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Reporter debrief: DFR Commissioner Michael Pieciak says EB-5 fraudsters should get jail time

Snow-covered trails at Jay Peak can be seen on the horizon, behind a brown field and farmhouse in the foreground.
Elodie Reed
VPR File
Jay Peak resort can be seen from across a farm field in Vermont's Northeast Kingdom. Newly unsealed federal court documents shed clearer light on the timeline for when the state new about the EB-5 fraud.

When federal authorities unveiled fraud charges against two Northeast Kingdom developers back in April of 2016, it sent shock waves through the region. Jay Peak Resort’s former owner Ariel Quiros and former CEO and president Bill Stenger were accused of misappropriating more than $200 million from foreign investors.

That money was supposed to be poured into economic development projects, but instead, Quiros and Stenger used it for personal expenses and to pay off old debts. They've since pleaded guilty to federal criminal charges related to the fraud.

And while this fraud was happening, state officials in Vermont were supposed to both market the EB-5 program – which Stenger and Quiros used to raise money – and regulate it.

So there are two lingering questions: When did state officials become aware that the developers were misusing funds? And did they do enough to stop it? Recently unsealed documents in federal court shed some light on this.

VPR’s Henry Epp spoke with reporter Liam Elder-Connors, who has been going through those documents. Elder-Connors spoke recently with Vermont Commissioner of Financial Regulation Michael Pieciak, who had a central role in the investigation into Stenger’s and Quiros’ actions. Their conversation below has been edited and condensed for clarity.

Henry Epp: So what are these documents? Tell us about what state officials knew and when they knew it.

Liam Elder-Connors: They give us some more concrete times, dates and details about exactly that question of: When were state officials starting to become concerned about these projects? We've known that state officials maybe had some concerns in 2014 – towards the end of it.

More from VPR: Reporter Debrief: VTDigger's Latest Alleges State Officials Knew Of EB-5 Scandal But 'Continued The Fraud'

But now, we can see in the documents that in the summer of 2014, state officials at the Agency of Commerce and Community Development were concerned. In a memo to then-Gov. Peter Shumlin, the secretary of ACCD said the developers were giving them incomplete or wrong information about some of the projects.

And so, Liam, you recently spoke to Mike Pieciak, who's the current commissioner of Financial Regulation. But back in 2015, he was the deputy commissioner. And he actually led the department's investigation into Quiros’ and Stenger’s EB-5 projects, right?

That's right. And that investigation officially started in March of 2015. And Pieciak says within three months, they'd seen enough to make a criminal referral to the FBI.

And that raised a question for me because in April of 2015, DFR allowed Quiros and Stenger to raise money for AnC Bio – that's the biotech plant that they were planning to build in Newport using EB-5 funds.

"... We were allowed to do our investigation. So it did take us time. It was complicated. But we never got pressured to not investigate fully."
- Michael Pieciak, commissioner of Financial Regulation

Now, they were allowed to raise that money, but it had to be held in an escrow account because DFR was reviewing the project's finances.

But then, in July 2015 — which is a month after DFR made that criminal referral to the FBI — the agency allowed the developers to resume raising money for the Burke Hotel project. DFR also put restrictions on that money, to make sure it went to construction costs.

More from VPR: Reporter Debrief: Bill Stenger, Former Jay Peak Developer, Enters Guilty Plea In Federal EB-5 Case

But I wanted to know why state officials had let Stenger and Quiros raise any money at all if they were that concerned about the projects.

This is what Pieciak told me, recently, when I asked him that. We'll hear his answer and more of our conversation:

Hear reporter Liam Elder-Connors' interview with Commissioner of Financial Regulation Michael Pieciak

Commissioner Michael Pieciak: Basically, by that point – by July of 2015 – we had investigated Burke closely enough to understand that they were treating that project significantly different. It didn't have misuse of funds; it was consistent with the representations that they had told investors.

So the concern with the Burke project was making sure that any new money that came into that universe was used appropriately and only for construction purposes.

The hotel at that time was half-built and you know, you had 70 or 80 investors that had put their money in. And if that hotel had not been completed, you know, that would have made that property worthless for those investors.

Now for the AnC Bio project – which was the other one that was soliciting funds – any new investor money had to go into an escrow account. That was a project that we had concerns about.

Elder-Connors: It does seem like there was some risk, though, in allowing these developers who you were suspicious of and, in fact, had referred some of their activities to the FBI, that there's going to be some risk and allowing them to raise funds – even if you felt fairly sure that the development at Burke was going more or less as they said that it was going

Pieciak: Yeah, no, it's a great question. I mean, I'll just tell you: from my own personal experience, I was not in favor of it. It did seem like a risk to me. But you know, it wasn't my call at the end of the day.

However, when I look back on the call that was made, and the fact that, you know, the hotel was complete, that, you know, we had determined that there was not any misappropriation or commingling and that the investors had the opportunity to get their green cards from USCIS – out of all of the difficult calls that could have been made, it seemed like the right call, in retrospect.

More from VPR: EB-5 Development: 4 Named In Criminal Indictment Filed In Federal Court Over NEK Project

Elder-Connors: Was there pressure from the governor's office or any other entities in the state government – I mean, including even from Gov. Peter Shumlin – to resume the development at the Burke project?

Pieciak: No. You know, what I remember was not … There was never, you know … The pressure that was put on us — whenever there was pressure — was from the project developers, right? They were providing us with information that was not accurate, and then telling us, “Hey, we provided you everything. Why are these projects not moving forward?”

So we were allowed to do our investigation. So it did take us time. It was complicated. But we never got pressured to not investigate fully. And if anything, we got encouragement to do our work as quickly as we could.

And once it became clear that there would be an enforcement case, you know, we got encouragement from the governor himself — from Gov. Shumlin — to bring our case as quickly as we could.

Elder-Connors: Ariel Quiros and Bill Stenger have both pled guilty to federal crimes related to these projects — related to the AnC Bio project. Do they deserve to go to jail?

Pieciak: This is the biggest fraud that Vermont has ever seen. It impacted hundreds and hundreds of investors. I heard from an investor, recently, who was worried about having to go to the country where he immigrated from, where he was facing persecution because of his religion.

So these investors have been harmed financially. They've had a great deal of uncertainty brought into their lives in terms of, you know: are they going to be able to continue their life here in the United States? Or is that going to be disrupted? So with no doubt, you know, that needs to be rectified. And justice needs to be served — by seeing jail time for both individuals.

Henry Epp: That was VPR reporter Liam Elder-Connors, speaking to Financial Regulation Commissioner Mike Pieciak. Liam, before we go, there's been a lot of recent court activity around this issue. Can you get us up to speed on the cases that are out there right now?

Elder-Connors: Yeah, one of the more recent cases was a class action lawsuit filed by several EB-5 investors in August. And that suit alleges that the state allowed the fraud essentially to continue. And it actually names Pieciak, along with other state officials.

"... Justice needs to be served – by seeing jail time for both individuals."
- Michael Pieciak, commissioner of financial regulation

And I should say: I didn't specifically ask Pieciak about this case during our conversation. But broadly, he did defend the state's actions and pointed to the DFR investigation, noting that they had been working closely with federal authorities to unravel the fraud.

And one of the other big, kind of court cases to resolve is that we are still waiting for Quiros’ and Stenger’s sentencing hearings. They both pled guilty to federal crimes, but sentencing has not happened.

Have questions, comments or tips? Send us a message or get in touch with reporter Liam Elder-Connors @lseconnors

Henry worked for Vermont Public as a reporter from 2017 to 2023.
Liam is Vermont Public’s public safety reporter, focusing on law enforcement, courts and the prison system.
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