Leahy: EB-5 Program Must Be Reformed

Apr 15, 2016

Sen. Patrick Leahy said Friday that Congress must provide more oversight of funds raised through the federal EB-5 program, which allows foreign investors to invest hundreds of thousands of dollars in exchange for visas to the U.S.

The program was used by Northeast Kingdom developers Bill Stenger and Ariel Quiros to raise hundreds of millions of dollars, the majority of which was allegedly misappropriated in a "Ponzi-like" scheme, according to the Securities and Exchange Commission.

Leahy said he's concerned about the Vermonters whose livelihoods were supposed to be supported by the foreign investments.

"Men and women who were getting good-paying jobs in construction - carpenters, plumbers, electricians - I worry about them," Leahy said. "I'm far more concerned about them than anybody else in here because they had a hope for jobs. It's not the easiest place to get jobs."

According to data released by the Vermont Department of Labor Friday, the unemployment rate in the Northeast Kingdom is 6.9 percent (not seasonally adjusted) - the highest unemployment rate in the state.

The EB-5 program requires that the foreign investments support a certain amount of job creation or preservation.

Leahy said the state's oversight of the program was key to catching the alleged fraud.

"We have been doing, it's my understanding, a great deal of checking into this and probably this might not have been uncovered in other states where they have [EB-5]," Leahy said.

Leahy said reform efforts by himself and Republican Iowa Sen. Chuck Grassley would add oversight to the EB-5 program to prevent misuse of investment funds. He said those efforts have been stalled by the House Republican leadership for years, but that he's not willing to support the EB-5 program's continued existence if there aren't changes.

The program is set to expire in September unless it is re-authorized by Congress.

"If these reforms don't go through, we will not have an EB-5 program because Senator Grassley and I- I will certainly do everything I can to block it," Leahy said Friday.

Leahy said at an appearance Friday that he considered Stenger a friend.

"He's been a friend, we've talked, talked a lot even though he's a Republican and I'm a Democrat," Leahy said. "I have a lot of friends who are Republicans and I appreciate that. And I especially appreciate seeing the men and women who are now getting paid a decent amount, so of course I am so disappointed in this."

According to filings with the Federal Elections Commission, Leahy received $4,800 from Stenger on March 8, 2009. There is no record of Quiros donating to Leahy's campaigns.

Leahy said he plans to give away all of the money Stenger has ever given his campaigns.

"Whatever the amount is, I've asked my staff yesterday to find out if [the developers] have [donated] and give it to some charity in the Northeast Kingdom that would enable people with jobs," Leahy said.