Leahy says he had no warning of fraud case against 'friend' Stenger - VTDigger
 

Leahy says he had no warning of fraud case against ‘friend’ Stenger

Patrick Leahy

Sen. Patrick Leahy, D-Vt., speaks to the media Friday at the train station in Essex Junction. Photo by Mark Johnson/VTDigger

A disappointed Sen. Patrick Leahy said Friday he had no regrets about being one of the country’s leading champions for the EB-5 immigrant investor program and said reforms that he’s been pushing could have uncovered allegations sooner that two developers in the Northeast Kingdom were using the program to run a “Ponzi-like” scheme.

The senator said he first heard of the federal fraud investigation against Bill Stenger and Ariel Quiros from a reporter Wednesday after speaking about EB-5 reforms. Also Wednesday, officials from the Securities and Exchange Commission raided offices at one of the developers’ projects, Q Burke Mountain Resort, changing the locks and seizing equipment.

Vermont’s senior senator, who is running for re-election, said he was “gravely disappointed” to hear the allegations and worried about the workers in the Northeast Kingdom who might be affected. He made his comments after a press event in Essex Junction touting reforms meant to ease rail and air travel between the United States and Canada.

He said he would donate any past campaign contributions from Stenger and Quiros to a charity in the Northeast Kingdom.

Unlike Gov. Peter Shumlin and Attorney General William Sorrell, who said Thursday they were briefed by the state Department of Financial Regulation about the status of the case and the seriousness of the allegations, Leahy said he received no briefings from anyone in law enforcement or anyone else, including the governor, the attorney general’s office or the SEC.

“I was in the loop to the extent I saw the VTDigger stories. I had no reason to doubt that and some of the other stories. But the idea of the SEC, the U.S. attorney, no. And there’s no reason I would have been kept in the loop of that,” Leahy said.

The SEC on Thursday announced a 52-count complaint alleging fraud by Stenger and Quiros, claiming they misused $200 million of investor money and that Quiros diverted $50 million of that for his personal use.

Leahy said the measures put into the original EB-5 legislation provided oversight and that the Vermont system, where promotion of the program is handled by the Agency of Commerce and Community Development and regulation of the program by DFR, was a strong model. Shumlin split the roles of promotion and enforcement in February 2015.

“I think Vermont, we’re a little state, we’ve been doing — it’s my understanding — a great deal in checking into this and probably this might not have been uncovered in other states where they haven’t” set up a regulatory framework, Leahy said.

The allegations, he said, should provide evidence why the reforms he has been promoting should be adopted. Without those reforms, Leahy said, he would not support extending the program.

Under the EB-5 program, investors put up $500,000 in economically distressed areas like the Northeast Kingdom — or $1 million elsewhere — in return for permanent residency in the United States.

Asked if had regrets being one of the leading proponents of the EB-5 program, Leahy said: “Nope. Oh, no, no. We created a program with oversight, and it’s the oversight that’s finding out what’s going on.”

Asked if more could have been done, Leahy praised the Vermont oversight but also said reforms he pushed years ago could have uncovered the alleged scheme sooner had they been enacted. He acknowledged that’s “easy to say now.”

“It’s the oversight here in Vermont where they froze money, they were looking into it. That’s what we need and the kind of intensive rules that Sen. (Chuck) Grassley and I want,” Leahy said. Grassley, of Iowa, is the Republican chair of the Senate Judiciary Committee. Leahy is the highest-ranking Democrat.

Leahy called Stenger a friend and said he would feel betrayed if the allegations prove true.

Bill Stenger is an owner of Q Burke Mountain Resort.

Bill Stenger is an owner of Q Burke Mountain Resort. File photo

“We’ve talked a lot. Even though, I mean he’s a Republican and I’m a Democrat, I have a lot of friends who are Republicans, and I appreciate that. I know that and I especially appreciate seeing the men and women who are now getting paid a decent amount, so of course I’m so disappointed in this, especially being in the Northeast Kingdom, a place I’ve done everything to bring grants and everything else for jobs,” Leahy said.

Leahy said his staff was researching how much money Stenger has contributed to his political campaigns over the years, and he vowed to give an equivalent amount to a charity in the Northeast Kingdom. The senator said he believed he received $4,800 from Stenger in the last election cycle and had never received a donation from Quiros.

A check of election records showed $4,800 from Stenger in 2009. There was also a $500 contribution from Stenger to Leahy in 1998, the records show. Quiros is not listed as giving any individual contributions to Leahy, but he gave the Vermont Democratic Party a total of $22,000 between 2012 and 2014.

Leahy said he was worried about the workers and their jobs and not the developers. He also never mentioned the investors.

“I think of the men and women who were getting good-paying jobs in construction — carpenters, plumbers, electricians. I worry about them. I’m far more concerned about them than anybody else here because they had hope for jobs. It’s not the easiest place to get jobs,” Leahy said.

