Joan Goldstein
Vermont Agency of Commerce & Community
Development Regional Center
One National Life Dr./Deane C. Davis Bldg./6th Floor
Montpelier, VT 05620

RECEIVED
JUL 06 2010
Agency of Commerce and
Community Development

 U.S. Department of Homeland Security
U.S. Citizenship and Immigration Services
Immigrant Investor Program
131 M Street, NE, MS 2235
Washington, DC 20529

US. Citizenship
and Immigration
Services
TO:

DATE: July 3,2018

Michael Sullivan Pieciak and Joan Goldstein
Vermont Agency of Commerce and Community
Development Regional Center
One National Life Dr./Deane C. Davis Bldg./6th Floor
Montpelier, VT 05620

Application: Form 1-924
File Number: RCW1031910148
RCID: ID1031910148

NOTICE OF TERMINATION
This letter shall serve as notification that U.S. Citizenship and Immigration Services ("USCIS") has
terminated the designation of Vermont Agency of Commerce and Community Development Regional
Center (the "Regional Center" or VACCD RC)as a regional center under the Immigrant Investor Program
(the "Program") pursuant to Title 8 of the Code of Federal Regulations ("8 C.F.R.") section 204.6(m)(6).
The reasons for the termination are explained, below:
(SEE ATTACHED)
If the Regional Center disagrees with this decision, or if the Regional Center has additional evidence that
shows this decision is incorrect, the Regional Center may file a motion or an appeal to this decision by
filing a completed Form I-290B, Notice of Appeal or Motion, along with the appropriate filing fee. A copy
is enclosed. The Regional Center may also include a brief or other written statement and additional
evidence in support ofthe motion or appeal. The Form I-290B must be filed within 33 days from the date
of this notice. If a motion or appeal is not filed within 33 days, this decision is final.
The Regional Center must send the completed Form 1-290B and supporting documentation with the
appropriate filing fee to the address indicated below.
If using the U.S. Postal Service:
USCIS
P.O. Box 660168
Dallas, TX 75266

If using USPS Express Main/Courier:
USCIS
Attn: I-290B
2501 S. State Highway 121 Business
Suite 400
Lewisville, TX 75067

For an appeal, the Regional Center may request additional time to submit a brief within 30 calendar days
of filing the appeal. Any brief, written statement, or evidence in support of an appeal that is not filed with
Form 1-290B must be directly sent within 30 days of filing the appeal to:
USCIS Administrative Appeals Office
U.S. Citizenship and Immigration Services
20 Massachusetts Avenue, NW,MS 2090

 Vermont Agency of Commerce and Community Development Regional Center — Designation Terminated
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Washington, DC 20529-2090
For more information about the filing requirements for appeals and motions, please see 8 C.F.R. § 103.3
or 103.5, or visit the USCIS website at www.uscis.gov.
Sincerely,

J ulia L. Harrison
Acting Chief, Immigrant Investor Program

Enclosure: (1) Form I-290B with instructions
(2)Notice of Intent to Terminate issued on August 14, 2017

cc:

Robert C. Divine
Baker Donelson Bearman Caldwell & Berkowitz, P.C.
633 Chestnut Street, Suite 1900
Chattanooga, TN 37450

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NOTICE OF TERMINATION
Termination of Regional Center Designation Under the Immigrant Investor Program
Vermont Agency of Commerce and Community Development Regional Center
The regulation at 8 C.F.R. § 204.6(m)(6)(Continued participation requirements for regional centers)
provides:
(i) Regional centers approved for participation in the program must:
• (A) Continue to meet the requirements of section 610(a) of the Appropriations
Act.
(B) Provide USCIS with updated information annually, and/or as otherwise
requested by USCIS, to demonstrate that the regional center is continuing to
promote economic growth, including increased export sales, improved regional
productivity, job creation, and increased domestic capital investment in the
approved geographic area, using a form designated for this purpose; and
(C)Pay the fee provided by 8 CFR 103.7(b)(1)(i)(XX).
(ii) USCIS will issue a notice of intent to terminate the designation of a regional center in
the program if:
(A) A regional center fails to submit the information required in paragraph
(m)(6)(i)(B) of this section, or pay the associated fee; or
(B) USCIS determines that the regional center no longer serves the purpose of
promoting economic growth, including increased export sales, improved regional
productivity,job creation, and increased domestic capital investment.
(iii) A notice of intent to terminate the designation of a regional center will be sent to the
regional center and set forth the reasons for termination.
(iv) The regional center will be provided 30 days from receipt of the notice of intent to
terminate to rebut the ground or grounds stated in the notice of intent to terminate.
(v) USCIS will notify the regional center of the final decision. If USCIS determines that
the regional center's participation in the program should be terminated, USCIS will state
the reasons for termination. The regional center may appeal the final termination decision
in accordance with 8 CFR 103.3.
(vi) A regional center may elect to withdraw from the program and request a termination
of the regional center designation. The regional center must notify USCIS of such

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election in the form of a letter or as otherwise requested by USCIS. USCIS will notify the
regional center of its decision regarding the withdrawal request in writing.
I.

