Business & Economy

Departure of EB-5 chief raises revolving door debate

Dignitaries break ground on a proposed EB-5 project in Newport last month. No state officials attended the ceremony. Photo by Anne Galloway/VTDigger

Dignitaries break ground on a proposed EB-5 project in Newport last month. No state officials attended the ceremony. Photo by Anne Galloway/VTDigger

[B]rent Raymond, executive director of the Vermont Regional EB-5 Center, resigned last week and has taken a job with Mount Snow, where he will manage two EB-5 immigrant investor funded projects at the ski resort.

Raymond, in his role as director of the Vermont center, was responsible for marketing the state’s EB-5 program and promoting state-approved projects. Raymond was also charged with monitoring EB-5 projects, including Mount Snow, and ensuring that the interests of investors were protected under state and federal securities laws.

Mount Snow, based in West Dover, is using $52 million in EB-5 funds to build a 120-million-gallon water storage pond, the purchase of new snowmaking equipment and a three-story base lodge with a restaurant, bar and skier services.

What is EB-5?

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.

Patricia Moulton, the secretary of the Agency of Commerce and Community Development, said in an interview Tuesday that Raymond left the center Monday. Raymond offered the agency 30 days’ notice but it was decided that he should leave immediately to avoid the appearance of a conflict of interest. Raymond is to be paid for the 30 days, the Vermont Press Bureau reported.

Raymond has served as the director for three years. He previously worked as a business liaison for Rep. Peter Welch, D-Vt., and as a financial adviser for Merrill Lynch and TD Banknorth.

Moulton characterized Raymond’s departure as “standard turnover, nothing out of the ordinary.” Raymond parted ways with the agency “amicably and respectfully,” she said.

“He got a good offer from Mount Snow that he wanted to take them up on; it’s the only reason he’s leaving that I’m aware of,” Moulton said. “It doesn’t surprise me. He is well liked by the project, and it doesn’t surprise me he would take an offer working on their EB-5 program.”

David Moulton, Patricia’s brother who is director of operations at Mount Snow, was “not involved in hiring Brent,” she said.

Raymond isn’t the only member of agency staff to leave in recent weeks. Becky Fu, the manager of international trade and investment for the state and a former member of the Vermont regional center staff, left three weeks ago to take a job with Trapp Family Lodge, which is also a recipient of EB-5 immigrant investor funds. The Von Trapp family has sought $22 million in EB-5 funds to build a new brewery and restaurant.

Questions raised about conflict of interest

Moulton said she approved Raymond’s resignation as swiftly as possible (Monday) in order “to avoid any real or apparent conflict.”

But questions have been raised about whether Raymond’s leap from director of the state EB-5 center to Mount Snow constitutes a conflict of interest.

Even Gov. Peter Shumlin said, in a statement through his spokesperson Scott Coriell, that he is “concerned about a potential conflict of interest in this decision.”

Brent Raymond

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

“As soon as the Governor’s Office was made aware of this development, we made very clear that the employee should cease working in his capacity as director of the Regional Center immediately,” Coriell wrote in an email.

“We fully expect all appointees and former appointees to comply with the Executive Code of Ethics,” Coriell said. “The Governor has also asked ACCD to review the communications leading up to this departure to ensure that all actions were in compliance with the Executive Code of Ethics and conflict of interest policies.”

Shumlin’s executive code of ethics, which went into effect in July 2011, says that appointees may not, for one year after leaving office, lobby the state or state lawmakers. The code is silent, however, on state officials’ employment by businesses they once regulated. There is also no state statute banning the revolving door.

Cyrus Patten, executive director of Campaign for Vermont, a group that has advocated for ethics reforms, said Raymond’s move from state watchdog to company man is a perfect example of the “revolving door” between business and state government.

“We lack standards, and we have no baseline against which to compare and evaluate potential conflicts,” Patten said. “We have a revolving door, and it would be hard for anybody to prove there was any sort of quid pro quo or fraudulent action. We need to have assurances that the trust we put in people is not being abused.”

Vermont is among a minority of states that does not have financial disclosure requirements for state officers, does not require officeholders to disclose conflicts of interest and does not have an ethics commission.

Patten supports a state law that would block the revolving door, and he has advocated for the formation of an ethics commission that would review conflicts of interest. Secretary of State Jim Condos has proposed a similar panel that would be supported by a staff of attorneys and researchers.

Patten has also raised questions about Shumlin’s appointment last week of Alyssa Schuren as commissioner of the Department of Environmental Conservation. Schuren’s husband is Paul Burns, executive director of VPIRG which lobbies the Legislature on environmental issues. Typically, commissioners are asked to comment on legislation under consideration. Burns and VPIRG have aggressively advocated for bills regarding GMO labeling, renewable energy standards and toxic chemicals in consumer products. The Department of Environmental Conservation is responsible for enforcing environmental laws and regulating polluters.

