Smart move by Vermont Senator Patrick Leahy who pivoted nimbly to advocate for reform of the EB-5 program, just in time to make the same news cycle as the raid on Q-Burke.
As you can read in the story below, EB-5 is the particular briar patch into which the developers of Q-Burke dove headfirst, only to later find themselves hopelessly ensnared.
From its inception, we on GMD have questioned the value of this program to the public and couldn’t help wondering whether it would evolve into a government sanctioned ponzi scheme.
Senator Leahy was a big supporter of the EB-5 program for Vermont, as was Governor Shumlin. Job one for governors and senators is to promote economic growth, so their initial enthusiasm is not surprising; but even the earliest news stories about Mr. Stenger’s and Mr. Quiros’s scheme should have set off a few alarm bells.
As I recall, the original pitch promised a hotel, conference center, airport, high-tech window manufactory and a state of the art bio-tech plant; and that was to be just the start. There were big plans to see EB5 investments plumping local economies all over the state.
In a corner of the state where winters are long and opportunities are few, such a drastic transformation might initially mean construction and service jobs for the locals; but it seemed likely that low wage locals would soon find themselves priced out of the housing market in a burgeoning resort town.
With things having gotten so far out of hand in the finance department that the SEC has blown the whistle, it now looks like the jig may be up.
So announcement of Senator Leahy’s reform efforts couldn’t have come at a more opportune moment.
Sadly, it is may be too late to save Vermont’s credibility for international investors.