Current:Home > FinanceAudit finds inadequate state oversight in Vermont’s largest fraud case -Achieve Wealth Network
Audit finds inadequate state oversight in Vermont’s largest fraud case
View
Date:2025-04-15 08:08:18
The state of Vermont did not provide adequate oversight to prevent the massive fraud that occurred in ski area and other development projects funded by foreign investors’ money through a special visa program, a state audit has found.
The financial scandal first revealed in 2016, which became the state’s largest fraud case, shook Vermont and the economically depressed region called the Northeast Kingdom.
In 2018, Vermont’s former attorney general asked for an audit of the state’s involvement in the projects at Jay Peak and Burke resorts to address the loss of trust in state government from the fraud, State Auditor Doug Hoffer wrote in the report released on Thursday. The audit was completed after the legal proceedings concluded, he wrote.
The findings should not be entirely surprising, Hoffer wrote.
“In short, we found a pattern of misplaced trust, unfortunate decision-making, lengthy delays, and missed opportunities to prevent or minimize fraud,” Hoffer wrote.
Ariel Quiros, a Miami businessman and former owner of two Vermont ski resorts, was sentenced in 2022 to five years in prison for his role in a failed plan to build a biotechnology plant in Newport using tens of millions of dollars raised through the EB-5 visa program. Under the program, foreigners invest $500,000 in U.S. a project that creates at least 10 jobs in exchange for a chance to earn permanent U.S. residency. William Stenger, the former president of Jay Peak, and William Kelly, an advisor to Quiros, each got sentences of 18 months.
But the fraud encompassed seven other projects at Jay Peak and Burke resorts.
In 2016, the federal Securities and Exchange Commission and the state of Vermont alleged that Quiros and Stenger took part in a “massive eight-year fraudulent scheme.” The civil allegations involved misusing more than $200 million of about $400 million raised from foreign investors for various ski area developments through the EB-5 visa program “in Ponzi-like fashion.”
In a Ponzi scheme, money provided by new investors is used to pay high returns to early-stage investors to suggest the enterprise is prosperous. The scheme collapses when required redemptions exceed new investments.
Quiros and Stenger settled civil charges with the SEC, with Quiros surrendering more than $80 million in assets, including the two resorts. In the seven projects at Jay Peak and Burke, “construction was done but not always to the specifications or at the costs told to the investors. Significant funds were simply misused,” the report said.
Under the EB-5 program, the federal government designates regional centers to promote economic growth and oversee and monitor sponsored projects, the report states. Most regional centers are privately owned but the Vermont Regional Center was state government-run.
The center, which was the EB-5 office within the Agency of Commerce and Community Development, had competing duties: to market and promote EB-5 projects and to regulate them, the auditor’s report states.
“Experts and policymakers have long warned against such arrangements for fear that an agency relied upon to help a project succeed may be reluctant to exercise its regulatory powers. In addition, a marketing office may not have the skill sets needed to properly regulate complex financial arrangements such as EB-5. Unfortunately, this proved all too true at ACCD,” the report states.
Last July, the state of Vermont agreed to pay $16.5 million to settle all pending and potential lawsuits from foreign investors in the development projects.
The United States Citizenship and Immigration Services is still determining the immigration status of the Jay Peak and Burke investors, Goldstein wrote. At least 424 of 564 Jay Peak investors have already received green cards and the state is working to increase the chances that many more do, she wrote.
veryGood! (7)
Related
- A Mississippi company is sentenced for mislabeling cheap seafood as premium local fish
- How this Brazilian doc got nearly every person in her city to take a COVID vaccine
- Blake Lively's Trainer Wants You to Sleep More and Not Count Calories (Yes, Really)
- Wildfire smoke impacting flights at Northeast airports
- Israel lets Palestinians go back to northern Gaza for first time in over a year as cease
- Abortion is on the ballot in Montana. Voters will decide fate of the 'Born Alive' law
- Uganda has locked down two districts in a bid to stem the spread of Ebola
- Omicron boosters for kids 5-12 are cleared by the CDC
- In ‘Nickel Boys,’ striving for a new way to see
- Families fear a ban on gender affirming care in the wake of harassment of clinics
Ranking
- $73.5M beach replenishment project starts in January at Jersey Shore
- Today’s Climate: July 28, 2010
- Offset and Princesses Kulture and Kalea Have Daddy-Daughter Date at The Little Mermaid Premiere
- Health department medical detectives find 84% of U.S. maternal deaths are preventable
- Macy's says employee who allegedly hid $150 million in expenses had no major 'impact'
- In California, Climate Change Is an ‘Immediate and Escalating’ Threat
- The story of two bird-saving brothers in India gets an Oscar nom, an HBO premiere
- Today’s Climate: July 2, 2010
Recommendation
Toyota to invest $922 million to build a new paint facility at its Kentucky complex
The story of two bird-saving brothers in India gets an Oscar nom, an HBO premiere
Property Rights Outcry Stops Billion-Dollar Pipeline Project in Georgia
How to Clean Your Hairbrush: An Easy Guide to Remove Hair, Lint, Product Build-Up and Dead Skin
Charges tied to China weigh on GM in Q4, but profit and revenue top expectations
How Derek Jeter Went From Baseball's Most Famous Bachelor to Married Father of 4
What’s Eating Away at the Greenland Ice Sheet?
A Heat Wave Left Arctic Sea Ice Near a Record Winter Low. This Town Is Paying the Price.