As State Settles Civil Case Against EB-5 Fraudster, Scott Says 'Dark Cloud' Beginning To Lift

Jul 12, 2018

The man who used EB-5 projects in the Northeast Kingdom to orchestrate one of the biggest financial frauds in state history has settled a civil suit brought by the state of Vermont.

Ariel Quiros has agreed to pay $2 million, in exchange for the dismissal of charges filed by the state in 2016. Attorney General TJ Donovan said Quiros will pay the money by forfeiting five properties he still owns in Vermont.

Quiros’ CEO, Bill Stenger, has also settled with the state, agreeing to pay $100,000 to the city of Newport.

Gov. Phil Scott said the Quiros settlement will be used for economic development projects in Newport, which was left with a giant hole in its downtown as a result of the developers’ fraud.

“While our work is not yet completed, the dark cloud that has been hanging over us for the last few years is beginning to lift, and I’m confident better days are ahead for this region,” Scott said at a press conference in Newport announcing the settlement.

"Everyone in the community had put all their ducks that EB-5 was going to save the city. Well, we now know what happened." — Newport Mayor Paul Monette

Federal authorities say Quiros used a Ponzi scheme to defraud foreign investors of more than $200 million.

Last year, Quiros agreed to pay $80 million to settle civil charges brought by the Securities and Exchange Commission. Donovan said Thursday the federal government is also conducting a criminal investigation into Quiros’ activities.

Donovan said Quiros’ settlement with the federal government had stripped Quiros of many of the assets the state might have otherwise gone after. And by dismissing the case, Donovan said the state will now be able to release more than one million documents to State Auditor Doug Hoffer for an independent review of the state’s role in the EB-5 scandal.

The EB-5 program was overseen and monitored by the state of Vermont, and foreign investors have accused state officials of turning a blind eye to Quiros’ fraudulent activities. United States Citizenship and Immigration Services last week ordered the shutdown of the state-run EB-5 Regional Center.

“I think the biggest issue in this case was the loss of public trust in state government. And we hope that this settlement today goes a long way to restoring the public’s trust in state government,” Donovan said. “This allows us to release the documents to an independent third party to answer the question about what happened in terms of state government’s management of EB-5.”

Newport Mayor Paul Monette called the settlement with Quiros and Stenger a “step in the healing process” for his city. The developers’ plans had once included a number of major projects in Newport, all of which were dashed when the SEC began to uncover the scheme.

“Everyone in the community had put all their ducks that EB-5 was going to save the city. Well, we now know what happened,” Monette said Thursday.

Monette, however, said the $2 million settlement “really does start to bring closure.”

“We will have money for economic development,” Monette said. “It will allow us to move forward with trying to market Main Street … and move forward with other projects in the community.”