Business & Economy

VTDigger exclusive: State suspends approval for EB-5 funded biotech company

AnC Bio Korea
The AnC Bio headquarters in Seoul.

© 2015 VTDigger

Gov. Peter Shumlin has asked the state’s chief financial regulator to probe plans for a massive Northeast Kingdom development after a state agency raised significant and critical questions about the finances for a multimillion dollar biotech project in Newport.

State approval for AnC Bio Vermont was suspended in August.

At the governor’s behest, the state agency that oversees the EB-5 immigrant investor program has asked the Department of Financial Regulation to determine whether the $118 million biotech project in Newport complies with state and federal securities laws.

The suspension of AnC Bio’s memorandum of understanding comes as the state has reorganized its oversight of EB-5 projects. The protection of investor interests will now be the responsibility of the Department of Financial Regulation. The Agency of Commerce and Community Development, which had been solely responsible for EB-5 marketing and oversight, will now handle promotion only.

AnC Bio Vermont is run by Ariel Quiros and Bill Stenger, the developers of the Jay Peak Resort. The 67,000-square-foot biotech facility would manufacture organ replacement devices, conduct adult stem cell research and offer “clean rooms” to universities and other biotech companies.

What is EB-5?

During the recession, it was difficult for developers in Vermont, and nationally, to obtain financing for projects, and the EB-5 immigrant investor program became an attractive alternative to commercial lenders.

In exchange for a $500,000 investment in qualifying projects in Vermont, immigrant investors can seek permanent residency in the United States. Investments under the EB-5 program must be placed “at-risk” in order for immigrants to qualify for permanent residency. That means return of investment is not guaranteed.

The U.S. Customs and Immigration Service requires that each investment results in the creation of 10 jobs.

Projects are exempt from filing documentation with the Securities and Exchange Commission even though investors must sign off on a limited partnership agreement with developers.

In August, the agency asked the developers to submit a new application for AnC Bio Vermont with disclosures about the use of investor funds, business plans, market studies and FDA approvals for stem cell research and medical devices to be manufactured at the plant.

ACCD Secretary Patricia Moulton said agency officials became concerned about the financial health of AnC Bio when they learned in May that the parent company’s headquarters in Seoul had been seized by creditors and sold at a public auction in 2013.

Moulton and agency officials insisted that Stenger and Quiros update business plans for the proposed biotech company immediately.

“We told them we needed to get together, and we needed you to update this,” Moulton said. “We need to do that and we need to do it quickly and we want you to stop doing any marketing because we want to make sure your private placement memorandum (the business plan for prospective investors) is disclosing everything and presenting all the right information so that any prudent investor could determine ‘Yes or no, I want to put my money in this deal.’”

Stenger and Quiros have spent $282 million from 564 immigrant investors on a large-scale expansion of Jay Peak Resort that includes three hotels, three restaurants, a conference center, an indoor water park, an ice arena and condominiums. The developers have planned to use another $300 million in EB-5 funds for AnC Bio, Q Burke Mountain Resort, and the West Bowl expansion at Jay Peak.

The state canceled the West Bowl expansion in August and both AnC Bio and Q Burke projects are now under Department of Financial Regulation scrutiny. The regional center also passed along concerns to the department about existing projects at Jay Peak that have come under fire from a group of investors. All Vermont EB-5 projects will be reviewed by the department.

“We welcome State oversight of our EB-5 projects,” Stenger said in a statement. “The State’s oversight is in large part what has made our EB-5 program so successful. It is what has allowed us to create over 2,500 jobs, have over 600 investors receive their green cards and inject some economic vitality into the Northeast Kingdom.”

Bill Stenger
Bill Stenger outside the Stateside Hotel at Jay Peak in September 2013. File photo by Hilary Niles/VTDigger

Stenger says the AnC Bio project is on track and he says the company will break ground this spring.

If the Department of Financial Regulation determines that the developers are out of compliance with state and federal securities and immigration laws, Commissioner Susan Donegan can revoke state approval.

Vermont was one of the early adopters of the national immigrant investor program and started its own regional center in 1997. The Vermont Regional EB-5 Center had been responsible for approving new investor-funded developments, marketing projects overseas and ensuring that the projects comply with federal requirements. State officials could not say how many projects in Vermont have been reviewed by the center.

The center’s reputation was tarnished by negative publicity about a Jay Peak project last fall.

VTDigger stories regarding complaints by some Tram Haus investors about how they were treated by Jay Peak developers Quiros and Stenger raised questions about whether the agency has provided adequate oversight of the EB-5 program. The developers converted the equity stakes investors held in a hotel at the resort into unsecured loans in August 2013. Investors in the Tram Haus Lodge were officially informed about the details nine months after the fact. The investors say complaints they sent to the regional center in May 2014 were largely ignored.

