Home Biomedical research Valley News – Judge: FBI interviews with Shumlin administration in EB-5 fraud case must be unsealed

Valley News – Judge: FBI interviews with Shumlin administration in EB-5 fraud case must be unsealed


Federal Judge Geoffrey Crawford on Wednesday ordered the release of summaries of FBI interviews with former Governor Peter Shumlin and members of his administration charged with overseeing the fraudulent Jay Peak Resort schemes.

Crawford dismissed claims by federal prosecutors that records should remain sealed in the government’s case against former Jay Peak Resort president and CEO Bill Stenger over a proposed settlement biomedical research facility in Newport, Vermont, known as AnC Bio Vermont. Ultimately, prosecutors say, about $84 million from 170 investors for that project was misused by Stenger and his former partner, Jay Peak owner Ariel Quiros.

The Vermont District U.S. Attorney’s Office had previously shared the sealed documents with a third party — the Vermont Attorney General’s Office, which is defending the state in a separate civil lawsuit brought by defrauded immigrant investors represented by the Barr Law Group. And, according to Crawford, Stenger’s defense allowed attorney Russell Barr to read the files.

“These interview tapes are something of an open secret,” Judge wrote, later adding in his opinion, “In conventional expression, the cat is out of the bag.”

The federal court ruling is a victory for Barr and his clients, who hoped to gain permanent residency in the United States through the federal EB-5 investor visa program, which provides green cards to those who invest at least $500,000. $ in eligible and creative jobs. projects.

These plaintiffs filed a lawsuit against the Vermont Agency for Commerce and Community Development, as well as allegations of gross negligence against two former directors of the Vermont Regional Center in state civil court. The Vermont Attorney General’s Office is defending the state agency and former officials in the case.

“Today, the countless victims of this fraudulent scheme take one step closer to justice,” Barr wrote in an email to VTDigger in response to Crawford’s ruling.

David Groff, an assistant attorney general handling the case for the state, did not respond to a request for comment.

Barr’s office asked the federal judge to reconsider protective orders he issued authorizing the U.S. Attorney’s Office, which has a close relationship with the state attorney general’s office, to keep FBI documents secret. .

Barr alleges in the civil case that the Shumlin administration concealed the fraud from Jay Peak for a full year before the United States Securities and Exchange Commission shut down the scam in April 2016 and charged Quiros and Stenger with embezzled $200 million in investor funds.

The U.S. Attorney’s Office categorically opposed the release of documents, including the 23 FBI interview summaries, on procedural grounds. Paul Van de Graaf, assistant U.S. attorney and senior government prosecutor, sought to make permanent three temporary protective orders that prevented disclosure of the documents during the discovery process in the federal case.

Crawford determined that federal prosecutors failed to show “good cause” to withhold the documents. The judge gave the U.S. attorney’s office seven days to redact personal information from the records and then will make the documents available to the court. Grand jury transcripts and related records will remain sealed.

The U.S. Attorney’s Office filed criminal charges against Quiros and Stenger in May 2019. The two men reached plea agreements. In the coming months, Crawford is expected to convict Quiros and Stenger.

Crawford’s ruling sets the stage for a better understanding of whether the Vermont attorney general’s office and the Shumlin administration covered up and perpetuated the Ponzi scheme until the federal government acted.

Since July 2014, attorneys general and officials from the state Department of Financial Regulation, the Commerce Agency, and the governor’s office have blocked the public release of internal state communications regarding the case. The Vermont Journalism Trust, VTDigger’s parent organization, has filed three lawsuits against the Vermont Attorney General’s office since 2017 seeking documents relating to state involvement in the case. Barr also searched state records for five years in his ongoing legal battle on behalf of investors.

The cache of records is large. FBI and IRS documents collected over the years “run into the millions of pages,” Crawford wrote. The Vermont attorney general’s office said it contained 3 million pages. During the discovery phase in the Stenger case, the U.S. Attorney’s Office and defense attorneys accepted the three temporary protective orders issued by Crawford restraining the release of documents, as is customary.

After Barr subpoenaed Stenger’s attorneys, David Williams and Brooks McArthur, for records relating to the investor’s case, the U.S. Attorney’s Office sought to permanently seal the FBI interview summaries and other cases in federal court.

Crawford speculated in the decision that if he accepted the US attorney’s request to keep the documents secret, the Vermont attorney general’s office could more easily persuade a lower court judge to deny access. to the documents in the civil case brought by Barr for the investors.

The judge wrote that the basis for withholding the documents no longer exists because Stenger’s case will not go to trial. The former chairman and chief executive of Jay Peak pleaded guilty in August to a charge of making a false statement to the government. There is also no need to protect witnesses from retaliation, Crawford wrote, and there is no risk to an ongoing investigation.

Revealing 8 years of secrets

New revelations came to light last fall when Williams and McArthur submitted hundreds of pages of sealed documents, including summaries of 23 FBI interviews conducted in 2021 with former and current state officials.

On behalf of the Vermont Journalism Trust, the Cornell Law School First Amendment Clinic, the ACLU of Vermont and the Cornell Dolan law firm sued for the unsealing of 600 pages of documents and won.

The FBI interview summaries, however, remained sealed. In 2021, the FBI interviewed Shumlin; his former chief of staff, Liz Miller; his former general counsel, Sarah London; former Secretaries of Commerce Lawrence Miller and Pat Moulton; and former and current Commissioners of the Department of Financial Regulation, Susan Donegan and Mike Pieciak.

All of those records, along with the FBI’s interviews with the agencies’ attorneys, will be released under Crawford’s latest order. Other summaries — from Quiros, former Gov. Jim Douglas, former Shumlin chief of staff Bill Lofy and former Administration Agency secretary Jeb Spaulding — will not be available.

In response to an interview request, Pieciak texted.

“Judge Crawford made the right decision and I am pleased that other key documents will soon be available to the public,” he wrote.

Williams and Brooks described the story arc of the FBI interviews in a filing last fall. Defense attorneys said state officials said they were under “political pressure” to pursue fraud to complete a hotel at Burke Mountain Resort, which Quiros owned.

Shumlin met with Quiros at his home in East Montpellier on New Year’s Day 2015 to talk about cost overruns and state oversight of the Jay Peak projects, Williams and Brooks wrote. Shumlin also requested information about the apparent arrest in China of an employee of the EB-5 Regional Center in Vermont, Quiros told federal authorities.

A few months later, Shumlin and state officials met with Quiros again, defense attorneys said. This time, the Miami businessman, holding a file from Manila with photographs, asked Shumlin to speak to him privately, according to FBI documents cited by Williams and Brooks.

The former governor then reinstated the two projects the trade agency had previously suspended – the Burke Mountain Hotel and the Newport Biomedical Facility.

Communications unsealed by the court last fall showed state officials allowed the fraud to continue even though they knew investors would be harmed. Pieciak, the current commissioner of the Department of Financial Regulation, made a presentation in August 2015 to Shumlin staff and appointees. In it, he pointed out that due to the fraud at Jay Peak, investors in the Burke Hotel and the biomedical facility would not get their money back — or receive green cards.

And yet, the governor and his team pursued a plan to allow the scam to continue, records show. The projects have been reactivated. Stenger was authorized to solicit dozens of other foreign investors for AnC Bio Vermont and the Burke Hotel. The Department of Financial Regulation held the money in escrow, and the Vermont Attorney General’s office distributed money to the contractor. The Burke Hotel was completed just weeks before federal authorities intervened.

About 400 of the 800 foreign investors, most of whom had bought Burke and AnC Bio Vermont, were not granted permanent residence in the United States as promised under the EB-5 program.