Kennedy School of Government.

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