Must be a new experience for Bill Stenger, having a hard time getting his calls returned. After all, he’s been a major player at the intersection of Vermont business and politics for a long time now, benefiting from sweetheart deals and inadequate oversight (see Postscript below) courtesy of at least two successive administrations.
After years of holding together his massive EB-5 project with chicken wire and spit, Stenger is now embroiled in the sales pitch of a lifetime: portraying himself as innocent in the face of federal and state investigations and an increasingly ugly paper trail.
From VPR’s Peter Hirschfeld, we learn that federal officials “had strong forensic evidence of a massive fraud” at least two years ago, and that Stenger was subjected to an intensive interview by SEC investigators in May 2014.
And from the Burlington Free Press’ Jess Aloe, we learn that Stenger’s top financial executive resigned in 2011 “after [Stenger] failed to address concerns about the use of money from foreign investors.”
It is literally impossible to believe that an experienced entrepreneur like Stenger could somehow remain clueless in the face of all that. But there he was, telling the Free Press last Monday (two days before the SEC raided his offices, seized his papers, and changed the locks) that nothing was wrong. And on Friday, two days after the raid, he doubled down.
“There was a lot of stuff in the presentation that I got on Wednesday that I was not aware of,” Stenger said. “I can’t go any further than that. I’ve got to let it go at that. I’m trying to figure this out as well. I just need to deal with it.”
Okay, I see what we’re doing here: blaming the dark-skinned flatlander.
That would be Ariel Quiros, who had been depicted sparingly by the Vermont media — vaguely characterized as Stenger’s silent partner in the EB-5 plan — until now, when he stands revealed as the sole owner of the corporation with absolute control over decisions and disbursements.
Stenger, meanwhile, had been the visionary leader, the idea man who would bring prosperity to the Northeast Kingdom for the first time since the Sheep Boom of the early 1800s. Now, far from casting himself as the Kingdom’s John Galt, he’s taking on the role of Sergeant Schultz, who saw nothing, heard nothing, and knew nothing.
And the media is playing along. Quiros routinely gets first billing in news stories. I even saw one reference to “Quiros/Stenger.” We seem to be easing the Vermonter out of the spotlight and pinning the blame on the foreigner.
We also see this dynamic at work in Eternal General Bill Sorrell’s statement that he is “not contemplating” any state criminal charges against the EB-5 scamsters. The state and the feds are pursuing civil cases; the feds are likely to bring criminal indictments; but nothing such from Sorrell.
Interesting dichotomy. Quiros’ activities crossed state lines and involved defrauding a federal program. Stenger’s activities were much more Vermont-centered, and involved interactions with the state. Thus, Quiros is likely to bear the brunt of a federal criminal case, while the state would have more grounds for going after Stenger.
Unless they don’t, of course. This might be Bill Sorrell’s parting gift to Vermont’s elite: keeping one of their own out of the slammer.
From all appearances, Ariel Quiros was the mastermind and beneficiary of this scheme. But there is plenty of evidence that Bill Stenger was a willing participant. At the very least, he failed in his fidiuciary responsibilities. Beyond that, there’s plenty to indicate that he knew exactly what was going on and deliberately did nothing about it. (Just ask his former finance executive.)
This whole project was a leaky bucket for years, with Quiros continuously pounding new holes in the bottom. Millions and millions disappeared. Meanwhile, Stenger was traveling the world, tirelessly fundraising — and yet, he had to delay the projects over and over again because there wasn’t enough money in the till.
Didn’t he ever wonder where all the money was going, why the actual work seemed to be stuck in neutral, or why he had to keep pounding the pavement?
I can’t say that Stenger personally profited from the scheme, although his motivations are hard to understand if he didn’t. Why did he stay on as the front man if his boss was robbing the company blind? Why keep denying there’s a fire when the smoke is billowing all around him? Why risk his reputation, his future, his freedom, to prop up Ariel Quiros, if he wasn’t getting a piece of the action?
It would be instructive to learn more about Stenger’s personal finances. Presumably the feds are exploring that angle. I wouldn’t be surprised if they found enough to change Bill Sorrell’s mind about criminal prosecution.
Postscript. A correspondent reminds me of three unsavory events in Bill Stenger’s past — occasions where he got sweetheart deals from the state of Vermont. As it happens, all three occurred during the Jim Douglas administration.
About twelve years ago, Stenger received a $750,000 Community Development Block Grant to build an 18-hole golf course at Jay Peak. CDBGs are supposed to foster “housing, economic development, public facilities, public services, and handicapped accessibility modifications.” A golf course sorta qualifies under “economic development,” but golf courses don’t create very many jobs (and most of those are menial) and there’s not much spinoff effect. Hard to imagine Stenger’s golf course was more deserving than other applicants.
If that wasn’t bad enough, he spent some of that money violating state environmental rules. The Department of Environmental Quality took him to court; he ultimately agreed to undertake remediation measures and pay $105,000 in fines.
And then there was the 2010 land swap at Jay Peak Resort (follow link, scroll down to page 33). The Green Mountain Club supported the deal, which saw Stenger trade a 151-acre ridgeline parcel for a less environmentally sensitive 59 acres. The land deal was okay, but the financial terms were not. The state actually paid Jay Peak $54,000 in the deal, in spite of the fact that Stenger planned major developments on the land which stood to profit him greatly in coming years. And in spite of the fact that Jay Peak was public land to begin with, leased to Stenger on very favorable terms.
Meanwhile, as Auditor Doug Hoffer pointed out in a 2015 audit, ski resorts including Jay Peak profited substantially from long-term leases of public lands. The lease terms were set decades ago, and fail to reflect anything close to the current value of the land or the profits derived therefrom.
In the case of Jay Peak, property values have skyrocketed since the onset of Stenger’s EB-5 investments, which included new lodging, condominiums, and an indoor waterpark. His lease payments to the state have increased at a modest pace — it doesn’t come close to the increased profit margin.
Funny thing, by the way, that with all the delays to all the OTHER elements of Stenger’s EB-5 scheme, he managed to build the improvements to his own resort. Hmmm.
Stay tuned, folks. The shitstorm has barely begun.