Vermont announces EB-5 settlement
The two men accused of perpetrating a $200 million fraud in the Northeast Kingdom have settled a civil suit with the state. The settlement was announced in Newport today where the EB-5 foreign investor program was supposed to deliver new development and new hope for the community.
Ariel Quiros and Bill Stenger previously settled federal cases against them with the U.S. Securities and Exchange Commission. Now state civil suits are behind them as well, but people in the Northeast Kingdom still wonder when the mess the two men created will be cleaned up.
"It allows us to move forward with a considerable amount of money for the Northeast Kingdom's and impacted communities," said Gov. Phil Scott Thursday.
Quiros will surrender five properties to the state to satisfy a $2 million penalty. Bill Stenger will pay Newport $100,000 over five years. The two men were accused by the state and federal governments of misusing $200 million of the nearly $400 million they raised for developments through the EB-5 foreign investor program.
"I believe these settlements satisfy the principles of accountability, transparency, relating the harm done to the city of Newport and Northeast Kingdom and restoring the public trust that this scandal has done to our state," said Vermont Attorney General T.J. Donovan.
Downtown Newport was to see major building projects, but officials say those projects were all a fraud, concocted to lure more investors to cover the costs of other projects at Jay Peak. Quiros was also accused of spending $50 million of investors' funds on personal luxuries like a Trump Tower condo. Now, the $2.1 million in settlement money will be earmarked for economic development in Newport.
"I think they need that pretty bad. If you drive around the city you see for sale signs everywhere," said Oliver Lalliel of Newport.
"The dark cloud that has been hanging over us for the last few years is beginning to lift," Gov. Scott said.
The state will dismiss the civil cases against Quiros and Stenger as part of the settlement. Donovan says that will allow for a review of the state's oversight of the EB-5 program to begin.
"The greatest harm that this scandal has inflicted on our state is the loss of public trust in state government, specifically the question of what did state government do or didn't do in terms of the management of EB-5," Donovan said.
As part of the settlement there was no admission of wrong-doing from either Quiros or Stenger. Donovan says he doubts they would have gotten an admission since there is still a federal criminal investigation ongoing.