The Scott administration will “expedite” release of records pertaining to EB-5 projects that are at the center of the largest fraud case in the state’s history.
Last month, Gov. Phil Scott asked the Department of Financial Regulation to develop a plan to disclose communications between state commerce agency officials and the developers of the Jay Peak projects.
The documents will become available as defense lawyers seek records as part of the discovery process in the state’s lawsuit against former Jay Peak owner Ariel Quiros and his partner, Bill Stenger, the former CEO of the ski resort located in the Northeast Kingdom.
The state sued Quiros and Stenger on April 14, 2016, two days after the Securities and Exchange Commission leveled charges that the two men had misused $200 million in immigrant investor program through the EB-5 program. Quiros and Stenger are accused of violating state and federal securities laws.
The records have been closed to public purview until now. The Vermont Attorney General withheld the documents from VTDigger, citing an exemption in the Vermont Public Records Act for relevant litigation. Bill Sorrell, the former AG, said the documents would not be made available until after the state’s lawsuit against Stenger and Quiros ended.
Scott has said it’s important for the public to have access to the records in order for his administration to “hit the reset” button on the Vermont EB-5 Regional Center program.
In a statement, Scott said the Jay Peak matter is “one of the largest alleged fraud cases in Vermont’s history and a matter of significant public interest, so I feel it is important to release documents in as timely a manner as possible.”
“I’ve advocated for transparency to restore faith and trust in government and in the EB-5 program, while also ensuring the release of information does not jeopardize the legal cases brought by the State or federal government,” Scott said. “Our top priority is to preserve the integrity of the legal process so the State can effectively enforce its laws.”
The plan, developed with the Vermont Attorney General’s Office, “dictates” that the Department of Financial Regulation “track the discovery process.”
As documents from the state are made available to the defendants, the state will file a motion with the court allowing public release of those records. The media, at that point, can intervene in the case and argue whether the motion should be granted. If the court grants the motion, the documents will be disclosed.
Michael Pieciak, the commissioner of the Department of Financial Regulation, says the plan balances Scott’s “goals to inform the public on this important matter, with ensuring we uphold the integrity of the case.”
The records will be made available “in a matter of months” as the court case proceeds. Previously, the documents would only have been made available after the litigation concluded, which could have been years.
While the discovery process has begun, the schedule for the state case has not yet been set. Once the records are released, they will be posted on the DFR website on a rolling basis through 2017.
Documents protected by attorney client privilege and the work product doctrine will not be produced to the defendants or the public.
Some records may be produced to the defendants, but withheld from the public under court-issued protective orders.
VTDigger has sought state records regarding allegations of fraud at Jay Peak since 2014. The Shumlin administration and the Vermont Attorney General withheld records under a number of exemptions in the Vermont Public Records Act, including trade secrets, attorney client privilege, confidential business information, executive privilege and the work product doctrine.
In some cases, officials have claimed the records didn’t exist. For example, VTDigger was told that communications between James Candido, the former head of the Vermont EB-5 Regional Center, didn’t exist. Full release of communications requested for Alex MacLean, Gov. Shumlin’s former campaign manager, were never disclosed to the public.
At one point, Bill Griffin, chief assistant attorney general, said VTDigger would need to pay $200,000 for the 50,000 pages of state documents related to the case and there was no guarantee that the pages released would not be blank.
In August last year, the news organization sought communications between the U.S. Citizenship and Immigration Service and the Vermont EB-5 Regional Center about the possible termination of the state-run program.
The state blocked disclosure of the records. VTDigger appealed the decision and was turned down. After the news organization and the Vermont ACLU sued, the state released 131 pages of communications. Fourteen pages pertaining to questions about the allegations of fraud at Jay Peak were blank.
In court, the state cited the broad relevant litigation loophole in the Vermont Public Records Act to continue to block release of the records.
In February, the Scott administration released the documentation. The records show that USCIS raised questions about state oversight of the Jay Peak projects and told state officials that if “additional information and evidence” was not provided, a “notice of intent to terminate” would be issued to the Vermont EB-5 Regional Center.