Ragged Mt. hit with second EB

Jul 20, 2023

‘The Ragged Mountain resort has grown, and is working hard to develop further, despite the extreme challenges,’ wrote Jason P. Gottlieb, a New York lawyer representing the Ragged Mountain defendants. (Courtesy Photo)

The investment arm that raised millions in foreign funds for the expansion of the Ragged Mountain ski area faces another lawsuit by a foreign-born investor seeking a return of her initial investment.

Anna Radzinskaia, who currently resides in Florida, filed the lawsuit in June in Miami federal court, faulting New Hampshire EB-5 Regional Center LLC for not returning $545,000 she invested in Ragged Mountain in 2018.

It is the second lawsuit filed by a noncitizen who invested in the Danbury ski mountain under the EB-5 program, which provides green cards in exchange for job-creating investments in the United States.

In the 17-page lawsuit, lawyers for Radzinskaia say New Hampshire EB-5 Regional Center LLC and other defendants defrauded Radzinskaia, paid kickbacks to the lawyer who arranged the investment, misappropriated the investment money and refused to return her investment.

And the lawsuit claims that the upgrades at Ragged Mountain, especially for lodging, never lived up to what was promised.

“It appears … that the defendants have misapplied the funds and otherwise utilized the funds in a manner contrary to the parties’ agreements, and thus simply do not have the funds to return,” reads the lawsuit, filed in June by Michael Sayre of the Armstrong Teasdale firm in Coral Gables, Fla.

In their response, the defendants say the investment was intended to be long-term, the terms of the deal don’t permit quick returns, and lawsuits filed in Florida state and federal courts follow an attempted “extortionate threat” by Radzinskaia’s lawyers.

“We are, of course, aware of Ms. Radzinskaia’s complaint, which is unfounded in many serious ways,” wrote Jason P. Gottlieb, a New York lawyer representing the Ragged Mountain defendants, in an email to NH Business Review.

But he acknowledged “headwinds” that have slowed progress in the expansion.

“The Ragged Mountain resort has grown, and is working hard to develop further, despite the extreme challenges of Covid and poor snowfall over the last few ski seasons. These headwinds have made the progress slower than anticipated,” Gottlieb wrote in an email to NHBR.

On the positive side, some of the EB-5 investors associated with Ragged Mountain received their green cards, which signify permanent residency status, a vital goal of the program, he said. And development is continuing at Ragged, he said.

His legal team has asked to move the case to federal court in New Hampshire.

The suit also names New Hampshire Ragged Mountain Investment Center LP and its general partner, Douglas Anderson, as defendants.

Lawsuits in state and federal court give no hint about Radzinskaia, such as her age or her country of origin. But she apparently gained residency status through another means, without the EB-5 investment, which prompted her to seek the return of her EB-5 investment, according to one of Gottlieb’s filings.

Vermont EB-5 fraud

While rare in New Hampshire, EB-5 investments have come under scrutiny elsewhere.

In neighboring Vermont, the investments played a key role in the federal fraud-related prosecutions and imprisonment of three ski executives associated with the expansion of Jay Peak in the Northeast Kingdom.

In early July, the state of Vermont paid $16.5 million to settle claims brought by EB-5 investors, who faulted the state for lax oversight of its state-run EB-5 program, according to VTDigger.

Last November, the company that owns Ragged Mountain — the Park City, Utah-based Pacific Group Resorts Inc. — acquired Jay Peak. Pacific Group did not return an email and voice message seeking comment for this article.

Messages left at Ragged Mountain were also not returned.

On the federal level, Congress last year passed the EB-5 Reform and Integrity Act, which was sponsored by House Democratic leader Hakeem Jeffries.

The law aims to ensure that investment funds come from legitimate sources, establishes transparency goals for regional investment centers and raises minimum investments, according to U.S. Citizenship and Immigration Services.

Minimum investments now amount to $900,000 in high unemployment areas and $1.8 million anywhere else.

The USCIS lists nine EB-5 regional centers located in New Hampshire. Only two appear to have made investments in the Granite State: Ragged Mountain and the $28 million Riverwalk Resort at Loon Mountain.

When Pacific Group received its approvals for the Ragged Mountain expansion, it was expected to raise $35 million and create 700 jobs, according to reports at the time. The focus of the investment would be a resort hotel.

But the Ragged Mountain website makes no mention of a resort hotel. The only onsite lodging available are slopeside cabin condominiums.

In 2013, when Ragged Mountain received the go-ahead from federal officials for the EB-5 investment, it said the expansion would open additional ski terrain on the adjacent Pinnacle Peak.

Although terrain was cut in 2014, no word has surfaced when it comes to lifts to service the expansion, according to the New England ski history website.

According to the Pacific Group website, Ragged Mountain’s efforts since 2016 include expanded snowmaking and the launch of a Mission Affordable program to lure young people into skiing.

The Radzinskaia lawsuit references a confidential memorandum that projected that the Ragged Mountain buildout would involve 890 residential dwelling units plus a hotel. That would include 201 single-family second homes priced between $300,000 and $675,000.

The job creation goals were never met, according to the lawsuit.

“Either the funds were not invested as promised or Defendants misused or misguided the funds,” the suit reads.

In September 2020, a Ukrainian investor, Oleksandr Krylov, filed a similar lawsuit, seeking the return of his Ragged Mountain investment when he withdrew his application for a green card.

U.S. District Court Judge Joseph Laplante threw out the case in October 2021.