An Immigrant-Funded Biotech Center in Rural Vermont? What Could Go Wrong?
by Bill Hayes
In An Immigrant-Funded Biotech Center in Rural Vermont? What Could Go Wrong?, a Bloomberg Businessweek feature story looks at where the money went when foreign investors were promised green cards in return for investing $500,000.
Pedro Brito, a manager at a waste-disposal business in Caracas, was riding his motorcycle home from work in November 2014 when six men on three motorbikes surrounded him. One pressed a gun to his stomach and threatened to kill him if he looked up. They wanted his motorcycle. Brito got off the bike and ran. Later, after reporting the theft to police, he received a threatening phone call. A month after that, his home was robbed. Then his 19-year-old daughter and her boyfriend were carjacked. Brito and his wife decided it was time for the family to leave Venezuela.
Some friends recommended that he consult an immigration attorney in Fort Lauderdale, who put him in touch with two men offering an intriguing opportunity for people eager to live in the U.S. and willing to pay for a legitimate chance. One was Bill Stenger, the chief executive of Jay Peak Resort, a family destination perched on a mountain in Vermont’s Northeast Kingdom region. The other was Ariel Quiros, the Miami businessman who owned the property. A decade earlier, Jay Peak had consisted only of a ski area and a roach-ridden lodge. Now it had three hotels, six restaurants, some 200 cottages, an indoor water park, an ice rink, a spa, and a convention center, all tended to by 600 employees. The $280 million transformation had been made possible by a U.S. government program known as EB-5, which allows prospective immigrants to invest $500,000 in hard-up areas in exchange for temporary residency for themselves and their families. Anyone whose investment creates 10 jobs can then become a permanent resident. The only faster way to become an American is to marry one.
The EB-5 program has opened up all sorts of possibilities since it was started in 1990 — mischief, abuse, and fraud among them. Initially it required investors to put in $1 million and show direct evidence that the money had led to those 10 new jobs. But after two years, Congress modified the program to encourage investment in rural and underdeveloped areas, permitting prospective immigrants to invest less money in projects and count “indirect” jobs estimated by economic models.
These projects get sponsored by federally approved regional centers, which serve as economic-development organizations drawing on EB-5 money. There are now 861 such centers, all of which — except for Vermont’s — are privately run. They work with hundreds of brokers, who raise funds for projects such as wind farms and military-base redevelopments while collecting fees for themselves. These initiatives don’t always create the required jobs, return investors’ capital, or help distressed communities. Developers have found ways, for example, of using funding intended for rural areas to build in well-off neighborhoods. [more]