This week, Vermont State Auditor Doug Hoffer released a full review of state oversight during the EB-5 project, which became one of the biggest fraud scandals in Vermont's history.
The federal EB-5 program allows foreigners who invest at least $500,000 in an approved U.S. development project that creates new jobs to immigrate to the United States. The Vermont project involved Jay Peak, Burke Mountain Resort, and "AnC Bio Vermont", a biomedical facility in Newport.
In 2015, federal authorities accused Jay Peak owners of a systematic "Ponzi-like" scheme that diverted $200 million of investor money from their intended projects, some of which was used to line one owner's pocket.
"In short, we found a pattern of misplaced trust, unfortunate decision-making, lengthy delays, and missed opportunities to prevent or minimize fraud," Hoffer said.
Hoffer's report examines failures at the state level, as well as the actions of the main perpetrators, who were ultimately convicted of felony offenses.
Some of the key flaws Hoffer points to include the structural design of the project, failure to require audits when concerns were first raised, misleading claims, and poor timing.
"These are just some examples of instances in which if state officials had made different decisions, events may have played out differently. Had appropriate systems been in place, with properly delineated roles and responsibilities between state agencies, addressing this historic fraud would not have been so dependent upon ad hoc decision-making by individual state officials," Hoffer said.
In July of 2023, the state reached a $16 million global settlement to resolve all pending and potential lawsuits that have been brought or could be brought by the approximately 850 investors in the Jay Peak EB-5 projects. Hoffer says Vermont taxpayers will foot the bill.
"We hope our audit is read with a single aim in mind – learning from the State’s role in the EB-5 saga to prevent such a thing from happening again," Hoffer said.
Three Jay Peak officials pled guilty to the felony charges against them. Ariel Quiros was sentenced to five years behind bars, Bill Kelly was sentenced to 18 months, and Bill Stenger received a sentence of 18 months in prison.