Vermont closing EB-5 center following massive Jay Peak fraud case

After years of touting Vermont's Regional Center as uniquely suited to guarantee the legitimacy of homegrown EB-5 projects, the state announced late Monday afternoon the center would be "winding down," taking on no new projects.

The Scott Administration's announcement comes as the federal department that oversees the EB-5 program, U.S. Citizenship and Immigration Service, filed a notice of intent to terminate Vermont's Regional Center.

The decision comes in the wake of one of the biggest fraud cases in the history of the national EB-5 program. The accused are Ariel Quiros and Bill Stenger, who managed EB-5 projects at Jay Peak and elsewhere in the Northeast Kingdom. The partners were accused last year of misusing some $200 million of investor funds, with Quiros accused of benefiting personally from about $50 million.

The federal decision to terminate the Vermont center was based on "the alleged fraud perpetrated by Ariel Quiros and Bill Stenger, for which the state is currently pursuing a civil fraud case," the governor's office said in a statement.

The state says it received the notice of USCIS's intent to terminate the center after the Vermont Department of Financial Regulation submitted a report to the governor's office recommending that the regional center be phased out. The regional center will continue to oversee existing projects at Mount Snow and SouthFace Village at Okemo.

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Under the EB-5 program, foreign investors have the opportunity to receive green cards by investing $500,000 in projects in economically depressed regions of the United States that create a certain number of jobs.

The governor's office said the decision by USCIS to terminate the regional center is "generally aligned" with the Scott Administration's decision. The administration said it hopes to coordinate with the federal agency, however, to "address the closure in a way that ensures stability for Vermont's economy and protects employees, contractors and investors in the projects."

In an addendum to its report to Gov. Scott, the Department of Financial Regulation and Agency of Commerce and Community Development said that while they agree with the USCIS decision to close the regional center, they don't agree with the federal agency's decision for "immediate termination."

"If USCIS followed through with the termination as proposed, dozens of investors in Jay Peak and non-Jay Peak projects may be adversely impacted as those investors would no longer be eligible to receive an unconditional visa," the addendum states.

The Scott Administration said it would file a "timely response" to the USCIS, and that it hopes to wind down the regional center in a way that protects investors and "future economic development" in Vermont.

Federal Receiver Michael Goldberg, who took over management of the properties in the Northeast Kingdom formerly owned and operated by Quiros and Stenger, recently announced that he was offering refunds to EB-5 investors in a failed biomedical facility in Newport. Goldberg said he was working to preserve a path to permanent green cards for investors who already had their conditional green cards.

"As our report details, the Scott Administration agrees that the Center should ultimately be closed. It is clear from our review that state government was not, and is not, the best-suited entity for managing the EB-5 program," Commerce Secretary Michael Schirling said in a statement. "It is our hope that USCIS will agree with our approach for a staggered closure to minimize any adverse economic impact and ensure investors in existing, viable projects are protected."

Contact Dan D’Ambrosio at 660-1841 or ddambrosio@freepressmedia.com.



