Commentary

Keelan: For EB-5 scandal, State of Vermont will need a bigger rug

Jay Peak

by Don Keelan

I am not a big fan of using aphorisms; however, there is one that describes what has taken place in Montpelier. Vermont State government has swept the EB-5 Ponzi-like scheme under the rug. 

Just days before the State was devastated by continuous rain storms, we were informed that the civil lawsuit against the State by eight EB-5 investors had been settled ‘out of court.’ The storm’s statewide destruction moved the settlement entirely off the radar screen, possibly, forever. 

On June 22, 2023, just two days into the forecasted ten-day civil trial brought by the eight investors, the State agreed to settle the case. Less than two weeks later, on July 6th, another settlement with 64 other swindled EB-5 investors was reached. Approximately $ 16.5 million will be paid to the investors by the State over several years. Case closed. No testimony is required of involved State officials; under the ‘rug,’ it goes. 

Don Keelan

Interestingly, another storm, Tropical Storm Irene, made it necessary or fortuitous 12 years ago for the State to refocus elsewhere when the largest fraud in Vermont history was perpetrated on hundreds of EB-5 investors in the Northeast Kingdom. 

Several of Vermont’s most senior political members, some now retired, and some senior State officials, may rest easy. They will not be called to testify about what would cause the U.S. Citizenship & Immigration Services to close down a State agency. The Vermont Agency of Commerce & Community Development Regional Center was ordered closed by the federal government for its mismanagement and lack of oversight in a project that ran into hundreds of millions of dollars. 

At the civil trial, it was forecasted that over 39,000 pages of testimony and documents would be presented. For nearly 11 years, the press and, most notably, VTDigger.org attempted to obtain access to the documents but were denied. The media spent thousands of dollars on FOI actions, but only a little was forthcoming. It was clear: State government officials did not want any information released, especially if it could embarrass officials still in office. That may change soon, now that the State has agreed to pay off the plaintiffs and release all pertinent documents.

The plaintiffs’ case was clear. Why did the State of Vermont promote the activities of the three convicted fraudsters by enticing over 800 foreign investors to lay out over $500,000 each to obtain a ‘green card’ and possibly future residency in the United States? 

It was no secret that former Governor Shumlin took advantage of his position with the fraudsters. He would sometimes use the chief fraudster’s condominium in New York City. Also, he was involved with promotional material informing potential foreign investors that the Vermont government audits the activities of their invested dollars. The State never conducted an audit. 

It took a federal agency to close down a State agency and thus began the investigation. Not by the Vermont Legislature or the Attorney General’s office. State officials would never wish to embarrass or compromise its Congressional legislators and place at risk the funds that flow into the State from Washington. 

The Jay Peak and Newport Vermont scandals are not the first financial debacles orchestrated by ‘important people’ to be swept under the rug. Another example was that which took place in May of 2016 at Burlington College and how a Vermont bank and a State agency participated in its risky and inconceivable borrowing scheme. And as is often the case, the college’s collapse was ‘swept under the rug.’ It is a Vermont way of life never to challenge folks who can be crucial in obtaining federal funds for the State. 

Like many other Vermonters, I, too, would like to see the EB-5 scandal put to rest. It has gone on for more than 12 years. Even with such a wish, it is disappointing that the role of the State and State officials will never be known. Their role(s) are now under this ‘immense rug.’

The author is a U.S. Marine (retired), CPA, and columnist living in Arlington, VT.

Categories: Commentary

19 replies »

  1. Thank you for bringing this up again. I have not forgotten about this scandal and wondered why the people of the state are paying for crooked dealings that our State officials did. Are they paying anything did any of them do jail time? No. Maybe our States Atorney General should answer some questions instead of saying nothing to see here.

  2. The amount of corruption done by our state officials just boggles my mind. Between the corrupt US Gov’t in Washington and most states’ ‘leaders’ it’s overwhelming. Just where has honesty & integrity gone when our own leaders can take advantage over & over again???

