Allegations that
According to civil complaints filed by the U.S. Securities and Exchange Commission and the state of Vermont, the fraud began when Miami businessman Ariel Quiros improperly used investors’ money to finance his purchase of the Jay Peak ski area in 2008. Over the course of the years, Quiros, abetted by Jay Peak CEO Bill Stenger, is alleged to have orchestrated the misuse of $200 million of the $350 million they generated through the federal EB-5 program, which confers permanent residency status on foreign nationals willing to invest $500,000 or more in job-creating development projects in economically depressed areas of the United States. The complaints also allege that Quiros misappropriated $50 million for his own use. Stenger and Quiros have denied wrongdoing, and Stenger told VtDigger that he is cooperating with the authorities.
Among the questions we would like to see answered:
Vermont Public Radio reports that in a 2014 interview Quiros gave to SEC lawyers, he asserted that he only bought Jay Peak because officials, apparently including then-Gov. Jim Douglas, all but pleaded with him to do so. If that’s true, on what basis were those pleas issued? Were state officials personally familiar with Quiros’ business dealings, or was he recommended to them?
Gov. Peter Shumlin, who succeeded Douglas in office, has said previously that the state made efforts to vet EB-5 proposals in order to give investors some level of confidence that they were worthy. What did that review consist of in the case of the multiple Jay Peak projects and who conducted it? Was financial information elicited from Quiros and Stenger, and what did it show?
Until the end of 2014, the state Agency of Commerce and Community Development had responsibility for both overseeing and promoting EB-5 projects. Why was that structure originally put into place during the Douglas administration and why did it take four years for Shumlin to recognize that the two responsibilities were incompatible and transfer oversight to the Department of Financial Regulation?
Both Douglas and Shumlin made extensive overseas trips on behalf of the developers to seek investments. Did the governors confine themselves to promoting the state as a good place to do business, or did they solicit investors specifically on behalf of the Jay Peak projects?
The SEC had gathered strong evidence of massive fraud by May 2014, and yet the state Department of Financial Regulation only began its inquiry in early 2015, once responsibility for EB-5 oversight had been transferred to it. When did the state first become aware of the SEC inquiry? Were Quiros and Stenger allowed to continue to solicit investors while either or both inquiries were underway? If so, why?
Finally, Quiros and Stenger, their associates and family members contributed thousands of dollars to the Vermont Democratic Party and to Shumlin’s election campaigns in 2012 and 2014. Did their generosity result in favorable regulatory treatment for their Northeast Kingdom projects?
As these questions suggest, some form of independent post-mortem has to be performed on this fiasco, bolstered by the publication of all relevant state government documents, to ensure that what happened here was simply a case of wishful thinking run wild on the part of state officials who wanted to believe that an economic renaissance was in the making for the Northeast Kingdom. As Shumlin said when the charges were made public, “I mean the dream that we could finally create hundreds and hundreds of jobs in the part of the state that has been struggling for jobs is something any reasonable person would wish to pursue.”
That is certainly true, but that was no excuse for donning rose-colored glasses when clear vision was required, if that’s what happened. Living the dream is one thing; dreaming the dream quite another.