Over the weekend, VTDigger’s Anne Galloway posted a detailed history of the Stenger/Quiros scandal entitled “Jay Peak’s Path to Fraud.” It’s a must-read for those wanting to get a good summary of the affair; the reporting is backed up by Digger’s two-plus-year investigation of the story.

And it raises a huge question in my mind: Did Stenger and Quiros ever seriously intend to build the megaprojects in Newport, or were they nothing more than flashy promises designed to dazzle the politicians and the public, and pave the way for what they really wanted — the transformation of their ski resorts?

In September 2012, Stenger and Quiros announced a bold initiative including major improvements at the resorts, a new terminal at Newport’s airport, and a suite of ambitious projects in Newport itself, including a window-manufacturing plant, a five-story office building, a hotel and conference center, and a marina, as well as a biotech facility in the works since 2009.

The numbers were mind-boggling: over half a billion dollars invested in the perennially impoverished Northeast Kingdom, and a rebirth for the city of Newport. Up to 10,000 new jobs.

Today, many of the ski resort improvements are complete or largely so, while nothing much has happened in Newport except for the demolition of some historic downtown buildings, leaving a hole in the cityscape. And now it looks like nothing will ever happen.

In retrospect, the promises were too good to be true, but they were irresistible at the time. Plus, Stenger had a track record for delivering: he had successfully leveraged EB-5 money to turn Jay Peak into a four-season resort. No reason to doubt him, right?

Now, let’s take the cynic’s view of the timeline.

According to federal investigators, Quiros used EB-5 money to fund his purchase of Jay Peak in 2008. That started the dominos falling: since he hadn’t used the initial funds to pay for construction, he had to use new investor funds to pay those costs. Which then put him in the hole for the second round of projects. He also took on more than $100 million in margin loan debt, which meant he needed to generate even more cash.

In March 2012, Douglas Hulme, CEO of Rapid USA Visas, cut ties with Stenger and Quiros. For several years, the company had helped Stenger attract foreign investors; but eventually it “lost confidence in the accuracy of representations made by Jay Peak”. Vermont officials conducted a cursory (in my view) check on Stenger, but as Galloway reports, “it is clear that state officials did not investigate Hulme’s allegations.”

And Hulme wasn’t alone in raising red flags, Galloway reports:

…in the spring of 2012, behind the scenes, the state was starting to take heat from EB-5 attorneys and consultants who were raising questions about how the regional center was vetting projects, internal memos show.

In April, state officials held a conference call with Hulme. Minutes of that call “have not been made available,” and then-Commerce Secretary Lawrence Miller “declined to comment on the substance of the meeting.”

In the end, Miller brushed aside Hulme’s concerns. Indeed, he sent a letter to Hulme in June accusing him of “unfair and deceptive marketing.”

No wonder MIller doesn’t want to comment. He blew it, big time. (Which might raise a question or two about the expertise and insight he brought to health care reform, but that’s an issue for another day.)

Four months later, the Shumlin administration and the state’s congressional delegation gathered in Newport to support Stenger’s plan to bring an additional $600 million in investor funds to the state at the much ballyhooed daylong press conference.

A press conference that occurred in the height of the 2012 campaign season. Perfect timing for ambitious politicians.

Also great timing if Stenger and Quiros were looking to tamp down any lingering doubts over the Rapid USA withdrawal and/or persistent criticism from others involved in EB-5. How better to lash the politicians to your mast than with the siren song of a massive economic boost to the Northeast Kingdom?

There were whispers here and there. The Korean firm behind the biotech campus seemed a bit shady. Then-Gov. Jim Douglas traveled to Korea in 2009 with Stenger; he noted “a surprising lack of activity at AnC Bio Korea, the Korean plant that was directly affiliated with AnC Bio Vermont.” Oh, if only he had exercised a bit of curiosity at the time. Eventually, AnC Bio Korea vanished in a puff of smoke.

Beyond that,

To many locals, Stenger’s grand plan seemed too big and too good to be true from the beginning. Skeptics wondered whether Orleans [County] could house 10,000 workers. No one understood how hundreds of thousands of square feet in new construction could be completed on an aggressive four-year timetable.

But nobody wanted to look too closely, and they ignored the whiffs of decay in hopes that the project would survive and thrive.

A curious bifurcation

There’s an interesting thing about the projects completed and not completed. None of the projects in Newport have come to pass. The airport expansion is off the table, and Q Burke’s contract to operate the airport will not be renewed.

But Jay Peak? It’s gotten a thorough makeover as a four-season resort, including an indoor waterpark, 18-hole golf course, hotels and luxury condos. Some work is unfinished, but the value of the resort has substantially increased. Q Burke isn’t as far along, but there is a nice new hotel ready to open.

In the fall of 2012, Stenger and Quiros were promising thousands of new jobs in tourism and high-tech manufacturing, plus a transformation of Newport’s downtown and waterfront.

Turned out, only the tourism jobs were realized (and only part of them). Those are fine as far as they go, but the high-tech manufacturing and the transformation of Newport held the greatest promise for sustainable full-time employment.

It’s clear that Stenger and Quiros prioritized the ski-resort projects. Which begs the question, were they really serious about the Newport proposals? Or was Newport merely bait for politicians and the public?

Or to take a middle course, were they longshot ideas that helped generate enthusiasm for the resort improvements and/or maintain the cash flow needed to keep the S.S. Quiros above water?

I don’t have any proof to offer, but the chronology is highly suggestive.