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  • Posted on:  09 October 2020

In what is apparently a major business deal gone wrong, Ragged Mountain Ski Resort is being sued for over $545,000 by Ukrainian Investor Oleksandr Krylov. According to sources close to the case, the Eastern European magnate claims that his money was given to the Danbury business through the U.S. Government EB-5 scheme despite having already removed his visa application.

However, lawyers for Ragged Mountain claim that the money has already been spent, and insist that the resort owners is not required to repay a cent of it until 2025. Moreover, they claim that they were not able to provide restitution anyway due to financial strain from the COVID-19 pandemic.

EB-5 and Foreign Investment

Understandably, the main focus of the case has become the little-known EB-5 visa program, which was at the time run by the Department of Homeland Security. The program's basic goal was to provide green cards to foreigners who invested $500k (now $900k) or more in various qualified projects. Most of these projects consisted of constructions in rural areas or places with unusually high number of citizens out of work.

In recent years, EB-5 has been at the center of a number of national fraud cases, including a high-profile scandal involving Vermont's Jay Peak, another ski center. In the case of Ragged Mountain, the vacation spot qualified for funding through the program due to its isolated location. In 2013, the budding ski destination was approved for a $35 million expansion under EB-5. Some of the plans for the funds included building a new ski lift, purchasing machines for making snow, and improving the resort's warm season offerings.

Some $10.6 million of this money, however, was meant to go toward a brand-new condo, hotel, and spa with attached retail and administration buildings. According to attorneys for Krylov, this was the build he funded back in 2015. The next year, he followed up by applying for his green card as intended. However, after some time, Krylov apparently changed his mind, removing his support for green card and stating that he, for lack of a better phrase, wanted a refund.

No Clear Winner in Sight

According to Krylov's Florida-based attorney, the cash should be able to be recovered regardless of the coronavirus pandemic, as it should be kept in escrow. Ragged Mountain's attorney disagrees, however, stating that the nature of Mr. Krylov's investment was to put his money at risk. According to her, the EB-5 program is much more than just an immigration matter – it is a business deal.

Moreover, Ragged Mountain seems insistent that they would pay the funds back if they had it. But with the pandemic still ongoing and an uncertain winter looming, they aren't sure they'll be able to come up with it. However, recent records state that Ragged Mountain's operating company, RM Management and Operations LLC, was the recipient of anywhere between $350k and $1 million through the Paycheck Protection Program and over $112k from New Hampshire's own state program.

Either way, both Krylov and Ragged Mountain seem to be in for a long, hard winter, as this case appears to be one with no clear victory for either side.

For most foreign investors, the EB-5 program seems like an appealing method to move to the US and have business growing here in the U.S. However, just like all investments, the EB-5 program could be dangerous and lead to a total failure, if you pick the wrong partner or lawyer. This is the reason why you will need to find the most professional lawyer team to help you when you decide to apply for the EB-5 program.

ACS Law Offices, Inc. has been helping many foreign investors to obtain better business opportunities and the EB-5 visas for decades. Call us now if you are interested in the EB-5 program. We can help you.


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