Tag Archives: EB-5

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.

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You’re unbelievable

Astounding Coincidences in Vermont Politics, EB-5 Scandal Edition…

a. Five days before the Bill Stenger/EB-5 scandal broke wide open, the Shumlin administration requests the deletion of archived emails from five former staffers in Shumlin’s office. One of the five is Alex MacLean, who left state government to take a job with Stenger’s massive development project.

b. On the day before the scandal broke, Senator Pat Leahy — until then a staunch supporter of EB-5 and Stenger — adopted a much more skeptical tone toward EB-5, saying that the program needed a major overhaul if it’s going to stay in business. Leahy insists he knew nothing about the imminent collapse of Stenger’s (alleged) pyramid scheme.

You know, call me a cynic, but I don’t believe any of it.

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Let’s not let ’em rewrite history

Governor Shumlin calls the Stengerville Scandal “a dark day for Vermont.” Well, no, not really.

It’s a bad day for the Northeast Kingdom. For the rest of Vermont, it’s not going to make much of a difference. Not in economic terms, anyway.

No, the day is darkest, by far, for Vermont’s political and business elite, who have eagerly promoted this project for years, and have done Captain Renault proud in overseeing a couple of guys who spun a tale too good to be true, and who turned out to be fraudsters on a massive scale.

A lot of smart people acted like rubes. They were completely taken in by the immigration equivalent of a Nigerian email scam. And many of them should be held to account. My own list includes the past two Governors (the fraud began “from day one” in 2008, which means it was the Douglas administration that orchestrated this deal and established the regulatory process that failed so spectacularly), the past three Secretaries of Commerce and Community Development, the various bureaucrats who were directly tasked with EB-5 oversight, top lawmakers from both parties, business leaders who might have realized it was in their interest to avoid an embarrassing and wide-ranging financial scandal in their backyards, and various and sundry members of the political establishment — whose number, IMO, includes one Phil Scott, a contented and connected establishmentarian since 2002, I believe.

The day is even darker for would-be immigrant investors, many of whom will not only never see their money again, but will also never get their green cards. But hey, they’re just a buncha foreigners, so whatever.

As far as I know, nobody has yet asked Governor Douglas or his top economic-development officials any hard questions about the creation of the Stenger/Quiros EB-5 project, which happened under his watch. Douglas happily traveled around the world on Stenger’s dime (cough, I mean, his foreign marks’ dime) promoting the project, thus helping Stenger and Quiros perpetrate their massive fraud.

I do hope somebody pins down Jim Douglas on all of this. We need to know how it happened so we can prevent it from ever happening again.

As for Governor Shumlin, still busily depicting himself as the hero of this two-bit melodrama, well, more evidence that he’s just blowing smoke comes to us from a younger Paul Heintz, writing in Seven Days a full four years ago. 

Reminder: Shumlin is asserting that he started feeling queasy about Stengerville in 2014, which led to transferring oversight from ACCD to the Department of Financial Regulation. It was the DFR’s bloodhounds who did much to uncover the scam.

Which doesn’t explain why Shumlin resolutely kept his doubts to himself until the scandal broke wide open this week. It also doesn’t explain why Shumlin didn’t think anything was wrong until 2014, since there were definite signs of trouble a full two years earlier. Take it away, Younger Paul Heintz, dateline April 4, 2012:

… one of Jay Peak’s closest associates, Rapid USA Visas, recently disparaged Stenger and his company by publicly severing its ties with the resort and questioning its financial health.

For five years, Rapid USA had worked closely with Jay Peak to attract foreign investors.

… That changed [in March 2012], when hundreds of immigration attorneys around the world received an email from the firm that announced, “Rapid USA no longer has confidence in the accuracy of representations made by Jay Peak, Inc., or in the financial status of and disclosures made by [it].”

Now, there’s a big red flag if ever I saw one. A company whose business is enabling EB-5 programs suddenly backs away from Stenger. And, pray tell, how did the Shumlin administration respond?

“We, of course, wanted to take a closer look, so we spent the entire day at Jay after that letter,” says James Candido, who directs the state’s EB-5 program at the Agency of Commerce and Community Development. “There was absolutely nothing that was out of the ordinary.”

