The Shumlin administration sought Monday to disassociate its request to delete the emails of five former staffers from a major civil fraud case revealed last week against two developers in the Northeast Kingdom who used a foreign investor program overseen by the state to raise capital.
Top administration officials briefed reporters on its request made prior to the public revelation of fraud charges against Bill Stenger and Ariel Quiros to delete the emails of former administration staff members that are more than three years old. The request to delete emails came under fire over the weekend after it was revealed in a VTDigger.org article.
“To conflate them is absolutely incorrect and inaccurate,” Darren Springer, chief of staff for Gov. Peter Shumlin, told reporters Monday.
One of the former staffers in question, Alexandra MacLean, left the governor’s office for a job at Jay Peak, where many of the EB-5 Immigrant Investor Program development projects headed by Stenger and Quiros took place. The other former employees include Bill Lofy, who served as Shumlin’s chief of staff, Bianca Slota, a former spokeswoman, Ariel Weingroff, a former special assistant and Elizabeth Bankowski, who led Shumlin’s transition team after he won the governorship in 2010.
Quiros and Stenger are accused by both the federal Securities and Exchange Commission and the state of misusing about $200 million of the $350 million they raised from foreign investors in $500,000 increments. Quiros is also accused of using $50 million of investor money for his own personal gain. The administration said an investigation by the state Department of Financial Regulation helped unravel the alleged fraud.
On Monday, Springer, Administration Secretary Justin Johnson and Scott Coriell, the governor’s spokesman, said the request to delete the emails was part of an ongoing project to archive records and not related to the fraud charges. According to Springer, the Shumlin administration will be the first to archive emails and staff have been working with Secretary of State Jim Condos’ office on proper procedures since the governor announced last June that he would not seek a fourth term.
Working under an initial November 2015 guidance memo from Condos, the administration asked the Department of Information and Innovation to delete the emails of the former staff members that are more than three years old and have no archival value. The latest guidance from Condos, issued on March 30, states that routine correspondence that does not involve the governor only needs to be kept until it is obsolete.
Springer said Shumlin’s legal counsel, Sarah London, was looking to follow that guidance when she first asked DII to delete the emails of the former staffers on April 1. But when DII checked with Condos’ office, it objected to the administration’s deletion request.
“This has been kind of a long-standing discussion between us and the Secretary of State. We believe we were following the guidance that he provided. When he raised concerns on (April 8) we put a stop to any further activity … until we can have a further conversation around it and clarify his guidance,” Springer said.
The objection, issued in an email to DII by State Archivist Tanya Marshall, stated that the request “is not in compliance with state law and destruction hasn’t been authorized.”
Springer said London and Condos’ office were not on the same page in terms of how to proceed.
“There was either miscommunication or misunderstanding between the Secretary of State and Sarah as to where we were in that process,” Springer said. “As the first administration that’s going to be archiving a significant number of emails, not just the governor’s but emails to and from the governor and senior staff, you’re going to deal with some novel issues. Sarah was working off of the guidance she thought was in place and that it was appropriate to move forward. The Secretary of State had a different interpretation, that’s why we pulled the action back and we’re not going to do anything on it further until we do come to some finalized agreement with the Secretary of State.”
The effort to begin archiving records by London was an attempt to prevent the need for additional staff as Shumlin’s tenure winds down, Springer said.
“I think she was trying to begin moving things forward so we don’t have to hire a whole bunch of temporary staff, which is what I understand happened to the previous administration, to handle public records. If we’re doing emails and they didn’t, we have even more need than they did,” he said.
The federal fraud case, made by the SEC and filed in U.S. District Court in Miami where Quiros resides, and the state-level case filed in Washington County Superior Court, were publicly revealed on April 14.
Administration officials said Monday the request to DII and the fraud case should not be conflated and all emails related to Jay Peak or the EB-5 program — even from the former staffers — have been preserved because of a “litigation hold” sought by Attorney General Bill Sorrell months ago.
“No emails from any of those archives have been deleted, and the more critical point, in my mind, is any former staff accounts, and in fact any current staff accounts, that have anything related to Jay Peak, EB-5, are under a litigation hold from the attorney general,” Springer said. “A litigation hold was put in place months ago so that we could preserve records related to the Jay Peak EB-5.”
“In no circumstance could any email related to Jay Peak or EB-5 projects have been a part of the archiving action that Sarah London was looking to do with DII,” Springer added.
In a statement released by the governor’s office Monday, London said the archiving process was wholly unrelated to the fraud case.
“The litigation hold process and my request to DII had nothing to do with each other, and my request to DII had nothing whatsoever to do with the expected timing of any litigation,” she said.
The administration has requested that Sorrell’s office release the emails from former staff members related to EB-5 projects involved in the fraud case, according to Springer.
“We are very comfortable with releasing the emails — the Jay Peak EB-5 emails from the former staff accounts. We have made that request to the attorney general’s office. The attorney general has to make a determination whether or not that would prejudice our litigation, so that will be something the attorney general will have to look at. But this office does not have any issue with those issues being made public,” Springer said.
The administration’s willingness to release emails only pertains to former staff members, however, and not more current correspondence pertaining to the EB-5 projects involved in the fraud case.
“I think that there have been a number of things that have developed over the course of the state investigation and the coordination with the federal government that probably would not be appropriate to release at this point,” Springer said.
When pressured by reporters to release more current communications, Springer said public records requests could be filed and the administration would be “happy to do our very best to process it.”
“You’re certainly able to make that records request,” he said. “In terms of the litigation hold, I think there may be distinction between the former records and what’s in them relevant to prejudicing the litigation and what’s in more current documents.”
Attorney General Bill Sorrell confirmed Monday that he issued a litigation hold last October, which included documents from the governor’s office, the Department of Financial Regulation and his own office.
“We certainly acknowledge that, prudently, with it looking more and more like there was going to be litigation related to the EB-5 projects, we wanted to make sure that any relevant documents would be preserved and documented,” he told the Vermont Press Bureau.
Now that a civil court proceeding has been initiated against Stenger and Quiros, the emails are protected from release under an exception to the state’s public records law because they are part of ongoing litigation, Sorrell said.
The Shumlin administration has requested that the former employees’ emails relating to the EB-5 projects be released, Sorrell said, but he has denied that request.
“We’ve asked the governor’s office not to release those documents,” he said. “It’s just very much cleaner at this point that we rely on the exception under the statute.”
Sorrell said releasing the documents could compromise the state’s court case.
“Our interest is really in trying to maintain the integrity of a very significant lawsuit. We certainly don’t want to see the state releasing some documents and not others and looking like we’re trying to hurt the defendants,” Sorrell added.
This story was originally published by the Vermont Press Bureau and is republished here under a partnership with the bureau.