The senator said he never took a trade trip with Stenger but spoke at an EB-5 event Stenger held in Shanghai. But Leahy insisted that whenever he went to an EB-5 event, he never encouraged anyone to invest and instead spoke only of Vermont’s beauty.

“I was very, very careful as I always am on all of these things and say, ‘Vermont is a beautiful state. I love Vermont. Can I show you some pictures of Vermont?’ And I don’t know if anybody asked me do I think this is a good investment or not. If they had, I would have said I’m not an investor, I have no way of knowing,” Leahy said.

Leahy praised other Vermont projects that he said had “followed the rules,” including projects at Sugarbush resort and Country Kitchen, financed through EB-5 investment.

Mark Johnson

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  • Randy Koch

    So there you have it: Patrick Leahy is not a crook; his friend and campaign donor may be a crook and that would be a bummer; Patrick Leahy did not shill for his friend’s Ponzi scheme but simply went around the world saying Vermont is a pretty place for a Ponzi scheme. Next question?

  • William Geller

    We all know you get more effective government with term limits 28 years is plenty 8 as a representative 12 senator & 8 president . Federal pension & healthcare for Pres& VP only if the state they represent wants to give the benefits fine. But never on the federal program. This will never happen as the citizens will not demand it & for sure those in Gov will never bring it up

    • Elise Eaton

      Please run for office and bring it up. Often.

    • Richard M Roderick

      8 12 8 won’t not be good. It would shift the balance of power to the Senate. First thing we need to do is to stop the gerrymandering of house districts and stop voter suppression laws and enforce our antitrust laws. Nationally and locally.

  • Stephen Trahan

    Milne for Senator isn’t as far fetched as it sounded a couple weeks ago.

  • You’d think he was on the varsity team by now, but no, only a cheerleader. Time for a change.

  • Neil Johnson

    We have a systemic problem with accounting in our state and federal government. It the EB5 program was run like any normal construction/project loan, none of this would have happened. The question is was the system set up for failure? and/or was the regulatory body not doing it’s job? Was their political nepotism that put incompetent people in office?

    Our current government finds it all too easy to move funds from one account to another, it’s daily business. In the business world this could be called co-mingling, embezzlement, fraud but it’s accepted by within government and tolerated but the citizens.

    We need to have better accounting, we need to be clear on our accounts. We need to stop the spin, raising fees, that pay for government is a tax increase on the citizens. We need to be able to see in our paychecks, that yes your employer has given you a raise every year for the last 15 years. You haven’t seen the raise because healthcare too it.

    We need to get back to the basics, the fundamentals.

  • Azur Moulaert

    Jay Peak’s “jobs” are circling around the drain of a failed and corrupt project. This kind of Disney like resort monstrosity is not par with Vermont’s heritage nor character. Paradoxically, our true Nature has been well documented by two great books the Senator has sponsored – People of Vermont and Vermont Landscapes. I’ll take Cochran’s or Bolton any day over the pomposity and pretentiousness of Stenger’s playground.

    • Susanna Rodani

      Yes Azur. Greed and corruption go hand in hand because pompous and pretentious people have no moral consciousness. This project is essentially a circus for those flatlander a primarily looking for that special feeling of being even more special, if that is possible? Strange that such a place could even exist in the Kingdom?

  • Jessie McIndoe

    When does political spin turn into an EB(F5) tornado? All we need to hear from Leahy and Shumlin is the door slamming on their way out.

  • John Smith

    Come ON, Leahy. As a voter I’m even more concerned when you say that “you didn’t tell anyone to invest, you just told them how beautiful Vermont is”. How can you say such a thing with a straight face? It’s *obvious* to anyone that, when you are standing in an event being held by a developer to promote a certain investment, you are implicitly vouching for that investment.

    Instead of trying to distance yourself from that sh!tstorm, you should be standing by both your electorate *and* the foreign investors that trusted you, and demanding hard jail time for your “friend”, Mr. Stenger and his crooked partner, Mr. Quiros. I expect no less from a Senator.

    • Neil Johnson

      There is one slight problem, State and Federal oversight. This is and was such an easy problem to avoid with the most simple of accounting/oversight. But apparently that was not done. There is huge negligence or incompetence here.

      From others my understanding is Leahy is supposed to have overseen this program? So these contractors are going to be hurt the most…..at least investors get citizenship, which had that not been on the table, no sane person would have every invested. Meanwhile contractors will go belly up along with all of their suppliers.

  • Pete Novick

    “I was in the loop to the extent I saw the VTDigger stories. I had no reason to doubt that and some of the other stories. But the idea of the SEC, the U.S. attorney, no. And there’s no reason I would have been kept in the loop of that,”

    – Senator Patrick Leahy, speaking to reporters in Essex Junction, April 15, 2016, (quoted in this VTDigger article.)

