Among the unsolved mysteries of South Dakota’s EB-5 scandal is how $167 million in state subsidies and private capital, including $95 million in EB-5 visa investment money, could have disappeared into Northern Beef Packers, a beef plant that took six years to build, ran nine months before going bankrupt, and then sold at auction to a clever investor for a mere $4.8 million—literally, pennies on the dollar.
We may find an answer to that mystery in Vermont, where state officials allege that developers Ariel Quiros and Bill Stenger used EB-5 money for something other than the EB-5 projects with which they lured their foreign investors:
Governor Peter Shumlin, Department of Financial Regulation (DFR) Commissioner Susan Donegan, Attorney General William Sorrell, and Agency of Commerce and Community Development (ACCD) Secretary Patricia Moulton on Thursday afternoon announced that the State and US Securities and Exchange Commission (SEC) have filed similar civil actions alleging investor fraud dating back to 2008 at EB-5 development projects run by Florida resident Ariel Quiros and Bill Stenger….
From his very first contact with Jay Peak in 2008, Quiros “improperly” and with Stenger’s assistance, bought Jay Peak Resort with a substantial amount of EB-5 funds. AnC Bio, meanwhile, was to be a $110 million, medical clean-room EB-5 project originally set to open this fall. The SEC alleges that AnC Bio, the last of the approved projects, was a virtual ATM machine for Quiros.
…The complaints allege that Quiros and Stenger misused more than $200 million of investor funds intended for EB-5 development projects in northeastern Vermont. The cases further allege that Quiros misappropriated an additional $50 million of investor funds for his own personal use. According to the allegations, investor funds were unlawfully diverted, or misused, between and among various EB-5 projects over many years. In addition, Quiros’s alleged misappropriations of investor funds for personal use include: over $2 million to purchase an apartment at Trump Place in New York City; millions of dollars to pay personal income taxes and other personal expenses; and over $20 million to purchase Jay Peak and Q Burke Resorts [Timothy McQuiston, “State Files Suit Alleging Investor Fraud at Jay Peak, Inc EB-5 Projects,” Vermont Business Magazine, 2016.04.14].
Virtual ATM—that sounds like how South Dakota’s EB-5 czar Joop Bollen is charged with using the EB-5 money his state contract required for liability purposes to buy Egyptian artifacts and TIF bonds in Northern Beef Packers. A scheme in which EB-5 money was diverted to other uses could also explain the apparent mismanagement, delays, and unpaid contractors and employees.
The Vermont escapaders apparently used a complex web of corporate entities to cover their misappropriations. That sounds much like how Joop Bollen structured his state-approved EB-5 scheme. let’s hope South Dakota’s Attorney General is preparing a map like Vermont A.G. Sorrell’s corporate diagram to help explain to the jury how Bollen moved his—oops! our money. And let’s hope A.G. Jackley shows more curiosity and traces those intricate money paths back through Northern Beef Packers and all the way to Cyprus and Russia.
Bonus Political Notes: Quiros and Stenger have contributed to Vermont’s ruling politicians, much like friends of EB-5 in South Dakota; the difference, of course, is that Democrats have power in Vermont.
Democratic U.S. Senator Patrick Leahy spoke Thursday to demand reform in the EB-5 program. Senator Leahy has worked with his Republican colleague from Iowa, known EB-5 watchdog Chuck Grassley, to bring more accountability to EB-5. The Senate passed an EB-5 amendment in 2013, but the GOP House refused to take the matter up for a vote. Rep. Kristi Noem, what’s that you said about wanting EB-5 reform?
Vermont and South Dakota are the only two states that have run EB-5 Regional Centers themselves rather than leaving it entirely to private companies. Yet these state-run programs seem just as susceptible to fraud and corruption as numerous privately-run EB-5 programs in other states. With so much corruption in EB-5, perhaps we need to drop the word reform and focus on the word repeal.
Years after blaming the dead guy and publicly closing his case – saying that the rest is up to the feds – Marty Jackley re-opened his case after the feds pronounced South Dakota’s EB-5 regional center too corrupt to continue in operation and made him look inept for closing it in the first place. Still he has only scratched the surface and picked the low hanging fruit.
Frankly, I don’t think the AG’s Office and DCI are presently even capable of conducting an investigation that results in a diagram like the one the Vermont AG is pointing at. If there exist more than 10 lines you’re beyond the depth of our talent here.
$167 million of public money lost in just one EB-5 scam. Think about what good things might have been done with that money if we had competent and ethical people in office. SD needs a non-partisan ethics commission and a new crop of leaders.
I think you are spot on Mr. Rorschach regarding low hanging fruit. Say what you will about Democrats, but they seem to be more on getting to the bottom of corruption than their counterparts. Corruption is equal opportunity so it is correct that both parties are at fault in that regard, the big difference is that in the case of Vermont, they actually are clear that corruption will not be tolerated. Jackley can only sees Michelson in his rear view mirror. Jackley knows that if he kicks open this den of rattlesnakes, they will strike him as hard as he would be able to strike them. Short Rounds has covered his tracks in such a way that only Jackley can tell what trail to take and he ain´t about to do that. Joop will get a stern talking to and then a small fine and then we are off to see the wizard. Taxpayers screwed yet again by our corrupt republican party in power. Wonder when regular republicans figure out they have been played.
