‘Just between you and me’: FBI records reveal an EB-5 fraudster’s direct line to Gov. Peter Shumlin

Then-Gov. Peter Shumlin was on vacation in August 2014 when the owner of Jay Peak Resort texted to say he wanted to talk on a private line. At the time, Shumlin was on an island with no internet connection and spotty cell reception, according to newly unsealed FBI interview summaries, and could only take his “governor-related” calls at an elevated point on the property.

Seated on a tractor atop a hill, Shumlin learned from Jay Peak owner Ariel Quiros that the U.S. Securities and Exchange Commission had been probing the Northeast Kingdom economic development projects the two men had spent years promoting. 

“Shumlin was concerned,” the FBI noted. 

He had good reason to be. Twenty months later, in April 2016, the SEC would file federal fraud charges against Quiros and his partners, alleging they had orchestrated a massive, “Ponzi-like scheme” involving eight development projects in Vermont’s Northeast Kingdom. Prosecutors alleged that the men misused $200 million in funds raised through the federal EB-5 investor visa program and defrauded hundreds of foreign investors. Quiros, a Miami developer, would eventually plead guilty to criminal fraud and money laundering charges.

Shumlin’s role as a booster of the Jay Peak projects has long been clear, but little has been known about the behind-the-scenes role he played in protecting the projects as federal and state officials closed in on the fraud. That changed last week when U.S. District Court Judge Geoffrey Crawford unsealed summaries of FBI interviews with Shumlin and 14 other current and former state officials — including six cabinet officials and former Gov. Jim Douglas. 

The FBI interview summaries establish that Quiros for years had a direct line of communication with the governor, frequently texting him on what Shumlin referred to as his campaign phone. They first met in person over dinner in Miami in 2011 and continued to meet — without any others present — until New Year’s Day 2015 when Quiros dropped by Shumlin’s East Montpelier home for tea. 

By then, state officials had joined the feds in suspecting fraud, and Quiros was worried about the questions the state was asking, Shumlin later told the FBI. Quiros, he said, “thought a governor could just get on the phone and call them off,” the FBI paraphrased Shumlin as saying. The governor insisted he instructed Quiros to tell the authorities everything. 

“Give them the information they need,” Shumlin claimed he told Quiros over tea. “It will protect us all.”

The newly unsealed records show that, even as Quiros sought Shumlin’s assistance with the troubled projects, he gave the governor campaign contributions, gifts and access to his Manhattan apartment. At one point, Quiros went so far as to dangle before the governor a Venezuelan oil deal he said would bring cheap fuel to Vermont. 

Shumlin insisted in one interview with the feds that no one from the state had ever been “on the take” from the Jay Peak developers. In another interview, Assistant U.S. Attorney Paul Van de Graaf asked Shumlin why Quiros might have wanted to maintain a separate line of communication with him. 

“I just don’t know,” the former governor responded. 

Though the interviews make clear that Shumlin knew about the SEC probe in August 2014, he maintained he had no idea how complicated the problems facing the developers were until September 2015, when top officials with the state Department of Financial Regulation briefed him. To that, Van de Graaf appeared to express a note of skepticism, ticking off the warning signs from 2013 through 2015 that might have drawn the governor’s attention. 

Shumlin responded that he had, indeed, read media reports about those issues and had asked his staff to look into them. But as far as he knew, the developers were “saints” and “miracle-workers” who were creating hundreds of jobs in the economically challenged Northeast Kingdom. “We thought we were on the side of the angels,” he said. 

The FBI interviews show that Shumlin’s own top advisers did not share that view. Former political aides told prosecutors that the governor’s frequent communications with Quiros — and his visits to the Manhattan apartment — made them nervous. They sought to limit direct exchanges between Shumlin and his former campaign manager, Alex MacLean, who had gone to work for the developers. 

Meanwhile, top cabinet officials charged with overseeing the state’s role in EB-5 projects tried in vain to warn Shumlin that the Jay Peak developments were a house of cards.

Susan Donegan, who served at the time as the state’s commissioner of financial regulation, told the FBI that she recalled multiple meetings — including some prior to March 2015 — when she shared early investigative findings with the governor. 

“Specifically, (the Department of Financial Regulation) told Governor Shumlin about irregularities in accounting, transactions that didn’t make sense, and purchases of property and luxury items,” the FBI paraphrased Donegan as saying. 

In one dramatic incident not previously reported, Donegan in April 2015 wrote a letter to Shumlin and his legal counsel, Sarah London, threatening to resign if the administration failed to protect new investors in the troubled projects. 

“Donegan felt that if she continued to remain Commissioner of the DFR she would be breaking the law if nothing was going to be done to protect … investors,” the FBI wrote in summarizing her interview. 

