Another Ski Resort Investment Scandal

It’s hard to believe that after Jay Peak’s ongoing EB-5 scandal that yet another New England ski resort would be caught up in a scheme to defraud foreign investors.  But this week, almost a year to the date since we reported on its intended sale, Saddleback Mountain in Maine made the news.

The Allegation

On June 21, Sebastian Monsour, the CEO of the Majella Group, the Australian company buying Maine’s Saddleback Mountain Resort, was arrested by Australian law enforcement following a raid on his offices in Brisbane, Australia. According to the Melbourne newspaper, The Age, Monsour, was charged with one count of fraud by the State Crime Command’s Financial and Cyber Crime Group. On June 21, The Brisbane Times reported that Monsour is the brother-in-law of former Queensland premier Campbell Newman.

News Center Maine (WCSH-TV) reported that Mr. Fusheng Li of China filed a lawsuit against Monsour in January 2017, accusing him of deceit and of taking advantage of Australia’s Significant Investor program, which is similar to the United States’ EB-5 program. The program allows foreign investors to become eligible for a permanent Australian visa if they invest 5 million Australian dollars over a minimum of four years in an approved Australian business.

Monsour, the lawsuit alleges, encouraged Li to invest in Majella properties by citing the Majella Group’s many successful development projects in Maine, including Rangeley’s Saddleback Mountain Resort, the Williston-West Church in Portland and a Portland waterfront project of 300 condos, retail space, and a veteran’s hospital.

According to News Center Maine, Majella Group still has not produced the funds to finalize the sale of Saddleback Mountain Resort, which the company announced it would purchase from previous owners Bill and Irene Berry on June 28, 2017. Li claims that at the time he made the investment in the Majella Group, he was told the company already owned the ski mountain. The 723-acre resort is Maine’s third largest ski area and averaged 80,000 to 100,000 skier visits annually but has been closed for the past three seasons.

News Center Maine also reported that Jessica Grondin, a spokesperson for the City of Portland said the waterfront project doesn’t exist and was never approved by the city. An employee at Sullivan Real Estate Group, which represents the church, told News Center Maine the property is for sale for $650,000 and is no longer affiliated with the Majella Group.

In a recording the New Center Maine obtained of a September 11, 2017, Majella Group staff meeting, Monsour said, “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.” In the same recording, Monsour told employees his company was “low on cash.”

The EB-5 Program, like Australia’s Significant Investor Program, allows foreign investors to earn permanent residency in the United States for themselves and their immediate family members in the form of a green card obtained if they invest $500,000 or more in a U.S. business or real estate project.

In 2016, the Federal Securities and Exchange Commission filed an allegation that former Jay Peak Resort owner Ariel Quiros of Q Resorts and former Jay Peak Resort general manager Bill Stenger, had misused $200 million of more than $350 million raised from foreign investors via the federal EB-5 program.

In 2013, the U.S. Securities and Exchange Commission published a statement warning investors about scams seeking to exploit the EB-5 program. In the past, investor funds have been used fraudulently, leaving them out of money and a visa when the fraudulent ventures fail.

Maine Department of Economic and Community Development Commissioner George Gervais said to the Portland Press Herald, “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].”

The Backstory

As reported last summer by Vermont Ski + Ride, Majella Group swooped in to purchase Saddleback Mountain Resort in late June 2017, while a group of dedicated area locals who formed the Saddleback Mountain Foundation was racing to fundraise the $12 million necessary to purchase and operate the mountain as a nonprofit venture.

The Future

On June 23, The Associated Press reported that Executive Director Crystal Canney said the group sees a path forward and “we are prepared to lead.” When contacted by VT Ski + Ride, Canney declined to comment for this story.

In the public Friends of Saddleback Mountain Facebook Group, “founded to ensure positive communication about Saddleback Mountain,” to “preserve the vibe, texture, atmosphere and culture of our beloved Saddleback,” there were many posts about the ongoing debacle from local skiers.

Lesli Hinman wrote on May 8, “In my days at Saddleback… it was awesome. It was down to earth, it brought families together, it had a simple flair with amazing skiing and people. It was local, it was family and it was Maine skiing at its best.”

Bill Sandreuter of North Yarmouth, ME wrote, “I will always love Saddleback. For the terrain, for the good people I’ve met there, and for the indescribable vibe that’s unique to this mountain. There is no better place to ski.”

Most recently, on June 22, Nelson Peterson of Litchfield, ME wrote, “If nothing has happened yet, no way they can get it up and running for next year. Getting my skins ready.”