The management of Jay Peak Resort is defending its right to convert $17.5 million in equity stakes held by immigrant investors into unsecured, nine-year loans. The conversion was implemented on Aug. 31, 2013, without the knowledge or consent of 35 immigrant investors who each put up $500,000 toward the construction of Tram Haus Lodge, which is part of the Jay Peak Resort.

The deal was disclosed to reporters and the Vermont EB-5 Regional Center last year, but investors were not sent paperwork for the original loan until May of this year.

Jay Peak has since offered a second IOU to investors that shortens the repayment period to five years. The promissory note is secured by the value of Jay Peak Resort, says company president Bill Stenger.

Several investors say they expected to receive the principal on their investments at the end of a five-year period.

The company and the state's Agency of Commerce and Community Development say the decision to convert the equity investments into loans was entirely within the company's rights.

Jay Peak owner Ariel Quiros said the transaction was "200 percent" ethical.

The transaction effectively meant they were no longer EB-5 investors, Quiros said, which in turn freed him up to guarantee repayment.

"We took something that was not guaranteed and made it guaranteed," Quiros said in an interview Sunday. "How can you possibly call that wrong?"

Stenger and Quiros hold that their sole discretion was established very clearly in the agreement all investors signed.


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Stenger is the first to admit he was "clumsy" with notification about the August transaction to close out the limited partners' equity in Jay Peak's first project, which funded construction of the Tram Haus Lodge.

Criticism or no, Quiros said, all the projects he's undertaken have been approved and built.

Stenger said he is making up for poor communication that led Tram Haus investors to question the circumstances of the deal.

"I made some mistakes, and there's going to be news tonight of mistakes in the world. I feel we have really addressed those issues," Stenger said. "But we're doing a good job, we'll continue to, and we'll certainly learn from this situation. Believe me, I will not have this issue in the future."

Sen. Patrick Leahy, D-Vt., a champion of both EB-5 at the federal level and Jay Peak's Northeast Kingdom Economic Development Initiative in Vermont, is unswayed in his support of both the resort and Stenger as its leader.

"I know Bill, and what he has done for Vermont speaks volumes," Leahy said Monday in a written statement to VTDigger. "He has acknowledged that he did not keep these investors informed in a timely way, that he regrets that, and that he's intent on learning from this experience what he needs to do better. I know he cares about his community and his business partners and I trust that he wants to ensure that his investors are treated fairly."