  3. Keep in mind, too, that then Sen. Patrick Leahy was a full-blown advocate for this EB-5 fiasco. He, and his wife Marcelle, openly lobbied for the Jay Peak project, along with Marcelle’s uncle, Tony Pomerleau, who stood to gain from various Newport area real estate transactions – until the fraudulent nature of the whole deal began to unravel.

    • Senator Leahy brought millions upon millions more dollars to Vermont than you imply he or Tony Pomerleau took out. Where are your facts to back up these accusations?

      • So corruption is okay with you as long as the person has a D behind their name? How is it that all these politicians end up very wealth on just government pay. Ask Bernie from Brooklyn if he’s ever in Vermont. He’s living quite large these days. Both parties have their crooks but the democrats are masters of illusion and corruption as we are seeing at the highest levels of government. Your liberal thought filter is clogged with all the lies you’ve been fed over the years. If you want change, stop defending career politicians who do quite well while the rest of us working people struggle. These great politicos have drowned the nation in $32 Trillion dollars of debt and the voting public says it’s not my representative or senator to blame. Yes it is! Term limits Now!

      • Sure… Leahy brought in millions of dollars to Vermont. One way was his promotion of the Jay Peak EB-5 fiasco.

        Where are my facts? Which facts are you looking for?

        “Pomer­leau’s niece, Mar­celle, is mar­ried to U.S. Sen. Patrick Leahy, who called him “Un­cle Tony.” – The Chronicle

        “The senator held his 50th wedding anniversary at Jay Peak and called on Stenger to testify before Congress about the benefits of the EB-5 initiative.” – VT Digger September 3, 2019,

        “Pomerleau said he pulled his offer to sell the prime site on Lake Memphremagog to Stenger after four years of discussions failed to seal the deal.” Burlington Free Press, July 18, 2014

        “Jay Peak president Bill Stenger said his team has made a down payment of $100,000, and closing documents are being drafted and reviewed by attorneys.” VT Digger July 2, 2015

      • So JayDee, not a peep from you? Has your self-righteous indignation been satisfied now by the factual understanding of Leahy’s sordid involvement in the EB-5 scandal? If you want more evidence, read VT Digger’s account – yes, VT Digger, of all publications.

        “Before Vermont’s EB-5 immigrant investor program became intertwined in the story of the state’s largest ever fraud, Sen. Patrick Leahy wanted people to associate one politician with the program: him.”

        https://vtdigger.org/2019/09/03/new-records-on-eb5-you-need-to-recognize-leahy-and-only-leahy/

      • Dano: ‘Term Limits’ is a common and equally misguided political panacea. As long as the public shirks its individual responsibility to be accountable, to themselves and their neighbors, there will be a never-ending line of corrupt politicians to take the place of those who come before them.

        The problem is that we all expect too much from the government. We should elect those representatives who understand the following.

        “Government has three primary functions. It should provide for military defense of the nation. It should enforce contracts between individuals. It should protect citizens from crimes against themselves or their property. When government – in pursuit of good intentions – tries to rearrange the economy, legislate morality, or help special interests, the costs come in inefficiency, lack of motivation, and loss of freedom. Government should be a referee, not an active player.” – Milton Friedman

        If ‘we the people’ don’t understand this, how can we expect our elected representatives to understand it?

      • I’m still waiting to find out why Leaky Leahy replaced Justice Roberts at the impeachment hoax trial #2? I guess since he “retired,” those details will remain under the rug as well. My guess is the airport dedication was just one reward for being a very good blue obedient lapdog criminal.

      • H Jay to me, I fully understand the workings of the government. We are living under the power structure of career politicians and suffering the results from Joe Biden, allowed to build his family wealth from his position in government for 50 years. He ran out of good ideas 48 years ago if he ever had any good ideas. I am old enough to have watched him in the senate and was amazed how such a person could keep getting reelected time after time. The same thing here in Vermont, Pat Leahy 50 years, Bernie 40 years, Welch 30 years or more. Term limits won’t cure government but they just might break up some of the corrupt power brokers who weasel their way through building wealth and power while an ignorant voter block keeps them in place. Hoping the public will see and deal with the cheats and corruption just won’t and doesn’t happen. We need more than quotes from the 1700s, we need change.

