Business & Economy

Stowe Aviation withdraws from Vermont EB-5 Regional Center

Stowe airport, Russell Barr
Russell Barr (left) and his son, Harrison, pose with a Cirrus SR22 at the Morrisville-Stowe State Airport. File photo by Hilary Niles/VTDigger
An airport operator in Stowe is pulling out of an agreement with the Vermont EB-5 Regional Center.

Stowe Aviation had planned to use EB-5 immigrant investor funding, along with other private capital, to support infrastructure improvements, including a new terminal at the state-owned Morrisville-Stowe State Airport. The company signed an agreement with the state regional center in May 2014.

The airport is near Stowe Mountain Resort, a popular ski destination.

Russell Barr, an attorney and the owner of the company, says he hoped the airport expansion would help build the tourism economy in Lamoille County. He had originally planned to raise $14 million from 28 immigrant investors for the $30 million proposed expansion, which included an aircraft maintenance operation, a flight training school and an air charter.

Through the EB-5 program, immigrant investors can obtain a green card in exchange for a $500,000 investment in a development located in an economically depressed rural area. Each investment must result in the creation of 10 jobs.

But Stowe Aviation was able to attract just four investors to the project. Barr says marketing for the project was hampered by allegations of fraud at Jay Peak Resort that surfaced in news reports published by VTDigger in 2014 and 2015.

In April 2016, federal regulators brought 52 counts of securities fraud against Ariel Quiros and Bill Stenger, the developers of Jay Peak Resort. The Securities and Exchange Commission and state regulators charged the two men with misusing $200 million in EB-5 immigrant investor monies. The alleged fraud, considered to be the largest in the history of the national immigrant investor program, occurred under the watch of state officials who ran the Vermont EB-5 Regional Center.

The fraud at Jay Peak Resort allegedly began in 2008 when Quiros bought the ski area with investor funds that were supposed to be used for the construction of a hotel. That was the beginning of an alleged Ponzi-like scheme in which the developers used money from future investors to backfill previous projects. Despite red flags in 2012, state officials didn’t raise questions about the developers’ finances until the summer of 2014.

After the federal charges came down, Stowe Aviation officials could not get any information about why their project had stalled and what the impact the Jay Peak fraud would have on their ability to solicit investors, according to Tom Anderson, chief operating officer for the company.

Not long after, Stowe Aviation got into a dispute with the state over allegations of noncompliance with the EB-5 program. The issue was not resolved.

Barr says he now has no choice but to withdraw from the state-run immigrant investor program.

Stowe Aviation is the second company in the state EB-5 program to back away from the state regional center.

Last month, Peak Resorts, the owner of Mount Snow ski area, which continues to use the Vermont EB-5 Regional Center for a $52 million EB-5 funded project, announced the company will use a different regional center for another expansion at the resort in Dover.

Barr calls for independent investigation

Barr says the Vermont EB-5 Regional Center “no longer has any credibility with us or within the global EB-5 community, and certainly not amongst the citizens of Vermont.”

VTrans, in stark contrast, he says, has supported Stowe Aviation’s development of the Morrisville-Stowe Airport. The state aviation division has helped Barr obtain federal and state funding for a runway extension and other improvements.

Barr accuses regional center officials of withholding information about a U.S. Citzenship and Immigration Services “investigation of the Vermont Regional Center that has been ongoing since July 2016.”

Documents provided to VTDigger by the Scott administration in February, after months of legal wrangling with the Vermont Attorney General’s office, show that federal immigration officials have considered closing the state’s EB-5 regional center. 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.

Barr says when he asked the state about the USCIS inquiry last summer his requests were ignored.

Mike Pieciak
Mike Pieciak, commissioner of the Department of Financial Regulation. Photo by Erin Mansfield/VTDigger

In September, he sent a letter to Mike Pieciak, the commissioner of the Department of Financial Regulation, asking for an internal investigation into the regional center’s role in allowing the Jay Peak fraud to occur. Barr says his company has been hurt financially by the allegations about the Northeast Kingdom projects and the associated damage to the state’s reputation in the EB-5 program internationally.

