Vt. officials argue for gradual winding down of EB-5 center

The federal government wants to pull the plug on a Vermont regional center designed to spur economic development with the help of wealthy foreigners. Gov. Phil Scott says he wants to see the state get out of the program as well, though for different reasons.

U.S. Customs and Immigration Services administrators want to dissolve the Vermont Regional EB-5 Center. The EB-5 program grants green cards to wealthy foreigners who invest $500,000 or more in approved development projects. In a letter, federal administrators say Vermont's center can't do its job, pointing to the web of fraud and lies allegedly perpetrated right under regulators' noses for years at Jay Peak, and the center's tarnished reputation after the scandal came to light.

"We plan to have a vigorous response to the letter," said Mike Pieciak, the commissioner of Vermont's Department of Financial Regulation.

Pieciak is responsible for writing the state's recent, extensive breakdown of what went wrong and why. Pieciak says the state agency managing the investment center, Commerce and Community Development, was out of its depth.

"They were under-resourced, they lacked authority and they lacked expertise in terms of financial investigations and financial transactions," Pieciak said. "We agree with the ultimate outcome, that the regional center should be wound down and closed, but we don't agree with the process they're employing, nor do we agree with the substance of their arguments they make against the regional center."

He says the dynamics of the program changed dramatically between when the Vermont center opened in 1997 and its modern incarnation, and that the state shouldn't be the middleman between investors, a project and the federal government anymore. While he recognizes shortcomings in the regulation of projects like the Kingdom Con, he says Vermont did a better job with oversight than most centers. And Pieciak argues the federal administrators suggest too rapid an exit. To be done correctly he says it could take 10 years.

"Vermont's plan is much more reasonable, it's much more responsive to the Vermont economy, to the Vermont businesses that are engaged in EB-5, and also to the investors that are invested in these projects," he said.

The center would continue working on the projects it already has under that plan. But any new projects-- or even new phases to old ones-- would need to be run through a new, private center like projects everywhere else in the country.

Administration officials say Governor Scott was unavailable to comment Tuesday on the future of the Vermont center.

Betsy Bishop, president of the state's chamber of commerce, says it's unfortunate the state is losing the competitive advantage of having its own center, but she anticipates EB-5 development dollars will continue flowing into Vermont as long as businesses can still access the federal program.