Procedural History

On June 26, 1997, USCIS designated and authorized the Regional Center's participation in the Program.
On July 8, 2016, USCIS issued a Request for Information (RFI) to the Regional Center. The Regional
Center submitted its response to the RFI on August 25, 2016. On August 14, 2017, USCIS issued a
Notice of Intent to Terminate ("NOIT") to the Regional Center which afforded the Regional Center 30
days from receipt of the NOIT to offer evidence in opposition to the grounds alleged in the NOIT. On
September 18, 2017, USC1S received a response to the NOIT (the "NOIT Response"), which did not
sufficiently address the grounds alleged in the NOIT. Accordingly, USCIS has determined that the
Regional Center's participation in the Program should be terminated. Pursuant to 8 C.F.R. §
204.6(m)(6)(v) and through this Notice of Termination, USCIS hereby terminates the Regional Center's
participation in the Program.
The Regional Center Deficiencies Cited in the NOIT
The NOIT specified four reasons for its issuance:
1. Failure by VACCD RC to provide adequate and proper oversight, monitoring, and management
of its projects.
2. Diversion of EB-5 investor funds from intended job creating projects to other purposes, including
for Ariel Quiros's1 personal use. This (a) caused some project funding shortages, and (b)
jeopardized the eligibility of some EB-5 investors to have the conditions on their permanent
residence status lifted via their Form 1-829 petitions, due to insufficientjob creation.

Ariel Quiros is a key defendant in separate civil complaints brought by the U.S. Securities and Exchange
Commission (the SEC)and the state of Vermont concerning allegations of diversion of EB-5 investment funds. Mr.
Quiros was involved in operating the New Commercial Enterprises(each an NCE)associated with most of VACCD
RC's projects charged in those complaints.
The "SEC complaint" refers to a civil action brought by the SEC on April 12, 2016 against 7 EB-5 entities
associated
with
the
VACCD
RC,
among
10
other
named
Defendants.
See
hup:\\
,liti2nionicomplaints..20 I Olcomp-pr20 I
).pdI.
The "Vermont State complaint" refers to a civil complaint filed by the State of Vermont on April 14, 2016 against
the same 17 Defendants as in the SEC complaint, regarding activities relating to the Regional Center. The
allegations in the SEC and Vermont State complaints are similar. (The SEC and Vermont's Department of Financial
Regulation, which handled the state's investigation, coordinated their investigations.)
See
h
k
ermont.go si les/default/1iles1 peak iA mended%2(Complai nt%20%28State%20v.%20Quiros%29
(),I,201:11T.).11 )1 for the June, 2016 amended complaint.

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3. Misrepresentations to USCIS and the EB-5 investors with regards to sponsored job-creating
projects' funding and prospects for success.
4. Adverse effects on future projects and job creation. The resulting negative publicity from the
SEC and Vermont State complaints has led developers which had been associated with two
VACCD RC projects to drop their participation with the Regional Center for future projects.
This Notice will discuss these in further detail below, as well as the VACCD RC NOIT response.

II.

Reasons for Termination

USCIS has determined that the Regional Center no longer serves the purpose of promoting economic
growth, including increased export sales, improved regional productivity, job creation, or increased
domestic capital investment as required by 8 C.F.R. § 204.6(m)(6).
A. Failure to Continue to Serve the Purpose of Promoting Economic Growth
Regional centers are designated for the promotion of economic growth and must continue to meet the
requirements of section 610(a)ofthe Appropriations Act as amended, and promote economic growth in a
manner that does not conflict with requirements for classification under section 203(b)(5) of the
Immigration and Nationality Act ("INA"), removal of conditions on lawful permanent residence under
section 216A ofthe INA, and implementing regulations following their designation. According to section
610(a) of the Appropriations Act, economic growth includes increased export sales, improved regional
productivity, job creation, or increased domestic capital investment. See also 8 C.F.R. § 204.6(m)(6)(ii)
("USCIS will issue a notice of intent to terminate the designation of a regional center in the program if. . .
USCIS determines that the regional center no longer serves the purpose of promoting economic growth,
including increased export sales, improved regional productivity, job creation, and increased domestic
capital investment.").
The reasons why a regional center may no longer serve the purpose of promoting economic growth are
varied and "extend beyond inactivity on the part of a regional center." 75 FR 58962. For example,
depending on the facts, a regional center that takes actions that undermine investors' ability to comply
with EB-5 statutory and regulatory requirements such that investors cannot obtain EB-5 classification
through investment in the regional center may no longer serve the purpose of promoting economic
growth. See Section 610(a)-(b) of the Appropriations Act (stating that one purpose of a regional center is
to concentrate pooled investment in defined economic zones and accomplishing such pooled investment
by setting aside visas for aliens classified under INA 203(b)(5)). Likewise, a regional center that fails to
engage in proper monitoring and oversight of the capital investment activities and jobs created or
maintained under the sponsorship of the regional center may no longer serve the purpose of promoting
economic growth in compliance with the Program and its authorities.
When derogatory information arises (such as evidence of inaction, mismanagement, theft, or fraud by the
regional center or related entities), USCIS weighs all relevant factors in the totality of the circumstances