Quiros, the owner of Jay Peak, has said the dissolution of the Tram Haus investors’ agreement was “200 percent” ethical. Stenger and Quiros maintain that the IOU gives investors a guarantee of repayment in five years.

Moulton, who was appointed secretary in June, says the new arrangement with the Department of Financial Regulation is designed to “prevent this kind of complaint scenario again in the future” and to repair damage to the state’s reputation with investors overseas.

The negative publicity caused “a tremendous amount of fallout,” Moulton said, and the department is working to reassure immigrant investors around the world that the state is protecting their interests. “Any kind of negative anything on EB-5 spreads like wildfire globally,” she said. “We’ve seen that, we’ve felt that.”

Pat Moulton
Patricia Moulton is secretary of the Agency of Commerce and Community Development. File photo by Hilary Niles/VTDigger

Shumlin asked the agency to change the regulatory process for EB-5 projects the same month VTDigger published a report about the state’s lax oversight of Jay Peak and the close ties between the developers and state officials.

“The governor was the one who said, ‘Why don’t we look at this captive model where you guys are drumming up the projects and DFR is doing the regulatory piece?’” Moulton recalls.

Through the agreement with the Department of Financial Regulation, which has a reputation for high standards and tough enforcement of state insurance and securities regulations, the agency hopes to restore investor faith in the state’s EB-5 program. The department is hiring an analyst and an examiner specifically to handle EB-5 project compliance with state and federal securities laws.

Donegan, the DFR commissioner, would not talk about the status of pending reviews for any specific projects. She emphasized that the Jay Peak-related projects, including AnC Bio, “are by no means subject to special scrutiny.” DFR will apply the same “ordinary” level of review to all EB-5 projects in Vermont, she said.

“DFR is not singling out any particular project and hopes to work well with all projects as we undertake review of any offering or amended offerings,” Donegan said. “Our goal is simple. We want to ensure that Vermont’s EB-5 Regional Center maintains its high standards and good reputation for the benefit of economic development statewide. Vermont has seen a great deal of positive development already from EB-5 projects including those outside of the Jay Peak programs. We believe good oversight and economic growth go hand in hand.”

In general, she said, the department is responsible for ensuring that investors receive adequate information about a company’s business plan, financial standing and structure.

“This is about telling people enough information so that people can make a reasonable and full choice about whether or not they want to hand over their money,” Donegan said.

The securities issued through the EB-5 program are exempt from filings with the Securities and Exchange Commission, the federal agency that regulates the investment industry, and that makes disclosure of financial information especially critical, Donegan said.

Susan Donegan
Department of Financial Regulation Commissioner Susan Donegan. File photo by Hilary Niles/VTDigger

“Full disclosure means they (the investors) understand the business plan and they’ve got the information to make their decision (about whether to invest),” Donegan said. “It’s about reasonableness, it’s about full disclosure that’s fair.”

Tony Sutton, a spokesman for a group of 20 disgruntled investors in the Tram Haus Lodge, a hotel at Jay Peak, has said investor requests for financial disclosures relating to the Tram Haus project and complaints about the way investors were treated by Quiros and Stenger made in May last year have been largely ignored by the Vermont Regional Center and the Jay Peak developers. A VTDigger story in October based on emails obtained under the public records law showed that the head of the center, Brent Raymond, has had a tight relationship with Bill Stenger, and once referred to him as a “great man.”

Sutton says the state reorganization of oversight duties is a direct result of investor complaints “bringing exposure of Jay Peak’s financial misconduct, the failure of the VRC to supervise and oversee Jay Peak and VTDigger’s investigation of those issues.”

Sutton remains critical of the state’s handling of investor complaints, which he says were sent to the Department of Financial Regulation in July.

“DFR is responsible for regulating securities in Vermont, but it immediately deferred the matter to the Vermont Regional Center,” Sutton wrote in an email. “It is incredible that such a serious matter relating to possible securities violations and financial misconduct has not been followed up by DFR before now.

“If the DFR is truly committed and sincere in its intentions to bring long overdue meaningful oversight, accountability and compliance with State and Federal Regulations to the VRC and Jay Peak’s (JP) projects, DFR must take real actionable steps to protect the interests of investors and hold JP and its owners fully accountable for their wrongdoings,” Sutton said. “DFR must immediately require, that Jay Peak, Stenger and Quiros provide full disclosure to all its current and past EB5 investors, all of its financial transactions and business activities in each of its offerings to date and reject the Quiros notion that Jay Peak is ‘200% ethical.’”

Donegan says that DFR’s securities division did not receive a direct investor complaint about Tram Haus Lodge. “If we had, we would have reviewed the complaint to determine whether we had jurisdiction under Vermont’s securities laws and certainly would have responded to the investor one way or another,” she said.