      • Dano: I agree with your assessment of the current political landscape. But I find your reaction to be defensive, not productive.

        Friedman’s remark was written in 1962, not the 1700s. In fact, Friedman was an advocate for term limits too. None the less, my question stands. Can you explain how term limits will cure the poor judgement of an indoctrinated electorate, unwilling to accept responsibility for its choices?

        Friedman said that term limits, at the very best, “would do less harm. He said:…”It makes one wonder: how many national problems are getting ignored or kicked down the road so congressional incumbents can keep getting re-elected?”

        I say: What is it about term limits that would prevent the incumbent’s successor from kicking problems down the road too?

        The answer, in both Friedman’s and my humble opinion, is that we the people should be handling our own problems, and not expecting the government, with or without term limits, to do everything for us. Unless and until the electorate realizes this, we’re condemned to the same political shenanigans as always.

        Postscript: That a wise word was penned in the 1700s doesn’t make it any less relevant today. Our Founders were on to something – and we should be paying more attention to what they said, not less.

  4. While I agree that the “invisible” players have successfully managed to escape the embarrassment they so richly deserve, the stench of greed and corruption that wafts up from under the rug will firmly attach itself to those who participated. And while the documents may someday be released, they will probably be heavily redacted. It is a sad commentary that this was allowed to end the way it has….it is not only an embarrassment for the State but a another financial burden to an already over taxed citizenry. Better to raise taxes to pay the settlements than to embarrass the political members or State officials involved…..right?

  5. Corruption in the halls, of the highest levels, of government…treasonous politicians, selling hard fought for citizenship, for chump change, with no due diligence, of the major players, dubbed like the clueless they are, wool pulled completely over their eyes, by crooked dealers, and the whole shebang sweep under the rug…move along sheep, nothing to see here, but don’t forget to vote for us next election.

    I watched the whole thing unfold, and all the moves, by the players, warned about it in VT Digger, when it was still free press, and watched all the elected players walk, while their wrong doings made me sick of what our good state has become, and the fools that governed us.

    Shame on you ,every damn one of you. You ruined a very good state. I hope you have a sleepless retirement reflecting on the shame and crookedness you have sown.

    Shame on you all.

    • It is in the very nature of government to corrupt one’s sensibilities. The Founders warned of this over and again – from Franklin’s admonition that we have a Republic ‘if we can keep it’, to Madison’s concern with ‘factions’ – ‘groups of people who gather together to protect and promote their special economic interests’… and who ‘frequently work against the public interest and infringe upon the rights of others.’ Or, as may have been misattributed to Alexis de Tocqueville, that “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.”

      In the final analysis, however, we the people elect these crooks.

      “The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.”
      ― George Orwell, [Vermont’s] Animal Farm

  6. And this is how Montpelier operates, biggest scandal in Vermont paid off by the vermont taxpayer and covered up by the VERMONT press. This is how crony capitalism, nepotism is the brother of socialism/communism.

    Maybe our green mountains are formed from Montpelier corruption?

    Nothing to see here!

    The real kicker? What is the VTGOP saying? They are and have done NOTHING!!,!,,, SOMETIMES what is NOT said is the most important part of the conversation.

  7. Well Jay, While I agree that historical writings and quotes are fine when trying to educate people. However, you and I are probably read by people who are already in our camp. Trying to educate the NPR, VPR, Vtdigger et all crowd isn’t very productive in my view. The average person in Vermont hasn’t a clue about the founders and aren’t motivated to dig any deeper into the history of the 1700s.

    I’ve noticed recently that your current mission here is to present famous and not so famous quotes in an effort to educate the masses or whoever reads our comments. While we wait around for everyone to be educated nothing else is getting done. Further more, how would you scale the productivity of any comment on these sites? That’s just your opinion. There’s always a little slam in your reply to people who comment on your comments.

    So, while you may consider my comments to not be productive, someone else might. I’ll write what I want to present and you can too. That’s free speech. It’s fairly evident that the people are not able or willing to do what you suggest. The political rape of America has gone on far too long. Like I said, term limits might not stop all the corruption but until the people step up, term limits might help, especially if ethics and honesty are restored within government.