Category Archives: EB-5

The Tragedy of Stenger, Prince of Newport, As Related By Himself

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I must return to Mark Johnson’s epic interview slash psychodrama with convicted EB-5 fraudster Bill Stenger, seen here standing next to a gent whose name I cannot quite recall. This time, let’s take a look at how Stenger explains himself as a naive, trusting soul whose biggest sin was that he wanted so desperately for the projects to work that he ignored some very obvious signs of trouble.

Johnson did his level best to hold Stenger’s feet to the fire, and Stenger repeatedly responded by steering down what John Ehrlichman called the “modified limited hangout route.” Stenger admitted complicity but not criminality, depicting himself simultaneously as perpetrator and victim. Neat trick, that.

The problem is, even if you believe Stenger’s account — which would be a dangerous thing to do — he seems to be guilty of gross negligence instead of overt criminality. That’s not a great consolation prize. Neither does it make me feel sorry for him that he had to serve a short sentence in a relatively comfortable federal facility.

Which he describes, as often as not, in the second person, a subtle way of deflecting the fact that this happened to his own self. “You” reported for prison. “You” were welcomed by fellow inmates. “You” got time off for attending courses. And so on.

But that’s a minor point. Time for a deeper dive on how he describes his role in the EB-5 scandal and his timeline, which serves to make his own story less believable.

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The Great Unanswered Question About EB-5: What Did the Shumlin Administration Know and When Did They Know It? (UPDATED)

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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.)

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You Will Please Ask No Questions About the EB-5 Disaster and, By the Way, Here’s the Bill

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It was an “oh, by the way” moment for the ages. And an outrage against good government.

On Wednesday, Attorney General Charity Clark told a House committee that we, the taxpayers of Vermont, are on the hook for a $16.5 million settlement of the EB-5 scandal.

You know, the settlement that allowed key players to avoid the embarrassment and potential legal liability of testifying under oath? Yeah, that one.

Once in a while, an issue or development just hits me so hard that I find myself lying in bed wide awake, staring at the ceiling and grinding my teeth until I have no choice but to get up and write something. And here we are. Let’s recap the high points, shall we?

  • Through a combination of incompetence and hubris, state officials allowed themselves to be flim-flammed.
  • Other state officials then covered up the truth about the affair by claiming they had to keep key documents secret pending court cases.
  • On the eve of trial, the state settled a lawsuit by EB-5 investors just days before former state officials (up to and including former governor Peter Shumlin) were set to testify under oath.
  • If all those documents were ever released once the legal peril was removed, it somehow escaped my attention.
  • The state’s insurance company, AIG, took one look at this mess and denied coverage.
  • The state rolled over and accepted a token payment from AIG.
  • The Scott administration and Attorney General Charity Clark then waited as long as possible to reveal the AIG denial — only doing so when they had to go ask the Legislature for the needed funds.

Are you grinding your teeth yet?

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Will the EB-5 Settlement Be an Open Window or an Escape Hatch?

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Congrats to former governor Peter Shumlin, who will be spared the indignity — and potential legal peril — of testifying under oath about the EB-5 scandal, thanks to the state’s universal settlement of lawsuits by investors in the fraudulent scheme.

Regrets for the rest of us, who’ve been wondering for years what he knew and when he knew it

At the same time, hopes arise for the fullest possible disclosure of documents hitherto barred from public disclosure because of the state’s legal exposure. Well, that threat has been removed, right? So now we can expect a big press conference any day now where state officials will pull a curtain away from a mountain of documents and eliminate all the suspicions.

Right?

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Sh*t My Governor Says

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The topline of yesterday’s Covid presser was all about the schools. Id est, how the Scott administration is imposing policies and expectations on the schools but refusing to lift a finger to help them handle the additional workload.

But there were several other statements we shouldn’t allow to pass unmocked. So here’s a sampler, a Children’s Treasury if you will, of dumb stuff said by the governor plus a couple of entries from Finance Commissioner and Number Cruncher Extraordinaire Michael Pieciak.

We’ll start with Scott playing pure politics, something he likes to accuse other people of doing. As he continues to resist calls for tighter anti-Covid measures, he was asked what he’d do if the Legislature passed such measures and sent them to his desk.

“I don’t think it’s necessary,” he said. “If they want to come back into session and they want to introduce a mask mandate, they want to limit travel, they want to shut down bars and restaurants, they want to limit gatherings, they want to cancel Christmas, I mean, that’s up to them.”

The deliberate exaggeration of opposing views is classic passive-aggressive Phil Scott. But cancel Christmas? When did the governor start watching Fox News?

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We’ve Got an Overflow in the Moral Sewer of Vermont Politics

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Something stinks around here, and it looks like the Powers That Be are scrambling to keep anyone from identifying the source of the stench.

For those just tuning in, tonight’s VTDigger brings us the happy tidings of an agreement between federal prosecutors and Bill Stenger, one of the defendants in the EB-5 fraud case. The two sides have agreed on what evidence will be presented in Stenger’s case… and in exchange, Stenger’s lawyers won’t force a whole bunch of well-connected Vermonters to testify under oath.