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to determine whether the regional center is continuing to serve the purpose of promoting economic
growth. Such factors may include the seriousness of the derogatory information, the degree of regional
center involvement in the activities described in the derogatory information, any resulting damage or risk
imposed on investors and the economy, as well as any mitigating, corrective, or restorative actions taken
or forthcoming to redress the situation.
USCIS has considered all evidence in the record including evidence provided in response to the NOIT
"for relevance, probative value, and credibility, both individually and within the context of the totality of
the evidence," in determining whether the Regional Center's continued participation is justified under the
regulations by a preponderance of the evidence. See Matter of Chawathe, 25 I&N Dec. 369, 376(AAO
2010). For the reasons set forth below, USCIS has determined by a preponderance of the evidence that
the Regional Center no longer serves the purpose of promoting economic growth in compliance with the
Program.
I. Negative Factors identified in the NOIT
1. Lack ofAdministrative Oversight(8 CFR 204.6(m)(6))
The NOIT provided detail as to how the Regional Center did not carry out sufficient monitoring,
oversight, and management of its projects and, in contrast, how if it had done so, the alleged malfeasance
related to the projects, might have been prevented. This lack of oversight was consequential, as diversion
of investor capital negatively impacted the regional center's ability to continue to promote economic
growth. At the time of the regional center's designation, USCIS regulations provided for termination of a
regional center when it was not continuing to meet program requirements and upon a Service
determination that the regional center no longer was promoting economic growth. 8 C.F.R. 204.6(m)(6)
(1997). Additionally, at that time participation of a regional center in the Immigrant Investor Program
required a "detailed statement regarding the amount and source of capital which has been committed to
the regional center" and agency policy in the Adjudicator's Field Manual(AFM). AFM 22.4(a)(2)(B)(iv)
interpreted this to include in part, "A description of the plans to administer, oversee, and manage the
proposed Regional Center, including but not limited to how the regional center will:
• Oversee all investment activities affiliated with, through or under the sponsorship of the proposed
Regional Center."
Further, at the time of the Regional Center designation, the regulations stated:
To ensure that regional centers continue to meet the requirements of section 610(a) of the
Appropriations Act, the Assistant Commissioner for Adjudications shall issue a notice of
intent to terminate the participation of a regional center in the pilot program upon a
determination that the regional center no longer serves the purpose of promoting
economic growth, including increased export sales, improved regional productivity, job
creation, and increased domestic capital investment. 8 C.F.R. 204.6(m)(6)(1997).

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In addition, USCIS reminded VACCD of this responsibility in its 1-924 approval notice and subsequent
amendment approvals. As highlighted in the NOIT, multiple USCIS approval letters sent to VACCD RC
for its designation and amendments (i.e., for Form 1-924 applications) conveyed its monitoring
responsibilities. For instance, the Regional Center's letter reaffirming its designation, dated June 11,
2007, clarifies the management and oversight responsibilities stating:
"In order for USCIS to determine whether your regional center is in compliance with the above cited
regulation, and in order to continue to operate as a USCIS approved and designated regional center,
your administration, oversight, and management of your regional center shall be such as to monitor
all investment activities under the sponsorship of your regional center..."2
That letter also indicates that the Regional Center must be prepared to explain,
"How the VACCD-RC is administering its regional center"3, and...
"How the VACCD-RC is actively engaged in the evaluation, oversight and follow up on any
proposed commercial activities that will be utilized by alien investors in order to create direct and/or
indirectjobs through qualifying EB-5 capital investments into commercial enterprises within the State
of Vermont."'
The NOIT also mentions that "the USCIS amendment approval letters (sent to the Regional Center) dated
October 6, 2009 and August 12, 2010 convey VACCD-RC's administration, oversight, and management
responsibilities, as described immediately above."'
In response to the concern raised, the Regional Center provided three main arguments. First, that "A
regional center's responsibilities for the oversight of day-to-day operations of the separate and
unaffiliated NCEs are not established in any law, regulation, or published policy, and are not defined
anywhere."6 However, as explained above, at the time of the regional center's designation, participation
in the program required that a regional center provide the agency with a detailed statement regarding the
amount and source of capital committed to the regional center, and agency policy reflected in the AFM
interpreted that to mean oversight of all investment activity affiliated with, through, or under the
sponsorship of the proposed regional center. This policy has remained unchanged and is currently in the
Policy Manual at Volume 6, Part G, Chapter 3, Section A.
Second the Regional Center argued that "the NOIT fails to identify any legal standard for measuring the
adequacy of the VRC's (i.e., VACCD RC's) monitoring and oversight".7 Again, as indicated above,
page 17 of the NOIT.
Ibid., page 17.
4 Ibid., page 17.
Ibid., page 17.
6 See page 5 of the response.
7 Ibid., page 8.
2 See
3

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USICS clarified the policy requirement in numerous letters to the Regional Center over multiple years.
And, these oversight responsibilities clearly involved the projects themselves, which turned out to be the
problem area for the widespread misuse and misappropriation of EB-5 funds, as well as
misrepresentations to USCIS and the EB-5 investors, according to the SEC and Vermont State
complaints.
Third, the Regional Center argued that because the VACCD RC did indeed timely report the required
information to the agency, it had met its monitoring and oversight requirement.8 However, timely filing
the 1-924A is only part of the annual requirement for regional centers. The form I-924A instructions
clearly indicate the requirement to "Answer all questions fully and accurately." As well as a notification
that "By signing this form, you have stated under penalty of perjury (28 USC section 1746) that all
information and documentation submitted with this form is complete, true, and correct." Therefore it is
not sufficient to timely file the I-924A, but the information contained in that filing must be complete, true
and correct. The NOIT Response seems to argue that VACCD RC's only oversight responsibility was
reporting its activities to USCIS. But, such reporting must be accurate and without effectively monitoring
its projects, a regional center cannot accurately carry out its reporting requirements and responsibilities to
USCIS. This is the case for any regional center.
Although the MOUs between the Regional Center and project developers seemed to require quarterly
reports, the NOIT pointed to reports that this did not happen. The NOIT Response did not address this or
provide any other evidence that the Regional Center had engaged in monitoring and oversight.
Therefore after considering all of the information in the record, the agency concludes by a preponderance
of the evidence that the VACCD RC did not adequately fulfill its project oversight and monitoring
responsibilities, which are integral to satisfying obligations set forth in the EB-5 regulations. As noted
previously, a regional center that fails to engage in proper monitoring and oversight of the capital
investment activities and jobs created or maintained under the sponsorship of the regional center may no
longer serve the purpose of promoting economic growth in compliance with the Program and its
authorities.
2. Diversion ofEB-5 Funds
As addressed in the NOIT, the SEC and Vermont State complaints indicate that EB-5 funds were used for
purposes that are inconsistent with the business plans and Private Placement Memoranda (each, a PPM)
submitted to USCIS by the Regional Center and in furtherance ofjob creation. As noted in the NOIT,
"according to the Vermont (State) complaint, EB-5 'investors were not informed through the (PPMs')
Source and Use of Investor Funds or in any other part of any offering document that their funds would be
used in any other way than for the purposes specifically identified in the PPMs, including, for example,
that their funds would be:

8

Ibid., page 5.

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(a) Misused to purchase T-bills;
(b) Pledged as collateral for loans for non-project purposes;
(c) Misappropriated for the personal benefit of Quiros;
(d) Misused to pay for other EB-5 Projects' costs or other non-disclosed costs; or
(e) Commingled with funds invested in other projects'9."1°
In addition, the NOIT stated that, "as for further specifics regarding the diversion and misuse of EB-5
funds, the Vermont (State) complaint also notes that 'since 2008, Quiros has misappropriated at least $50
million of investor funds to, among other things: (1) purchase Jay Peak Resort; (2) purchase Burke
Mountain Resort;(3) back a personal line of credit to pay his personal income taxes;(4) pay taxes for an
unrelated company Quiros owns; and (5) purchase a luxury condominium in Trump Place New York.
Quiros also improperly used investor funds to pay for margin loan interest and fees ($2.5 million) and to
pay down and off margin loan debts'll."12
The NOIT details how the diversion of funds from the Jay Peak Hotel Suites Stateside, Jay Peak
Biomedical, and Q Burke Mountain Resort projects contributed to budget shortfalls and an inability to
complete the intended project work on time -- or complete almost no work at all, in the case of Jay Peak
Biomedical. Also, the NOIT describes how these diversions led to many contractors not being paid on
time for their work, causing financial problems. For instance, the Receiver's $150 million settlement with
Raymond James & Associates reportedly does not cover the contractors owed for previously completed
work on the Jay Peak Biomedical project.13
Further, as explained in the NOIT, using EB-5 funds for purposes unrelated to the proposed projects and
job creating activities not only casts doubt on the legitimacy of the projects' representations on the use of
EB-5 funds in furtherance of job creation and economic growth, but may also impact the Regional
Center's investors whose petitions rely on the job creation for Program eligibility.
The NOIT Response did not address the NOIT's points about the diversion of funds, and thus did not
overcome its concerns. Therefore, after reviewing the evidence in the record, including all that was
submitted in response to the NOIT, it appears that EB-5 funds invested in activities sponsored by the
Regional Center were used for purposes unrelated to the business activities ofthe JCEs. These diversions
may have also jeopardized the EB-5 investors' eligibility for lawful permanent resident status in the
United States through their investments in projects sponsored by the Regional Center. Based on this
apparent diversion and the seriousness of its consequences, USCIS has determined by a preponderance of
9

For the citation from the Vermont State complaint, see page 27 of that document.
See pages 20-21 ofthe NOIT.
1 1 For the citation from the Vermont State complaint, see pages 3-4 of that document.
12 See page 21 of the NOIT.
13 See http://www.stowetoday.com/news_and_citizen/news/local_news/better-late-than-never-percy-gets-eb—
pay/article_bled7fc8-3be9-1 le7-9ce7-e7ba214b9d6a.html -- Andrew Martin, News and Citizen,"Better late than
never— Percy gets EB-5 pay", May 18, 2017, and the Receiver's website: https://jaypeakreceivership.com/wp-

content/uploads/2017/04/41473529_1-2.pdf.

