New records: ‘On EB5 you need to recognize Leahy and only Leahy’

Sen. Patrick Leahy speaks at a news conference at the Ethan Allen Homestead in Burlington on Friday, June 21, 2019. 

Before Vermont’s EB-5 immigrant investor program became intertwined in the story of the state’s largest ever fraud, Sen. Patrick Leahy wanted people to associate one politician with the program: him.

Leahy’s staff in 2011 pushed then-incoming Gov. Peter Shumlin to sing the senator’s praises during his inaugural address for playing a lead role in backing the state’s EB-5 program, according to records recently obtained by VTDigger through a public records lawsuit.

Those new records also shed more light on the role state officials played in EB-5 projects at Jay Peak Resort that ended in fraud allegations and a rash of lawsuits. 

In an email exchange obtained by VTDigger, Chuck Ross, of Leahy’s office, wrote to Bill Lofy, Shumlin’s incoming chief of staff, on Jan. 3, 2011, three days before the inaugural address. 

Ross made a suggestion about what to include about the congressional delegation.

“Recognize them and their good work – on EB5 you need to recognize Leahy and only Leahy,” Ross wrote.

While the email came from Ross’ Senate address, he had been tapped in November 2010 after the general election to serve as Vermont’s agriculture secretary once Shumlin was formally sworn in as governor in January 2011. Shumlin’s predecessor, Gov. Jim Douglas, a Republican, was also a vocal proponent of the state-run EB-5 program.   

Ross, reached Tuesday, said when he sent the Jan. 3, 2011 email he was still a member of Leahy’s staff. 

“I don’t think it’s any secret Leahy had been working to make EB-5 successful,” Ross said Tuesday. “If the governor was going to make remarks about EB-5, I wanted to make sure my boss was recognized for the work that he had done.”

Shumlin included two paragraphs in his address about the state’s EB-5 program and gave Leahy credit, along with Bill Stenger, Jay Peak’s president and the leading EB-5 developer in the state at that time. Stenger pled no contest to 52 counts of securities fraud in 2016 and is now facing criminal charges. 

Chuck Ross during his time as Vermont’s Secretary of Agriculture.

“Let me give you an exciting example of what I mean by innovation in financing and venture capital,” Shumlin said. “The EB-5 program, championed in Congress by Senator Leahy, is an established means of generating capital that is creating jobs. Thousands of them, right here in Vermont. We must take this program to levels not imagined by its creators. EB-5 gives us a vehicle not only to raise essential capital, but also to spread Vermont’s stellar reputation from one end of the globe to another.

“We have a pioneer in this effort, Bill Stenger, of Jay Peak, deep in the Northeast Kingdom, who joins us today. Bill has plumbed this federal program to its fullest potential. Through this initiative he has created over a thousand new jobs in the highest unemployment area of the state that would not otherwise exist.”

VTDigger obtained the records through a lawsuit against the state after years of being denied access to documents related to the state-run Vermont EB-5 Regional Center. 

A settlement of that lawsuit resulted in VTDigger securing documents tied to the state’s operation of the regional center, and the release of a few communications between Leahy’s office and the state about the EB-5 program. As part of an eight-month mediation process, the Vermont Attorney General’s office determined that other records sought by VTDigger between former Jay Peak business partner Douglas Hulme and state officials, appear to have been destroyed. 

Leahy has long been a prominent backer of the EB-5 program in Vermont, and a friend of Stenger, who continued working for Jay Peak until he was indicted in May.

Sen. Patrick Leahy and Jay Peak developer Bill Stenger.

The senator held his 50th wedding anniversary at Jay Peak and called on Stenger to testify before Congress about the benefits of the EB-5 initiative. 

In addition, Leahy joined Stenger on a trade mission to Ireland and the senator solicited investors in China on behalf of the EB-5 program and the Jay Peak projects.

The senator also wrote a letter of support for the proposed AnC Bio biomedical research project, which was later found to be “nearly a complete fraud” by the U.S. Securities and Exchange Commission.  

Federal prosecutors this spring leveled criminal charges against the developers in that failed EB-5 financed biomedical facility proposed for Newport. Stenger and his one-time business partner, Ariel Quiros, Jay Peak’s owner at the time, were charged along with two associates in May with conspiracy to commit wire fraud and concealing fraud. The criminal charges came more than three years after state and federal regulators brought the EB-5 program in the state virtually to a halt. 

