Vermont Public is independent, community-supported media, serving Vermont with trusted, relevant and essential information. We share stories that bring people together, from every corner of our region. New to Vermont Public? Start here.

© 2024 Vermont Public | 365 Troy Ave. Colchester, VT 05446

Public Files:
WVTI · WOXM · WVBA · WVNK · WVTQ · WVTX
WVPR · WRVT · WOXR · WNCH · WVPA
WVPS · WVXR · WETK · WVTB · WVER
WVER-FM · WVLR-FM · WBTN-FM

For assistance accessing our public files, please contact hello@vermontpublic.org or call 802-655-9451.
Play Live Radio
Next Up:
0:00
0:00
0:00 0:00
Available On Air Stations

Explore our coverage of government and politics.

Sex, Bribery And EB-5: Lawyers Drop Bombshell Allegations In Case Against State

Chandler Matson, left, and Russell Barr, standing, are suing the state of Vermont for its alleged complicity in the largest fraud in Vermont history.
Peter Hirschfeld
/
VPR
Chandler Matson, left, and Russell Barr, standing, are suing the state of Vermont for its alleged complicity in the largest fraud in Vermont history.

A lawyer suing the state of Vermont on behalf of foreign investors who were defrauded in the Northeast Kingdom EB-5 scamdropped a bombshell allegation after a court hearing Monday.

Stowe attorney Russell Barr says a Vermont government official was arrested for having sex with a minor during a trip to China to promote EB-5 projects.

“It was then apparently covered up," Barr said Monday. "And we’re only just trying to find out all the details."

Asked by reporters to identify the alleged perpetrator, Barr said he was “not at liberty right now to say that.”

Barr, who provided no evidence of the crime, and did not reveal where he got information about the alleged arrest, said the alleged sex crime occurred in “probably 2013 or 2014.” He said other government officials were aware of the incident.

“And one of the other officials on the trip actually bailed out that official, so we’re trying to figure out who bailed out the other official, and why wasn’t this explained to our state, to our citizens,” Barr said.

"It's been very hard to get to the truth simply because you have state officials that have done their very best to hide this." — Stowe attorney Russell Barr

Barr said the alleged incident spotlights the state’s morally bankrupt approach to monitoring a series of EB-5 projects that collapsed in 2016, when the Securities and Exchange Commission filed federal fraud charges against the projects’ owner, Ariel Quiros.

The feds say that Quiros, who later settled with the SEC for $84 million, used the EB-5 program to orchestrate a massive “Ponzi-like scheme” in which he misappropriated $200 million in investor funds, and stole $50 million.

A group of foreign investors is now suing the state for negligence, breach of contract, and fraud, saying government officials violated state and federal laws by failing to adequately monitor and oversee finances in the ill-fated EB-5 ventures.

Within the next two weeks, Barr said he’ll file an amended complaint in Lamoille County Superior Court in which he names the alleged perpetrator of the sex crime.

“This is information that is emerging, unfolding,” Barr said. “And it’s been very hard to get to the truth simply because you have state officials that have done their very best to hide this.”

Barr said the alleged sex crime isn’t the only piece of damning evidence that government officials breached their duty to foreign investors. Barr said he has evidence - which he did not supply Monday - that former Gov. Peter Shumlin stayed for free in a luxury condominium owned by Quiros.

The SEC says Quiros paid for the multi-million dollar condo, located on the 39th floor of the Trump Tower in midtown Manhattan, with stolen investor funds.

“If in fact, that’s true, which we believe it to be true, that’s accepting bribes,” Barr said of Shumlin’s alleged stay at Quiros’ Manhattan residence. “And that does go a long way in explaining why this state has done no investigation at this point, and why they’re hiding.”

VTDigger’s Anne Galloway, citing an unnamed source, first reported onShumlin’s alleged stay at Quiros’ condominium unit prior to Monday’s court hearing.

The dramatic allegations came after a two-and-a-half-hour court hearing in which lawyers from the attorney general’s office asked Lamoille County Superior Court Judge Thomas Carlson to dismiss the case filed by Barr and his co-counsel, Chandler Matson.

The attorney general’s office, which is representing the state, says the plaintiffs have failed to identify any specific instances of fraud or negligence on the part of state officials. They also say the government officials named in the civil complaint are protected by sovereign immunity.

Barr and Matson, meanwhile, are asking Carlson to allow the case to proceed to the discovery phase, which would allow them to depose government witnesses, and gain access to thousands of previously undisclosed government documents related to the EB-5 scandal.

The Vermont Statehouse is often called the people’s house. I am your eyes and ears there. I keep a close eye on how legislation could affect your life; I also regularly speak to the people who write that legislation.
Latest Stories