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McQuiston: Closing EB5

The state of Vermont has been deeply embarrassed by the fraud allegations up at Jay Peak. It also wants to make the best of the hundreds of millions of dollars invested in projects there and at unrelated projects across the state. Scandal, yes, but it’s also created thousands of jobs in the critical hospitality industry, which was the intent of the EB-5 program in the first place.

Now the the US Citizenship and Immigration Services - or USCIS - wants to shut down the state program.

Late last week the state responded to the USCIS’ termination letter. While the USCIS letter was not clear on when it would shut it down, the tone suggested it would be soon. The feds did however, give the state an opportunity to respond.

And did Vermont ever respond in language that was both cajoling and scolding.

The state’s letter starts out conciliatory and takes a commonsense approach to the issue.

As most Vermonters are aware, both the feds and the state have charged the owner of Jay Peak with fraud over an alleged 200 million dollar misuse of EB-5 funds, including putting millions into his own pocket.

A federal receiver has got essentially all the money back, but the episode has left unrelated developers of unfinished projects at Mount Snow in Wilmington and Trapps in Stowe wondering if they can continue.

Governor Scott would like the state to close the EB-5 office also, but in an orderly way to ensure that those projects can be completed.

The state’s letter argues that simply closing the Vermont EB-5 center would harm the very people and projects the USCIS is claiming to protect.

The state says a collaborative and slow winding down of the state’s EB-5 center would be the most prudent way to proceed.

But the letter doesn’t stop there.

It goes on to say that the USCIS has misrepresented the state’s role in the debacle on legal grounds. And, remarkably, the letter claims the USCIS’ argument is flawed.

The state’s letter says “no law or regulation sets forth a regional center’s monitoring and oversight obligations.” So, the state wasn’t responsible for the very thing that USCIS is essentially punishing it for.

The state even goes on to say that the feds use of the news media to make its case is “unreasonable, arbitrary, and capricious” and that USCIS never even verified if the stories were accurate.

So much for conciliatory.

Tim McQuiston is editor of Vermont Business Magazine.
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