Lawsuits over EB-5 Kickbacks Set to Head to Trial

Two major lawsuits related to an immigration-related investment fraud scandal are back underway in northern Vermont after delays related to the coronavirus pandemic. Indeed, just this past Wednesday, two different video hearings were filed in Federal court. The first featured the deposition of witnesses currently residing behind the closed border to Canada, while the other seemed to indicate that the long-delayed case might finally be ready for trial.

Reports indicate that Federal Judge Christina Reiss recently informed legal counsel that she was well aware of the problems the pandemic was causing for their respective teams. However, she was adamant that counsel provide detailed reports of how they would like to proceed. The goal of the inquiry, she saw, was to establish an achievable “goal line” for trial. Originally, attorney Chandler Matson had expressed a hope to resolve the case by the end of March, a date that has come and gone with months to spare.

Matson, along with his partner Russ Barr, is representing a number of foreign E-5 investors who claim to be the victim of a kickback-related investment scheme. They assert that the fraud is tied to a failed EB-5 financed project intended to finance a $110 million research building in the town of Newport, which sits just across the border with Montreal. According to the plaintiffs, their money was illegally funneled to real estate developers William Stenger and Ariel Quiros by Jianming Shen, a NY State immigration lawyer.

The plaintiffs further assert that Shen was the recipient of over $1 million in kickbacks as payment for bringing investors to the project without their knowledge or consent. Indeed, based on the reputation of Quiros and Stenger, the plaintiffs claim they would never have allowed such a transaction to take place

If these charges prove true, there could be dire consequences for all involved and cause a number of already-constructed properties to end up under Federal scrutiny. Moreover, answers may be coming sooner rather than later. According to the notes from Wednesday’s hearings, both civil and criminal trials are finally set to proceed within the next few weeks.

For a little background, the Federal EB-5 visa program is designed to allow foreign investors who put at least $0.5 million into various qualified projects to obtain green cards or even permanent US residency. In fact, both Quiros and Stenger had already used EB-5 funds in several major projects. One example is their recently-constructed ski center, Jay Peak, which actually overlooks the Quebec wilderness.

The disgraced duo’s projects were swiftly halted when Federal and State regulators discovered what they called a “ponzi” scheme involving misused and misappropriated EB-5 funds. The current allegations being made against all three men are also only the latest in a litany of lawsuits and investigations centered around their business operations. Indeed, the currently stand accused of a number of suspect activities in both the United States and Canada.

That said, according to Reiss, it is the Canadian aspect of these cases that is causing the majority of the slowdowns. This is mainly due to the shutdown of the US-Canadian border due to what the latter country defines as the US’s inability to deal with the coronavirus pandemic.  Still, Reiss remained adamant that the attorneys on both sides should be making the best use of their time until the border situation normalizes. With any luck, the defrauded investors will start to see a light at the end of the tunnel by early October.