See, Stenger’s defense had argued that state officials knew about the fraud long before it was publicly revealed and did nothing to stop it. Given the contents of a recent document dump, it’s clear that Team Shumlin knew a great deal and did their best to keep it under the rug. So their appearances under oath would have been at least embarrassing and perhaps incriminating.

The Vermonters in question include former governor Peter Shumlin and at least five top officials in his administration. They would have taken the stand next week, so this deal is a last-minute reprieve for these worthies. And yet another roadblock in the path of public disclosure. This fraud goes back at least a decade, and we’ve still only seen the faint outlines of official complicity.

Imagine, just for shits and giggles, Shumlin takes the stand and his testimony is at odds with the evidentiary record. Or he ducks the questions and pleads the Fifth. Not a good look, that.

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Boo This Man

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It’s possible, in this moment of his ultimate disgrace, to feel just a little bit sorry for ex-governor Peter Shumlin. From fall 2014 to summer 2015, he endured three separate political de-pantsings — any one of which could have felled a lesser man in his tracks. First, his near-defeat at the hands of political outsider (and truly terrible campaigner) Scott Milne; then, having to admit failure in his signature push for single-payer health care; and then, in the spring of 2015, finding out that the Quiros/Stenger EB-5 projects were built on fiscal and ethical quicksand.

That said, his governorship will have to go down in history as singularly disastrous.

We know this now because of the dogged efforts of VTDigger to unearth a trove of documents kept secret by state officials. Its pursuit of the EB-5 White Whale was rewarded last week by a federal judge’s ruling that the documents must be made public.

And now, after poring their way through the docs, Alan Keays and Anne Galloway have published one of the most damning political pieces in recent memory. They recount how Shumlin and his team knew by the spring of 2015 that the EB-5 projects were fundamentally fraudulent and doomed to collapse… and yet they kept on flogging the projects for a full year. Their efforts only ended in the spring of 2016 when the feds launched a massive civil suit against Bill Stenger and Ariel Quiros.

That’s bad. But Keays and Galloway document a variety of ways in which the story is even worse than that dreadful topline. Let’s run the highlights, shall we?

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There Are Two Ways This Can End, and They’re Both Terrible

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Anne Galloway, the Captain Ahab of Vermont journalism, has returned to port with another big bloody chunk of the Great White Whale.

The whale is the EB-5 scandal, about which fundamental questions remain unanswered because a lot of information has yet to be made public. I don’t agree with how VTDigger is stonewalling its union, but this is an example of why we need Digger. Galloway is doing a tremendous public service by chasing a complicated story that no other media outlet has been willing to tackle.

Should I do a brief recap of the EB-5 thing? Is that possible? Well, here we go.

EB-5 is a program that offers green cards to foreign investors who put money into development projects in designated rural and/or poor areas. It was a small thing in Vermont until the great recession of 2008-9, when it suddenly took off. State oversight failed to keep up with its rapid growth. A lot of good projects got built, but Ariel Quiros allegedly committed large-scale fraud by taking money for projects he never built. He was assisted in these efforts by Vermont businessman Bill Stenger.

The state of Vermont, particularly the Shumlin administration, either failed to detect the fraud or tried to cover it up. Which one? Probably both, but we don’t know because a lot of key documents are still, several years later, being kept under wraps.

VTDigger has been diligently pursuing those documents, and keeps winning partial victories. Which then gives them reams upon reams of documents to go through.

On Wednesday, Digger posted another installment in its series. This time, it reports that state officials knew there was fraudulent activity two years before the the scandal was revealed by federal regulators in 2016.

Yikes.

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Lost in the weeds

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Sue Minter seems to be spending a lot of time lately trying to out-ethics Phil Scott. After he announced he would sell his stake in Dubois Construction if elected governor, she continued to pound on potential conflicts of interest. Now, she’s returning campaign donations from a lawyer connected to the scandal-plagued EB-5 developments ni the Northeast Kingdom.

Maybe it’s just me, but I think this is a waste of time and unlikely to resonate with voters. It’s the kind of stuff that political insiders (and us outsiders who obsess about politics) care about, but I seriously question whether the voters do.

Besides which, trying to blacken Scott’s reputation is a mug’s game. He’s such a familiar figure with such a positive image; you’re not likely to change people’s minds unless there’s an October Surprise lurking in Scott’s closet.

Better, in my mind, to focus on the issues, where Scott is weakest.

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Journalism in defiance of press release

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Round of applause for the Burlington Free Press’ April Burbank, who filed an appropriately skeptical report on Scott Milne’s umpty-billionth attack on Sen. Pat Leahy’s integrity.

The subject of his latest sally was, once again, EB-5. In a press release and news conference, MIlne played his favorite hits and added a couple new verses while depicting Leahy as The Great And Powerful Wizard of EB-5.

Unfortunately for Milne’s desired narrative, Burbank began her story thusly:

Scott Milne said he’s “not ready” to discuss specific policies he would pursue if elected to the U.S. Senate, other than ethical questions he has raised about his opponent, Sen. Patrick Leahy.

Yeah, boy, is he “not ready.”

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