By Michael Bielawski
A new report details mistakes made by the state concerning its handling of the infamous EB5 scandal of 2016, when millions of dollars were extracted from major development projects involving a federal foreign worker program.
Developers Ariel Quiros, William Stenger, and William Kelly were all convicted following their indictment in federal court.
The report by Auditor Doug Hoffer comes to defense of the state by suggesting they were deceived with false information, but it still acknowledges more could have been done to protect huge losses for investors.
“This report is intended to contribute to the public record of the Jay Peak scandal by providing, in a single source, a comprehensive summary of the State government’s role and answers the following questions,” the Hoffer report states.
There are three primary questions it seeks to answer. One: “How did ACCD [Agency of Commerce and Community Development] and others describe ACCD’s oversight and what oversight actions did it take?”
The next is, “What actions did the State take regarding its approval of the AnC Bio Vermont and Burke Mountain EB-5 projects before April 2016?”
A report appearing on VermontBiz in 2021 offered some background on AnC Bio which had business dealings across the world.
“A fourth defendant, Jong Weon Choi, also known as Alex Choi of South Korea, remains on the run, federal authorities have said,” it states. “Choi was convicted in South Korea for financial fraud in 2016 in connection with AnC Bio Korea, which the proposed Vermont venture was tailored after, officials said.”
AnC Bio was intended to be a drug manufacturing operation, but it was never built.
VermontBiz notes that overall, there was a general sentiment that the state was not fully transparent with the public.
“Both sets of lawyers have maintained Vermont officials kept the public in the dark while trying to ensure most of the EB-5 construction work was completed,” their report states.
The third question they ask is, “What is the reported immigration and investment repayment status of the investors in each of the Jay and Burke EB-5 project phases?”
The status of repayments is not great. The report recalls the damage done to the victims.
“Many of the investor/victims of the fraud perpetrated by Quiros, Kelly, and Stenger are still experiencing negative effects years later. Most have received only a fraction of their investments back and many have not received green cards, a principal draw of the EB-5 program,” it states.
It alleges that false information was preventing the state from detecting the fraud. It states, “As part of the fraud scheme, the offenders lied and provided false and misleading documents to State officials. Undoubtedly this played a role in the State taking years to take action against Jay Peak, Burke Mountain, and AnC Bio Vermont EB-5 Fraud.”
Still, it concedes that more could have been done.
“Nevertheless, it is at least possible that a more proactive approach by ACCD (e.g., refusing to sign MOUs without financial audit clauses, going through with its warnings to cancel the AnC Bio Vermont MOU) could have mitigated investor losses. The Governor’s decision to bring the expertise and authority of DFR into the VRC was key to
stopping the fraud since DFR’s investigative work, in conjunction with that of the SEC, led to enforcement actions.”
The report rocked Vermont media, the scope and scale of the incident seemed overwhelming to Vermonters.
“Six years ago, federal regulators revealed the largest financial fraud in Vermont’s history,” Vermont Public wrote when they reflected on the affair in 2022. “The owners and developers of Jay Peak ski resort were accused of misappropriating more than $200 million that they’d raised for development projects in the Northeast Kingdom.”
The author is a writer for the Vermont Daily Chronicle