A day.

A day.

A whole bleepin’ day. Presumably in the company of Stenger and friends. And presumably the state Commerce officials didn’t have the accounting expertise that, say, the Department of Financial Regulation could bring to bear.

Wouldn’t have mattered anyway, because ONE FRICKIN’ DAY is not enough to untangle a carefully-constructed fraudulent enterprise. It is enough to share a drink with good ol’ Bill Stenger and fill up on his silver-tongued reassurances.

(By the way, would it surprise you in the slightest to hear that Mr. Candido left ACCD in 2012 to take a job with a Boston law firm developing an EB-5 project out west? No? Oh, you cynical bastard. Welcome to the club.)

This wasn’t the only red flag concerning EB-5 in Vermont that predated Shumlin’s self-proclaimed Eureka moment. Heintz goes on to recount the sad story of DreamLife, a Canadian company that promised to use EB-5 money to build four luxurious senior-living complexes in Vermont.

Problem: DreamLife was basically a company whose sole function was to attract EB-5 investors and skim off commissions. And the company was spectacularly unsuccessful; it never attracted investors, and never even began acquiring land for its developments.

Former DreamLife employee Douglas Littlefield says the company has reneged on numerous business commitments. “Personally, I don’t think he should have been allowed to come to Vermont,” says Littlefield, who was hired two years ago to scout potential sites. “I wish anyone who works with him good luck.”

“He” is DreamLife founder Richard Parenteau, a man with a checkered past who had to cut ties with DreamLife when his legal entanglements in Canada prevented him from crossing the border to do business in the States. And what Littlefield is saying, basically, is “How in hell did the state of Vermont let this guy get a foot in the door?”

You can read many more details at Heintz’ 2012 piece, which is strongly recommended. Suffice it to say, there was a hell of a lot of smoke, and even some visible flames, around Vermont’s EB-5 program long before Shumlin attained clarity in 2014. The pot of gold at the end of the rainbow was too enticing for Shumlin to start asking questions about EB-5 until he had no choice.

He chooses to start his narrative from a point in time that makes him look good. Or at least not quite so bad. We shouldn’t let him get away with it.

Nor should we let Shumlin take all the blame. Jim Douglas, what say you? Any regrets? Any apologies for the EB-5 investors you helped ensnare in Stenger’s web of deceit?

Phil Scott, you’re casting postdated aspersions about Shumlin’s oversight of Stengerville. What’s your record on EB-5 projects? Have you touted EB-5 as a valuable tool for economic development? Have you been there, smiling and punching shoulders, at project unveilings? Have you cozied up to EB-5 developers? Have you gone on any junkets?

As for the rest of you… well, you know who you are, and your time will come.

Let the rewriting of history commence

Slightly off topic: Good thing the Burlington Free Press published its advertorial piece about Q Burke (written by a Q Burke PR person) before the shit hit the fan at Stengerville. I hope the Freeploid got paid in advance, because Stenger’s not cutting any checks anytime soon. The article, identified as “NEWS,” can still be viewed on the Freeper’s website. At least for now. I’m surprised they haven’t consigned it to the dark web already.

Anyway, on with the shitshow. Unsurprisingly, Governor Shumlin has launched full-steam-ahead into a thorough rewrite of history. He’s claiming that he saw the Stenger/Quiros scandal coming before everyone else, and his administration took proactive steps to uncover the scandal and limit the damage.

Bwahahahahahahahahahaha.

If true, his response to the scandal was astoundingly muted. It looks as though he began slowly edging away from his previous boosterism for the project, which included many an international junket which saw him doing his level best to steer investors into the Stenger/Quiros web of fraud and deceit. Slowly edging away, but otherwise holding his tongue. How unlike a watchdog.

I wonder what he’d say to all those investors if he was somehow confronted by them all. Do I hear a “nothingburger”?

Perhaps I’m being overly harsh on the Guv, since he didn’t have direct oversight on EB-5 projects, he inherited the oversight process from the administratively flawless Douglas administration, and the Stenger/Quiros plan seemed like such a boon for a long-depressed part of the state. But his words today just made my blood boil.

