Citing concerns about fraud, a Maine official says the state would not get involved with the buyer of Saddleback ski area if he only wants the resort so he can take advantage of a federal program that gives U.S. visas to rich foreign investors.
In an audio tape released Tuesday purportedly of a Majella Group staff meeting in September 2017, a man identified as CEO Sebastian Monsour tells the gathering that the EB-5 visa program is the primary goal of the acquisition.
“Now, I just want to point out that opening the mountain at Saddleback for the Saddleback Resort is not a primary concern for us. Getting Saddleback is. The EB-5 program is the reason we are actually buying Saddleback,” the Brisbane, Australia-based developer tells his staff. “The mountain and opening the mountain is something we would like to achieve, but if we don’t, we are not going to lose any sleep with regards to it.”
On Wednesday, Maine Department of Economic and Community Development Commissioner George Gervais said he had no desire to “take chances on projects that have no interest in actually following through.”
“There’s fraudulent activity that we want nothing to do with,” Gervais said, speaking about problems with the EB-5 program in general. “If putting a project out there as a way to attract investments that have no intentions of getting off the ground, yeah, I’d say that is (fraud).”
Last summer, after searching for a buyer for two years, owners Bill and Irene Berry and Majella Group announced a “historic deal” for Majella to buy the Rangeley resort, ski lifts, lodge and 6,337 acres. Monsour laid out plans to make Saddleback the “premier ski area in North America” and called reopening a “priority” as recently as October.
The sale still has not been finalized and in the audio recorded at the September staff meeting and leaked to News Center Maine by a former employee, Monsour said he had “very, very, very” few funds and would be late on payroll.
Majella’s on-site general manager at Saddleback Fred LaMontagne, Majella spokeswoman Leah Kidd and Bill Berry did not return messages for comment Wednesday.
Greg Andrews, Majella’s on-site chief financial officer at Saddleback, declined to comment beyond saying things are a lot better than they’re being portrayed in the media.
PROGRAM RIPE FOR EXPLOITATION
The EB-5 program provides foreign investors with an expedited process to secure visas to live and work in the United States if they give at least $500,000 to a qualified project. The program, administered by the U.S. Citizenship and Immigration Services, has been promoted as a way to infuse American projects with cash and to create jobs, but it’s also been the subject of abuse.
In some cases, developers pocketed foreign investors’ money without completing a project, leaving them without their money or a visa.
In 2013, the U.S. Securities and Exchange Commission issued an alert to warn investors about scams seeking to exploit the EB-5 program. The program remains controversial, even as it is touted by those related to President Trump. The Securities and Exchange Commission is currently investigating the family business of Jared Kushner, Trump’s son-in-law, over its EB-5 use.
While foreign investors and projects can connect on their own, the vast majority go through regional centers approved by U.S. Citizenship and Immigration Services. One of those Regional Centers was based at Saddleback, but it disbanded with no projects a few years after it was created.
Maine has three approved EB-5 Regional Centers. Two are based in the Boston area. The third is headed by the Maine Department of Economic and Community Development, or DECD.
The DECD won Regional Center approval last fall. Its center is expected to be operational in the next month or two.
Gervais said Majella had been interested in going through the DECD’s center for an EB-5 project at Saddleback, but the center wasn’t yet approved at the time. After it won approval, Gervais said, the DECD heard nothing more from Majella.
“Once we got approved, they stopped talking,” he said.
‘WE WANT QUALITY PROJECTS’
The DECD is establishing policies and procedures for its new center – important, Gervais has said, considering the alleged fraud and other problems that have plagued some centers, including a variety of scandals at centers in Illinois, New York, Vermont and Washington.
Gervais said he would not be interested in using the EB-5 program without producing a project.
“We want quality projects that will use the EB-5 as it was originally intended to be used and attract foreign investment to the state,” Gervais said. “We need projects to be successful and be able to attract even more investment and other good projects down the road, so we can’t take chances on projects that have no interest in actually following through.”
Gervais said any developer that applies to the DECD’s Regional Center – including Monsour, if he chose to – will have to pass “a rigorous due diligence process.” The center, he said, will sponsor “only projects that have a high likelihood of success.”
The Berry family has owned Saddleback since 2003 and invested more than $40 million in improvements, according to published reports.
In July 2015, the family announced that without cinching a $3 million loan for a faster chairlift in the following two weeks, the upcoming ski season would be called off, and it was.
RESORT ‘HAS A LOT TO OFFER’ AREA
Saddleback had drawn 80,000 to 100,000 skier visits a year and employed 300 people during the winter, making it the third-largest employer in Franklin County, according to a report at the time.
The resort has had teases regarding new ownership – and high hopes – ever since.
A clerk at the Loony Bin Variety in Rangeley said people coming into the convenience store Wednesday were “bummed” at the idea of Saddleback not opening.
“I think the thought is it’s not going to happen,” he said. “(Majella) doesn’t give anybody any information about what’s going on – this is the first time anybody’s heard (anything) about it since they bought it.”
Ginny Nuttall, the designated broker and owner of Noyes Real Estate in Rangeley, said skiers aren’t looking for real estate locally, but the market has kept moving right along by snowmobilers who are.
She said she was disappointed but not surprised to hear of the audio.
“I would like to see the opportunity for somebody else to purchase it because it doesn’t appear that this group is going to be able to go forward,” Nuttall said. “We need somebody who can come in and has enough money to not just run the ski area but develop it.
“Saddleback has a lot to offer the area,” she said. “The Berry family did what they could. They worked hard to make the mountain a good family skiing area, but we need it open again.”
Sun Journal Staff Writer Pam Harnden contributed to this story.
Clarification: This story was updated at 5:15 p.m. Thursday March 15 to clarify a comment from Maine Department of Economic and Community Development Commissioner George Gervais that could have been interpreted as a comment specifically on the Saddleback case. He was speaking in broad terms and not about the purchase of Saddleback.
Correction: The story was also updated to correct the titles for two people. Greg Andrews is Majella’s on-site chief financial officer at Saddleback, and Fred LaMontagne is Majella’s on-site general manager at Saddleback.
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