Vermont's Most Powerful Politicians Helped Fundraise For Most Spectacular EB-5 Flop
Of all the alleged EB-5 frauds perpetrated by Bill Stenger and Ariel Quiros, none was as grand in scale as the case of AnC Bio. Stenger and Quiros raised $80 million from foreign investors toward the improbable dream of building a world-class biomedical facility in the Northeast Kingdom. And some of the state’s highest-ranking elected officials had a strong role in helping them raise that money.
In October of 2010, during a 12-day swing through Asia, then-Gov. James Douglas visited a spacious ballroom inside the Park Hyatt Saigon in Vietnam. Douglas had an elaborate boutonniere in his left lapel; a floor-to-ceiling poster of the Statue of Liberty was draped behind him.
With a young female translator at his side, Douglas addressed prospective investors, and extolled the virtues of EB-5 projects that included a $110 million biomedical research facility in Newport.
“Perhaps most importantly for our discussion this evening, Vermont’s EB-5 regional center is the only one in the nation that is administered by the state government,” Douglas says. “Although the state does not guarantee an investment’s return, we do provide oversight and monitoring of the projects and the investments that are made in them.”
The moment, captured for posterity in a low-resolution You Tube video, spotlights the early role his administration played in securing capital for what would later prove to be ill-fated EB-5 projects in the Northeast Kingdom.
Federal authorities allege that of the $80 million investors put into the AnC Bio project, Quiros and Stenger either stole or misappropriated almost all of it.
Oddly enough, Quiros says it was Jim Douglas who came up with the idea for AnC Bio – a South Korean-based research company that was supposed to expand into Vermont. In May 2014, lawyers for the Securities and Exchange Commission asked Quiros, “When you said that someone from the state of Vermont asked you to put together this project, what individual or individuals are you referring to?”
“The governor. The governor and other officials. They said, Quiros, what can we do to create this – how can we get something out of South Korea into Vermont?”
Douglas says Quiros’ story doesn’t reflect reality.
“I never encouraged him to do anything,” Douglas said this week, speaking by phone from his office at Middlebury College.
"I never encouraged him [Ariel Quiros] to do anything." - Former Gov. Jim Douglas
Douglas says that, to his knowledge, neither he nor anyone else in his administration approached Quiros or Stenger with the idea for AnC Bio. He says he doesn’t recall even meeting Quiros until the two of them went on a trip to South Korea in 2009 to formalize the state’s relationship with AnC Bio.
He does acknowledge his role in helping Stenger and Quiros raise money for the project.
“The EB-5 program had been around for some time but hadn’t really blossomed until Jay Peak took it to a new level,” Douglas says. “So I had great hope and expectation that these plans would come to fruition and wanted to show my support.”
On that front, Douglas wasn’t alone. A search into the depths of the Internet turns up other promotional videos for Anc Bio, including one uploaded in October of 2012 that features Gov. Peter Shumlin.
“This is going to the center of biotech research development and production, one of them, in the best democracy in the world, right here in Newport, Vermont,” Shumlin says during a filmed appearance at Jay Peak. “We’re saying, with these extraordinary partnerships, Northeast Kingdom, best quality of life in the world, and jobs, jobs, jobs.”
Shumlin isn’t the only Vermont political luminary in the five-minute video. There’s also U.S. Sen. Patrick Leahy, the man Shumlin has previously referred to as the “godfather of the EB-5 program.”
“It will create short-term jobs,” Leahy says of Anc Bio. “But it will-create long term jobs, where people can plan in the community, they can build their homes, they can live here, they can send their kids to school.”
In hindsight, the business venture that Stenger, Quiros, Douglas, Shumlin and Leahy were pitching now seems somewhat implausible: a 90,000 square-foot facility in Newport that would use stem cells to grow artificial human hearts, livers and kidneys, then harvest them for medical use.
Shumlin says the potential of economic development for a region so desperately in need of jobs was too promising an opportunity to turn down.
“I mean, the dream that we could finally create hundreds and hundreds of jobs in the part of the state that has been struggling for jobs is something that any reasonable person would wish to pursue,” Shumlin said last week.
Shumlin acknowledged last week that AnC Bio is likely a total bust, and that probably nothing will ever be built. Shumlin says he thinks other EB-5 projects might still thrive, despite the alleged frauds by Stenger and Quiros.