Well that didn’t take long, once they started looking. A few short months ago the state quietly beefed up its oversight of the federal investment for visa EB-5 program. The Department of Financial Regulation (DFR) took on the watchdog role from the Agency of Commerce and Community Development (ACCD).

This change came after a large group of EB-5 investors had complained that the Agency of Commerce and Community Development hadn’t properly overseen the investment aspects of the program. The state hopes to put to rest persistent concerns over whether the ACCD could regulate the EB-5 programs while at the same time functioning as its full time booster and enthusiastically promoting it overseas.  

Now, taking on the oversight task, the DFR has indeed been requested to check AnC Bio Vermont (AnC Bio S. Korea was formerly named The Sports Seoul 21 Co., Ltd) and other programs specifically for compliance with federal and state securities laws.

  From VtDigger.com comes a detailed report of the entire drama:

At the governor’s behest, the state agency that oversees the EB-5 immigrant investor program has asked the Department of Financial Regulation to determine whether the $118 million biotech project in Newport complies with state and federal securities laws.  

The suspension of AnC Bio’s memorandum of understanding comes as the state has reorganized its oversight of EB-5 projects. The protection of investor interests will now be the responsibility of the Department of Financial Regulation. The Agency of Commerce and Community Development, which had been solely responsible for EB-5 marketing and oversight, will now handle promotion only.

[…] The state cancelled the West Bowl expansion in August and both AnC Bio and Q Burke projects are now under Department of Financial Regulation scrutiny. The regional center also passed along concerns to the department about existing projects at Jay Peak that have come under fire from investors. All Vermont EB-5 projects will be reviewed by the project.

The planned AnC Bio biotech lab/factory is part of the growing EB-5 investment-fueled pyramid of development projects underway by Jay Peak partners Bill Stenger and Ariel Quiros. VtDigger.com is currently all over this story and they seem to be the only one casting a skeptical eye on it. 

The Vermont EB-5 investment from its early beginnings has involved Vermont business, and international investments worth hundreds of millions of dollars. Major office holders in the state from each party – including several past governors, both current senators and our lone congressman – have supported Vermont EB-5 deals. Ultimately over the years all the boosters and promoters support the grand promises of many hundreds of jobs – coming … soon.

So with all that interest in the outcome, where  is the other media coverage that should be looking behind the curtain of boosterism as you might expect?

Well for now I know where it isn’t. Yesterday morning I checked the Burlington Free Press online and no mention of the newest troubles in Vt’s EB-5 world. The FreeP  did have an eye-catching story headlined: Cat Turd Hockey Team … a scoop for that paper to be sure.

Of course growing income inequality and the shrinking middle class have been in the headlines for a couple years but surprisingly Wisconsin and Vermont find themselves sharing a common economic trait. The middle class in Vermont and Wisconsin is declining at one of the fastest rates in the nation.

Gov.of Wisconsin Scott Walker (the man blogger Charlie Pierce accurately tags  the goggle-eyed homunculus now employed as the assistant director of employee relations at the subsidiary of Koch Industries once known as the state of Wisconsin) and Gov. Peter Shumlin are both in charge of states with rapidly declining middle class.

The states with the most extreme middle-class shrinkage are Wisconsin — where the share of households that are middle class fell from 54.6 percent in 2000 to 48.9 percent in 2013 — Vermont, Ohio and North Dakota. The state that fared the best was Wyoming, where the middle class only fell from 51.5 percent of the population to 51.2 percent.

Here is a map [interactive version] that PEW’s Stateline blog put together which shows the percentage rate of middle class shrinkage in all 50 states. [Those making between 67 percent and 200 percent of the state’s median income are considered middle class for the purpose of the map.]

 In Wisconsin Governor Walker’s assault on the middle class includes going after wages, benefits and bargaining rights of state union employees. Maybe he’s not yet in Wisconsin’s league, but Governor Shumlin is similarly playing hardball with middle class employee union workers — leveraging more than 300 union layoffs for re-opening existing contract agreements and refusing to consider upper-income tax increases.

