Missing from state’s EB-5 debacle: An apology

“Love means never having to say you’re sorry” was the catchphrase from the syrupy 1970 movie “Love Story.” It struck a chord with the public, and the American Film Institute puts it at No. 13 on the top 100 list of all-time movie quotes.

Now it’s the strategy for the Vermont state government as it wraps up its shameful role in the biggest scandal in the history of the EB-5 program.

Not only is the state not saying it’s sorry, but it’s refusing to explain how badly it bungled the Jay Peak scandal.

EB-5 is supposed to be a job creation program, offering resident green cards to foreign investors who ante up at least $500,000 for U.S. projects that create at least 10 jobs.

Vermont’s shame is not only its failure to monitor a Ponzi-style fraud in the expansion of Jay Peak, but also its attacks on VTDigger.org when it raised questions about what was going on, and its flat-out refusal to accept responsibility for a scam that spanned nearly a decade and bilked hundreds of millions of dollars from foreign investors.

The state reached a $2.1 million settlement last week with the former Jay Peak developers at the center of the scandal. The money — just 25 percent of the $8 million the state originally sought — will go toward economic development efforts in the Newport area, where the Jay Peak fraudsters proposed major projects and hundreds of jobs — all of it a lie.

The federal government shut down the Vermont EB-5 Regional Center for its utter incompetence, leaving the immigration status of 400 investors in limbo.

None of the money will go to the more than 800 EB-5 investors who were defrauded by former Jay Peak developers Bill Stenger and Ariel Quiros, even though the state said it had launched its own case to seek justice for investors. That was apparently a lie, too.

Earlier, in settling a case brought by the U.S. Securities and Exchange Commission, Quiros surrendered $81 million in assets, and Stenger paid a $75,000 penalty. In the state settlement, Quiros is surrendering five properties in Vermont valued at $2 million, and Stenger will pay a $100,000 penalty over four years.

Quiros’ defense attorney, Melissa Visconti, argued in court that the state has “unclean hands” and shared liability for the fraud because state officials knew about financial improprieties at Jay Peak but did nothing.

Last week, the federal government shut down the Vermont EB-5 Regional Center for its utter incompetence, which included misrepresenting reality to investors in the projects. Because of the center’s ineptitude, the immigration status of 400 investors remains in limbo.

Conveniently, the state used its lawsuit as an excuse not to disclose documents detailing how the fraud could have gone on for a decade under state supervision. Now that the lawsuit’s been settled, Attorney General TJ Donovan has hitched the state’s secrecy to a lawsuit filed by investors, and so the state records will stay secret.

Also conveniently, the state case was settled before any sworn statements were taken from witnesses, so state officials involved in the EB-5 program did not have to testify under oath about their actions. Those depositions also would have become public as the case proceeded.

Donovan said that, if the judge approves the state settlement — which seems likely — EB-5 documents will be provided to State Auditor Douglas Hoffer to “answer that question of what happened in state government in terms of the management of EB-5.”

Stowe attorney Russell Barr, pursuing a case for EB-5 investors, says the state’s refusal to release the records is a form of corruption.

“Our clients have a suggestion: Do the right thing,” Barr said. “The [Scott] administration can do the right thing for the first time since the debacle began. Release the records, stop victimizing the investors, and start cleaning your house.”

So far, the state has been remarkably unapologetic about its role in the EB-5 scam. Perhaps that’s because the state prefers the No. 1 all-time movie quote, from “Gone With the Wind”: “Frankly, my dear, I don’t give a damn.”

https://www.stowetoday.com/stowe_reporter/opinion/weekly_editorial/missing-from-state-s-eb--debacle-an-apology/article_68066e4a-8b63-11e8-b5f5-5f85a30d6a57.html

Mentions

• Vermont EB5 Regional Center
• UNITED STATES SECURITIES AND EXCHANGE COMMISSION
• Ariel Quiros
• Bill Stenger
• Russell D. Barr

Litigation Cases

• MICHAEL I. GOLDBERG vs The AM Wealth Management Group of Raymond James & Ariel Quiros & Joel Burstein
• JAMES B. SHAW, JOHANNES EIJMBERTS, and LORNE MORRIS Individually and On Behalf of All Others Similarly Situated, vs The AM Wealth Management Group of Raymond James & Bill Stenger & Joel Burstein & Ariel Quiros
• ALEXANDRE DACCACHE, on behalf of himself and all others similarly situated vs Ariel Quiros & Bill Stenger & The AM Wealth Management Group of Raymond James & Joel Burstein
• State of Vermont vs Bill Stenger & Ariel Quiros
• UNITED STATES SECURITIES AND EXCHANGE COMMISSION vs Ariel Quiros & Bill Stenger

States

• Vermont