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When the shit volcano erupts, everybody runs for cover

When you’ve got a big development scheme in your state that’s had the enthusiastic backing of The Great and Powerful, what’s the last thing you want to hear?

“Ponzi-like scheme”?

“Systematically looted”?

“… the gamut from false statements to deceptive financial transactions to outright theft”?

“… pilfering tens of millions of dollars in investor money”?

Yep, we’ve got ’em all, as Mount Quiros, the shit volcano, erupts and everybody runs for cover lest their expensive suits get ruined.

You know, it’s not very often that the term “clusterfuck” is an understatement, but here we are.

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Some of Pat Leahy’s ideas kinda suck

He's had better days.

He’s had better days.

Two of Senator Leahy’s signature initiatives have been in the news lately, and the attention hasn’t exactly been flattering to the quality of our senior solon’s ideas. One is the EB-5 program, which allows wealthy foreigners to buy green cards by investing in job-creating projects; the other is a Homeland Security funding formula that ensures a piece of the pie for small states.

Let’s do the latter first. Late last month, Leahy’s office issued two press releases touting either $6.7 million (July 28) or $6.8 million (July 25) in Homeland Security Preparedness Grants, take your pick. But hey, what’s $100,000 when you’re getting it from Uncle Sam’s sofa cushions?

Both releases brag about Leahy’s role in creating “a formula… that protects smaller states like Vermont” and expands on the point:

Leahy has long championed all-state minimum funding formulas for homeland security grants to ensure that smaller, rural states like Vermont are included and supported by federal resources to thwart and deal with terrorism. Since 2001, Leahy’s all-state minimum has brought Vermont more than $115 million in federal funding to help first responders upgrade equipment, modernize radio systems and offer new training opportunities.

I remember the Congressional debate over this formula. At the time, many thought it was a bad idea. And even though Vermont has benefited, I question its wisdom.

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Drawing the Shmethical Line

Brent Raymond’s move from regulating the EB-5 program to operating one of them is proving impossible to ignore. How impossible? Top Shumlin administration officials are actually raising questions about it. They’re even invoking the feared Executive Code of Ethics.

“The governor has concerns about the potential for a conflict of interest in this decision. … We fully expect all appointees and former appointees to comply with the Executive Code of Ethics,” spokesman Scott Coriell said in an email. “The governor has also asked (the Agency of Commerce and Community Development) to review the communications leading up to this departure to ensure that all actions were in compliance with the Executive Code of Ethics and conflict of interest policies.”

Ah, the Executive Code of Shmethics: the Mock Apple Pie of good government. (Mmmm, Ritz crackers and RealLemon!)

This picture should not be interpreted as visual commentary on the content of this post.

This picture should not be interpreted as visual commentary on the content of this post.


The most interesting phrase in the above paragraph is “leading up to his departure.” It would, indeed, be instructive to know how long Mr. Raymond was negotiating his new job with an EB-5 developer while continuing to be, at least in title, the state’s EB-5 regulator.

And how in Hell he thought it was okay to do that.

Well, at some level he probably knew it wasn’t okay. Otherwise he wouldn’t have kept his superiors in the dark until he actually had the job in hand. Whereupon they waived his 30-day notice and showed him the door toot suite.

He’ll still get paid for the 30 days. Because after all, why punish the guy?

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A particularly obvious spin of the revolving door

Oh looky here, another top Shumlin administration has turned in his resignation. This time, it’s Brent Raymond, the chief overseer of (and cheerleader for) EB-5 programs in Vermont. His biggest task has been to kinda-sorta ride herd on the Bill Stenger suite of projects, including a major expansion of his ski resort in the Northeast Kingdom.

And where’s Mr. Raymond going?

Raymond said Monday he has accepted a position working for Mt. Snow and Peak Resorts…. Mt. Snow has a $52 million EB-5 project with the Vermont Regional Center.

… Raymond said as part of his new duties he will be working on Mt. Snow’s EB-5 project.

Small world, isn’t it?

Once again, I am moved to say “This is exactly the kind of thing that makes people think our government is a den of corruption and insider dealings.”

