1. “Pot of Gold Economic Investments Might Just Be Mud,”
By Mark Renkert, Mcsl
Chairman, SMART Holdings USA
“All That Glitters Is Not Gold,” described Shakespeare in Merchant of
Venice in 1596 depicting the importance of discernment when determining
value.
And thus can be said about the media’s campaign trumpeting job and
economic development creation of the United States EB-5 Program.
“10,000 Jobs To Be Created,” The Burlington Free Press
(http://bfpne.ws/ZS1nBl )
Vermont is one of a growing number of states where the media blitz has
raised a skeptic’s brow.
Morrisville, Vermont hosted a now-rejected EB-5 Dreamlife Senior
Housing Project originated by Quebec Canada resident, Richard Parenteau
who has funded two dozen business starts and failures over the years and
lately, the Stowe Reporter Newspaper reported that Parenteau’s Dreamlife
Retirement Resorts, LLC which filed “Regionally” (which means that they
don’t have to meet the Job Generating characteristics mandated by most EB-
5 Projects) has raised fraud concerns over principal misrepresentation over

2. partner credentials. (Quick Reference Guide for EB-5: EB-5 Characteristics
Easy Chart)
But the zeal of chasing EB-5 Investors is like the Gold Rush of the 1840’s.
And gold it is ..... for Investment idea originators like Stenger who can get
as much as $25,000 per investor and each product can have up to a 100
investors regardless whether the Investment Project flies or not.
That's right - Project Hosts get up to $35,000 in fees per investor. And some
feel that might be the true motivation behind many of the projects.
For Jay Peak: once the I-526 had been approved, Stenger has an additional
clause in the subscription agreement that provides compensation of $10,000
per investor even if the investor did not pursue the investment after the 30-
day review period ended, making Jay Peak one of the few EB-5 regional
centers that charged (and still charges) a document fee. (more
see: http://bit.ly/VU4aUm )
There are armies of hucksters traveling the world recruiting groups of
investor pools with a zeal not seen since the Time-Share-Condominium
Recruitment blitzes of yesteryear. Often with the same kinds of results.

3. In Vermont officials sought to stop EB-5 privileges from Richard Parenteau
of Quebec after serious misrepresentations occurred. And in Missouri,
government officials ran for cover with the colossal failure of Mamtek
International when 600-almost-jobs went “poof” as the $65M deal in
Moberly, MO tanked sending the CEO to jail for theft and Missouri
lawmakers asking critical questions:
“How are jobs forecasted and why is there no audit trail to show a job
generating trail. There has to cause-and-effect linkage and it has to be
clear and transparent.”
“Four jobs of a promised 600 were created in the Missiouri project– why
weren’t the risks disclosed to lawmakers – why weren’t investors told that
there was NOT a plant already in operation in China as stipulated in the
application process?”
In Vermont, Bill Stenger’s EB-5 project led the the development of a large
water park and indoor pool at a ski area that increased room night visits
when ski conditions were bad. But continuing EB-5 Projects a Bio-lab is
currently only half-funded and a Door / Window Door Manufacturing grab

4. the headlines with “Job Creation 10,000 Jobs Forecasted.
Says business financier and valuation expert, Michael J. Kipp, CPA, the
CEO of SMART Holdings USA – “That 10,000 Job Generation Number is a
statistical impossibility and could not be sanctioned by any Sarbanes Oxley
Investment Prospectus in the United States.”
Long time Stenger EB-5 alliance Rapid USA (http://www.visausa.com)
CEO, Douglas Hulme, in February 2013 distanced itself from Stenger’s
investments.
Seven Day’s Newspaper reported (http://www.7dvt.com/2012vermont-eb-5-
visas) "For five years, Rapid USA had worked closely with Jay Peak to
attract foreign investors. The company advertised the project internationally
and helped investors navigate the complex process," but the relationship
soured when Rapid USA lost confidence in the Jay Peak Plan.
In March 2013 hundreds of immigration attorneys around the world received
an email from Rapid USA that announced, “Rapid USA no longer has
confidence in the accuracy of representations made by Jay Peak, Inc., or in
the financial status of and disclosures made by [it].”
Rapid USA, CEO, Douglas Hulme turned down repeated media requests to