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the evidence that the Regional Center no longer serves the purpose of promoting economic growth in
compliance with the Program.
3. Material Misrepresentations Involving the Projects
As indicated in the NOIT, during the course of its adjudications and the verification of information
submitted by VACCD RC and individual Form 1-526 petitioners, USCIS has discovered significant
discrepancies between what the Regional Center represented in its filings and documents provided to
individual Form 1-526 petitioners, and what USCIS was able to determine independently.
For example, the NOIT described how the Jay Peak Biomedical PPM states that a certain ANC Bio
Product was, "currently in the process of FDA approval", but that, in reality, as noted in the Vermont
State complaint, the, "...Defendants had not, and, upon information and belief, have never, applied for
FDA approval for the ANC Bio Products. The PPM further states that the project is set to commence in
October, 2014, without also including the material contingency that commencement of the project was
dependent on FDA approval, and without disclosing the risk that the FDA might not approve the ANC
Bio Products".14 This was a misrepresentation which made the project's prospects appear much more
favorable than the facts warranted. The Regional Center's NOIT Response did not address the NOIT's
points about these misrepresentations.
USCIS concerns regarding material representations submitted in filings associated with VACCD to
USCIS were raised previously in the Request for Information (RFI) that was issued to the Regional
Center on July 8, 2016. In that RFI, USCIS noted that it had received petitioner filings for the ANC Bio
project as recently as April 2016 and asked when the Regional Center became aware of the alleged
diversion of investors' funds, as relevant to (1) any investigative action(s) taken, and (2) the Regional
Center's marketing activities for the projects.
According to the RFI response to questions about the ANC Bio documents the Regional Center responded
that, "ACCD directed significant attention to the offering documents and the manner in which the Jay
Peak Biomedical project was marketed. ACCD paid particular attention to the accuracy of marketing
materials, which led to a focus on the Private Placement Memoranda ("PPM"), as well as the Business
and Marketing Plans, and the Job Creation analysis. By late 2013, ACCD began having concerns about
whether all material information about the Jay Peak Biomedical project was being disclosed to investors."
Yet these concerns were not shared with USCIS, rather VACCD remained silent in their concerns and
took no action as over 83 petitions for this NCE that were approved in 2014 and 2015.
Therefore, taking into account all of the information in the record it appears that there were
misrepresentations consisting of false or misleading information about Regional Center-sponsored capital
investment activity in materials submitted to USCIS and that when VACCD became aware of these
misrepresentations, it took no corrective action. These discrepancies and misrepresentations cast doubt
14

See page 25 of the NOIT. This quotation was originally in pages 39-40 of the amended Vermont State complaint.

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on the credibility of VACCD RC's filings and call into question the legitimacy of its operations. For
these reasons, USCIS has determined by a preponderance of the evidence, that the Regional Center no
longer serves the purpose of promoting economic growth in compliance with the Program.
4. Adverse Effects on Future Projects and Job Creation
While the NOIT acknowledged that VACCD RC has completed a number of projects and created jobs, it
raised concerns that the SEC and Vermont State complaints and the resulting extensive adverse publicity
have negatively affected the Regional Center's ability in the future to sponsor projects and create new
jobs.I5 In particular, it mentioned two NCEs which have participated in job creating projects sponsored
by VACCD RC but recently said they will not be doing so in the future. First, as explained in the
NOITI6,"Stowe Aviation has ended its relationship with the VACCD RC to carry out a project expanding
the Morrisville-Stowe State Airport. Russell Barr, Stowe Aviation's owner, said that marketing for the
project was hampered by allegations of fraud at Jay Peak Resort."17 Second, Peak Resorts Inc. has
partnered with the Regional Center to develop the Mount Snow project, which has expanded its snowmaking capacity and will build a new Carinthia ski lodge. "However, Peak Resort's next EB-5 project
will build new residential units at Mount Snow, but it will not work with the VACCD RC, but
instead..."I8 has formed its own regional center for this, the Great North Regional Center.19 Peak Resorts
Vice President, Dick Deutsch, reportedly "...told investors that he wanted to divorce Mount Snow's
projects from the state's EB-5 troubles", which he thought led to a delay in getting their EB-5 funds
released for the first phase of the Mount Snow project.2° Thus, the NOIT noted, "the SEC and Vermont
(State) complaints and the resultant publicity appear to have dampened the future ability of the VACCD
RC to sponsor projects and promote economic growth".2'
The NOIT asserts that the negative publicity and fallout from the SEC and Vermont State complaints hurt
the ability of VACCD RC to sponsor future projects; the NOIT Response did not refute that. Rather, the
Regional Center noted that it will not sponsor any new projects and that the Vermont State government
wants to wind down operations of the Regional Center. The Regional Center stated, "The State and
USCIS have a common interest in ultimately closing the VRC." Further, the Regional Center submitted
a document dated August 18, 2017 from the Vermont Department of Financial Regulation("DFR") which
states, "Fundamentally, we believe operating a regional center is not a function that is best performed by
the State and the need for a State-run regional center has passed." Here, the Regional Center and the
See page 26 ofthe NOIT.
16 Ibid., page 26.
17 See htlps:Lividie:ger.orils2017104103/stowe-aviation-withciraws-vermont-eh-5-reH()11:11-centeri; VTDigger, Anne
Galloway,"Stowe Aviation Withdraws from Vermont EB-5 Regional Center", April 3. 2017, p. 2.
15

page 26 ofthe NOIT.
designated this as an EB-5 regional center on November 9, 2017.
20 See hups://vtdig2.er.org/2017/0311 0/mount-snow-spl il-state-plans-ch-5-litelecl-expansioni; VTDigger, Mike Faher,
"Mount Snow to Split with State, Plans EB-5-Fueled Expansion", March 10, 2017. This is also mentioned on page
26 of the NOIT.
21 See page 26 ofthe NOIT.
18 See

19 USCIS

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State of Vermont acknowledge that the Regional Center will no longer sponsor any new projects and that
it should be closed. Thus, by these statements, we can conclude that the Regional Center will not
continue to promote economic growth in the future. Also, while the regulations do allow a regional
center to withdraw from the EB-5 Program, they do not provide for a regional center to withdraw or wind
down on its own timeline. The regulations specifically provide that USCIS should terminate a regional
center when it determines that it no longer continues to promote economic growth, regardless of any
timeline. Here, USCIS has determined at this present time that the Regional Center no longer serves the
purpose of promoting economic growth required by 8 C.F.R. § 204.6(m)(6) and that the Regional Center
should be terminated based on negative factors relating to the Regional Center. As explained in more
detail below, the positive factors contained in the record as a whole are outweighed by negative factors,
warranting termination of the Regional Center's designation.
H.