As more people slip-slide away from the middle class, high-end income earners in Vermont (and probably in Wisconsin too) continue to do just fine. Vermont was one of 33 states in which the top one percent captured between half and all income growth between 2009 and 2011.

It seems Shumlin’s budgetary triangulation has placed him on Scott Walker’s conservative tangent. Maybe Shumlin is wrong getting so comfortable on a “right” triangle.

This past Saturday and Sunday Governor Shumlin was away at a Democratic Governors Association gathering in Puerto Rico (the weather: partly cloudy, temps in the low 70’s). Meanwhile back in Vermont, Lt. Governor Phil Scott (as required by state law) became acting governor, taking on official duties for two days during Shumlin’s absence.

 This week Lt. Gov. Phil Scott takes a turn out of town and heads off Wednesday for Washington DC to a National Lt. Governors Association meeting. Scott will miss his coffee hour on Thursday. It is not an official function, but a regular occasion when legislators, advocates, press, and members of the public are invited to stop by the Lt. Governor’s office for coffee and casual conversation.

In addition I’d guess this is a handy way to keep track of which way the political wind is blowing around the State house and Montpelier. At least it is important enough not to be canceled — but who shmoozes and acts as his eyes and ears when he’s away? 

 Well, Scott didn't have to look too far for his stand-in to serve coffee, and it isn’t a fellow Republican but Democrat Dick Mazza. Not only did Mazza, a Democrat, help re-elect Scott but is now hosting his coffee klatsch.

Not sure how Scott’s official duties are handled when he is away, but clearly his good buddy Dick Mazza has his back for coffee, donuts, and re-election campaigns.

When first elected several years back, he was the first democratic governor of his northern state in years, a millionaire who just beat a Republican opponent by a narrow margin. And how has it turned out? Well  he is “[the] most liberal governor in the country in terms of his willingness to raise taxes and to spend.” according to one University political scientist. 

Huh? The northern governor isn’t Vermont’s erstwhile “liberal” Democrat Peter Shumlin, but Minnesota’s Democratic Governor Mark Dayton.

Governor Dayton is getting glowing reviews on helping to substantially improve the Minnesota economy. In fact, this northern state was rated one of the better growing economies in the country. An increase in minimum wage is scheduled next year and bills improving workplace protections for women and guaranteed equal pay legislation were enacted. Spending on public education was increased along with a tuition freeze at public universities and two-year colleges and increased unionization.

And part of how he did it was by raising taxes on the wealthiest. In fact taxes were raised 2 percent on couples making at least $250,000 per year. Thus did Minnesota become the fifth-highest taxed state in the nation. The earth did not open up and swallow Minnesota, and — oh, by the way — there was no exodus of high earners.

So what befell Minnesota? Well…

Since 2011, Minnesota has been doing quite well for itself. The state has created more than 170,000 jobs, according to the Huffington Post. Its unemployment rate stands at 3.6% — the fifth-lowest in the country, and far below the nationwide rate of 5.7% — and the state government boasts a budget surplus of $1 billion. Forbes considers Minnesota one of the top 10 in the country for business.

Dayton said of his tax raise on high earners “politically it was the right thing to do.”

And meanwhile Vermont is struggling with a $112-million-dollar hole in the budget and “liberal” Governor Shumlin is hoping to solve it with a cobbled-together patchwork plan.

Shumlin says he wants to take a “balanced way” to a balanced budget, and

“…That means real cuts. That means finding efficiencies … And I recommended a small amount in revenue,”

The proposed plan includes his proposal for another heavy round of “real cuts” — $30 million in cuts to services, salaries and benefits of state workers, for starters.

Sadly, Shumlin is sounding more like Wisconsin Republican Governor Scott Walker than Minnesota Democrat Mark Dayton. And he’s downright obtuse on raising taxes on the well off. Not exactly the “very model of a northern liberal Governor.”

Well ,the Chairman of the Senate Committee on Environment and Public Works, Senator James Inhofe(R) took the time today to prove global warming is a hoax-by brandishing a snowball on the senate floor. 

