VPR Header
Play Live Radio
Next Up:
Available On Air Stations
VPR News

Scott Questions Shumlin's Handling Of EB-5 Projects

Lt. Gov. Phil Scott has issued a statement condemning the Shumlin administration’s decision to allow alleged fraudsters Bill Stenger and Ariel Quiros to keep soliciting foreign investments even after authorities had suspicions of wrongdoing.

In April, federal and state authorities filed lawsuits against Stenger and Quirosalleging fraud on the scale of $200 million.

A Vermont Public Radio investigation revealed that administration officials received documents that raised suspicions as early as 2014.

“Even after repeatedly failing to provide compliance information to state regulators, they [Stenger and Quiros] were allowed to raise more money,” said Scott, who is running for governor. (Shumlin is not running for reelection.)

A spokesman for Shumlin called Scott's criticisms "a political attempt to rewrite history," pointing out the fact that Scott publicly voiced support for the EB-5 program well-after the state's investigation was public knowledge.

According to a story from the Vermont Center for Community Journalism from November 2015, Scott was publicly pressing the state's Department of Financial Regulation to pay EB-5 project contractors with escrowed investor funds.

"I didn’t hear the Lt. Gov. calling at that time to stop the projects, kill the jobs, and cease payments to contractors," said Shumlin spokesman Scott Coriell. "Quite the opposite, five months after the investigation was public the Lt. Gov. said he was supportive of the EB-5 program and sympathized with the contractors."

Stenger and Quiros raised the money through a federal program known as EB-5, which grants U.S. residency to foreign investors who have made a job-creating investment of $500,000. EB-5-funded projects in Vermont are overseen by state authorities.

Even after the state launched an investigation into the alleged fraud, Quiros and Stenger failed to produce financial statements requested by state regulators. Despite those problems, the state allowed the pair to solicit new investments from abroad for their Northeast Kingdom projects.

Coriell said the fundraising was allowed only with close oversight by the state.

"Under the terms, the projects could not spend money without sign off from the state," Coriell said in an email. "We literally had someone go to the project site and confirm that the invoices matched the physical materials. That is what led to the subcontractor complaints which the Lt. Gov. said he sympathized with."

In his statement, Scott suggested continuing the projects and allowing Quiros and Stenger to keep raising money was a poor judgment call by the administration.

“By the administration’s own admission, it was a ‘calculated risk,’” Scott said in the statement. “Yet, they’ve not yet explained why they took this risk or why they allowed the problem to continue to grow.”

Shumlin has strongly criticized the VPR story and requested that it be retracted. The governor's staff says the early indications of potential wrongdoing that the administration received in November 2014 -- bank statements indicating co-mingled accounts -- prompted officials to ask detailed questions, but were not evidence of fraud.

Update 7:26 p.m. This story was updated to reflect comments from Shumlin spokesman Scott Coriell as well as Lt. Gov. Scott's earlier stance on the EB-5 program.

Related Content