The state ultimately agreed to put those investments in escrow — and Donegan remained in her post — but the administration declined to shut down the projects, waiting for the SEC to do so a year later. In that time, even more immigrant investors pinned their hopes of obtaining green cards on developments the state had reason to believe would fall apart. 

“There was a year period when some could say the state should have done something to stop any further investing” in the projects, as Van de Graaf put it in an interview with former Shumlin chief of staff Liz Miller.

Instead, state officials continued to publicly insist that nothing was wrong. 

Asked by Van de Graaf to reflect on the entirety of the fraud, Shumlin called it “the biggest betrayal of his life,” according to an interview summary, and characterized himself as one its many victims. It was also “a huge embarrassment,” he said. 

“We put our names on this,” Shumlin told the feds. “It is the biggest disappointment of my political life.”

‘Just between you and me’

While in New York City in the fall of 2012, possibly on state business, Shumlin sought out Quiros to solicit a campaign contribution, he later told the FBI. But over dinner, Quiros promised to do him one better.

When Shumlin told Quiros that one of the greatest challenges Vermonters faced was the high price of home heating oil, Quiros mentioned he was Venezeulan and that he had relationships with the country’s leaders. He said he could “work out a deal” to provide Venezuelan oil to Vermont and asked Shumlin for a letter on official letterhead “for credibility purposes.”

The deal never came to pass, and Shumlin never heard another word about it, he told the FBI, “which was typical with Quiros.”

But after that, the two continued to trade favors, the FBI interviews show. 

Quiros offered up his Manhattan apartment, and Shumlin accepted on four occasions in 2013 and 2014, including once with his then-girlfriend (and now-wife), Katie Hunt, and once with family friends. When one of the governor’s daughters was stranded without power after Hurricane Sandy hit the city in the fall of 2012, Shumlin asked Quiros for help. Later, according to text messages obtained by the FBI, Shumlin thanked Quiros for an unspecified gift. 

“Shumlin cannot recall the gift,” the FBI wrote, summarizing an interview. “People were constantly giving him gifts as the governor.”

At one point, Miller, then Shumlin’s chief of staff, asked London, his legal counsel, whether the governor’s visits to Quiros’ pad complied with state law. London reasoned that they did because Shumlin was not in the city on government business and Vermont had no statute prohibiting such gifts. Though Shumlin himself had signed an executive code of ethics governing the behavior of his appointees, London noted that it did not apply to the governor himself. 

“London’s take is that the condo stay was not illegal,” the FBI wrote in its summary of an interview with the legal counsel. 

But Miller’s predecessor as chief of staff, Bill Lofy, told the feds he “did not like the optics of it.” Lofy, who left the governor’s office after the 2012 election but remained Shumlin’s liaison to the Democratic Governors Association, said he had not been aware of the arrangement at the time. If he had, according to a summary of his own interview with the FBI, “Lofy would have told Shumlin to exercise extreme caution in a relationship with an interest relating to the state. This is just the type of thing that made Lofy ready to move on.”

As Quiros doled out favors, Shumlin became a key cheerleader of Vermont’s EB-5 projects, traveling to Miami, China and Vietnam to promote them — and appearing in a promotional video for the Jay Peak developments in which he falsely claimed that the state audited the projects. In fact, the Vermont Regional Center, an arm of the state Agency of Commerce and Community Development, merely marketed and administered EB-5 projects in the state on behalf of U.S. Citizenship and Immigration Services. Only in late 2014, after the state became aware of the SEC investigation, did it begin to perform true financial oversight through the Department of Financial Regulation. 

In the FBI interviews, Van de Graaf appeared focused on determining why Shumlin made the audit claim. Officials gave varying accounts, attributing it to talking points provided by the developers or a state official — or chalking it up to mere confusion on the part of the governor. 

Over the years, Quiros routinely discussed his business dealings with the governor, the FBI interviews show. 

In one fall 2013 text exchange prosecutors asked Shumlin about, Quiros apparently floated the idea of firing his then-partner and co-conspirator, Jay Peak President Bill Stenger. Shumlin urged caution. Given how hard Stenger worked, the governor responded, “do you really want to get rid of this guy?”

Quiros broached the topic again in August 2014 when the governor took his call from the tractor on the island hilltop. 

“The call went on too long. Shumlin wanted to get to the beach,” the FBI paraphrased the governor as saying. “Quiros was mad at Stenger about something (Shumlin cannot remember what). Quiros had promised Stenger 20% ownership of Jay Peak, but now was not going to give that to Stenger. It was almost like a father being angry at his son.”