5. elaborate on his company’s claims. But his silence was deafening and
sparked speculation about Jay Peak’s ability to deliver on promises led one
critic to claim that Jay Peak and Rapid USA were violating federal securities
laws.
“Overall, we have significant concerns about [Jay Peak’s] ability to operate
as a going concern,” says Michael Gibson, an EB-5 financial investment
adviser who has tangled with Stenger in the past and who posted Hulme’s
email on his industry blog. “We’ve had our suspicions for years. We don’t
believe Jay Peak is making money.”
Michael Gibson is a leading US EB-5 Expert and has reported and blogged
numerous frauds and potential frauds all over the US reported here:
( http://eb5news.blogspot.com/2012/04/michael-gibson-reports-
investor.html )
Vermont politicians have stood with Stenger to date.
Still…… other Politicians in other states did the same standing by their
project yet were duped while also steadfastly supporting the sinking
investments and indicted officers. One case involved Missouri Governor Jay
Nixon who ardently supported a failed EB-5 Project that jailed its CEO
Bruce Cole who was charged with theft and securities fraud and who was
arrested with a $500,000 bond. (http://www.mogop.org/2011/09/5689/)

6. Meanwhile constituents in Missouri have lost confidence in their job
creation team.

7. While in Vermont: Stenger disputes the allegations and provided
documentation showing that sales for the season are up 38 percent over
2012’s— or $5.7 million. Lift-ticket sales are down $400,000 from last year,
Stenger says, but an increase in lodging options on the mountain — 1000
more beds this year alone — has more than made up the difference. For
example, sales during the last week of March reached $891,000, compared
with $589,000 for that same week in 2011. Analyst point out that Jay’s
discounted package deals have eroded margin but boosted volume making
profitability illusive and reliant on steep discounts.
Still others don’t like how data is compiled, measured or reported.
Non-Verifiable methodology reporting to US Citizens the program’s Job
Creation and Economic Benefits are key reasons why The Federation For
American Immigration Reform (FFAIF) opposes the U.S. Citizenship and
Immigration Services (USCIS) EB-5 program.
FFAIF reports that 70% of EB-5 projects fail to make four years of operation
and that less than 1% of job touted are actually created.
So in Vermont’s case that would be fewer than 1,000 jobs after hundreds of
millions in investment.
The FFAIF study reported: At present, the debate about the EB-5 program
consists primarily on anecdotal evidence of the success or failure of a
handful of investment projects. Analysis of available data strongly suggest
that the failure rate has been high, and that the economic benefits provided
by the EB-5 program have been negligible, at best. As the USCIS
Ombudsman has noted: “The bill’s supporters predicted that about 4,000
millionaire investors, along with family members, would sign up, bringing
in $4 billion in new investments and creating 40,000 jobs [annually]."
However, the most comprehensive study of the program was a 2005
Government Accountability Office (GAO) report which analyzed the
performance of the program from 1992 through 2004. The GAO found that
after 12 years the EB-5 program had only led to $1 billion (instead of the
predicted $48 billion) in investments and there was no reliable accounting of
jobs created.

8. To be sure there needs to be reliable and accurate reporting of facts so
investors can make informed decisions. EB-5 Promoters need to be held
accountable about making Forward-looking statements through the media
and in their publicity vehicles and measures need to be taken by a governing
oversight body to avoid both investor fraud and for State’s taking a hit like
they did in Moberly, Missouri.
And while Shakespeare’s line in Merchant of Venice talking about gold
rings true….. it is also important to remember that there is no such thing as a
free lunch when it comes to investment and that EB-5 may be too
unpredictable, unregulated and wild for a State’s economic development
engine to rely on.
(Mark Renkert, Mcsl, is Chair of SMARTvt and is a Labor Force
Participation Expert and who has supervised thousands of job seekers for
over two decades. He works as a Retained Executive Recruiter, a Human
Capital Advisor, and Strategic Human Capital Development Advisor to
Fortune 50 Companies where he serves on their Board of Directors.
http://www.linkedin.com/in/smartvt )