Tony Sutton, one of 35 Jay Peak Phase 1 investors. Courtesy Photo
Tony Sutton, one of 35 Jay Peak Phase 1 investors. Courtesy photo

Moulton says she is “sorry to hear (the investors) feel frustrated,” and she says the agency was not happy with Stenger and Quiros’ “inappropriate” lack of communication, but she maintains that “the issues (the investors) keep bringing up are between they and the partner.” She points to the limited partnership agreement between the developers and the investors that gives Quiros and Stenger broad powers of authority. The agency, she said, has no jurisdiction over the agreement that investors willingly signed.

“If someone were to file a fraud complaint with DFR that would likely trigger an investigation,” Moulton said. “It seems like, from what I see, their issues are more ‘it didn’t work out the way I expected,’ as opposed to ‘I’ve been unfairly treated.’ I don’t know that we can respond.”

A changing regulatory landscape

When the state launched the Vermont EB-5 Regional Center in 1997, the EB-5 movement nationally was in its infancy, and what distinguished Vermont’s program was state oversight. Instead of allowing nonprofit and for-profit centers to form as other states have done, Vermont embedded the regional center in the Agency of Commerce and Community Development and promised investors the center would provide oversight for the projects.

The state has banked on that promise and its clean green rural reputation to promote developers’ projects to investors around the world. The Tram Haus investors say it was the seal of state approval that made the Jay Peak projects appealing.

State officials and the congressional delegation have been gung-ho about EB-5 over the years because it enabled the state to infuse investment cash into ski area construction and boost employment. And the fruits of the program have borne out: The Jay Peak developments, for example, have led to unprecedented job growth in the poorest region of the state, according to Tom Kavet, an economist for the Vermont Legislature.

Gov. Howard Dean formed the center at the end of his tenure, and the program began to take shape during Gov. Jim Douglas’ tenure. In 2009, Douglas went on a promotional tour of Asia with Stenger and Quiros. Sen. Patrick Leahy, D-Vt., has been a staunch backer of the program in Congress and helped to ensure reauthorization of EB-5 in 2012.

Congressional delegation, Stenger, Quiros
Rep. Peter Welch, Bill Stenger, Sen. Patrick Leahy, Sen. Bernie Sanders, Gov. Peter Shumlin, Ariel Quiros and Bill Kelly.

Leahy, Sen. Bernie Sanders, Rep. Peter Welch and Gov. Peter Shumlin were all on hand in September 2012 for the announcement of Stenger and Quiros’ $600 million Northeast Kingdom Development Initiative, which included AnC Bio, Q Burke and the buildout of Jay Peak. A picture of the pols, Stenger, Quiros and Kelly was later used in promotional materials for investors.

Shumlin continued the tradition of political boosterism for the developers of Jay Peak. In September 2013, he went on an EB-5 promotional tour in Vietnam and China paid for by Jay Peak. And a former key Shumlin aide, Alex MacLean, who worked for Stenger at the time, helped to produce marketing materials for Jay Peak that included a video with the governor saying the state “audits” EB-5 projects. (Audits were requested but not required of Jay Peak projects, and the state never performed them.)

The enthusiastic support of Jay Peak was not limited to politicians. Brent Raymond, the head of the regional center who spends much of his time flying overseas promoting EB-5 projects, defended the developer against investor complaints and in emails obtained by VTDigger last fall. Shortly after the VTDigger story in October was published, Moulton wrote a commentary blasting the article as “inaccurate.” After the VTDigger stories were published, the state began requiring quarterly reports, as mandated in the original agreements with the developers.

Brent Raymond
Brent Raymond, director of Vermont’s EB-5 Regional Center. File photo by Hilary Niles/VTDigger

The state has been in an uneasy role. The regional center has been responsible for promotion and oversight. And the disgruntled Tram Haus investors say the center’s oversight and responsiveness to complaints has been negligible.

Fraud alleged elsewhere

In the past two years, some highly publicized EB-5 fraud cases in other states have been exposed. For instance, the SEC’s investigation of the Chicago Convention Center fraud scheme led to the developer’s indictment after investigators found the developer put $2.5 million of administrative fees collected from immigrant investor funds into a personal bank account.

In response to the Chicago investigation, Vermont and federal regulators have tightened disclosure, application and compliance requirements.

Until 2014, regional center oversight was “fairly loose,” Moulton says. After the Chicago investigation, the center revamped its approval process for EB-5 projects and expanded its memorandum of understanding (“MOU”) requirements.

“We realized the watchdogs are here and we need to be more responsive,” Moulton said.