After Quiros notified Shumlin of the SEC investigation, the governor recounted to the FBI, he asked his staff to “confidentially” verify the assertion with the office of U.S. Sen. Patrick Leahy, D-Vt., a strong supporter of the EB-5 program. Leahy’s staff confirmed the news, according to Shumlin, and said the SEC was investigating every EB-5 project in the country. 

The governor and the developer appear to have discussed warning signs related to AnC Bio, a proposed Newport biotech facility affiliated with a Korean firm of the same name. The project, which turned out to be nearly a complete fraud, was at the heart of the government’s case against Quiros, Stenger and two associates. 

In October 2013, Quiros texted Shumlin asking him to talk about the “situation in Korea.” Shumlin told the feds he had no memory of their subsequent conversation, other than his observation that there was “smoke (but) no fire.” 

The next summer, Quiros requested a private meeting with Shumlin at the Manhattan apartment. The developer vented about the end of a Newport partnership with the late real estate magnate Tony Pomerleau. 

“Quiros wanted to know if Shumlin could help him,” according to an FBI summary of an interview with the governor. “Shumlin told Quiros there was nothing he could do and that Quiros would have to work it out with his partner.”

Throughout their relationship, according to Shumlin, there was one thing Quiros prized above all: discretion. 

As the governor told the FBI, “Quiros always want(ed) things to be confidential and would say this is ‘just between you and me.’”

‘Deer caught in the headlights’

Shumlin was not the only one in his administration with a close relationship to the Jay Peak developers. 

Patricia Moulton, who oversaw the state’s EB-5 program as Shumlin’s secretary of commerce, had known Stenger since she was 10 years old. Her father, the late state Economic Development Director Al Moulton, had been friends with Stenger. Moulton did not socialize with Stenger, she told the FBI, but felt comfortable asking for favors, such as using a Jay Peak condo for the cost of cleaning.

The connection, apparently, cut both ways.

“Stenger played on his relationship with her,” the FBI wrote, summarizing an interview with Moulton, adding that he had “played on her emotions.”

When Douglas Hulme, a former business partner of Quiros and Stenger, went public in 2012 with vague allegations against the Jay Peak developers, the state largely ignored him, buying Stenger’s argument that Hulme was simply bitter over being cut out of the upside. 

“Moulton trusted Stenger more than Hulme,” the FBI wrote in its summary of an interview with Moulton. “She had known Stenger longer, and they had had a good relationship.”

At one point when the state was about to take action against the developers, Stenger pleaded with her, tears in his eyes, she told the feds: “You can’t shut this down, Pat. 350 will be out of a job.” Stenger’s entreaty, she said, pulled at her heartstrings.

With the benefit of hindsight, Moulton told the feds, she had come to realize that Stenger had “lied to her face.”

Stenger knew which buttons to push in state government, according to Becky Fu Von Trapp, who worked in the Agency of Commerce and Community Development office overseeing the state’s EB-5 program.  

“Stenger would go to the governor or Miller if he wanted something,” the FBI paraphrased her as saying, referring to Moulton’s predecessor as commerce secretary, Lawrence Miller. “Stenger had too much political pull.”

According to Brent Raymond, Fu Von Trapp’s boss at the commerce agency, Stenger often offered him “comp stays” at Jay Peak — offers he regularly refused. “On one occasion, Stenger found out Raymond and his son were coming to Jay Peak,” the FBI wrote in a summary of an interview with the former commerce official. “Raymond was not billed for the stay despite his efforts to get a bill. Raymond feels violated by this experience.”

Stenger had a helpful lieutenant in MacLean, the former Shumlin campaign manager and deputy chief of staff who left the administration in 2013 to work for the Jay Peak developers. 

Upon her departure, MacLean sought ethics guidance on how to communicate with the governor, according to London, Shumlin’s legal counsel. MacLean was instructed that all such communications should flow through Liz Miller, the chief of staff. Nevertheless, Shumlin’s continued conversations with his former aide “caused tension between MacLean and Miller,” London told the FBI, and required Miller’s intervention. 

Raymond, who led the office overseeing Vermont’s EB-5 program, told the FBI that when he raised concerns with Quiros about potential nepotism in the AnC Bio project, he heard about it from MacLean. 

“She was sensitive about that question and yelled about it over the phone,” the FBI paraphrased Raymond as saying. “MacLean said she was going to go to the Governor and Miller about it.”

MacLean declined to comment. 

Shumlin himself recounted to the FBI how his relationship with MacLean had suffered as the Jay Peak scandal unfolded. At a certain point, he said, he began to dodge her phone calls or make small talk when they conversed. 

“(T)he circumstances that arose with Jay Peak made things very awkward between them,” the FBI paraphrased Shumlin as saying. “She was like a deer caught in the headlights.”