And “This is the kind of thing that illustrates, as if any further illustration was required, the need for an independent state Ethics Commission. And some tougher ethics laws, while we’re at it.”

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The Kingdom EB-5: Spiders in the attic. Lots of ’em.

About 15 years ago, a retired military man appeared in Dover, New Hampshire with an audacious plan: he had a revolutionary design for midsized passenger aircraft, and he was going to start a company — Alliance Aircraft — to build them. He claimed to have solid interest from some of the world’s major air carriers, and he planned to build a factory in some underutilized mill buildings in the middle of town. Good jobs, economic activity, what could be better?

At the time, I was a reporter/anchor for New Hampshire Public Radio, and I did a story about the project. At first everything seemed ideal, but the more I looked into it, the shakier it became. When I talked to experts in aviation and finance, I learned that this guy wasn’t especially well known and that it’s harder than Hell to launch a successful startup in a capital-intensive field like that.

My report raised questions about the project’s viability and public officials’ enthusiastic embrace of same. In the end, Alliance Aircraft fizzled out. No plant, no planes. Mind you, it wasn’t a scam; the head guy was a true believer. There was little or no public investment involved; the project didn’t even get that far.

Which brings us to today in the Northeast Kingdom. If you haven’t read VTDigger’s latest story about Bill Stenger’s EB-5 project, go and do so. It is a must-read.

The story by Anne Galloway focuses on AnC Bio, the biotech facility planned for Newport and funded by EB-5 investment — the federal program that gives green cards to foreign investors who put money into job-creating projects that would otherwise go unfunded. And the story is so full of authentic jaw-dropping “Holy Shit” moments that my mind was drawn back to the halcyon days of Alliance Aircraft.

I’ll recount some of the lowlights here, but please do yourself a favor and read the whole thing. It’s lengthy, but worth your time.

— AnC Bio Vermont is partnered with AnC Bio Korea, which has developed some promising products but has also been in severe financial straits for several years. How severe? Try “its headquarters was auctioned off in 2012” severe.

The Vermont firm is a separate corporation, but it’s entirely dependent on the Korean company for the intellectual property that would be the lifeblood of a Newport plant.

— Stenger’s group said nothing about AnC Bio Korea’s difficulties in its filings with investors or its communications with the state. Galloway: “State officials… weren’t aware of AnC Bio Korea’s problems until in the course of their own research in May 2014, they learned that the Korean headquarters had been sold at auction to satisfy banks and other creditors.”

— After learning of the Korea mess, the state ordered the Stenger group to cease any communication with investors about the Newport plan. This order was ignored. Thanks, Bill.

— Here’s a biggie buried deep in the story. The proposed site of the factory (plus 18 nearby acres) was purchased in 2011 for $3.1 million by a corporation owned by Stenger’s partner Ariel Quiros. Part of the land was sold to the EB-5 consortium, little more than a year later, for $6 million. That’s a tidy profit for Mr. Q. He’d profit even more if the plant is built and his 18 acres are adjacent to a booming factory.

— AnC Bio has yet to seek or receive FDA approval for any of its products, usually a lengthy process. Stenger: “…the FDA approval of products and services will in part be facilitated by the completion of the building.”

Cart before the horse, Bill?

I could go on, but you can read it all at VTDigger. Suffice it to say that this reeks eight ways from Sunday. And beyond the potential implications for the company, its investors, and the city of Newport, this could blow up big-time in Governor Shumlin’s face. He’s been Head Cheerleader for the Stenger projects, frequently traveling overseas to help Stenger and Quiros court investors. His administration set up a conveniently Stenger-friendly regulatory mechanism.

Not to mention that Shumlin’s former right hand, Alex MacLean, was working with the Stenger group through much of this troubled time. If she wasn’t pipelining information back to the administration about all this, she certainly wasn’t doing her political mentor any favors.

If the Newport project implodes or suffers any of several extremely realistic setbacks, it will be another black eye for Peter Shumlin’s tattered reputation for good management. A largely self-inflicted black eye, at that; he didn’t have to identify himself so closely with this project. But he got stars in his eyes, and he may well pay a heavy price.