Capitol Beat: Officials back away from EB-5 charges
News of massive civil fraud charges against two Northeast Kingdom developers Thursday had Vermont pols looking to distance themselves from the developers and the EB-5 program they used to fund their projects.
Republican Lt. Gov. Phil Scott issued a blistering statement after the charges were revealed that seemed to fault the administration of Democratic Gov. Peter Shumlin for exercising poor oversight.
“At a minimum there appears to be a significant lack of oversight on this project. We need immediate answers to basic, yet essential, questions. What went wrong at Jay Peak and Q Burke? How was this allowed to deteriorate to the point it is now? What steps, if any, did the Administration take to prevent this from happening?” Scott said in the statement. “This is obviously very troubling at a time when faith and trust in government is extremely low. We should be taking steps to restore Vermonters’ confidence in state government. Therefore, we must demand full transparency and accountability on this matter, learn from this and assure Vermonters it will not happen again in order to give Vermonters a clear reason to trust the integrity of their government.”
What Scott did not mention, however, was his past support for the EB-5 Foreign Investor Program, which provides investors with permanent U.S. residency for their investments. During a bike tour of the state during his bid for re-election in 2012, Scott cited the projects launched by Quiros and Stenger as an example of economic development efforts that could be replicated throughout the state.
“As I’m biking I’m thinking, ‘Why can’t we replicate that around the state?’ The EB-5 program makes sense. It’s worked for that area. It’s worked for Sugarbush. It doesn’t have to be used for just ski areas. There’s a big lesson to be learned there. I think that we need to challenge ourselves and look regionally at how to make that work for us,” Scott told the Bennington Banner.
Shumlin noted during a Thursday news conference announcing the charges that the alleged fraud began in 2008 — three years before Shumlin became governor. His spokesman, Scott Coriell, blasted Scott’s statement, calling it “outrageous” and accused Scott of “playing politics.”
“It’s clear that he is more concerned with his own future than the futures of Vermonters in the Northeast Kingdom who are shocked and concerned by today’s news,” Scott said Thursday. “The fact is that the alleged fraud began in 2008, three years before Gov. Shumlin came to office. Where was the lieutenant governor then when he was chair of the Senate Institutions Committee? Why wasn’t he asking tough question of that administration? Not for nothing, Phil Scott’s campaign is now being advised by key members of that administration, which was in charge during the genesis of the alleged fraud at Jay Peak.”
Scott’s primary opponent in this year’s gubernatorial race, Bruce Lisman, called on Vermont politicians to return the thousands of dollars in campaign contributions that Quiros and Stenger provided both personally and through their companies.
“Corruption doesn’t belong in Vermont. I call on Governor Shumlin and all Vermont politicians and political parties who have ever received contributions from Ariel Quiros, Bill Stenger, their companies, and their family members to return these political contributions to the court appointed receiver,” Lisman said in a statement. “The public trust between the people of our state and politicians leading our state has long been broken. It’s time to address these issues head on.”
But Lisman, too, had lauded the efforts of Stenger and Quiros through Campaign for Vermont, the nonprofit advocacy group he founded. Scott’s campaign staff and boosters were quick to re-tweet a press release the group issued in 2012 praising the projects.
“The Campaign for Vermont Prosperity congratulates Bill Stenger for continuing to convert federal EB-5 immigrant investor program into good construction, aviation and travel and tourism jobs in Vermont’s Northeast Kingdom,” the release stated. “Entrepreneurs like Bill are working day and night, and against many forces, to move their communities, and our state, in the right direction. His effort reminds us that clear vision and a focused effort achieves real results.”
Even former Republican Gov. James Douglas, who was in office when the alleged fraud began, looked to distance himself from the projects in an interview Friday with Seven Days. He took exception to Shumlin directing blame his way.
“I guess I could do the same thing and say this is (U.S. Sen.) Pat Leahy’s baby. It was created by the Congress in the 1990s. Pat’s been a great champion,” Douglas said of the man he ran against in 1992. “But I wouldn’t try to do that.”
Leahy has been a champion of the EB-5 program. But on Wednesday, just one day before the fraud charges were revealed, he called for significant reforms to the program. Leahy issued his own statement Thursday saying the program should be killed if changes are not made.
“Fraud and abuse cannot be tolerated, no matter where it occurs. Even where there is no indication of fraud, the incentives that Congress created to direct EB-5 investment to underserved areas are regularly abused,” Leahy said. “Given the significant problems plaguing this program, I will continue to push for meaningful reform. Without reform, I believe the time has come for the program to end.”
Looks like everyone is having second thoughts about the program.
- Jay Peak - Q Burke Mountain Resort, Hotel and Conference Center L.P.
- Ariel Quiros
- Bill Stenger
- Patrick Leahy
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