Previous civil lawsuits included claims that Stenger and Quiros had misused $200 million of the more than $350 million raised from immigrant investors over a 10-year span that was to be used for massive upgrades at Jay Peak and other development projects in Vermont’s Northeast Kingdom.

In a press conference right after the SEC brought its civil investor fraud lawsuit against Stenger, Leahy said he felt “betrayed” by his old friend. Leahy added that he would be disappointed if it turned out Stenger was responsible for the fraud. 

Pushing for reform

As the EB-5 scandal in Vermont has played out in recent years, Leahy has pushed for reforms aimed at fixing the national EB-5 program, which he has said is rife with fraud in projects around the country. However, the senior senator has not been able to get anti-fraud measures in place, even with the support of Republican Sen. Chuck Grassley, of Iowa.  

Dignitaries and developers announce the AnC Bio project at Gateway Center in Newport on July 29. From left, Ariel Quiros, chairman AnC Bio US, Gov. Peter Shumlin, Sen. Patrick Leahy, William Kelly, adviser to AnC Bio, and, at podium, Bill Stenger, partner at Jay Peak Resort and investor in AnC Bio. 

Documents recently released by the state to VTDigger as part of the public records lawsuit provide insight into the Vermont senator’s efforts shepherding the EB-5 program through reauthorizations in Congress over the years. 

Leahy, according to the records, was being kept in the loop on Vermont projects financed through the immigrant investor initiative, particularly the Jay Peak projects.

While Leahy and his office express a strong interest in the success of the EB-5 program during the roughly 10-year period when Stenger and Quiros were pushing their massive developments in the Northeast Kingdom, the state only produced about 200 pages of communications between the senator’s staff and state officials related to the EB-5 program out of a repository of 3 million pages of records held by the Vermont Attorney General’s office. (The senator’s office has steadfastly refused to release his office’s communications with Stenger and state officials. Congressional email is not subject to Freedom of Information Act requests, except through third-party communications with state or federal agencies.)

Gov. Peter Shumlin is sworn in for his first term by Chief Justice Paul Reiber. 

Besides the exchange over the inaugural address, only a handful of other communications were released between Leahy’s staff, the governor’s office or the state EB-5 office, regarding the Jay Peak projects. Many of the communications obtained by VTDigger are press releases related to announcements for other EB-5 financed projects in the state. 

And yet members of Leahy’s staff were often present at a number of Jay Peak press conferences, including a daylong event in September 2012 held by Stenger at Jay Peak, Burke Mountain and Newport, featuring Shumlin, Leahy, other members of the congressional delegation and state officials. 

There isn’t a single communication in the release of Leahy records referencing that watershed event. 

Despite Leahy’s keen interest in the EB-5 program and his eagerness to take credit for the jobs created at Jay Peak, there are only a handful of exchanges between Leahy’s staff and state commerce agency officials about Jay Peak before 2014. 

And there are no Leahy communications provided by the AG’s office after 2014, when investors began pressuring the state to take action against the developers.

Several key staffers, including Chris Saunders and Ted Brady, now the deputy commissioner of the commerce agency, were involved in watching the program for Leahy (also known by his staff as “the Boss”) in 2015 and 2016, and yet the AG’s office released no communications between either man and state officials during that period. 

The 200 pages of communications that were provided consist of a back-and-forth about Shumlin’s inaugural address between state officials and Stenger, a month before the new governor’s swearing-in. 

In an email dated Dec. 4, 2010, Jeb Spaulding, Shumlin’s incoming secretary of administration, wrote to Stenger, Ross, Emerson Lynn, editor of the St. Albans Messenger; Lawrence Miller, who was tapped by Shumlin for the post of secretary of the Agency of Commerce and Community Development; and Pat Moulton, deputy secretary of the agency. 

“VT visa investment initiative,” was the subject line.

“At a meeting yesterday between Governor-elect Shumlin and Bill Stenger, they had a very positive and exciting conversation about the additional potential of the EB-5 visa program for Vermont,” Spaulding wrote. “To make a long story short, at the end of the meeting, Peter requested that Bill work with Lawrence Miller, Chuck Ross, and Emerson Lynn to develop an aggressive initiative for Vermont to maximize the potential of EB-5 investments in our state. Bill agreed.”

Spaulding added, “The idea is to have an initiative ready to include in Peter’s inaugural speech. Bill has a good understanding of the potential of this program and knows what Peter is thinking, including an agricultural capital and an economic development capital pool component. Peter is willing to do everything in his power to maximize the potential of the EB5 visa investment program.”