“It’s clearly evolved over time, and now it’s evolved to the point where there’s SEC scrutiny on projects,” Moulton said. “We had taken the template that USCIS gave us initially as an MOU and we’ve improved it, it literally went from four pages to 14 pages on our own volition to say look we’ve got to tighten this up. In fact, we’re told by USCIS our MOU is one of the tighter ones.”

In 2014, the regional center began requiring EB-5 developers to agree to an audit provision in the MOU.

And in May last year, the agency hired a securities law firm to scrutinize Stenger and Quiros’ financial disclosures for AnC Bio. Raymond was concerned about the sale at auction of an affiliated company’s headquarters in South Korea.

The AnC Bio project was also “firmly into the securities area,” Moulton said, and “that’s not our bailiwick.”

The regulatory agreement with DFR in December was the culmination of nine months of investor complaints, bad publicity and an unsatisfactory six-month back and forth between the agency and Stenger and Quiros over financial disclosures.

The MOU between the two state entities was finalized on Dec. 22, 2014. The state announced the new collaboration in a press release on Feb. 20, the day VTDigger filed a public records request for state communications about the suspension of the AnC Bio project in Newport.

“We weren’t intending to get DFR involved in any existing projects, just new projects, and it became pretty clear when we started running up legal bills with outside counsel that we can’t afford to keep doing this,” Moulton said.

Moulton, Donegan and the governor recognized that the center’s dual marketing and oversight role was inherently problematic. “We had one guy (Raymond) trying to do sales and compliance, and we looked at our captive insurance model, and we said, that works — we’re the sales people and DFR are the regulatory people, why can’t we do that with EB-5?” Moulton said.

Separating EB-5 promotional activities from regulatory compliance, Moulton says, “makes it cleaner.”

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Anne Galloway

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  • Why does it make any sense to funnel ALL the state’s EB 5 money to one corner of the state and one developer?

    This reminds of the misguided support for big VTEL wireless grant – a big solution that has severely limited the state and fed’s options down the road now that the idea has turned out to be, well let’s just say “not as promised”

    • Dick Livesey

      That’s a fair observation Stan, but if I remember right, there are more than 12 of these projects in Vermont from Jay in the northern part of the state to West Dover down south. My bigger question with this story is the reporting seems sensationalist. If I’m reading it right, every project is going to be subject to this level of review, which is a good thing, and the biomedical campus was just the first to come under the new microscope. It seems the state and these developers are just working through some complex stuff. I don’t see why the story is recycling content from back in the fall about some disgruntled investors. Who hasn’t been disgruntled about an investment? I want to know more about the products this ANC company will be producing and why they chose to locate in Vermont. That seems to be the real story; hi-tech coming to Vermont. Isn’t that what this state has been trying to accomplish for years? VPR just did a story last week on that effort. It seems Digger missed an opportunity at a real story by asking to interview some of the scientists that will be working in Newport. I do remember a story from about a year and a half ago when they covered the announcement of the project and mentioned one or two of the doctors who will be running the place. Why didn’t they interview them again about what they will be doing with these “clean rooms.” Probably some pretty fascinating stuff.

      Sorry to ramble Stan, but to your observation about all this money going to one part of the state, I think this is one part of the state that could really use something like this ANC bio project to lift it up and put it on the map for something other than just tourism, and honestly, its high unemployment.

      • “It seems Digger missed an opportunity at a real story by asking to interview some of the scientists that will be working in Newport.”

        Because there are none. The project is just not that far advanced, basically a paper entity at this point.

        • Dick Livesey

          Oh, I apologize. I just found the story. It was the Burlington Free Press that reported on the science aspect, not Digger. It’s a Dr. Ike Lee who will be the chief scientist. It seems he’s residing in MA while this comes together, but does make reference to traveling regularly to Vermont. I guess that’s my point: I know this is still in the pre-construction phase, but after spending five minutes on Google, I was able to find the guy who will be running the place; another five minutes and I could have probably found his phone number. I bet he’d be worth a phone interview to hear what this facility is going to produce.

        • Kathy Nelson


          Would you like to see some red ink financials on AnC Bio? Along with their 81% probability of bankruptcy?

    • Jamie Carter

      It’s not the state’s EB-5 money… that’s why. It’s Jay Peak’s EB-5 money… they go and solicit investors, they do the project, they pay the return on investments. The state’s role is essentially strictly oversight. Someone in Rutland could go and get EB-5 money and use it in Rutland…

      Hope this answers your question

    • Ruthann fletcher

      This directly contradicts what was printed In the Orleans County Record today. Mixed messages everywhere.

