A pattern of remarkably large EB-5 swindles in Vermont is being followed by a pattern of really stiff government penalties.
The EB-5 program offered aliens a family-sized set of green cards if they placed $500,000 in a Department of Homeland Security-approved investment (like the ones in Vermont). The minimum investment was recently increased to $900,000.
The most recent example of the enforcement rigor is written into the plea agreement that Miami developer Ariel Quiros signed with the U.S. attorney's office last month. Quiros, 64, pleaded guilty to three federal charges in return for a promise from the feds that they would not seek more than 97 months (eight years and one month) in prison for him. The U.S. attorney's office also promised not to seek fines or forfeitures; instead, it would focus on a "restitution order for the [alien] victims".
Since the U.S. attorney's press release speaks of losses of $110 million, $85 million, and $8 million, the restitution might reach as much as $203 million; that's more than a fifth of a billion dollars.
In earlier rounds of punishments, the SEC laid down a 10-year-long banishment from the securities business (not just the EB-5 trade, but stocks and bonds as well) on Quiros' son-in-law, Joel Burnstein. The latter was an account executive at Raymond James, the big brokerage outfit where some of Quiros' ill-gotten gains were parked. Ten years is a long time.
Still earlier, Raymond James agreed to pay $150 million to get out of their involvement in the case. I have studied this matter rather carefully and cannot possibly see how the brokerage firm could have made a fraction of the $150 million.
The EB-5 projects promoted by Quiros and his on-the-ground partner, William Stenger (who has pleaded not guilty to similar charges) including the expansion and modernization of the Jay Peak ski resort and the proposed construction of the AnC Vermont biomedical research facility (never built). Both are (were) located in a genuinely depressed area in the far north of the state.
Once I sat elbow to elbow with Stenger when we were both witnesses at a Senate hearing on the continuation of the EB-5 program, which is, in part, a time-limited program. Stenger had been selected as a pro-EB-5 witness by Senator Patrick Leahy (D -Vt.), and I was a skeptic chosen by Sen. Chuck Grassley (R-Iowa).
Leahy was deeply embarrassed by the collapse of the Jay's Peak project and related scandals, and has since become a critic of the program.
One of the other punishments caused by these scandals was the abolition, by the feds, of the regional center which played a middleman (and relaxed regulator) role during these Vermont scandals; it was a part of the Vermont state government, an unusual arrangement (most regional centers are privately owned). Equally unusual was the effort by USCIS to take down the regional center — USCIS had looked at the Vermont operations for years without noticing that anything was going wrong.
Playing positive roles over the years were two non-connected forces. VTDigger, an alternative local news source, covered the complex developments doggedly over the years. Similarly, the federal court-appointed trustee, Michael Goldberg, appeared to be assertive and creative.