Two weeks later, he says, officials at the department and the agency sent a “fraudulent” letter of intent to cancel the state’s agreement with Stowe Aviation to the company, officials at U.S. Citizenship and Immigration Services, and a commercial lender that invested in the airport project.

Pieciak says his department has had ongoing discussions with Stowe Aviation related to compliance with USCIS policies. He declined to specify what problems were identified. “Beyond that I can’t comment,” he said.

Michael Schirling, the secretary of the Agency of Commerce and Community Development, also declined to comment about the specifics.

Barr accuses the regional center and the department of engaging in “vindictive behavior against Stowe Aviation and our investors by improperly interfering with our private contracts, commercial funding and our investors’ path to citizenship.”

“We have responded with hundreds of pages of substantive documents that refute the baseless claims by the VRC and DFR,” Barr says.

Months later, the state’s notice of intent to cancel the Stowe Aviation memorandum of understanding has not been finalized.

Barr says the state can’t back up claims that Stowe Aviation didn’t comply with the rules. “To this date, our MOU has yet to be cancelled because their allegations are completely baseless,” he said.

“What makes their actions even more egregious and malicious is that the Jay Peak MOU was never cancelled in spite of their knowledge of wrongdoing dating back to 2012,” Barr continued.

The state has cancelled one MOU in the history of the EB-5 program. In May 2013, the Vermont EB-5 Regional Center issued a notice of cancellation to Dreamlife Resorts, a planned retirement community. The reason? The developers listed an attorney on the agreement documents who was not licensed to practice law in Florida.

A year prior, a business partner in the Jay Peak projects made a much more chilling, and public, allegation – that Quiros and Stenger’s financial representations couldn’t be trusted. Douglas Hulme attempted to warn the state in more detail in a meeting in May 2012. But instead of heeding Hulme’s advice, state officials forced Rapid USA out of the state.

In September 2012, the Vermont congressional delegation participated in a daylong press conference in which Stenger announced $600 million in additional EB-5 projects in the Northeast Kingdom — on top of the $200 million that were underway at Jay Peak. Not long after, Lawrence Miller, the secretary of the commerce agency, greenlighted an expansion at Burke Mountain Resort, which was also purchased with EB-5 investor funds, and a proposed biomedical facility in Newport that the SEC later said was “nearly a complete fraud.”

Barr sees himself as a whistleblower who has been retaliated against in much the same way the state went after Hulme.

Because the regional center and the department are now “partners,” Barr says, “It’s not surprising that they have abused the power of the state to avoid accountability by refusing to investigate themselves.

The Vermont Regional Center and the Department of Financial Regulation formalized an agreement in January 2015 in which the center ceded regulatory authority to the department.

While state and federal regulators have investigated financial wrongdoing by Quiros and Stenger, no one has previously called for an investigation of the state’s own role in allowing the fraud to continue for eight years.

Phil Scott
Gov. Phil Scott. File photo by Anne Galloway/VTDigger

If Gov. Phil Scott wants to restore the state’s reputation, Barr says he must establish an ethics commission and hire an independent investigator to ensure the state is “devoid of corruption.”

Barr says he believes a handful of “bad state actors” still employed by the state at the regional center “are responsible for irrevocably harming Vermont and its citizens.”

“We call on the governor to take swift action against this group of bad state actors and to begin a complete, transparent and independent investigation into the VRC,” Barr said.

In an interview, Pieciak defended his colleagues at the regional center who “were passionate about getting to the bottom of the fraud, but didn’t have the expertise or legal authority to do it.”

Pieciak says he has reviewed some of the emails between state officials and the developers and “nothing gives rise to why we would investigate state officials.”

When he led the state investigation as deputy commissioner in 2015 and 2016, Pieciak says he was focused on the financial crimes committed by the developers. If there is an issue with state complicity, “we won’t hide it, but I’d be surprised if that were the case.”

Scott said it is “unfortunate” that Stowe Aviation is pulling out of the regional center.

The governor has said he wants to continue the EB-5 program in Vermont because he sees it as a valuable economic tool.