“I don’t see how she can objectively comment on legislation pushed by her partner,” Patten said.

Retired Middlebury College political science professor Eric Davis says the inherent conflict of interest in the Schuren/Burns relationship is no different than that of Elizabeth Miller, Shumlin’s former chief of staff, and her husband, Eric Miller, who is now a U.S. District Attorney, except that the Millers took action to avoid a conflict of interest. When Eric Miller was nominated for the post this spring, Elizabeth Miller announced shortly afterward that she would leave state government.

“It would seem to me from the outside that the potential for a conflict of interest between VPIRG and DEC are as great, if not greater, than the U.S. District Attorney post and the governor’s office,” Davis said.

A tumultuous time at the Vermont Regional EB-5 Center

The Vermont Regional EB-5 Center is one of only two in the nation that is run by a state government. Most of the centers are run by for-profit or nonprofit entities that are not subject to direct state oversight.

Jay Peak's Tram Haus Lodge. Photo by Justin Cash/

Jay Peak's Tram Haus Lodge. Photo by Justin Cash/

The Vermont center came under scrutiny last year when a group of immigrant investors in a hotel project at Jay Peak Resort filed complaints with Raymond about the developers of the Tram Haus Lodge.

Investors say Jay Peak seized their $500,000 equity stake in the Tram Haus Lodge without their knowledge and kept them in the dark about the finances of the project. Several investors have said that their expectation, based on the terms of their limited partnership agreement, was that the hotel would be sold after five years and they would recoup their investment with a profit.

The group of disgruntled investors say they put their faith in Jay Peak because of assurances that the Vermont Regional Center would vet the EB-5 projects. The regional center was required to collect quarterly reports on the projects, but that was not being done. After the investor complaints, Raymond began collecting weekly updates on the Jay Peak projects.

When the investors complained to the state, Raymond told them to direct their questions to the Jay Peak developers Bill Stenger and Ariel Quiros. The investors were angered that he was not willing to assist them directly, and they emailed a new set of complaints to another state official.

Bill Stenger

Bill Stenger

In emails obtained by VTDigger last year, Raymond described Stenger as “a great man” and the two discussed a joint strategy for dealing with reporters who were asking questions about the investor complaints.

During that same period, Raymond, however, began asking questions about another project EB-5 project Stenger and Quiros were pursuing: A biotech plant in Newport. In May of last year, at about the same time the Tram Haus investors were emailing complaints to the center, Raymond became concerned about the sale of the headquarters of a related company in Seoul.

AnC Bio Korea lost the building in a sale to government creditors in 2014, and Raymond began an inquiry into the financial status of the company. In August last year, he suspended the AnC Bio Vermont and Q Burke projects.

Over a period of six months, Stenger and Quiros refused, through their attorneys Primmer Piper Eggleston and Cramer, to provide Raymond and the state with basic financial information about AnC Bio, Q Burke and the Jay Peak projects. In January, the Agency of Commerce and Community Development turned oversight of AnC Bio Vermont and Q Burke, a resort in East Burke, over to the Department of Financial Regulation, which has the authority to enforce state securities laws.

Raymond continued to press the developers, after the department began a financial review of the projects, for more information. His requests were rebuffed, as were those from the Department of Financial Regulation, according to memos from the state, even after Shumlin met with Stenger and Quiros on March 27 in an attempt to come to an agreement over the financial disclosures. Despite questions about the developers' use of investor funds, the state ultimately allowed the developers to solicit more money from immigrants for AnC Bio and Q Burke under certain conditions.

In June, the private placement memoranda for AnC Bio Vermont and Q Burke were released as public documents to VTDigger. The memoranda, which are used to solicit investors, included a disclosure statement from the developers acknowledging that the Jay Peak Resort projects are under investigation by the Securities and Exchange Commission.

In emails, Raymond acknowledges that he has been subpoenaed multiple times by the SEC as part of their investigation, which began 18 months ago. The federal regulator has interviewed the general partners of the company, Stenger and Quiros, and is reviewing the finances of not only the Jay Peak projects, but also AnC Bio Vermont and Q Burke.

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Anne Galloway

About Anne

Anne Galloway is the founder and editor-at-large of VTDigger. Galloway founded VTDigger in 2009 after she was laid off from her position as Sunday editor of the Rutland Herald and Times Argus. VTDigger has grown from a $16,000 a year nonprofit with no employees to a $2.8 million nonprofit daily news operation with a staff of 32. In 2017, Galloway was a finalist for the Ancil Payne Award for Ethics, the Al Neuharth Innovation in Investigative Journalism Award and the Investigative Reporters and Editors FOIA Award for her investigation into allegations of foreign investor fraud at Jay Peak Resort.

Email: [email protected]

Follow Anne on Twitter @GallowayVTD

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