Positive Factors

While this Notice has so far generally focused on negative factors involving VACCD RC, in reaching its
determination, USCIS also considered the positive factors as they relate to the Regional Center's
promotion of economic growth. The following are some of the positive equities that were considered.
First, the VACCD RC has completed a number of projects and in the process has created many jobs.
Also, some projects are ongoing, such as the Mount Snow project, and will create additional jobs in the
future. For example the NOIT Response stated, "In fact, prior to receipt of the NOIT, Mt. Snow had
begun discussions with the [VACCD RC] about affiliating for its next phase, which would produce an
estimated nearly 1,400 additional jobs.22 The success of both Trapp (i.e., the Von Trapp NCE) and Mt.
Snow shows that the[VACCD RC] is currently promoting economic growth, and will continue to do so,
unless it is terminated by USCIS."23 (However, as explained in more detail below, the accomplishment of
job creation and project completion is severely undermined and outweighed by the diversion offunds that
occurred while the Regional Center failed to conduct adequate monitoring and oversight. This is
especially true considering that the diversion of funds affected multiple projects and continued over a
period of eight years.)
USCIS notes that problems with the projects are not alleged to have been perpetrated by any Vermont
State or VACCD RC employee; instead, the main defendants in the SEC and Vermont State complaints
are Ariel Quiros and William Stenger. A positive equity considered by USCIS included the support that
the State of Vermont provided in the investigation. For example, in the Receiver's press statement about
the settlement announced on April 13, 2017 between the Receiver, Michael Goldberg, and Raymond
James & Associates, Goldberg was very thankful of Vermont State government officials helping to
structure the settlement and protect, "the defrauded investors and creditors since the very beginning of the

22

USCIS notes that Mount Snow applied for designation of a separate regional center, Great Northern Regional
Center, which was approved on November,2017.
23
See page 3 of the NOIT Response.

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case".24 (Here, however, the cooperation is outweighed by the lax oversight that the Regional Center
provided which allowed the fraud to occur in the first place.)
Also among the positive equities considered by USCIS are the actions that the Vermont State government
has taken or claims to have taken to improve their monitoring and oversight of the Regional Center
projects. Since a MOU was signed by the VACCD and the DFR in December, 2014, the DFR has been
involved in what appears to be a rigorous compliance program for all Regional Center projects. This
includes the DFR setting standards with which new EB-5 projects must comply before associating with
VACCD RC, and performing comprehensive monitoring and oversight activities for current projects
(such as (1) physically visiting and inspecting all EB-5 projects in active construction, (2) requiring
annual certified project audits by independent accountants that are to be given to DFR, and (3) enacting
stricter requirements surrounding the existence of escrow and the release of escrowed funds). While it is
a good first step that the Regional Center signed an MOU with DFR and is creating a more "rigorous"
compliance program, we must weight this against the fact that the State failed to monitor and oversee the
activities of VACCD (allowing it to divert millions of dollars of EB-5 funds). The latter undermines the
claim that the Regional Center is able to conduct monitoring and oversight now. While the MOU and the
plan are a step in the right direction, these new procedures have been in effect for four years and it is
unclear that this new framework will actually allow the State to conduct adequate monitoring and
oversight of EB-5 investment activities it sponsors. For example, the Receiver is still unable to account
for all the money that was misappropriated, and the State was unable to answer many project-related
questions raised in the RFI issued in July 2016 and NOIT issued in August 2017, 3 years after this new
process was supposedly put into place.
USCIS, in making its decision, considered remedial efforts undertaken. For example, the $150 million
settlement announced April 13, 2017 between the Receiver, Michael Goldberg, and Raymond James &
Associates may mitigate the financial harm caused by the fraudulent use of funds. The Receiver has
indicated that these recovered funds may be used to reimburse some of the defrauded investors, to pay off
some contractor liens for project work already completed, and allow completion of the construction for
the Jay Peak Hotel Suites Stateside project.25 Again, while there may be some positive outcomes related to
this settlement agreement, this factor does not support the Regional Center's claim that it continues to
promote economic growth. Rather, this factor underscores the primary negative factor: that settlement
was necessary because the Regional Center failed to conduct monitoring and oversight ofthe EB-5 capital
investment activity it sponsored, resulting in the diversion of EB-5 funds. Here again, the negative
factors outweigh the positive factors.
III.

Other Considerations

USCIS also considered the fact that not all ofthe NCEs or projects were involved in the alleged fraud.

24
25

Ibid, p.1.
See, the Receiver's website: https://jaypeakreceivership.com/wp-content/uploads/2017/04/41473529_1 -2.pdf.

