Update below: Auditor Doug Hoffer is working on a thorough exploration of the EB-5 mess.

Mark Johnson posted a pretty incredible two-part podcast last week. In the latest installment of his “802 News” (discoverable here or Wherever You Download Your Podcasts), Johnson spent more than two hours grilling Bill Stenger, the Northeast Kingdom developer who served prison time in the EB-5 fraud case. There’s a lot to unpack about Stenger himself, but the thing that caught my attention was what he had to say about the role of the Shumlin administration. His comments tore the metaphorical scab off the unhealed wound that is EB-5, specifically the state’s role in enabling a massive fraud.

Let’s pause for a moment and posit that no one, absolutely no one, in Vermont officialdom seems the least bit interested in uncovering the whole truth about this. With each passing day, it seems less and less likely that there will ever be a full accounting for Peter Shumlin and his top officials, many of whom (coughMikePieciakcough) continue to hold positions of influence in and around state government.

To get to the key moment: By early 2015, there was plenty of smoke if not open fire around the EB-5 projects. At that point, the state had to reauthorize two of the projects, including AnC Bio Vermont, the big flashy biotech facility that was supposed to be built in The Hole, pictured above.

In Stenger’s telling, state officials knew at the time that lead investor Ariel Quiros was committing fraud, and yet they gave the green light to continue the projects. If this is true, then (as Stenger implies but doesn’t state outright), some very prominent people should have joined Stenger and Quiros in being fitted for bright orange jumpsuits.

(Those with short memories should go back and read some of VTDigger’s reporting on the scandal, spearheaded by Digger founder Anne Galloway. This story and this one for starters.)

After the state reauthorized the projects, Stenger said, “I went forward after that, raised another $35 million for AnC Bio, and I think $16-18 million more for Burke [Mountain Resort].” He added:

What I learned after the fact was that when the state went to see the [Securities and Exchange Commission]. The SEC informed them of Quiros’ fraud. And they still authorized the projects to go forward. That’s what I scratch my head about. I went to prison and I have a $250,000 restitution because of the money I raised after the state authorized the projects to go forward and the state knew at the time… that Quiros had committed fraud. And I did not know that.

It wasn’t until April 2016, when a clutch of SEC vehicles showed up at Stenger’s offices, that the whole scheme came unglued. So the question — again, assuming Stenger is telling the truth — is how in hell could the Shumlin administration reauthorize if it had even a hint that something fraudulent was going on? How could it allow Stenger to raise another $50 million-plus for a potentially bogus plan?

Well, going back to one of those Digger stories, you’ll learn that Shumlin knew there was trouble afoot as far back as August 2014, when Quiros told him that the SEC was investigating the projects. Which only underlines Stenger’s account of being deceived not only by Quiros, but by his own governor.

To judge by Stenger’s account, it seems that he and the state fell victim to the “frog in the boiling pot” scenario. At first the water was cool and inviting. Then the heat was slowly turned up while Stenger and the administration splashed around merrily on their inflatable floaties until they suddenly realized they were being cooked to death. Stenger tells of being single-mindedly focused on finishing the projects, which would have fulfilled the promises made to EB-5 investors and provide a dramatic boost to the Northeast Kingdom’s economy. As more and more red flags appeared, Stenger kept his head down and pushed on ahead — until it all collapsed in the spring of 2016.

I’m sure the administration wanted the projects to succeed as badly as Stenger, and this fed into its see-no-evil stance. Plus, Shumlin has an almost sociopathic belief in his own ability to pull shit off. See also: Vermont Health Connect.

In closing, let’s circle back to “we’ll never learn the full story.” The Vermont official class is a clubby thing, where respected functionaries migrate freely among administrations, nonprofits and lobby shops. If you’re in the club, you never know which of your fellow members might be the source of your next gig.

On top of that, there’s the centralized nature of Vermont’s system as enshrined, for better or worse, in our constitution. That sainted document has given us offenses against good government like the lack of a referendum process, the Legislature’s sole and complete control over redistricting, ethics, and campaign finance, municipalities’ lack of control over their own charters and, most relevant here, the Attorney General serving simultaneously as counsel for the people and for the state. If the interests of state and people are in conflict, the public gets the shaft. In the EB-5 case, Attorney General Charity Clark settled a big lawsuit (at a cost to the taxpayers of $16.5 million) just days before Peter Shumlin and other top officials would have had to testify under oath.

I don’t know if the door is closed for good. It doubtless is, as far as official Vermont is concerned. They certainly seem to hope so. Clark certainly did her part at a crucial juncture.

UPDATE. I left out one very important figure in my assessment of “official Vermont.” Auditor Doug Hoffer announced in 2018 that he would investigate EB-5. In 2020 he issued an “interim report” based on available documentation. Much information was not available because of pending civil and criminal cases. Hoffer should have everything he needs to provide plenty of answers, if not the dsdatisfaction of seeing certain people doing perp walks..

If I recall correctly, there are still boatloads of undisclosed EB-5 documents. t’d be nice if Digger or other news orgs would wage a court battle for full disclosure. I don’t know if such a thing is feasible, or if they have the resources or attention span necessary for such a fight; my hopes aren’t particularly high. Here in Vermont, we prefer our skeletons stowed away safely in the attic.