James Inhofe, the US senator who famously claimed that global warming was   “the greatest hoax ever perpetrated on the American people”, attempted to underscore his climate denial on the Senate floor Thursday by brandishing a snowball.

“I ask the chair: do you know what this is? It’s a snowball,” said Inhofe, hefting the icy globe in his right hand, before tossing it at a Senate page.    

The snowball stunt was part of a rambling speech to America’s most august deliberative body in which, amongst other points, Inhofe took aim at evidence by scientists that 2014 was the warmest year on record due to climate change. (According to detailed research Nasa and the National Oceanic and Atmospheric Administration, two of the top bodies of government scientists, it was.)

There is an old comedy routine from Firesign Theater in which one character attempts to prove he time traveled to ancient Greece by revealing that he has returned with a grape.  

I doubt that Senator Inhofe was thinking about that routine today when he used a snowball found in Washington DC to dramatize his view that global climate change is a hoax, but he utilized the same flawless logic.

Senator Inhofe is no doubt, bound for grapeness

Looks like Vermont EB-5 programs will be getting a little more regulatory scrutiny. This past Friday, in an online press release (some people may actually have seen it) the Vermont Agency of Commerce and Community Development (ACCD) announced a “collaboration” with the Department of Financial Regulation (DFR) on EB-5 issues. Among other duties, the ACCD is federally approved to administer the EB-5 program in Vermont. The DFR oversees banking, securities, and insurance and captive insurance statewide. An interagency agreement Memo of Understanding (MOU) on EB-5 compliance was finalized last December between these two agencies.

For those unfamiliar with it, the federal EB-5 program is an investment scheme that grants permanent visas to foreign investors who invest in approved private businesses development. Federal/state sanctioned private projects are supposed to provide jobs and an economic boost to specific areas of the state. The hundreds of millions of dollars worth of EB-5 projects in the Northeast Kingdom, engineered by Bill Stenger (owner of Jay Peak) and his partner Ariel Quiros, are perhaps the best known of the EB-5 funded efforts in the state.

One of several setbacks they encountered last summer included a controversy that erupted between Jay Peak and dozens of foreign investors. A group of EB-5 investors were angry with the way major terms of their existing $500,000 investment arrangements had been changed by Jay Peak partners Stenger and Quiros. Investors weren’t officially notified by the pair until five months after the fact. Disgruntled by this, the investors raised questions about the quality of oversight and the conflicts in the dual role the ACCD plays to promote and oversee EB-5 in Vermont.

Friday’s online press release announcing the inter-departmental agreement notes the growing need to upgrade state methods for determining securities law compliance of EB-5 projects. The expanded DFR duties include requiring quarterly reports, site visits, audits and document reviews of EB-5 projects. The division of tasks between the ACCD and the DFR agencies are spelled out in a memo noted in the press release :

This [MOU] will also allow us [ACCD] to significantly increase marketing and promotional activities which is critical in the highly competitive market for EB-5 investment. This is similar to how ACCD and DFR share responsibility for Vermont's gold-standard captive insurance program.

A timely upgrade to VT's EB-5 oversight

And it seems not a minute too soon. This week Bloomberg reported that the SEC is continuing to expand scrutiny of the EB-5 program. The SEC is now focusing on immigration lawyers collecting illegal fees. And the DHS will soon release a report that ABC News says may be critical of EB-5 and raise concerns over fraud, money laundering, even espionage.

In the past, the SEC investigated and halted EB-5 programs outside Vermont for fraud and security risks. Vermont’s EB-5 programs were rated as among the best run in the nation for 2014. This rating, though, is from Invest in the USA (IIUSA) a friendly non-profit EB-5 advocacy group whose stated primary mission is permanent authorization of the EB-5 Regional Center Program.

Not to be forgotten,and perhaps slightly reassuring potential foreign investors is the contention that Quiros made when questions were raised by unhappy investors, that Jay Peak’s transactions are “200% ethical” – could be the tagline for all EB-5 programs someday.

Despite this (or maybe because of it) someone in the state has decided to expand EB-5 oversight –even if they are doing it so discreetly no one may  even notice. But the odds of Vermont businessmen successfully fleecing some visa seeking foreign investor have just decreased, although perhaps not enough.

