MICHEL MARTIN, HOST:
To Vermont now, where the charges against two ski resort developers took the state by surprise last week. Federal and state regulars levied civil charges against the men leading Jay Peak Resort. They've raised more than $350 million from more than 700 immigrant investors, but that's not the problem. Authorities say the problem is how they spent all that money. Hilary Niles tells us more.
HILARY NILES, BYLINE: It was a grand plan. Jay Peak was a modest ski area transformed to a year-round destination. Now the resort would lead the biggest private investment Vermont's Northeast Kingdom had ever seen - about a half billion dollars to revive the region's rural economy with tourist developments, plus manufacturing from windows to airplanes to biotech.
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BILL STENGER: Today is not so much about Jay Peak. But it is about taking a program we have proven effective here and expanding its value to our surrounding community.
NILES: That's longtime Jay Peak President Bill Stenger in 2009. His program is a federal immigrant investor program called EB-5. It gives residency to foreigners who put at least a half-million dollars into American business. Stenger and the resort's owner used it to finance Jay Peak expansions. Now they'd use it more. On a recent sunny afternoon, Mac McKenny was standing on the Newport city dock. He still recalls the announcement.
MAC MCKENNY: I've lived here pretty much my whole life, so it seemed a little far-fetched. But you hate to discount anything and hopefully that it'll all pan out.
NILES: McKenny is helping to run a fishing camp for kids. This is why he loves living here despite how hard it is to make a living. It's hardscrabble but close-knit. And it's where Stenger has lived for decades. McKenny says he's become like a local.
MCKENNY: He's not flashy. From what I can tell, he's a hard-working dude. And he's trying to bring the area that he loves, probably as much as everybody else around here, kind of a fighting chance
NILES: Now the U.S. Securities and Exchange Commission and state regulators say Jay Peak's EB-5 scheme was a fraud. Stenger and resort owner Ariel Quiros face 62 civil charges of misleading investors and misusing more than $200 million of their money, including $50 million for Quiros's personal benefit. Stenger has denied wrongdoing to local press. Neither could be reached for comment. The two are locked out of their resorts, which will stay open under an appointed receiver. Quiros says assets are frozen. Criminal charges may follow. Local bartender Chris Toupin is not impressed.
CHRIS TOUPIN: They tore down the whole part of Main Street to build this big glorious building that's never going to happen. They were working on a biotech plant over here that was supposed to have a bunch of jobs coming for people around here, and it's not happening.
NILES: Residents aren't the only ones in limbo. Some investors have their green cards, but others may lose their chance and their money.
The EB-5 program is based on job creation. Investors get their green cards only after projects prove successful, but parts of the plan remained unbuilt. Meanwhile, state regulators are coming under fire for not catching the alleged fraud sooner. They say they didn't keep tighter reigns because the federal government didn't require them to. Vermont Commerce Secretary Patricia Moulton says that's a problem.
PATRICIA MOULTON: A tighter program because it's a good program to get investment into rural areas where it would otherwise be hard to get investment, and that's been proven here in Vermont. But it needs closer scrutiny, no question about it.
NILES: Vermont Sen. Patrick Leahy has long called for EB-5 reform. The program is up for review, and he says it can't continue the way it is now. For NPR News, I'm Hilary Niles. Transcript provided by NPR, Copyright NPR.