The Vermont Journalism Trust, the nonprofit parent organization of VTDigger, took its case Wednesday to the state’s highest court in its long-running legal battle over access to records related to the scandal-plagued state-run EB-5 regional center.
The news outlet, through seeking the records from the state, wants to determine who in state government knew what and when as the developers of Jay Peak Resort and other projects in the Northeast Kingdom financed through the EB-5 program defrauded foreign investors over a 10-year period.
The lawsuit stems from a public records request VTDigger filed in August 2020, which the state Agency of Commerce and Community Development denied.
At the hearing before the Vermont Supreme Court on Wednesday, attorneys from each side had 30 minutes to make their cases, with the justices often interrupting with technical questions about interpretations of Vermont’s Public Records Act and court rules of procedure.
“In response to the trust’s public record request, the state has produced roughly 1,000 documents but continues to withhold 75,” Harrison Stark, an attorney for the Vermont chapter of the American Civil Liberties Union who is representing the journalism trust, told the high court.
“The reason we’re here this morning is because, despite numerous requests, the state will not identify what these 75 documents are, or the basis for their nondisclosure,” Stark said. “The Public Records Act entitles the trust (to) that minimal information.”
Cornell Law School’s First Amendment Clinic and the ACLU of Vermont joined VTDigger and its legal counsel, Timothy Cornell of Cornell Dolan, P.C., in bringing the lawsuit and subsequent appeal.
Eleanor Spottswood, solicitor general for the Vermont Attorney General’s Office, represented the commerce agency. She argued that the state provided all the information it could regarding the documents. She said being more specific could be tantamount to releasing the documents themselves.
“You can identify a document in a hundred different ways but the state isn’t required to give all 100 of those ways,” Spottswood said.
The Vermont Attorney General’s Office has provided certain documents to VTDigger since the news organization sued, but maintains that others must remain secret because they’re relevant to ongoing litigation in a separate civil lawsuit EB-5 investors brought against the state.
That lawsuit, known as Sutton v. State of Vermont, was brought by Stowe attorney Russell Barr on behalf of a group of EB-5 investors who lost millions of dollars in the scandal. They have either been denied the permanent U.S. residency they had sought through the program or remain in legal limbo.
EB-5 requires a minimum investment of $500,000 in job-creating projects, and if a project meets its job targets, the investor gets a green card for permanent U.S. residency.
The withheld documents, Spottswood said, have been determined to be relevant to litigation in the investors’ pending case and therefore have not been released. Nor have they been released to Barr in his civil case, as the state claims they are subject to attorney-client privilege.
Chief Justice Paul Reiber raised the question of whether the trust’s public records request and action in the civil case constitute two separate but parallel tracks in seeking the release of the records.
He asked Spottswood if seeking the release of the records would create “sort of a backdoor” for the documents to be released that a different judge in a different court has decided are subject to attorney-client privilege.
“That’s exactly right, your honor,” Spottswood replied. “Not every state has a relevant-to- litigation exception, but the Vermont Legislature made that very deliberate decision to have one and to say, ‘We don’t need to have these parallel tracks.’”
The exemption in the Public Records Act allows a public body to withhold records deemed relevant to ongoing litigation.
This latest appeal by VTDigger comes nearly seven years after state regulators and the U.S. Securities and Exchange Commission brought enforcement actions against former Jay Peak owner Ariel Quiros and resort president Bill Stenger.
Quiros, Stenger and adviser William Kelly have since been indicted on federal criminal charges related to misusing money they raised through the EB-5 program. Each reached plea deals with prosecutors and are all now in prison.
Wednesday’s hearing was an appeal of Washington County Superior Judge Robert Mello’s ruling in February siding with the Attorney General’s Office, finding that the “only records being withheld in this case are those that were sought in discovery in the Sutton case but have not been produced under claim of attorney-client privilege.”
“The question before this court is whether or not the state has adequately identified the 75 documents it seeks to withhold and provided adequate supporting facts to justify that,” Stark, the ACLU attorney representing VTDigger, said during his oral argument Wednesday.
Stark said the purpose of a proper index of the withheld documents “is to create some sort of tool, some sort of mechanism, to have a meaningful conversation between the citizen requester and the agency about whether the documents are properly withheld without actually identifying the contents of the documents.”
The Vermont Supreme Court took the arguments under advisement and is expected to issue a ruling in the coming weeks.