Political cartoonist Jeff Danziger was joking around recently when he suggested that Vermont needs to piggy back on New Hampshire’s First in the Nation© Presidential Primary. In his opinion piece, Danziger cuts comically right to the heart of the matter:

It’s not only the money that the New Hampshire primary brings to that state. It’s the … well, OK, it’s the money. Their television stations will be rolling in dough, their restaurants will be crowded with journalists and hangers-on, and their merchants’ registers will jam.

 And now the idea has gone from spoof to legislation sponsored in Vermont by state Senator Anthony Pollina, who has put forward legislation almost duplicating Danziger’s same day as New Hampshire “proposal.” Like the humorist (but in more nuanced language) Senator Pollina also sees an “economic shot in the arm” and claims it would give Vermonters a greater role in choosing a president.

“There’s a lot of money generated during primary season, and there’s no reason why Vermont shouldn’t reap some of the benefits of the early primary,” Pollina said.

He notes that towns along the Connecticut River might benefit most from a once-every-four-years burst of border-town business for motels, restaurants and of course media buys: “This ad was paid for by friends of …”

And Pollina hopes more-liberal Vermont voices may help “shape the debate” or as Danziger put it, with all the false modesty he could muster:

We here in Vermont, who, God knows, are much better equipped to make an intelligent decision about the future of the country, are ignored wholesale. […] But actually it’s the money.

And how about the money? Well the dollars trickle down into the First in the Nation© Primary State in all kinds of ways. Jebbie Bush (the “smart one”), for example, who is expected to run for the Republican Presidential nomination, is handing out money in New Hampshire (and Iowa) through his PAC. Bush cash gifts include $10,000 to the New Hampshire Republican Committee and the legal limit $5,200 each to NH Congressman Frank Guinta and Senator Kelly Ayotte.

So yeah, about the money: it flows all kind of ways, and why do we assume Vermont’s liberal views will transform the debate? The reverse is possible — the primary debate could transform our political landscape. Imagine the extra thousands of dollars windfall the Vermont Republican Party or conservative Vermont candidates might receive.

Yup, we need some of that PAC money here in Vermont … Oh, and Danziger was just joking.

Lt Gov Phil Scott’s well-publicized economic pitch sessions — which he describes as a cross between a “Shark Tank show” and speed dating — took input from business leaders and self-selected legislators about how to rejuvenate the Vermont economy. This event is a little new gimmick the Lt.Gov. started recently. The conferrence showcases are organizationally a step up from his past Everyday Jobs Initiative publicity gimmick.

One piece of legislation resulting from the recent economic pitch session has been introduced, and (wait for it) … it’s a sales tax holiday! Seven Republican state representatives and three Democrats are sponsoring a bill declaring August 29th and 30th sales tax free; Phil Scott is selling it as part of his economic rejuvenation pitch.

As a result of input from Vermont’s business community at the “Vermont Economy Pitch,” held on January 7, lawmakers are responding by introducing bills aimed at growing the state’s economy.

 We have had these “tax holidays” several times before in Vermont: it is simply a period of time, one or two days, when the state suspends the tax on selected goods. The tax holiday gimmick reached a peak nationally in 2010 at 19 states, and then tapered off in 2014 with 16 states conducting them.

There's just one problem, and it's a big one: there is real doubt a tax holiday actually accomplishes much for the economy. Policy analysts find that sales tax holidays simply shift the timing of purchases and do not increase economic growth or significantly increase consumer purchases. They are a one- or two-day microburst of economic activity that would have happened over a period of time anyway. Then there is the added negative feature of some lost state revenue from the suspension of the sales taxes. Also, since sales taxes are somewhat regressive, suspending the sales tax gives small relief to low-income people and a large amount of relief to higher income shoppers.

The event may do little for the economy, but it is very effective at helping politicians look as if they are doing something — everyone loves a sale!

And maybe it shouldn’t be a surprise that a one-time-only feel-good sales event with no lasting effect is what results from Scott’s economic speed dating session. Sorta like a one-night stand: will there be regret in the morning?