Ross wrote a reply email on Dec. 7, 2010, to the group. 

Ted Brady, now deputy commissioner for the Agency of Commerce and Community Development, talks about the agency’s budget before the House Appropriations Committee in February 2019. 

“I have also spoken to Ted Brady in Leahy’s office who works on the EB5 initiatives in VT and with the DC staff who work on the extensions and adjustments to the underlying authorizing legislation,” Ross wrote.

Stenger, in his response to the group, wrote that he planned to attend the meeting as well.

“I can circulate thoughts before as I know the Gov. elect would like our collective thoughts before the first of the year,” he wrote. “Best to all. Bill.” 

In follow-up email, Stenger added, “Suggest we focus on history of program, structure now and going forward, constraints we face, and possible applications for future use. More later. 15 inches of snow at Jay Peak. Let the Meals and Rooms taxes begin!!”

It appears from the communications that a meeting was held Dec. 15, 2010, in Burlington, but exactly what happened, and what initiatives were discussed, was not revealed. The Vermont Attorney General’s office released no subsequent communications between the parties. 

No big EB-5 initiative was announced in Shumlin’s inaugural address. 

The groundbreaking announcement came in September 2012 when Stenger, in a daylong press conference with Shumlin, Leahy, Sen. Bernie Sanders and Rep. Peter Welch in tow, announced $600 million in additional EB-5 projects as part of the expansive Northeast Kingdom Initiative, which included a window manufacturing company, a biomedical facility, office complex, marina and conference center in Newport, and the transformation of Burke Mountain into a $180 million athletic center with Olympic swimming pools and tennis courts. 

Other communications obtained through the public records lawsuit involve state officials and Stenger asking the senator’s office for help with EB-5 related visas. 

On Dec. 4, 2013, Stenger wrote to Susan Sussman, a Leahy aide, and Brent Raymond, the Vermont EB-5 Regional Center director at the time, seeking help with a potential investor from Vietnam regarding a visa to visit Jay Peak.

“Susan, any help you can give is appreciated. As you might recall Governor Shumlin and Lawrence Miller and myself visited Vietnam and had a great trip with much interest in our projects,” Stenger wrote. 

Brent Raymond appears in a promotional video in 2013.

“Now that investors are trying to visit us and see the state and our facility they get blocked,” he added. “We enthusiastically invited them to come and see Vermont before investing and now some are taking us up on our invitation only to be blocked by our own officials.”

Sussman replied later that day, saying the issue had been brought to her attention.

“I have spoken with my liaison at the Department of State who assures me that there is no bias against EB-5 investors from Vietnam,” she responded. “The one person I am aware of who was denied a B1/B2 visitor visa to come see one of your projects prior to investing had some significant inconsistencies during her interview, which caused her visa application to be denied.”

That rapid-fire communication over visa concerns was the only exchange of its type in the records release. There are no email exchanges between Sussman and commerce agency officials about allegations of fraud — or any other EB-5 visa issues — after 2013, despite the fact that investors began bitterly complaining about Jay Peak in May 2014 and continued to badger state officials about their inability to obtain green cards after the SEC brought the Jay Peak projects to a halt in 2016. 

And while it appears that state officials kept Leahy’s office abreast of media coverage of the EB-5 program, there is only one direct communication in the records release. In a July 31, 2014, memo, Raymond, then-director of the state EB-5 regional center, wrote to three members of Leahy’s staff regarding delays for investors processing their visas through the federal immigration agency.

Days earlier VTDigger ran a story headlined: “VTDigger exclusive: Jay Peak loses trust of first EB-5 investors.”

“The VT Digger article is reverberating in China,” Raymond wrote to the Leahy staffers in his email. “Competing RCs {regional centers} are using it against us and our projects.” 

Douglas Hulme documents 

Under the terms of its settlement agreement with VTDigger, the Vermont Attorney General’s Office also agreed to release communications between Douglas Hulme, a former Jay Peak business partner, and the state. Initially, the state provided 10 pages of documents that had already been disclosed to VTDigger in 2015. 

Other documents obtained by VTDigger show that in December 2011, Hulme had asked Stenger and Quiros to provide him with proof that investor money wasn’t being commingled and misused. When the Jay Peak developers failed to do so, Hulme announced to 100 immigrant investors at the end of February 2012 that he no longer had faith in the financials at Jay Peak.    

Rapid USAs Visas CEO Douglas Hulme (left), a representative of Shen law firm (center) and Jay Peak CEO Bill Stenger (right).

