Gov. Douglas papers talk EB-5, media strategy

Freshly unsealed records from the Gov. Jim Douglas administration provide insider details about state government and Vermont businesses — if you know where to look.

Records from previous governors had carried private margin notes, sometimes written hastily in opposition or complaint.

"You'll find none of that from me," said Douglas, on a visit to the Vermont State Archives in Middlesex with the Burlington Free Press. He said he made complaints in person rather than leaving documentation.

Almost all of Douglas' records, even staff emails, are printed out and stored in cardboard boxes, rather than digital files. Douglas said he didn't even use an email account as governor, following former Gov. Howard Dean's advice.

The bulk of the records show a governor conscious of his public image, from news conferences and award ceremonies to a strategic media plan. Douglas served as governor from 2003-11.

Vermont governors are allowed to keep some records private, for a time, under an exemption to state public records law known as executive privilege. The governor and the Secretary of State's Office negotiate a timeline for making the records public.

For six years, 48 boxes of Douglas records were stored in a state vault and shielded from public view. They include the governor's daily schedule, weekly policy briefings from the governor's cabinet and administrative bill reviews.

The seal lifted Monday. Here are a few of the details that can be found in the files:

Careful relationships with business

Douglas received weekly reports from Kevin Dorn, who was then secretary of commerce and community development, with updates on expansions and layoffs at Vermont businesses.

All carried the header "CONFIDENTIAL and PRIVILEGED — No Sharing."

Early in the administration, Dorn asked the governor and his chief of staff, Tim Hayward, how to build relationships with businesses.

"We have lists of companies, both based within Vermont and outside of Vermont, who we would like to have you call to show a high level of interest from the State," Dorn wrote on Jan. 17, 2003. "We believe it is important to build these relationships. Are you interested in having a regular list of calls to make that we provide? Alternatively or perhaps as a supplement — may I engage (Lt. Gov.) Brian Dubie in helping us to make such calls?"

IBM in Essex Junction was a frequent topic of discussion in Dorn's weekly reports, as was the redevelopment of downtown Winooski.

Optimism about Jay Peak EB-5 projects

Douglas and his staff built a trusting relationship with William Stenger, who led of a suite of projects at Jay Peak funded by foreign investors through the federal EB-5 program

The state-run Vermont Regional Center was tasked with promoting and overseeing the projects.

Years later, in 2016, state and federal authorities accused Stenger and his business partner, Ariel Quiros of using the EB-5 projects to construct a Ponzi-like scheme riddled with "massive fraud." Quiros has denied wrongdoing. Stenger reached a settlement with federal investigators, but the state case and a federal criminal probe are continuing.

In 2003, the Douglas administration tried to help Stenger get approval to build a golf course at Jay Peak. The state Department of Fish and Wildlife worried that the golf course would harm bear habitat, and wanted Stenger to conduct a study that would have cost $200,000, according to Douglas administration memos.

"We are having a very hard time getting to a green light," Dorn wrote in a confidential memo to Douglas in May 2003. "Bill Stenger's patience with the process is waning — you may hear from him. We'll continue to work the process."

Seven years later, as Stenger's EB-5 projects got into full swing, Dorn informed the governor that Stenger was interested in building an orthopedic center at Jay Peak that would include surgery and rehabilitation.

"I think Bill wants to tap into the Canadian market where access to such services is somewhat limited and subject to delay," Dorn wrote.

The Douglas administration trusted that Stenger was building a biomedical research facility called AnC Bio and working to secure Food and Drug Administration approval for its products.

The federal government alleges that Quiros was siphoning tens of millions of dollars from the AnC Bio project from the beginning.

"I went up to see Bill S. this week —  no, I did not take my golf clubs —  to get an update on both the Jay Peak project and the status of AnCBio," Dorn wrote confidentially to Douglas in August 2010. "Bill is working with the AnC scientific staff to move one of their owner tech products through the approval process at the FDA....Once they have confidence in their relationship with the FDA and the review process they will initiate their construction process."

The AnC Bio facility in Newport was never built. The federal Securities and Exchange Commission has alleged that Stenger lied to investors and never submitted any products for FDA approval.

Douglas, Stenger and other business and government officials traveled to Asia to promote Vermont EB-5 projects in October 2010. The governor's itinerary and talking points are included in the unsealed records.

According to text of the speech, Douglas told potential investors that "the state is involved in assisting investors in getting approved, and that your investment is personally being monitored by state officials, offering greater stability and assurance."

Media strategy: 'Win it'

Tucked away in the governor's staff documents is a thick memo outlining the administration's strategy to promote its health care proposal.

The April 2005 memo, written by Douglas communications director Jason Gibbs and cabinet official Neale Lunderville, tells the governor and senior staff to "capture the health care debate and win it this year."

Democrats are shifting "the focus away from their poorly crafted and poorly received single payer plan," the memo continues.

The memo advised the administration to craft a clear and concise message on health care, describing the governor's plan as one that would "save Medicaid."

The administration's three-phase plan included a list of "targeted" media outlets and reporters to contact.

"In the end, we all know that health care is at the top of the people's agenda... Sure, we could stick with the status quo approach —  the same Prescription for a Healthy Vermont — and effectively move people away from supporting single payer, maybe even position the Governor for a successful veto," the governor's staff wrote. "Where would we be then, in that election year?

"Winning this battle could very well cost us, and many other Republicans, the war," the note continued. "The best choice is to find a way to make this issue ours — to make it the Governor's. The way to do that is to build a case for, and provide, certainty."

Gibbs was recently hired as chief of staff for Gov. Phil Scott. Lunderville has not been named to a cabinet post but volunteered his time to write Scott's budget during the gubernatorial transition. All told, Scott has hired at least six officials who were part of the Douglas administration.

Dorn is now city manager for South Burlington.

http://www.burlingtonfreepress.com/story/news/politics/2017/01/09/gov-douglas-papers-detail-eb-5-media-strategy/96162206/

Mentions

• Vermont EB5 Regional Center
• Jay Peak - AnC Bio Vermont
• UNITED STATES SECURITIES AND EXCHANGE COMMISSION
• Ariel Quiros
• Bill Stenger

Litigation Cases

• State of Vermont vs Bill Stenger & Ariel Quiros
• UNITED STATES SECURITIES AND EXCHANGE COMMISSION vs Ariel Quiros & Bill Stenger

States

• Vermont