MORRISTOWN, Vt. (WCAX) – The impacts of the Kingdom Con continue to play out even after the criminal sentencing two years ago of the ring leaders and last year’s $16 million settlement by the state of Vermont. A recent ruling from the Vermont Supreme Court raises new questions about the Vermont EB-5 Center’s current status and other legitimate projects that never took flight.
A group of foreign investors, the business community, and the state of Vermont once had high hopes for an EB-5 project at the Morrisville-Stowe State Airport, including a new runway, terminal upgrades, and promises of regularly scheduled air service. Stowe Aviation and the Agency of Commerce and Community Development penned an agreement in 2014 to make the upgrades, which would result in green cards for foreign investors who pumped money into the project.
But when the Kingdom Con investigation blew open in 2016, the project and its financing fizzled. The airport investors sued, alleging state officials didn’t hold up their end of the deal after the feds yanked Vermont’s oversight of the Vermont EB-5 Regional Center, even though the airport expansion project was legit.
“The state’s involvement in the program at Jay Peak turned the entire program upside down. You have people following the rules and doing the right thing that were harmed by those who chose not to follow the rules,” said Michael Stevens, a lawyer representing Stowe Aviation.
The state moved to dismiss the lawsuit. But in a recent ruling, the Vermont Supreme Court sided with Stowe Aviation and the foreign investors. Legal experts say they can now argue in trial court to try to recoup some of their losses.
“Even if they don’t prevail, they’re going to be able to argue that this case was improperly dismissed and they should get another chance. For better or worse, the loose ends continue,” said Jared Carter, a professor at the Vermont Law and Graduate School.
The case is an example of the stench that the fraud scandal had beyond the Northeast Kingdom. Today, while Vermont’s EB-5 Center is in good standing with federal regulators, officials say there are no current projects underway. Instead, the state is working with previous de-frauded foreign investors trying to prove that jobs were created at Kingdom Con projects so those investors can obtain their green cards. If they do, it could reduce last summer’s settlement, saving taxpayers around $4 million. ACCD officials, in response to an EB-5 report by the state auditor last week, said it’s their responsibility to maintain the EB-5 Center to attempt to make investors whole.
While the EB-5 program has caused headaches and made headlines, numerous successful projects have emerged, including the Trapp Family Lodge’s Bierhall Restaurant in Stowe, and improvements at Sugarbush and Mount Snow.
So, is the state missing out on new investments in the wake of Kingdom Con? “To me, the answer is yes. People don’t want to touch EB-5 with a 10-foot pole because of what happened here in Vermont,” Carter said.
Back at the Morrisville-Stowe State Airport, the runway may be open for air traffic but the state is still in a multi-year search for a contractor to provide basic services.