Mike Pieciak, commissioner of the Department of Financial Regulation.
The state has hired a company at a cost of up to $450,000 to remove “Personally Identifiable Information” from documents before making them public in its EB-5 investor fraud lawsuit against Jay Peak Resort developers.
The state Department of Financial Regulation announced Monday the hiring of the Chicago-based firm, Percipient, LLC.
The announcement comes nearly a year after Gov. Phil Scott called for an “expedited” plan for the public release of the records in the case, and almost two years after the state filed charged Ariel Quiros, the owner of Jay Peak, and Bill Stenger, former president, with defrauding more than 800 foreign investors.
Michael Pieciak, commissioner of the Department of Financial Regulation, said in a statement that the contract “represents a critical step forward in providing transparency to Vermonters regarding the alleged Jay Peak fraud.”
“It balances the great public interest in making the Jay Peak records available with the need to protect personal data of innocent investors and business owners,” Pieciak said.
Percipient is expected to review the estimated 1.5 million pages of records related to the lawsuit, and redact “federally protected information” about people, such as social security numbers, bank account numbers and driver’s license numbers, according to the state Department of Financial Regulation.
The contract calls for Percipient to charge 30 cents per page, with the cost to the state to review the estimated 1.5 million documents not to exceed $450,000, according to the department.
Pieciak said later Monday that Percipient was chosen over the other bidder for several reasons, including that it is “solely” in the litigation support business.
“This is sort of their wheelhouse,” the commissioner said.
Also, he said, the company presented a strong process, which included having each document reviewed by attorneys as well as software systems, with another person spot checking the results to ensure that no protected information gets released to the public.
“We’re talking about 800 investors,” the commissioner said. “To revictimize the victims by revealing their data would be totally inappropriate.”
The other bidder didn’t provide a “definitive” price. The company proposed a pilot project that will be used to estimate the time it takes to complete the process, Pieciak said.
Percipient will start its review with an initial batch of 5,000 documents, at an estimated cost of $1,500.
Once the information is redacted, the state will file a motion in Washington County Superior Court, where the lawsuit is pending, asking the judge to make the records public. Other parties, including Quiros and Stenger, could file objections, prompting the possibility of a hearing, he said.
Percipient and the state will continue to work on additional batches of records and after a similar court process, if approved by the judge, the documents will be made available on a “rolling basis” on the the state Department of Financial Regulation’s website.
Percipient officials couldn’t immediately be reached for comment Monday afternoon. The firm describes itself “as a legal technology and services company helping clients tackle legal operations, legal processes and electronic document review.”
The state in early November posted online a request for proposals for a company to review and redact the documents with work initially expected to start Dec. 4. That was pushed back as the state said it needed time to further review the bids and complete cyber-security checks due to the sensitive nature of the material.
The governor called for an “expedited” plan to release the records in March 2017. At that time, the release of the records was proposed to follow the discovery schedule in the case, which was expected to be complete by December 2017.
However, late last year Judge Teachout approved the attorney general’s request, with the defendants, Quiros and Stenger, consenting, to push back that discovery deadline to Nov. 15, 2018, nearly a year later. The state is not required to make all of the records public until then.
In its filing, the state said the additional time was needed to review the large volume of records.
The state’s contract with Percipient will run through Jan. 1, 2020. Pieciak says that date, which runs well after the current discovery deadline, is a “contingency” timeline.
State and federal regulators filed separate lawsuits in April 2016 against Quiros and Stenger. The filings allege the two men operated a “Ponzi-like scheme” with money from the EB-5 visa program for foreign investors.
The lawsuits claim Quiros and Stenger misused $200 million in EB-5 funds. Quiros is accused of looting $50 million for his personal use.
The money had been raised to pay for a series of developments in Vermont’s Northeast Kingdom, including massive upgrades at Jay Peak as well as other projects in Burke and Newport. About $200 million, or about half of the money for the developments, was diverted.
The Vermont EB-5 Regional Center, which is run by the state, did not protect investors from the fraud. The Ponzi-scheme went on for eight years, and federal officials have said the state’s oversight was wholly inadequate. A group of investors has also sued, raising questions about what state officials knew when.
Meanwhile, the Vermont Attorney General’s office and the Department of Financial Regulation have blocked the release of records, citing a relevant litigation exemption in the Vermont Public Records Act.
Former Attorney General Bill Sorrell, who was in the office at the time the lawsuit against the developers was filed in April 2016, said the documents would not be made available to the public until after the lawsuit ended, citing an exemption in the Vermont Public Records Act for relevant litigation. Sorrell estimated at the time that the litigation would take five years.
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- Bill Stenger
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- UNITED STATES SECURITIES AND EXCHANGE COMMISSION vs Ariel Quiros & Bill Stenger
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