Tag Archives: Securities and Exchange Commission

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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Breaking Up Is Easy To Do (When You’re Under Indictment)

Ever since the Securities and Exchange Commission brought the hammer down on the Jay Peak/Northeast Kingdom EB-5 developers, there have been plenty of Vermonters hoping that local hero Bill Stenger will turn out to be nothing more than a dupe in a massive fraud scheme by Ariel Quiros. That’s certainly the tale that Stenger’s been anxious to tell.

Well, now it’s Quiros’ turn to throw his partner under the bus. VTDigger’s Anne Galloway reports that Quiros has deployed an interesting defense — one that tacitly acknowledges wrongdoing on a significant scale.

The Miami businessman was not responsible for offering documents and did not communicate with investors, defense attorneys said. They allege that Stenger was the one who made misrepresentations to investors.

Oh, ho, ho, ho, ho. Cute.

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Yes, Virginia, the rich are different

Poor Little Rich Man.

Poor Little Rich Man.

Break out the tiny violins. Hold an onion under your eyes and squeeze out a few tears for Ariel Quiros, alleged EB-5 fraudster. His assets have been frozen by a federal court, and he’s having trouble making ends meet. Probably eating cat food for dinner and shacking up under a freeway bridge.

He’s claiming poverty in a court filing discovered by VTDigger’s Anne Galloway. But it’s a very special definition of “poverty” that could only come from a man accustomed to great wealth.

Quiros claims he needs $100,000 a month for “so-called reasonable living expenses.” In addition, Quiros is seeking $300,000 [a month] for professional expenses related to his court case.

Yeah, a hundred G’s just doesn’t go very far these days. I wonder if he qualifies for food stamps.

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Serenade for Tiny Violins

MouseTinyViolinPoor, poor Ariel Quiros. The alleged fraudster has had his assets frozen by the big bad federal government, to the point where he can’t “feed his family” or “purchase… a cup of coffee, let alone defend against the SEC’s allegations.”

So says Quiros attorney Charles Litchman, who is asking for the freeze to be lifted.

The people of the Northeast Kingdom weep for him.

But Vermonters are a resourceful breed. Maybe we can suggest some ways Ariel could generate a little cash, even as his millions remain sequestered.

For starters, perhaps he could sublet that $2.2 million Trump Tower condo, allegedly paid for with money looted from Quiros’ EB-5 development project.

I’m sure he has other properties that could be rented out or even sold; these guys always own a fistful of homes in the garden spots of the world. I hear he owns a 42-foot oceangoing sailboat; maybe he could hire it out.

I hear tell of a thing called “Groupon.” It’s how the kids are getting all kinds of great deals on the Interwebs. He should check into it.

There’s always the local food pantry. I’m sure they would welcome him with open arms, since a man of his means must have donated liberally to worthy causes in his community. Right?

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The hottest potato in Vermont

Our political elites are still involved in the unedifying spectacle of desperately trying to create distance between themselves and a former best buddy. Unedifying, and beggaring belief.

The best bud, of course, is alleged EB-5 scamster Bill Stenger, who still denies  — also beggaring belief — that he knew nothing about the misuse of $200 million in investor funds, and that it was all the dark-skinned flatlander’s fault. Pretty much everyone in Vermont politics has cozied up to Stenger in the past, and anyone in a position to bestow favors did so on a regular basis. Democrats, Republicans, even Bernie. (Who has thoroughly ducked the issue, his endless narrative about the evils of corporate influence notwithstanding.)

At the head of the “run away from Bill” parade is none other than our esteemed Governor, Peter Shumlin. One of his worst attributes as a leader is his extreme reluctance to admit he screwed up, even in the face of overwhelming evidence. And that makes his frantic positioning in this case all the more incredible; you can almost hear him claiming that Vermont’s handling of Stenger was a “nothing-burger.”

Yeah, that phrase will be on his political headstone, and it’s largely his own fault. He’d be better off just acknowledging unpleasant realities and accepting responsibility. Because as the state’s chief executive, he is uniquely responsible.

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Inartful dodges and implausible denials

Must be a new experience for Bill Stenger, having a hard time getting his calls returned. After all, he’s been a major player at the intersection of Vermont business and politics for a long time now, benefiting from sweetheart deals and inadequate oversight (see Postscript below) courtesy of at least two successive administrations.

After years of holding together his massive EB-5 project with chicken wire and spit, Stenger is now embroiled in the sales pitch of a lifetime: portraying himself as innocent in the face of federal and state investigations and an increasingly ugly paper trail.

From VPR’s Peter Hirschfeld, we learn that federal officials “had strong forensic evidence of a massive fraud” at least two years ago, and that Stenger was subjected to an intensive interview by SEC investigators in May 2014.

And from the Burlington Free Press’ Jess Aloe, we learn that Stenger’s top financial executive resigned in 2011 “after [Stenger] failed to address concerns about the use of money from foreign investors.”

It is literally impossible to believe that an experienced entrepreneur like Stenger could somehow remain clueless in the face of all that. But there he was, telling the Free Press last Monday (two days before the SEC raided his offices, seized his papers, and changed the locks) that nothing was wrong. And on Friday, two days after the raid, he doubled down.

“There was a lot of stuff in the presentation that I got on Wednesday that I was not aware of,” Stenger said. “I can’t go any further than that. I’ve got to let it go at that. I’m trying to figure this out as well. I just need to deal with it.”

Okay, I see what we’re doing here: blaming the dark-skinned flatlander.

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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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