      • Annette Smith

        Newport City: Stenger Says AnC Bio VT On Track For Spring Groundbreaking

        NEWPORT CITY — A more extensive state review of all EB-5 immigrant investment projects will not further delay the groundbreaking this spring and construction of the proposed AnC Bio VT bio-tech plant, developer Bill Stenger said Sunday.
        Monday, March 23, 2015

  • I have met Bill Stenger and Ariel Quiros several times over the past years I have faith that they were doing everything required of them by the State of Vermont. This smells to me like a cover my ass move by the Shumlin administration that has repeatedly mismanaged and played with the laws and regulations lousy, goosey with other large state regulated projects.
    Again, when is this administration going to be held accountable for their mismanagement and finger pointing?????

    • Michael Stahler

      Spot on Kim.

      I do have to give credit where credit is due…even if it is a little. The “revelation” by the Governor that maybe the Agency didn’t know what it was doing and was really in a conflict of interest was good. The fact that he said “gee, maybe folks who understand securities, financial regulations, and are unbiased should regulate EB-5 projects” was also good. But that’s where it stops. Once again it is clear that he protects his friends. Moulton should be gone. Maybe Raymond too. Their heads should have rolled so to say. It could have been quiet, but it would have shown investors and citizens that SOMEONE was accountable. It could have been quiet and would have reassured folks of the legitimacy of State Government and the credibility of those who run it.

      But instead it is obviously clear that Ms. Moulton only looking out for herself and her paycheck instead of doing the right thing. I might have a different opinion had she not written that pointed op-ed defending the very people her department claimed to be overseeing. Now she has done a 180.

      So now, when Vermont needs jobs and economic development, we have this spectacle. Foreign investors who were drawn to Vermont’s EB-5 projects because of the imprimatur of State Government oversight and approval will now look elsewhere. They might even laugh. This hurts those trying to do the right thing and hurts the everyday Vermonters who could have USED a better paying job. But Ms. Moulton doesn’t get that.

      The real travesty will be if it is in fact revealed that the NEK projects were in fact compliant but it was the State itself that blew it here.

      Credibility, and legitimacy, are very easy to lose and hard to earn.

  • Bill Olenick

    EB-5 fundraising is excerpt from SEC oversight while our own home grown investors have to contend with SEC regulations regarding fundraising…
    Who the heck made that law???!
    When will we stop giving people from other countries an advantage over our home grown financial infrastructure.
    Nothing but shortsightedness regarding this ill begotten program…I just detest seeing our citizenship being sold by misguided politicians for some chump change.
    Please throw these lawmakers out of office and put someone fresh in.

    • Bruce Post

      “Who the heck made that law?”

      I have heard that the late U.S. Senator Edward Kennedy was the prime mover behind EB5. One local expert on EB5 had this to say about that history: “Kennedy was for it because he was getting criticism galore from Irish citizens in Boston,” Stenger said. “They were saying, ‘Why are our relatives having to move to Canada to get into the United States?’”

      So, there you have it.

      • Bill Olenick

        Thank you Mr.Post

      • Bill Olenick

        Again be that the case Mr.Post than I propose a constitutional amendment that all laws made by a deceased politician be repealed as soon as they are in the ground…no disrespect intended.

        • David Tucker

          Now there’s something to get behind – all of the founding fathers are dead, and they created a lot of law, to say nothing of the constitution and bill of rights, let’s cancel all of that while we are at it!

          • Bill Olenick

            I was trying to make a point Mr.Tucker in the hope that some lawmakers might reflect the ramifications of their bills long after they are gone, but your point is well taken and I stand corrected in the fact that my words can have unforeseen consequences along the lines of shortsighted lawmakers lawmaking.

  • Page Guertin

    About time someone started paying attention. If I remember correctly, each $500K investment was supposed to generate 10 jobs. If that’s right, then 5640 jobs should have been created – somewhat more than the 2500 Stenger brags about. And what are those jobs, anyway? Are they decent or minimum-wage? Are Vermonters really benefitting from this program that sells US citizenship?

  • Michael Colby

    And when, exactly, will the conversation about removing Shumlin from office begin? How many more of these scams must we endure?

  • Bruce Post

    From Governor Shumlin’s Second Inaugural Address, January 10, 2013″

    “Perhaps that need is best embodied in the Northeast Kingdom, the area of our state that for generations has struggled with chronically high unemployment rates and low incomes, where Bill Stenger and Ari Quiros continue to shine a beacon of hope, opportunity and future prosperity.

    For Bill and Ari, investing $250 million, and creating 5,000 new jobs over the past 5 years while they built a world-class resort at Jay Peak, is not enough. They are moving on to Phase II, a project of unprecedented ambition, which partners with Senator Leahy’s EB-5 program and my administration to grow prosperity in other regions of the Kingdom with $600 million in new investment, creating
    10,000 new jobs.

