Former Jay Peak president alleges state of Vermont complicit in Jay Peak fraud, asks judge to release sealed records

Bill Stenger, former Jay Peak president, and a major player in the biggest EB-5 fraud of all time has reached a plea deal with prosecutors. In a recently filed motion, Stenger claims that Governor Shumlin and state officials knew about the fraud committed by Ariel Quiros, concealed their findings, and still continued to take money from new and unknowing investors to complete the Burke hotel project. Stenger is asking the judge to release records that he asserts will prove the state’s complicity in the fraud.

The Vermont Regional Center was state operated with securities regulators involved in the process. That kind of oversight was supposed to provide protection. Instead, the regional center and the state failed the hundreds of EB-5 investors that invested $450 million for what would become the biggest fraud in the history of the Regional Center Program.

Former Jay Peak President and CEO Bill Stenger pleaded guilty this August to a felony charge for filing a false document to the government; he could spend up to five years in prison. He has since filed a motion that alleges the government — all the way up to then-Governor Shumlin — is complicit in the fraud, and wants the judge to release records that he claims will support his claims.

To fathom what Shumlin and the government officials may have known, let’s look at a timeline of the project, Burke Mountain Resort (one of two remaining projects, along with AnC Bio, a proposed biotech facility). The details we have right now strongly suggest EB-5 investors were collateral damage when government officials tried to serve two masters — the investigation of a massive fraud and the desire to finish two stalled government projects.

August 2014: the state suspects fraud with the Burke project

The state officials in charge of overseeing the Vermont Regional Center began to suspect that developer Ariel Quiros, who had used $450 million of EB-5 investor money, was misdirecting funds. They certainly knew Quiros was in financial trouble. When the developer could not get any more investor money, he took out a $15 million line of credit against the investor capital.

Later in 2014, Quiros had stopped paying contractors and they walked off the two projects. They then became a state problem, as the state had oversight of the regional center, and Governor Shumlin was facing heat from both builders and state officials. On top of that, rumors were drifting to investors around the world. Shumlin brought in securities regulators to quiet the whispers of fraud and to oversee the Burke Resort and the other EB-5 funded project, AnC Bio, a proposed biotech facility.

New Year’s Day 2015 — happy covert rendezvous

Quiros and Shumlin met at the governor’s home, according to undisclosed FBI records. Later on, Quiros told investigators he and Shumlin discussed all of the Jay Peak troubles for five hours that day. Interestingly, Governor Shumlin has a vastly different recollection of their meeting; he told investigators that visit lasted a mere 20 minutes.

March 2015: investigators tell Shumlin of securities violations, Shumlin doesn’t seem to care

A couple months after the New Year’s Day meeting with Quiros, the governor met with the deputy commissioner of financial regulation, Mike Pieciak, and his superior, Susan Donegan. The pair told Shumlin of Jay Peak securities violations — Quiros had misappropriated millions of dollars of investor capital.

The governor then met with Quiros and Stenger to figure out how to get the two stalled projects going again. A state official who was at this meeting alleges that afterwards Shumlin and Quiros “ducked into a private room” to continue their conversation.

Shortly after, Donegan got together with Shumlin and could not agree on how to move forward. The governor wanted securities regulators to back off on the Burke development and allow the hotel to be completed. Donegan was opposed to this direction and instead tried to get Shumlin’s chief of staff and counsel to stop the projects based on securities violations.

May 2015: state probe brings in the FBI

In May, with the deputy commissioner of financial regulation leading the probe, the FBI was brought into the case. The federal agency was asked to investigate securities laws violations including self-dealing and misappropriation of investor capital.

Summer 2015: officials know investors are being defrauded and their Green Cards are in jeopardy

By the summer, the state probe with the help of the FBI had uncovered the full details of the scam — they had uncovered thousands of bank transactions Qurios made in an attempt to hide the fraud. In a presentation to the Attorney General, Pieciak stated, “the immigration status of [every Burke and AnC Bio] investor would likely be negated.”

Yet a curious thing happened. Or, more accurately, did not happen. The state regulators — knowing full well that significant securities laws were violated, and that the immigration benefits of EB-5 investors were in jeopardy — chose not to disclose this information to investors.

Officials continue to investigate the fraud — and continue to solicit dozens of investors

Donegan and Pieciak had a serious conflict of interest: continue to investigate what they knew was a massive fraud and simultaneously continue to accept new investors to finish the Burke project. To the latter end, they helped rein in 86 more investors and $43 million of new capital to finish the beleaguered resort.


Stenger, in his recent motion, alleges Pieciak misled the Securities and Exchange Commission about the project. And Stenger further claims that Shumlin’s office and state officials hid the fraud from the public for more than a year — until April 2016 when the SEC came down with 52 counts of securities fraud against Stenger and Quiros. The SEC determined Quiros had misappropriated nearly half of the $450 million he raised from EB-5 investors.

The final Burke numbers: $60 million taken in, nothing repaid, no Green Cards

In total, 119 immigrant investors invested almost $60 million of EB-5 capital in the Burke Resort. Not a single investor has received his or her money back. Not one of those investors has received their EB-5 immigration benefits.

Investor lawyers: state’s behaviour showed ‘total disregard’ for investors and was a ‘disgrace’

In the summer of 2021, seven Burke investors filed a lawsuit that supports Stenger’s claims. The investors allege that the state officials overseeing the Burke project had “full knowledge” of the fraud yet continued to use investor capital to pay off contractors, finish the project, and fill the state coffers.

Their attorney issued a harsh condemnation of Shumlin and the Vermont officials: “State of Vermont officials were absolutely aware of the Ponzi-scheme, they were absolutely aware that the investors’ money was going to be lost, and they were absolutely aware of the dire immigration consequences that awaited these immigrants.” The attorney summarized the actions of the state as a “total disregard for these people’s lives” and “a disgrace.”

When might the records be revealed?

The judge in the Stenger case will likely rule on whether or not to unseal the records in question before Stenger’s sentencing in October. If the records are disclosed and Shumlin and the state are revealed to be complicit in this fraud, expect EB-5’s fragile reputation to take a massive and deserved hit.

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