Scott said his administration has not discussed an internal investigation into potential wrongdoing by state officials, “but we will.”

“We have to have a process and a program that works and that Vermonters have trust and faith in, so we’ll be looking internally at that,” Scott said.

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Anne Galloway

About Anne

Anne Galloway is the founder and editor of and the executive director of the Vermont Journalism Trust. She has been a journalist for 20 years. Galloway was the editor of the Sunday Rutland Herald and Times Argus from 2006 through 2009. For many years, she was a contributing writer for Seven Days, and her reporting has appeared in The New York Times (Vows column), the New York Daily News, Vermont Life and City Pages (Minneapolis). In March 2017, she was a finalist for the Ancil Payne Award for Ethics in Journalism for her investigation into allegations of fraud at Jay Peak Resort. Galloway was also a finalist for the Investigative Reporters & Editors FOI Award in April 2017.

Email: [email protected]

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  • David Usher

    Thanks for staying with this story, Anne. All the tentacles of this massive fraud need to be explored and exposed. Perhaps a profile of the backgrounds, skills and expertise of the Vermont employees and consultants associated with the EB-5 program would reveal whether fraud, incompetence or conflicts of interest were involved.

  • Brooke Paige

    The story informs:

    “Through the EB-5 program, immigrant investors can obtain a green card in exchange for a $500,000 investment in a development located in an economically depressed rural area. Each investment must result in the creation of 10 jobs.”

    however, the story should have mentioned that Vermont’s EB-5 program has several features (loopholes) that have become the source of some of its problems and ongoing criticism:

    1) An EB-5 visa green card provides permanent residency (and green cards) for not only the investor/applicant, but for their spouse and up to six offspring under the age of 21.

    2) Unlike other EB-5 programs nationwide which require a minimum investment per investor/applicant of $1M, Vermont’s program requires an investment of only $500,000.

    3) Vermont’s EB-5 Visa project requires each investment to create 10 direct and/or indirect jobs per investor/applicant, a far less stringent requirement than “standard” projects nationwide that require that each EB-5 investment to create 10 “direct” jobs. This distinction has allowed promoters and investors to play “lose with the facts” in documenting compliance.

    4) Vermont’s EB-5 program criteria includes “additional (unspecified) incentives
    for: a) “at-risk” investments” and b) “troubled businesses” – defined as a
    business that “has had a net loss of at least 20% of net worth during the 12 or 24 month period prior to EB-5 visa project approval.:

    More details can be found at:

    • DougHoffer

      Some errors here. The $500,000 requirement is for rural areas or areas of high unemployment and is not unique to Vermont. Likewise, the jobs requirement is also national. All EB-5 investments can count indirect jobs. This is a weakness of the program, but is not unique to Vermont.

  • waltermoses38

    Ethics commission? As Senator White said,”that’s not going to happen.” It didn’t.

    • waltermoses38

      Senator White did supply plenty of chocolate cake to her committee though, not homemade, courtesy of Shaws.
      I’ve got to give credit to John Walters for that one. He seemed to enjoy it.

  • Bruce S. Post

    When I was a child and we drove by Bridgeport, Connecticut, and its Seaside Park around low tide in the summer, we would roll up our car windows because of the stench in the air. When we drove up Route 8 by the U.S. Rubber plant in Naugatuck, Connecticut, in the summer, we again would roll up our car windows because of stink from air pollution generated by the plant. (These were in the days before AC in automobiles.)

    And, what do we do now in Vermont because of the persisting and spreading stench and stink of the EB-5 program and Jay Peak/Burke Mountain? Largely, nothin’. Our vaunted “leaders”, so quick to buy into the vaporware peddled by Stenger, Quiros and others, act like Sgt. Schultz in the old TV show Hogan’s Heroes: “I see nothing, I know nothing, I did not even out this morning.”

    VT Digger’s continued reporting on EB-5 when read in tandem with Bill Schubart’s commentary on Vermont’s ethics crisis ( should be warning enough to us all that we need to wake up to the corruption in our midst.