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For example, the NOIT Response noted that, "terminating the VRC (quickly) may either leave Trapp
and/or Mt. Snow investors with no immigration benefits, or obligate Trapp and/or Mt. Snow to undertake
efforts to refund those investors. The latter would be costly and harmful to those businesses, as it would
likely require the businesses to access capital at potentially high costs to accomplish refunds and result in
the loss of jobs in the region. Such an outcome would conflict with the goals of the Program by
eliminating jobs and putting unnecessary financial strain on otherwise successful projects."26 The NOIT
Response provided letters from Dick Deutsch and Johannes von Trapp, President of Trapp Family Lodge,
in support of VACCD RC and in opposition to a quick termination. Both letters said that their NCEs had
nothing to do with and were not defendants in the SEC and Vermont State complaints, and thus they and
their EB-5 investors did not deserve to be hurt by an immediate termination. USCIS agrees that the
repercussions ofthe lack of management and oversight on the part ofthe regional center have far reaching
effects, which may include harm to businesses that did not invest in projects which were mentioned in the
SEC or State complaint. However, the ultimate responsibility for compliance with the relevant statutes
and regulations in the EB-5 Program, remains with the regional center entity. Here, it is the Regional
Center itself which has failed to engage in effective management and oversight, allowing EB-5 funds to
be diverted away from job creation and away from promotion of economic growth. It is with respect to
these diverted funds where the Regional Center has failed to promote economic growth. Therefore, it is
the Regional Center itself which has failed to comply with the requirements of8 C.F.R. § 204.6(m)(6)(to
continue to promote economic growth) leading to its termination. Thus, any harm to businesses which
were not listed in the SEC or State complaint is attributable to the Regional Center's lack of management
and oversight which resulted in the diversion of EB-5 funds.
As indicated above, the NOIT also raised the potential harm to investors that may come from termination.
Deutsch's letter, raised the concern that USCIS should allow,"Vermont to fulfill existing commitments to
EB-5 shareholders who relied on USCIS adjudications for benefits administered by virtue of an affiliation
with the Regional Center". Von Trapp's letter described how a quick termination would harm many of its
EB-5 investors, inter alia, since (1) they would be unable to enter the U.S. with conditional residence
status, and (2) their investments could not be refunded, as their funds had already been irrevocably spent
on the project. In this case, the Regional Center's lack of actions regarding management and oversight
allowed the diversion of funds and misrepresentations to USCIS across multiple projects and over many
years has jeopardized their petitioners' eligibility for EB-5 classification. The diversion of EB-5
investment funds away from job creating activities is contrary to the intent of the Program as it
undermined investors' ability to comply with EB-5 statutory and regulatory requirements and jeopardized
their eligibility for EB-5 classification. The actions of a regional center and all of its related entities must
be considered when evaluating the regional center's continued promotion of economic growth. The fact
that some investors' immigration status may be jeopardized who did not invest in those projects or whose
funds were not diverted is not enough to overcome the problems associated with the Regional Center's
diversion of EB-5 investments funds.

26

Ibid., page 3.

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IV.

Balancing of the Positive and Negative Equities

After considering all evidence in the record and balancing all of the positive and negative equities, USCIS
has determined that the Regional Center's participation in the Program should be terminated. As
explained in more detail below, the positive factors contained in the record as a whole are outweighed by
the severity of the negative factors regarding whether the Regional Center continues to promote economic
growth.
First, the extent, severity, and duration of the alleged malfeasance and diversion of funds are weighed
heavily in considering if the regional center continues to promote economic growth. It is important to
highlight here that the overall purpose of a regional center is to pool EB-5 investor capital so that it may
be deployed to new commercial enterprise(s) for the purpose of promoting economic growth and job
creation. Each immigrant investor who invests $500,000(or $1,000,000 outside a "Targeted Employment
Area") must demonstrate that their investment will create 10 jobs for qualifying individuals (regional
center-sponsored investments may receive credit for indirect job creation). 8 C.F.R. § 204.6(m)(7). In
addition, in situations where the NCE is not the job-creating entity, Matter ofIzummi, as well as USCIS
policy, requires that, in order to be considered properly at-risk, "the full amount of money must be made
available to the business(es) most closely responsible for creating the jobs upon which EB-5 eligibility is
based."27
Therefore, capital investment projects sponsored by a regional center demonstrate its promotion of
economic growth through the pooling of investment capital from EB-5 investors made available for, and
resulting in,job creation. Here, however, the Regional Center allowed EB-5 capital to be diverted, thus,
the diverted funds were not made available to the business most closely related to job creation and were
similarly not utilized for the promotion of economic growth. This factor is weighted heavily because it
has resulted in harm on various levels.
First, the diversion of EB-5 funds harmed the specific investors who were victims of fraud, resulting in
the loss of their investment funds. Moreover, the harm caused by the improper diversion of funds not
only harms the investors whose funds were misused, but extends beyond the EB-5 investors. For
instance, the diversion of EB-5 funds harms the workers(U.S. citizens and other qualifying workers) who
would have received jobs had the funds been properly invested. It results in a loss of overall economic
growth in the area where the diverted funds would have been invested. The diversion of funds damages
the integrity of the EB-5 Program and causes loss of public trust in the Federal and State agencies that
oversee the use of EB-5 funds. These various levels of harm are the result of the Regional Center's
failure to properly monitor and oversee the EB-5 investment activities under its sponsorship.
In this case, the SEC complaint alleged that over $200 million of EB-5 investor funds were misused,
including at least $50 million being misappropriated by Quiros for unpermitted purposes, including
personal use. All in all, the SEC complaint filed 52 counts against Quiros, Stenger and 7 VACCD RC
27

Matter ofkummi,22 I&N Dec. 169, 179(Assoc. Comm'r 1998).