    Senator Leahy is an attorney, having graduated from Georgetown School of Law in 1964. As an attorney, he should understand the due diligence standards of not only legal transactions and the parties thereto, but also the somewhat more informal criteria by which we measure friendship, trust and respect.

    Was Bill Stenger a co-conspirator in a criminal enterprise? It’s a fair question. One can only hope the United States Attorney for the District of Vermont is still in his office this Saturday night.

    Dime con quién andas, y te diré quién eres.

    (Tell me who your friends are (lit.: who you walk with) and I’ll tell you who you are.

    Words to live by.

    Cheers

    • Willem Post

      Pete,

      Somewhat like Miss Piggy: MOI?

      Very-longtime Senator Leahy has been and is intimately aware of the many EB-5 frauds throughout the US.

      Why have reforms of EB-5, it that were no the case?

      There has been fraudulent counting of jobs to show “success” of a project and get the Chinese multi-millionaires at the head of the line, to get their green cards, and their permanent residence in the US.

      Other folks have to wait at least 5 years to get their cards, etc.

      The obsceneness of such a provision in EB-5 is unAmerican, to say the least, and Leahy was an early champion of it.

      Steiger was his friend and campaign contributor; one hand washing the other.

  • David Dempsey

    Why is it that on April 8th Shumlin was aware that the SEC was going file charges this week and Leahy claims he didn’t know about in until wednesday, April 14th. Nice try Patrick. How stupid does he think his constituents here in Vermont are?

  • Keith Stern

    Leahy was quick to point out that Stenger is a Republican. Why did he feel the need to mention that?

  • It seems that so many of the commenters want to blame a long serving Senator for acts committed against us by devious individuals. If Leahy was not a public official, you would be treading on very precarious grounds with such claims.
    By the way, we have term limits. It’s called elections. Almost anyone can run and almost anyone of age can vote. Sanders proves that on both counts. This free-for-all on sites such as this and plastered over social media is a sickness. Innuendo and rumor are for the scandal sheets.

  • Ed Fisher

    “It’s not the easiest place to get jobs ” ……..How convenient that Sen. Leahy “didn’t know a thing “, how convenient for all of them . Perhaps if these career do nothings paid any attention at all to the Kingdom instead of the “other ” Vermont , west of Montpelier , north of Williston , these kinds of public rip-off’s and political step child , geographic and economic areas wouldn’t exist . I truly wonder when Vermont voters will grow a set and bounce these class acts out of office. Time for a special election – a confidence vote . Or is just plain old voter apathy that defies term limits ?

  • Pete Novick

    What’s in a name? Bernie Madoff….Ariel Quiros….Bill Stenger…?

    I am pretty familiar with the criminal case the government laid out in prosecuting and convicting Madoff, so I tossed and turned last night trying to figure out why the US Attorney for the District of Vermont, Eric Miller, seemed to be backpedaling as fast as he could regarding the criminal investigations and prosecutions his office is legally bound to conduct – provided he follows the evidence – where ever it leads.

    I sat bolt upright in bed at 3 am. I had the answer.

    All the victims of the Quiros – Stenger schemes are foreigners! Some are yellow. Some are black. They don’t speak English the way you and I do. They just want to get their little hands on those Green Cards. America is not for them, right?

    Don’t get me wrong. I am no jingoist, having lived, studied and worked outside the United States for more than 40 of my 64 years on the planet. I have lived in Vietnam, Japan, South Korea, and many other countries. And I’ll tell you one thing: living all that time away has made me a better American citizen.

    Our country, like many others, has a long and sordid history of mean and nasty actions towards foreigners. The Chinese Exclusion Act, The Alien and Sedition Acts, the interment of Japanese during WW II, to name but three examples.

    But it’s not just race and ethnicity. My mother graduated, at the top of her class, from Hunter College in 1937 and hoped to go to medical school. She didn’t know she already had three strikes against her: she was a woman, she was Irish and she was Catholic. She became a school teacher instead.

    I laid back down and fell soundly asleep.

    Cheers

    • Michael Ponte

      Concerning the behavior of Eric Miller, I would be more suspicious of the fact that his wife, Liz Miller, was Governor Shumlin’s Chief of Staff from January of 2013 until May of 2015.

  • Dan Allard

    Its funny that Leahy did not guess that there might be a problem, when his wifes uncle, Tony Pomerleau, had problems with Stenger several years ago.

  • Rob Pforzheimer

    “Leahy insisted that whenever he went to an EB-5 event, he never encouraged anyone to invest and instead spoke only of Vermont’s beauty. And I don’t know if anybody asked me do I think this is a good investment or not. If they had, I would have said I’m not an investor, I have no way of knowing,”
    Leahy may or may not have said this is a good investment, but the presence of the most senior Dem senator and his association with the promoters of this ponzi scheme would lead potential investors to think it may be legitimate.

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