The ‘Wild West’

If some in state government trusted Quiros and Stenger, others were more skeptical — and tried to sound the alarm to potential fraud. 

When Raymond took over the commerce agency office overseeing Vermont’s EB-5 program in 2012, he later told the FBI, he was “stunned by the lack of checks and balances,” calling it the “Wild West.”

At the time, the state was still grappling with Hulme’s public schism with his former Jay Peak partners. Hulme, a British immigration broker who had brought in most of the early investors in the resort projects, had rocked the foreign investor world in 2012 when he issued a statement to immigration attorneys that he no longer had faith in Jay Peak’s financials. 

According to an FBI interview with Lawrence Miller, who was then serving as Shumlin’s commerce secretary, Hulme appears to have shared more information with the state than has previously been disclosed. “He may have called to report that $13 million was missing from accounts,” the FBI paraphrased Miller as saying. 

Raymond pressed the commerce secretary to request an audit of the Jay Peak projects. Stenger agreed at first but later reneged, explaining that it would cost too much. 

“When Miller told Raymond there would be no audits, because they were too expensive, he had to focus to keep his jaw from dropping,” the FBI wrote in a summary of an interview with Raymond. “Everyone seemed to think the audits were a ‘no brainer.’”

In February 2013, Raymond and other commerce agency officials received a detailed report about the AnC Bio project compiled by a Newport resident, Diane Peel, who had researched Quiros’ history and the projects he was pushing. In an interview with the FBI, Lawrence Miller called it “the triggering event starting the state inquiry.”

Peel’s report, the commerce secretary told the feds, made him wonder, “does Stenger know who the hell his business partner is?”

Raymond hired a trio of Korean interns to research AnC Bio and eventually turned up unsettling information: The Korean company had “financial issues,” and its headquarters had been sold at auction by the government. Moreover, Raymond learned, AnC Bio’s founder, Alex Choi, was related by marriage to Quiros. 

During a conference in Shanghai in early 2014, Raymond told the FBI, he witnessed a group of six to eight Chinese nationals accosting a Vermont immigration attorney associated with the EB-5 projects and alleging they had been scammed. 

Raymond’s efforts to get answers from Stenger and the attention of top administration officials went nowhere. So when federal SEC investigators asked him for an interview and subpoenaed the state Agency of Commerce, Raymond was “relieved,” he later told the FBI. “He told and gave them ‘everything,’” the feds recounted. “Raymond finally ‘felt sane.’”

‘Pulling the plug’

When Donegan, the commissioner of financial regulation, began to oversee the state’s EB-5 projects in early 2015, her first impression was that the AnC Bio project was “messy.” Upon reviewing its financial records, she changed her assessment to “pretty funky.” And when she learned about Raymond’s testimony to the SEC, she later told the FBI, “red flags went up.”

Donegan demanded more information from the developers. Stenger, she told the feds, “would promise the stars, moon, and sun” but then provide nothing. “Donegan started to believe that not only was Stenger not cooperating, he was obstructing,” the FBI wrote. 

MacLean and “folks in the governor’s office” made clear to Donegan that the developers were displeased with her oversight, she told the FBI. And when Shumlin convened a meeting that March with Quiros, Stenger and top administration officials, the developers “informed the Governor that Donegan was standing in the way of (Jay Peak’s) progress,” the FBI paraphrased her as saying. 

“At this point, Donegan and her department highly suspected fraud regarding the (Jay Peak) projects,” the FBI wrote. 

But Shumlin, according to Donegan, had become “fixated” on the developers’ latest project, a hotel at Burke Mountain Resort. He was facing “intense pressure” from builders and local officials who wanted to ensure that the EB-5 investment kept flowing. Leahy’s office and state legislators were also “on the Governor’s back trying to get the (Jay Peak) projects to move along accordingly,” Donegan told the feds.

According to Liz Miller, then Shumlin’s chief of staff, Burke was an “economic pressure point.” The governor, she told the feds, “could not go anywhere without a contractor saying something.”

According to Moulton, the commerce secretary, she and Donegan “were on the same page that there was a big problem.” The two top officials “had some uncomfortable conversations with the Governor,” the FBI paraphrased Moulton as saying. “They were trying to raise the red flag with the Governor. The Governor wanted to be the peace maker, bringing everyone into the room to work things out.”

Moulton and Donegan “were upset with the Governor for not pulling the plug,” Moulton told the FBI, and Donegan threatened to resign. 

“The state officials were pushing the Governor to shut down the projects,” the FBI paraphrased the commerce secretary as saying. “But the governor said no — they would wait for SEC to take action.”

That would take another year.

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