Thursday, April 21, 2016

Why was nothing done about the South Dakota beef packing plant meltdown?

Source:  Dakota Free Press

Among the unsolved mysteries of South Dakota’s EB-5 scandal is how $167 million in state subsidies and private capital, including $95 million in EB-5 visa investment money, could have disappeared into Northern Beef Packers, a beef plant that took six years to build, ran nine months before going bankrupt, and then sold at auction to a clever investor for a mere $4.8 million—literally, pennies on the dollar.

We may find an answer to that mystery in Vermont, where state officials allege that developers Ariel Quiros and Bill Stenger used EB-5 money for something other than the EB-5 projects with which they lured their foreign investors:

Governor Peter Shumlin, Department of Financial Regulation (DFR) Commissioner Susan Donegan, Attorney General William Sorrell, and Agency of Commerce and Community Development (ACCD) Secretary Patricia Moulton announced on April 14 that the State and U.S. Securities and Exchange Commission (SEC) have filed similar civil actions alleging investor fraud dating back to 2008 at EB-5 development projects run by Florida resident Ariel Quiros and Bill Stenger….

From his very first contact with Jay Peak in 2008, Quiros “improperly” and with Stenger’s assistance, bought Jay Peak Resort with a substantial amount of EB-5 funds. AnC Bio, meanwhile, was to be a $110 million, medical clean-room EB-5 project originally set to open this fall. The SEC alleges that AnC Bio, the last of the approved projects, was a virtual ATM machine for Quiros.

…The complaints allege that Quiros and Stenger misused more than $200 million of investor funds intended for EB-5 development projects in northeastern Vermont. The cases further allege that Quiros misappropriated an additional $50 million of investor funds for his own personal use. According to the allegations, investor funds were unlawfully diverted, or misused, between and among various EB-5 projects over many years.  In addition, Quiros’s alleged misappropriations of investor funds for personal use include: over $2 million to purchase an apartment at Trump Place in New York City; millions of dollars to pay personal income taxes and other personal expenses; and over $20 million to purchase Jay Peak and Q Burke Resorts [Source:  Timothy McQuiston, “State Files Suit Alleging Investor Fraud at Jay Peak, Inc EB-5 Projects,” Vermont Business Magazine, 2016.04.14].

Stenger and Qiros are accused of using a complex web of corporate entities to cover their misappropriations. That sounds much like how Joop Bollen structured his state-approved EB-5 scheme.  Perhaps South Dakota Attorney General A.G. Jackley will trace those intricate money paths back through Northern Beef Packers and all the way to Cyprus and Russia.

Democratic U.S. Senator Patrick Leahy spoke Thursday to demand reform in the EB-5 program. Sen. Patrick Leahy (D-Vermont) has worked with his Republican colleague from Iowa, known EB-5 watchdog Sen. Chuck Grassley (R-Iowa), to bring more accountability to EB-5. The Senate passed an EB-5 amendment in 2013, but the GOP House refused to take the matter up for a vote. Rep. Kristi Noem, what’s that you said about wanting EB-5 reform?

Vermont and South Dakota are the only two states that have run EB-5 Regional Centers themselves rather than leaving it entirely to private companies. Yet these state-run programs seem just as susceptible to fraud and corruption as numerous privately-run EB-5 programs in other states.

Saturday, April 16, 2016

Vermont Regional Center meltdown

I guess I have decided to wait and see what happens, but there have been a deluge of calls and email messages regarding the SEC investigation into Jay Peak Resorts and the Vermont regional center.

Let's just try to do the best we can.

