This commentary is by Don Keelan of Arlington, a retired certified public accountant.
I am not a big fan of using cliches; however, there is one that describes what has taken place in Montpelier. Vermont state government has swept the EB-5 Ponzi-like scheme under the rug.
Just days before the state was devastated by continuous rainstorms, we were informed that the civil lawsuit against the state by eight EB-5 investors had been settled “out of court.” The storm’s statewide destruction moved the settlement entirely off the radar screen, possibly, forever.
On June 22, 2023, just two days into the forecasted 10-day civil trial brought by the eight investors, the state agreed to settle the case. Less than two weeks later, on July 6, another settlement with 64 other swindled EB-5 investors was reached.
Approximately $16.5 million will be paid to the investors by the state over several years. Case closed. No testimony is required of involved state officials; under the “rug” it goes.
Interestingly, another storm, Tropical Storm Irene, made it necessary or fortuitous 12 years ago for the state to refocus elsewhere when the largest fraud in Vermont history was perpetrated on hundreds of EB-5 investors in the Northeast Kingdom.
Several of Vermont’s most senior political members — some now retired, and some senior state officials — may rest easy. They will not be called to testify about what would cause the U.S. Citizenship & Immigration Services to close down a state agency.
The Vermont Agency of Commerce & Community Development Regional Center was ordered closed by the federal government for its mismanagement and lack of oversight in a project that ran into hundreds of millions of dollars.
At the civil trial, it was forecasted that over 39,000 pages of testimony and documents would be presented. For nearly 11 years, the press and, most notably, VTDigger.org attempted to obtain access to the documents but were denied. The media spent thousands of dollars on FOI actions, but only a little was forthcoming.
It was clear: State government officials did not want any information released, especially if it could embarrass officials still in office. That may change soon, now that the state has agreed to pay off the plaintiffs and release all pertinent documents.
The plaintiffs’ case was clear. Why did the state of Vermont promote the activities of the three convicted fraudsters by enticing over 800 foreign investors to lay out over $500,000 each to obtain a “green card’ and possibly future residency in the United States?
It was no secret that former Gov. Peter Shumlin took advantage of his position with the fraudsters. He would sometimes use the chief fraudster’s condominium in New York City. Also, he was involved with promotional material informing potential foreign investors that the Vermont government audits the activities of their invested dollars. The state never conducted an audit.
It took a federal agency to close down a state agency and thus began the investigation. Not by the Vermont Legislature or the Attorney General’s Office. State officials would never wish to embarrass or compromise its congressional legislators and place at risk the funds that flow into the state from Washington.
The Jay Peak and Newport, Vermont, scandals are not the first financial debacles orchestrated by “important people” to be swept under the rug. Another example was that which took place in May 2016 at Burlington College, and how a Vermont bank and a state agency participated in its risky and inconceivable borrowing scheme. And as is often the case, the college’s collapse was “swept under the rug.”
It is a Vermont way of life never to challenge folks who can be crucial in obtaining federal funds for the state.
Like many other Vermonters, I too would like to see the EB-5 scandal put to rest. It has gone on for more than 12 years. Even with such a wish, it is disappointing that the role of the state and state officials will never be known. Their role(s) are now under this “immense rug.”