“Wonder when regular republicans figure out they have been played.”
Can you say “Stockholm syndrome?”
As you say, Cory … Vermont is a blue state and they’re not going to “hide their problems”. Also SoDaker’s … Martin Jackley is no Vermont A.G. Sorrell.
The Vermont EB-5 fraud does mirror South Dakota’s in many ways.
The only thing that seems to be missing in the Vermont case is a dead body, or maybe they just haven’t found one yet.
Rorschach is spot on. The SD AG’s office and the spineless legislators are incapable of conducting the needed investigations for the EB-5 or the GEAR UP/Mid-Central crimes. South Dakota’s only hope was a federal investigation, which apparently is not forthcoming. The feds are the same vermin who turned the other way when the banksters imploded the economy, then settled the affair with bailouts and sending 1 minor foreign actor to jail. The message is clear – there is no sanction for “money crimes” if you are big enough and / or politically connected enough. Nation of laws my barleycorn.
tsitrain is becoming a positively irascible thorn in marty, the governor, and the legilslatures’ sides:)
“Stockholm syndrome?” Some of the most basic axioms “power corrupts” hold true. The program appears to be too easily corruptible without anything to do with D or R.
As with the Farmers Union corruption, Cory, you aren’t timid about exposing corruption in a Democrat institution as well as a Republican one. I just finished reading John Tsitrian’s version of the Vermont Attorney General’s presentation, “Memo To SD Attorney General Jackley: Can We Get An EB-5 Cash Flow Chart Like The One Below?”
Actually, the answer is yes. But you won’t get one out of Marty Jackley.
Between you and John, you can create your own cash flow chart, and where there are still questions, paste in a large question mark. Make sure you put Mike Rounds’ photo in the middle of it since he was the top boss. Another chart going back to Bollen signed his own no-compete bid to create his shady business until today, including the events of Benda’s killing, Jackley’s admission many months later he had created felony charges, the absurd GOAC hearing without bothering to swear in Bollen et al, Rounds’ election and the recent arrest of Bollen would tell the story of a widespread cover up involving the Board of Regents, the Governor’s Office and the GOP legislative leadership.
Then hold press conferences with John in Rapid City, Aberdeen, Sioux Falls and a couple other towns where there are still functional news media around. Heck, why not Pierre? The Cap Journal appears to have had some kind of resurrection and you can call on Bob Mercer and Tony Mangen at KCCR.
Post a sign at your press conferences – ‘South Dakota’s EB-5 scam: A decade of inaction.’
I think it will take dynamite like this to get the focus back on the Rounds Racketeering Scam.
Thanks for mentioning me here, leslie and 96T, and my particular thanks to Cory for calling attention to Vermont’s comprehensive effort on that state’s own issues with EB-5. DFP’s thoroughgoing attention and analysis are a motherlode in SD’s blogosphere and I imagine it’s the most heavily-mined blog in the region. I know I’ve helped myself to plenty of nuggets of information from it, trying to be scrupulous about sourcing them out to DFP when appropriate. The suggestion of joining forces with Cory on this is plenty flattering, but I doubt that either Cory or I have the time and resources to dig into the matter with professional-level expertise. That’s why I’m goading Attorney General Jackley and anybody else in the state who cares about the whole truth and nothing but to give us the kind of information that citizens of Vermont have access to. Why should we South Dakotans expect any less?
You know, we might be able to marshal some more resources for that effort if John and I were elected Senators (John, you still have two weeks to file an Independent petition) and could put the resources of the Legislative Research Council to work on that project. Send us and enough like-minded colleagues to Pierre, and we could empanel a summer study to dissect EB-5 once and for all—corporate web, bank franchise tax, Benda’s autopsy, the works.
We could also pass IM 22 and create a statewide ethics commission. :-)
Mr T-I’d like to hand you a cattle prod to goad Jackley into action. And a 2×4 just to get his undivided attention. When I win the lottery,you and Cory will have mucho dinero to run the crooks out of Pierre. Send Shania Twain to my home address as an inducement to win the lottery quickly. Thanks.
Interesting, David, that Leahy still maintains that EB-5 could be done right, but that it is unacceptable in its present form. I wonder if he’ll bring up South Dakota’s experience during floor debate on the program… and how South Dakota’s Senators will respond.
We’ll see if a mostly blue state can do it right. Denver is now close to using EB-5 to finance a refurbishment of our historic National Western Stock Show grounds to the tune of $1 Billion. Maybe when you’re Governor, Cory you can do the same at the state fairgrounds in Huron? As far as I’m concerned the more Chinese people in Colorado the better. Vancouver is at 30% Chinese nationals and their economy is booming because of it. They say the Chinese people are able to “flaunt their wealth” as they can’t back home.
Porter, when I’m Governor, we’ll use EB-5 for the reservations first… assuming the feds let South Dakota ever touch EB-5 again, and assuming Senators Leahy and Grassley don’t decide to kill the entire program. If they do, well, gosh darn it, we’ll just have to do economic development the old-fashioned way: we’ll earn it!