MONTPELIER, Vt. (WCAX) - A new lawsuit in the Kingdom Con case alleges former governor Peter Shumlin and other state officials knew about the massive fraud case over a year before federal investigators shut it down.
The lawsuit on behalf of defrauded foreign investors was first reported by VTDigger.
There have been rumblings for years that the state, which both oversaw and promoted the EB-5 visa investment program, had failed to stop the Kingdom Con. This latest lawsuit essentially says the state was complicit.
It was all tied to a huge development project at Jay Peak, Burke Mountain and downtown Newport, paid for by foreigners who invested a half-million dollars each in exchange for green cards to get into the United States. But prosecutors say the money was misused or stolen by the developers in a Ponzi-like scheme. Those key players have all been convicted of criminal charges, but there are civil cases, as well.
This latest federal lawsuit was filed Tuesday on behalf of defrauded investors. It’s based on newly obtained documents that the plaintiffs say show state officials were aware of the misuse of investor funds in late 2014 and briefed the Shumlin administration, including the governor himself, and the attorney general’s office in early 2015. But it wasn’t until 2016 that the Securities and Exchange Commission filed 52 counts of fraud that halted the scheme.
The lawsuit claims the state intentionally kept quiet-- allowing more investors to be defrauded-- so that construction projects already underway could continue.
The attorney representing the plaintiffs tells WCAX News he always felt there had been gross negligence on the part of the state for failing to prevent the fraud, but he said he finds it shocking that the state conspired to cover up material information and had no regard for the investors.
Now, these are just allegations in a lawsuit. The state has yet to file a legal response.
We reached out to some of the key defendants and all declined to comment.
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