    Some of those jobs will be at AnC Bio, a South Korean company that conducts cutting edge stem cell and artificial organ research and will be looking for scientists and other well-paid technicians. Menck Windows is a German
    manufacturer of the highest efficiency windows in the world; they will be adding 500 jobs. A world-class resort that will be built in downtown Newport on beautiful Lake Memphremagog, will need hundreds of workers, as will the revitalization at Burke Mountain.

    I will be traveling with Bill and Ari to South America, Asia and other ports to help secure capital for this project, and in the months ahead, additional announcements of job opportunities are likely to be forthcoming as they are secured.”


  • Joseph Perry

    If the first $100 million could not be paid back, what is going to happen when the next $248 million comes due next year?

    • Jamie Carter

      The first 100M is being paid back with interest. I know, VTDigger’s slanderous articles on the EB-5 program make it difficult to follow, but what happened is this…

      Investment money was essentially rolled into a 5 year loan with interest, which has in part been paid back at this time. So not only will the investors get all of their money back, they will actually get even more then they invested AND a green card. Not a bad return.

  • Bethany Dunbar

    This sentence is just unbelievable to me: “Pat Moulton, the secretary of the agency, said agency officials became concerned about the financial health of AnC Bio when they learned in May that the parent company headquarters in Seoul had been seized by creditors and sold at a public auction in 2013.”

    If the state is really being a watchdog, shouldn’t the state have known about something this important that happened in 2013 before May 2014?
    As an NEK resident, I’m certainly among the majority who wants this whole thing to happen. These jobs are badly needed. But none of it will happen unless there is some good oversight by the state. I certainly hope the state’s oversight will improve with this change in the system, but meanwhile, THANKS are due to VT Digger for being a real watchdog. Please keep up the good work.

    • Janine Thompson

      I completely agree with Bethany that it would be great for our area to have this project succeed. This could just be the start of a “new” economy for the NEK. But I’m going to reserve any Thank You’s for the reporting until someone can confirm through documentation that the Korean firm is in fact the parent company of the one that will open in Newport. The Orleans Record ran a story saying this was not the case. There seems to be some mixed messages around this.

      As I understand it, a parent company has direct control over its subsidiaries. It seems while the two companies share a similar name and VT may have acquired some technology from Korea, the Korean ANC has zero control over the Vermont ANC. So it seems we have a state official saying one thing, and a company official saying another. With so much at stake for our region, wouldn’t make sense to get some irrefutable facts surrounding the relationship? I know assumption is the mother of all screw ups and I’m not willing to assume just because two entities have a similar name, one is beholden to the other.

      I too will heap praise upon Digger for their reporting, provided they can establish a concrete link between the two companies and not just a quote from someone who might not in fact know the relationship.

  • dale tillotson

    Luv the photo of Shumlin and all of our leaders.
    Reminds me of former Burlington Mayor Bob Kiss standing at the Moran plant a few years back with 13 of the 14 city councilors on hand touting the new ice climbing facility that turned out the same way. Con Job. My thanks to the 14th city councilor at the time who did not stand in support of the project.

  • Bill Dunnington

    Great investigative reporting, Anne. Thank you.

    It’s taken a while to figure out that business development and oversight/regulation need to be separated.

    In the meantime, I must say, I don’t know Brent Raymond, but I feel bad for him – he is travelling his life away in Asia while his kids grow up here – for a venture that is increasingly suspect.

    I know Senator Leahy is very supportive of EB-5, but I wonder if it’s time to rethink the whole initiative. Maybe too much water over the dam.

  • Brian K. McCrae

    I have to say I’ve been pretty disappointed with this whole process. I grew up in Newport and left in pursuit of more opportunities when I graduated from high school 37 years ago. Like many Vermont expatriates, I always hoped to be able to come back to this area some day and be able to give back to the community, but opportunities in the area have always been few.

    A change in careers however, landed me back here eight years ago. At that time we were just hearing about Newport’s renaissance and soon the air was buzzing with news about this EB5 program. Unfortunately we’ve been treated to one disappointment after another. At first there was to be a huge new park and conference center on the lakefront, a German window factory, as well as the ANC Bio plant. Currently, a whole block of Main Street is now under demolition to provide for new retail and office space that was also promised. The problem is now, that money doesn’t seem to be forthcoming, so a makeshift park is apparently being planned for the empty site. Without any new jobs, how is the community going to support new businesses anyhow?

    According to the original plans that were presented to the community three years ago, all these new projects were to be completed by the end of this year. As many have said in comments above, we desperately need new jobs in the area. As plans for the German window plant, and water front development fell through, I have watched at least a half a dozen businesses on Main Street, and on the Waterfront Plaza go under (there have probably been even more.) Probably two-thirds of the storefronts here are empty, and there certainly aren’t any decent jobs coming in through these EB5 projects to stem the tide. Without more businesses downtown, and no real “anchor stores,” others will also slide into the abyss. The city center has just become a hangout for the city’s growing indigent population.

