EB-5: the tar baby of Vermont politics

I was wondering when a candidate would dip his hand into the EB-5 cookie jar. It’s easy pickin’s if you want to criticize Democratic leadership of state government. And here we go, Phil Scott’s dug in for some sweet treats.

After positing his support for EB-5 “with proper oversight,” he laid into the Shumlin administration on a specific point:

I was disappointed to learn… that the Shumlin Administration enabled the owners of the EB-5 projects in the Northeast Kingdom… to continue to solicit investors for months after the SEC had suspended that permission for Jay Peak. … By the Administration’s own admission, it was a ‘calculated risk.’  Yet, they’ve not yet explained why they took this risk or why they allowed the problem to continue to grow.

Now, here’s the problem.

The Shumlin administration made that decision in the spring of 2015. (More on that in a moment.) In June of that year, VTDigger’s Anne Galloway broke the news that federal authorities were investigating Jay Peak.

For months after that, Lieutenant Governor Phil Scott expressed his wholehearted support for Jay Peak. Indeed, in November he criticized the administration for inserting itself into the process, thus delaying payments to contractors.

Despite the issues at Q Burke, Scott says he still supports Vermont’s EB-5 program. He added that he sympathizes with [Jay Peak contractor] PeakCM, as he owns his own construction company.

So, hypocrite. But wait, there’s more.

In the spring of 2015, the administration did, in fact, allow the developers to continue soliciting investor funds in hopes of keeping the project afloat. But strict conditions were imposed.

“New investor money went into an escrow account,” explains Shumlin spox Scott Coriell*. “The state had to approve all expenditures.” Hence, the delays that Phil Scott was so exercised about.

*say that five times fast.

Not only did Phil Scott still support Jay Peak specifically and EB-5 in general as recently as nine months ago; not only did he fail to notice the clouds of smoke emanating from Ariel Quiros’ kitchen; not only did he fail to take seriously VTDigger’s reporting on Jay Peak; but he actually wanted the state to relax its controls on the project so his fellow contractors could get paid, even though he knew the feds were investigating the project.

And now he’s Monday morning quarterbacking. I guess that’s his definition of leadership.

This illustrates the problem with using EB-5 as a campaign issue. Nobody’s got clean hands on this one. Jay Peak president Bill Stenger has curated close relationships with Democratic and Republican politicos alike — although his natural allegiances and longstanding ties are with the GOP.

According to federal investigators, the Jay Peak fraud began in 2008 — more than two years before Peter Shumlin became governor. The Jim Douglas administration was in power when Jay Peak was given the go-ahead, and it began its alleged fraud on Douglas’ watch. And Douglas went on multiple foreign trips with Stenger, helping him attract EB-5 investors.

During his 2010 campaign, Peter Shumlin was sharply critical of Douglas’ junkets; but once he became governor, he enthusiastically joined Stenger on a number of recruiting trips.

No clean hands there.

All three of Vermont’s distinguished members of Congress were vocal supporters of EB-5, including the pure-as-the-driven-snow Bernie Sanders. All have, of course, backed away from Jay Peak since the SEC raided the joint.

And I should point out that Vermont’s EB-5 program dates back to the Howard Dean administration.

Nobody has begun to question the originators and enablers of the EB-5 fraud, from the 1990s to the filing of charges. That would include how many top officials in the Douglas administration — people who are likely to be recycled in a Phil Scott administration.

Really, there’s not a lot of talent on the Republican bench. And in GOP circles, the Douglas years are remembered fondly as the VTGOP’s last acquaintance with political power. Heck, Phil Scott says he’s writing in Jim Douglas for President.

If Jim Douglas is Scott;s Beau Ideal, I think we can expect to see Douglas stalwarts like Jason Gibbs, Mike Smith, Tom Pelham, Pat MacDonald, Tom Evslin, and Kevin Dorn once again prowling the corridors of power. (Dorn was Commerce Secretary for the entirety of the Douglas years, responsible for EB-5 oversight. Anything to add, Kevin?)

Well, maybe not radio buddy Mike Smith. I’m sure he’s making way too much money at WDEV to consider a return to Montpelier. Cough.

Oh, I almost forgot: Patricia Moulton, a member of the Douglas team through most of his eight years, and most recently Shumlin’s Secretary of Commerce whose agency screwed the pooch big-time on EB-5 oversight.

The Jim Douglas Standard of Leadership helped enable the Jay Peak fraud. As did the Peter Shumlin Standard of Leadership.

The point is, Phil Scott should be careful where he points that thing.  He’d be well advised to back away slowly, lest he awaken some sleeping dogs.

No clean hands. Anywhere.

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2 thoughts on “EB-5: the tar baby of Vermont politics

  1. walter h moses

    Regarding the administrations “calculated risk”: so they had a good idea of what a mess this was going to be, but a completed hotel is better than a half built hotel so let’s keep the ball rolling. To hell with the contractors and sub contractors, they will get their money sooner or later, maybe.
    So the little guys get hurt, but for politicians, that’s their fate anyway. No clean hands for sure.

    What a leach field Montpelier is. Now, if they would stop dumping overflow into the Wynooski….
    Got to find something to do…..oh yeah, that cat box.

    Reply
  2. Brooke Paige

    Extortion By Any Other Name !

    You can make excuses, you can look the other way, you can pretend you don’t know what the hell is going on; but in the end you are compelling foreigners with more money then good sense to fork out $500 grand for a chance of getting four green cards – maybe !

    This scam is not about investments, its about funneling cash into depressed economic areas with the hope that you might get your principle back with a little interest, if you are real lucky! The prize is the green cards and I suspect if you offered the “investors” the straight up deal $500,000 for four green cards to get your family out of the third world hell hole they are stuck in -they would take the deal in “a New York minute.” If they were offered that deal they would be dollars ahead because the EB-5 “investors” wind up dropping $50,000 to $75,000 in legal fees, commissions and other expenses to secure the “opportunity” to invest in a EB-5er..

    What a deal (sham, scam, whatever) brought to you by you friends in Montpelier and Washington – Putney Pete, Prince Patty (Leahy), Uncle Bernie and a host of other creative politicians, ever in search of some more “fast cash.” Here is a novel idea, why not offer Vermonters an “opportunity” to invest in Vermont with a guaranteed investment with a return of 3% or 4% tax free – we could call them industrial development bonds! OH, that’s right Vermonters have been taxed to death and don’t have any real money to “invest” – guess we’ll have to keep scamming the desperate foreigners !

    H. Brooke Paige

    Reply

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