James Candido, the head of the Vermont EB-5 Regional Center, spent a day at Jay Peak in March that year and announced that he had reviewed the financials and found nothing out of the ordinary. 

Records obtained by VTDigger in 2015 show Hulme and former commerce agency secretary Lawrence Miller arranged for a phone conference call in May 2012 to discuss Hulme’s reasons for abandoning the Jay Peak projects. 

The Vermont Attorney General’s Office provided no records pertaining to Candido’s “review” of Jay Peak and said there were no meeting notes from the conference call in the EB-5 litigation hold database. 

After VTDigger obtained documents from other sources of communications between Candido and Hulme, the state searched the Agency of Digital Services email system and located an external hard drive. 

From this search in July, several communications from Candido to Hulme were released that showed there were more official memos between the state and USCIS that had not been previously provided to VTDigger, despite negotiations over the I-924As and a request for any similar records.  

In an email produced by the state, however, Candido described 2008 “audits” submitted to USCIS. 

VTDigger demanded the release of those records and obtained a handful of additional letters between the state and the federal agency. 

In 2008, Candido told USCIS in a Request for Evidence that the regional center was “adhering to the quarterly meeting procedures outlined in the memorandum of understandings with both Sugarbush and Jay Peak resorts.” Candido said he and John Kessler, general counsel for the commerce agency, “oversee these meetings and document reviews.”  

Among the communications provided by the Vermont Attorney General’s Office is a 2009 letter from Kevin Dorn, the commerce secretary under Douglas, who tells USCIS that ACCD conducted regular monitoring of the Jay Peak projects, including quarterly on-site inspections, reviews of job creation numbers and EB-5 investments in the projects. 

“ACCD has remained fully informed regarding this EB-5 project and finds [Jay Peak] to be fully compliant,” Dorn wrote.

Progress reports were to be submitted quarterly by Kessler and Candido, according to the Request for Evidence. Records show, however, that quarterly reports were not submitted until late 2014 — after VTDigger published a story about the state’s close relationship with Stenger.

Regional center officials told investors that the state audited the projects, but financial reviews never took place.

Meanwhile, officials continued to promote state oversight as a perk of investing in Vermont EB-5 Regional Center projects. Records show the commerce agency website in 2010 touted “Vermont’s unique advantage” with an EB-5 program that “provides the oversight required by USCIS,” and the added “credibility that a state run center provides.” 

“Investors are ensured that projects are managed by an independent and qualified authority,” commerce agency staff wrote. 

In records from the Vermont EB-5 Regional Center website, officials cited more reasons why immigrants should consider Vermont as a great place to invest. “Faster approvals” are high on the list, and the commerce agency’s emphasis on “day-to-day involvement with the Vermont business community” that “ensure our projects are well qualified.” 

In addition, state officials assure USCIS in 2010 that investor monies in Jay Peak are held in escrow, as required under an MOU with the Vermont EB-5 Regional Center. Documents show that Jay Peak commingled EB-5 monies with other funds at least as early as 2008. 

In 2016, the SEC determined that the Jay Peak developers had begun defrauding investors early on — under the purview of state officials. 

Two years later, USCIS terminated the Vermont EB-5 Regional Center, citing negligence and material misrepresentations made by state officials. The Scott administration immediately appealed the decision. There has been no word on whether the appeal succeeded or failed.  

In the meantime, the Vermont Attorney General’s office has not investigated allegations of state negligence and possible malfeasance. Instead, TJ Donovan has assiduously defended the state and state officials, and through his office has actively blocked access to records that would shed light on the state’s role in the fraud at Jay Peak by using the relevant litigation exemption as a shield. Under the exemption, which has been interpreted broadly by the AG’s office, any lawsuit involving the state can be used as a reason to block the public release of records. Vermont is one of only a handful of states that has such an exemption to the public records act.

The AG’s office is now saying the litigation hold database, which contains 3 million pages of records, will not be publicly available until after the U.S. Attorney’s office criminal lawsuit against Stenger, Quiros and two others is completed. That case is not expected to go to trial until October 2020. 

https://vtdigger.org/2019/09/03/new-records-on-eb5-you-need-to-recognize-leahy-and-only-leahy/

Mentions

• Patrick Leahy
• Peter Shumlin
• U.S. Citizenship and Immigration Services
• Ariel Quiros
• Bill Stenger
• Jay Peak - AnC Bio Vermont

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