Boyd Campbell

Thursday, April 14, 2016

SEC freezes assets of ski resort amid fraud allegations

Washington, D.C., April 14, 2016 — The Securities and Exchange Commission today announced fraud charges and an asset freeze against a Vermont-based ski resort and related businesses allegedly misusing millions of dollars raised through investments solicited under the EB-5 Immigrant Investor Program.
The SEC’s case is filed in a Miami federal court.  The court has appointed a receiver over the companies to prevent any further spending of investor assets.
The SEC alleges that Ariel Quiros of Miami, William Stenger of Newport, Vt., and their companies made false statements and omitted key information while raising more than $350 million from investors to construct ski resort facilities and a biomedical research facility in Vermont.  Investors were told they were investing in one of several projects connected to Jay Peak Inc., a ski resort operated by Quiros and Stenger, and their money would only be used to finance that specific project.  Instead, in Ponzi-like fashion, money from investors in later projects was misappropriated to fund deficits in earlier projects.  More than $200 million was allegedly used for other-than-stated purposes, including $50 million spent on Quiros’s personal expenses and in other ways never disclosed to investors.
According to the SEC’s complaint, Quiros improperly tapped investor funds for such things as the purchase of a luxury condominium, payment of his income taxes and other taxes unrelated to the investments, and acquisition of an unrelated ski resort.
“The alleged fraud ran the gamut from false statements to deceptive financial transactions to outright theft,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement.  “As alleged in our complaint, the defendants diverted millions of EB-5 investor dollars to their own pockets, leaving little money for construction of the research facility investors were told would be built and thereby putting the investors’ funds and their immigration petitions in jeopardy.”
The SEC’s complaint charges Quiros, Stenger, Jay Peak, and a company owned by Quiros called Q Resorts Inc. as well as seven limited partnerships and their general partner companies with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  Four other companies are named as relief defendants in the SEC’s complaint for the purpose of recovering investor funds transferred into their accounts.  The SEC seeks preliminary and permanent injunctions, financial penalties, and disgorgement of ill-gotten gains plus interest.  The agency also seeks conduct-based injunctive relief against Quiros and Stenger along with an officer-and-director bar against Quiros.
The SEC’s investigation was conducted by Brian Theophilus James, Trisha D. Sindler, Michelle Lama, and Mark Dee, and the case was supervised by Chedly C. Dumornay of the Miami Regional Office.  The SEC’s litigation will be led by Christopher Martin and Robert K. Levenson of the Miami office.  The SEC appreciates the assistance of the Office of the Vermont Attorney General and other authorities in Vermont.  See:

https://www.sec.gov/news/pressrelease/2016-69.html

Wednesday, April 6, 2016

Scary thought

USCIS reports that as of April 5, 2016, it has approved 824 regional centers in the United States. Fully 98 percent (or more) of these regional centers are run by people who do not know what they are doing.
Scary thought, indeed!

Friday, January 15, 2016

Chicago EB-5 scam perpetrator pleads guilty to wire fraud

Anshoo Sethi, pleaded guilty on January 12 to wire fraud, admitting his role in a scam that promised to build hotels and a convention center near O’Hare Airport by fraudulently raising more than $158 million from Chinese investors who expected to get immigrant visas under the so-called EB-5 Program, whose goal is to create full-time U.S. worker jobs.
Sethi, 32, admitted in federal court that he provided investors with forged documents, including a bogus letter from Hyatt Hotels, to get them to invest in his development, which had been approved by U.S. Citizenship and Immigration Services, the agency that grants immigrant visas to foreigners who invest at least $500,000 in approved projects under the program.
None of Sethi’s 290 investors got a visa, but they did receive refunds of their $500,000 investments.

Tuesday, November 24, 2015

SEC freezes assets in south Florida EB-5 scam

http://www.sec.gov/litigation/litreleases/2015/lr23409.htm

Friday, November 20, 2015

EB-5-funded PhoenixMart HQ raided by FBI in securities fraud investigation

The PhoenixMart headquarters was raided by the Federal Bureau of Investigation on the morning of Nov. 19 in northeast Phoenix, Arizona.
FBI agents entered the building at 7:00 a.m. in what those close to the investigation said was a look into possible securities and investor fraud at the company.
Developers hoped that the multi-million-square-foot mixed-use project would have been a major economic asset for the Pinal County, Arizona, community. More than 500 acres were committed to the project, along with significant public improvements.