    Most of the change that has occurred has happened at Jay, but as the article mentioned, there have been questions raised about paying back that money.

    People are losing hope here. Instead of being the year Newport is transformed, 2015 is looking like it will bring this whole EB5 chapter in our history to a close… and not in a good way!

  • Don Peterson

    You might be able to say from watching the EB5 story unfold that an economic truism emerges:

    Rational investment decisions shouldn’t require gimmicks like the sale of green cards. The benefits ought to be self evident.

    As the supply of money available for investment in the NEK increases, the quality of the investment it attracts seems to have declined. This is a predictable outcome of irrational investment.

    Rather than sell the NEK on the obvious merits of a pleasant environment, a motivated workforce and good logistics, a decision was made to lure investment using citizenship as bait.

    A little demeaning I would think, as though we have to pay people to move here. In the meantime the administration is moving jobs away from here by closing the Derby call center. And those are real jobs now, not someday jobs later.

    • David Matthews

      It’s been repeated many times. There never has been so much investment money in the U.S. on the sidelines. If these investment opportunities currently in the EB-5 maze had been first vetted by domestic entities and found to be solid, why did they not jump at the chance to participate? Either they were not offered first to domestic investors, or they were and rejected, and the U.S. has essentially been pushing risky investments in the “gimmick” scenario.
      This is one state (and probably national as well) bureaucracy effort that should be at the top of list tomorrow in Mr. Shumlin’s necessary budget cuts.

  • Jim Mulligan

    “Ditto” to Bill Dunnington above

    Great investigative reporting, Anne. Thank you.

    A simple question

    Is the tenure of the one’s Green Card linked to the viability / life-line of the project?

    • Thank you, Jim. Good question.
      Immigrants get green cards once their applications have been approved. They receive permanent residency in the United States after the projects are built and the jobs have been created. The immigrants who invested in Jay Peak have received green cards and many have permanent residency status. Six of seven projects at the resort have been completed and hundreds of jobs have been created.

  • Susan Bugbee

    It would be interesting to hear more about the hundreds of jobs created. Wages, benefits, full-time, how long does someone have to be employed to count?

  • Randy Koch

    One huge but easily overlooked detail: VT officials “cannot say” how many other EB5 projects there are. How come? Can’t say or don’t want to say?

    Please don’t give them a pass on this, Anne.

    • Jamie Carter

      EB-5 is nationwide, it’s not just for VT. I’m sure they could call all of the other 50 states and find out, but I’d prefer my state employees focus on their work. I bet with some internet surfing you could find out on your own.

  • Matt Mientka

    “Immigrant investor” might be the problem here in the first place.

  • Peter L. Stromgren

    For the past few years I have advocated before the House and Senate committee’s removing the economic development function from the ACCD and create a separate Economic Development Agency managed by a secretary with relevant experience vetted and nominated by an outside committee. It would smaller and staffed with people who understand what is required for a proactive program. Run by professionals I would envision our EB-5 program would have had strong over site from the beginning.
    As one legislature said after I testified before the House committee “the governor hasn’t told us economic development is a priority”. From my vantage point it is all smoke and mirrors from the governor and ACCD. A few questions: In the last five years what opportunities has ACCD supported, of those the level of success achieved, how well did state sponsored support match those opportunities, and does anyone really understand what has transpired at the local level in the past five years. Questions I have asked and still waiting for an answer…any answer.

  • Janine Thompson

    Is there a chance that VD is unknowingly being used by Big Pharma? I know this is conspiracy theory at its worst, but I do know that the pharmaceutical companies consider stem-cell therapy one of the biggest (if not the BIGGEST) threats to their market share. When I read about what this company wants to do and the fact that it will be one of only a very few in this country to do it, I can see some pharma official reaching out to someone in Montpelier and asking them to throw a monkey wrench in this project. I know that’s hard to comprehend, but we are talking about a multi-billion dollar market and how easy would it be for someone from a Big Pharma company to say to someone in Montpelier that they might stop donating to say, Fletcher Allen, if they didn’t freeze up the ANC project.

    Digger- Can you use the Freedom of Information Act to request any emails from people in the state and say, Pfizer or Novartis?

  • Sam Miller

    As I read this article, it seemed more a rehash then about what’s new and whether or not the Anc Bio project is dead and fraud has been legally alleged. Beyond that the comments appear mostly political criticism rather than documented facts.

  • Tim Loucks

    Looks like all Vermonters – including Shumlin, Leahy, Sanders and Welch – are about to learn a painful lesson. The EB-5 program is nothing more than a legal Ponzi scheme.