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NCEs(New Commercial Enterprises). According to the SEC and Vermont State complaints, the alleged
malfeasance went on from 2008 through the filing of the complaints in April, 2016 — a total of8 years.28
Eight NCEs were involved in the alleged wide-ranging impropriety mentioned in the SEC and Vermont
State complaints, involving about half of the Regional Center's approved projects.29 All this describes
malfeasance on a large scale. Evidence in the record indicates that VACCD RC's failure to provide
adequate oversight and monitoring of its projects allowed the alleged impropriety by Quiros and Stenger
to occur and jeopardize the Regional Center's ability to promote economic growth within EB-5 Program
requirements, as well as the EB-5 investors' investments and immigration benefits. A regional center
must continue to demonstrate ongoing active engagement in monitoring, oversight, and due diligence of
all investment activities under its sponsorship. This is essential for USCIS to determine that VACCD RC
is in compliance with 8 CFR 204.6.
Second, as noted above, a regional center that takes actions that undermine investors' ability to comply
with EB-5 statutory and regulatory requirements such that investors cannot obtain EB-5 classification
through investment in the regional center may no longer serve the purpose of promoting economic
growth. See Section 610(a)-(b) of the Appropriations Act (stating that one purpose of a regional center is
to concentrate pooled investment in defined economic zones and accomplishing such pooled investment
by setting aside visas for aliens classified under INA 203(b)(5)). In this case, the regional center's lack of
management and oversight has jeopardized their petitioners' ability to obtain EB-5 classification through
their initial investment. For example, even if some of the investors recoup their investments, as noted
above per the Receiver's settlement, some of them have had their funds tied up unproductively for years.
Certain other investors whose investments are not reimbursed are also unduly at risk of not achieving
permanent residence status. For instance, 186 petitioners filed Forms 1-526 with USCIS for the Jay Peak
Biomedical NCE, representing $94 million dollars. However, reports indicate that work has stopped on
this project,3° and almost nothing on it was done. Again, when the Regional Center first became aware of
the concerns with this project, it is unclear what action if any was taken to inform investors or USCIS of
their concerns.31 The Regional Center's inaction placed its investors' immigration status in jeopardy, and
in tying up funds for a project that would not be completed, it undermined the dual purpose of the
regional center program, job creation and economic growth. In this case, the regional center's lax
oversight provided an environment in which this fraud was not only perpetrated, but continued for eight

28 This

is detailed throughout the SEC and Vermont State complaints.
were the Jay Peak Hotel Suites LP, Jay Peak Hotel Suites Phase 11 LP, Jay Peak Penthouse Suites LP, Jay
Peak Golf and Mountain Suites LP, Jay Peak Lodge and Townhouses LP, Jay Peak Hotel Suites Stateside LP, Jay
Peak Biomedical Research Park LP, and Q Burke Mountain Resort, Hotel & Conference Center LP.
See
hup::''
%..sto ctoday.comlno% s and 61j/ell/lie silkical newsibetter-late-than-never-perc -gets-cb-30
article ti I ed7IC8-3 be9- 1e7-9ee7-e7ba214h9ci6a.
-- Andrew Martin, News and Citizen, "Better late than
never — Percy gets EB-5 pay", May 18, 2017, and the Receiver's website: https://jaypeakreceivership.com/wpcontent/uploads/2017/04/41473529_1-2.pdf.
31 As noted previously, in response to the NOIT issued on August 14, 2017 VACCD acknowledged that four year
ago VACCD began having concerns about whether all material information about the Jay Peak Biomedical project
was being disclosed to investors." Yet these concerns were never shared with USCIS.
29 These

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years. Also, the misrepresentations contained in documents that the Regional Center submitted to USCIS
(as detailed above) are additional factors which cast significant doubt upon the Regional Center's ability
to monitor and oversee its operations and promote economic growth. Finally, for a regional center to
continue to promote economic growth it must continue to have projects for new EB-5 investors to invest
in for the purpose ofjob creation. Here, however, the Regional Center has indicated that it does not plan
to sponsor any new projects.
USCIS has considered the positive factors for the VACCD RC. However, in summary USCIS believes
the concerns conveyed in the preceding paragraphs and NOIT outweigh those positive factors, leading to
the decision in this Notice.
V.

Conclusion

For the reasons described above and set forth in the NOIT and pursuant to 8 C.F.R. 204.6(m)(6), USCIS
has determined that the Regional Center no longer serves the purpose of promoting economic growth and
hereby terminates the Regional Center's participation in the Program.
If the Regional Center disagrees with this decision, or if the Regional Center has additional evidence that
shows this decision is incorrect, the Regional Center may file a motion or an appeal to this decision by
filing a completed Form I-290B, Notice of Appeal or Motion, along with the appropriate filing fee. A copy
is enclosed. The Regional Center may also include a brief or other written statement and additional
evidence in support of the motion or appeal. The Form I-290B must be filed within 33 days from the date
of this notice. If a motion or appeal is not filed within 33 days, this decision is final.
The Regional Center must send the completed Form I-290B and supporting documentation with the
appropriate filing fee to the address indicated below.
If using the U.S. Postal Service:
USCIS
P.O. Box 660168
Dallas, TX 75266

If using USPS Express Main/Courier:
USCIS
Attn: I-290B
2501 S. State Highway 121 Business
Suite 400
Lewisville, TX 75067

For an appeal, the Regional Center may request additional time to submit a brief within 30 calendar days
of filing the appeal. Any brief, written statement, or evidence in support of an appeal that is not filed with
Form I-290B must be directly sent within 30 days of filing the appeal to:
USCIS Administrative Appeals Office
U.S. Citizenship and Immigration Services
20 Massachusetts Avenue, NW,MS 2090
Washington, DC 20529-2090