Federal prosecutors are calling on a judge to keep millions of documents, including secret grand jury testimony and witness statements that have been kept under wraps for years, from a lawyer representing bilked foreign investors in a lawsuit against the state.
Attorney Russell Barr of the Barr Law Group in Stowe, on behalf of the investors, has been fighting to get the documents ever since filing his lawsuit four years ago. He’s been repeatedly blocked by federal and state prosecutors.
Federal prosecutors, in a filing this week, say Barr’s latest move to get the records from the legal team representing Bill Stenger in a criminal case should be rejected by a federal judge and taken up in state court where that civil lawsuit is pending.
“However unsatisfying for the Barr Law Group, the media, or the Vermont public, the assignment of criminal culpability is distinct from an assessment of governmental competence and related civil liability,” Assistant U.S. Attorney Nicole Cate wrote in the filing.
“Those questions are properly addressed in other proceedings and contexts,” Cate wrote.
Cate is leading the prosecution of Stenger, Jay Peak’s former CEO and president, as well as Ariel Quiros, Stenger’s former business partner and Jay Peak’s former owner, and William Kelly, a longtime friend and adviser to Quiros.
Stenger, Quiros and Kelly have all pleaded guilty to federal crimes in connection with a failed project they headed to build a $110 million biomedical research facility in Newport known as AnC Bio Vermont.
Despite raising more than $80 million from over 160 foreign investors seeking permanent U.S. residency through the federal EB-5 visa program, the AnC Bio Vermont project never got off the ground.
The collapse of that project dashed the investors’ hopes of legally living in the United States and left them out at least $500,000 each, which they had put into the development that was later termed by federal regulators “nearly a complete fraud.”
Barr, on behalf of foreign EB-5 investors, filed a civil lawsuit in 2017 against the state of Vermont and state officials responsible for the oversight and monitoring of a series of EB-5-financed projects headed by Quiros and Stenger, including the AnC Bio development in Newport.
In the lawsuit, Barr accuses the state and the administration of then-Gov. Peter Shumlin of not only failing to prevent the developers from committing fraud, but also perpetuating the fraud by permitting investors to continue to pour money into projects while knowing that the fraud was occurring.
The Vermont Attorney General’s Office, representing the state in that lawsuit, has fought to keep Barr from getting documents that he claims can prove the state’s culpability in the fraud.
Recently, Barr, through a subpoena from the state lawsuit, filed to obtain those documents from Stenger’s legal team, which had received them from federal prosecutors as part of the criminal case against their client.
Federal prosecutors prevented that from happening, seeking and then obtaining from federal Judge Geoffrey Crawford a protective order keeping those records hidden from Barr, his clients and public scrutiny.
Barr has since filed a motion asking Crawford to reverse that ruling, prompting a reply from federal prosecutors demanding that the protective order remain in place.
“Federal law provides specific procedures for the public to seek to obtain federal investigative files and provides specific rights to crime victims,” Cate, the federal prosecutor, wrote in a filing this week.
“The plaintiffs represented by the Barr Law Group — whether they are members of the public or victims of the crimes in this federal matter — are no exception,” the prosecutor added.
Barr, according to Cate, is seeking an “end-run” around procedures regarding the disclosure of federal criminal investigation materials.
“Indeed, neither members of the public nor crime victims are entitled to wholesale access to the discovery materials exchanged in a federal criminal matter. And for good reason,” Cate wrote.
“The discovery materials that the United States provided to criminal defense counsel are voluminous and varied,” Cate added, “but the bulk of them fall into two broad categories: documents that the United States obtained from third parties and statements made by witnesses as part of the federal criminal investigation.”
Those materials, the prosecutor wrote, should remain secret.
“The United States typically treats witness statements as sensitive documents to protect witness safety and privacy concerns,” Cate wrote. “Furthermore, this category includes grand jury materials, which are subject to well-established rules of secrecy and should not be publicly disclosed in this context.”
According to Cate’s filing, prosecutors have provided Stenger’s attorneys with millions of pages of records.
The prosecutor, in the filing, wrote, “to the extent that Barr Law Group is concerned about the State of Vermont’s ‘obfuscation practice,’ the issue should be raised and remedied within the contexts of the Barr Law Group’s ongoing lawsuits against various State of Vermont defendants.”
It’s unclear when Crawford will rule on the matter and whether he will hold a hearing before issuing a decision.