    Don Peterson hit the nail on the head with his post. This program distorts the investor’s decision making process and results in irrational investments.

    Beefing up amenities at Jay Peak made a lot of sense. But the remaining projects don’t appear to make much if any sense. Ask Tony Pomerlau. Why would a Biotech firm build a plant in the middle of a cow field?

    I’m not an expert on EB-5, but my hunch is that some of the early investors might see some return beyond their green cards, but not many. Mr. Stenger and Mr. Quiros? They’ve benefitted nicely. My hunch is they’ve converted almost all of that money into their personal equity at Jay Peak. All perfectly legal. And completely reprehensible.

    Live and learn.

  • Judith Henault

    Great reporting, Anne. Many thanks.
    We here in Newport are now looking at nearly half of Main St. torn down with no rebuilding plan having been approved and no funds for doing so in place. What a mess in every sense of the word.
    Had Due diligence been done by both local and state authorities, none of this would be happening. AnC bio has a very shoddy track record and Ari Quiros’ former business dealings should have been thoroughly vetted.
    All this was suggested and ignored by local ‘authorities’ who trusted in Mr. Stenger’s vision even as it was falling apart piece by piece. At least Tony Pomerleau caught on and we should have learned from that.
    Again, what a mess.

  • walter moses

    Thank you, Anne Galloway. Please continue to investigate and update.

  • Michael O’Beirne

    Very interesting article. I considered opening operations to service U.S. Foreign-Trade Zone users into Vermont. Along with EB-5 efforts, a new FTZ occurred and was finalized. Have any active users opened shop within FTZ No. 286?

    • David Dempsey

      Good work Ann. You have pointed out the main reason to investigate EB-5 spending. When Shumlin went on his junkets to find investors, he told them the state will audit the projects. In fact, the state has never done an audit and if the VTdigger article a while back hadn’t pointed that out, the state wouldn’t have changed a thing.

  • Judith Henault

    Let’s not loose sight of the fact that AnC bio was was sold at auction for non-payment of taxes in 2013. There is more of a connection than Mr. Stenger is suggesting. Does anyone remember Dr. Lee’s visit?
    What makes us think that this company will be a good tax payer here? This company has had many transformations over the years and these should be thoroughly researched before ANY permits are granted.

  • Charles Merriman

    Terrific investigation, Anne! It is wonderful to have at least one news source in Vermont worth a read.

    Having said that, I cannot get excited about this story. Why? Because it boils down to some rich, overseas investors complaining that Stenger lied to them and/or did a bait and switch and isn’t it terrible that Vermont taxpayers haven’t coughed up more of their limited resources paying for a regulatory scheme that protects the rich, overseas investor?

    The rich, overseas investor is a big boy and he should have done his own due diligence. If, as the rich overseas investor alleges, Stenger materially misled him or changed the terms of the deal (something I highly doubt), then–quite obviously–the rich, overseas investor could seek recourse in our courts. Instead he expects Vermont taxpayers to spend more on regulation so as to calm his petulance. Phaw!

    • The story is AnC Bio. More to come.

      • Bill Peberdy

        The hook.
        This may indeed, as one commenter says boil down to only “some rich, overseas investors complaining that Stenger and Quiros [they say] lied to them and/or did a bait and switch”

        But here is why it matters – rich, overseas investors seeking a green card where led to their investment, in part by Vermont State officials happily boosting and promoting the investment at all points -leading them to the bait.
        That’s quite a hook to hang your bait on.

        • Charles Merriman

          Of course you are right, Bill. But I still can’t get too excited about rich, overseas investors who are using their wealth to legally line-jump the green card process (with, as you so correctly note, the help of our government). Perhaps I am guilty of shadenfreude, but at some level I keep thinking of the old Yankee joke: “he was a stranger in our land. So we took him in.”

  • Judith Henault

    Mr. Merriman
    How about divesting the story of the Eb-5 element and seeing it as a devlopment debacle for Newport, her residents and taxpayers. We have a Main St. in shambles and it will likely stay that way for over a year. Our property has to be reevaluated because Stenger and Co. overpaid for the property it is now destroying (taxes going up), buildings torn down because they were never rehabbed or properly maintained. AnC Bio keeps changing its plans for what will be produced up here and we are shouldering a good chunk of the infrastructure costs.
    I look FWD to the next installment from Ms Galloway as AnC has quite an interesting past.

  • Mark Renkert

    Mouton is quoted, “We can not afford more outside spending for legal counsel.”

    Question: How much has been spent on EB-5 outside counsel by the state of Vermont ?

    Was it budgeted spending ?

    Who authorized outside counsel spending ?

    What State Agency oversees the spending?

    What was the result of the spending ?

    How much EB-5 Spending for outside counsel is planned for this budget year ?