NEWPORT — With EB-5 fraud penalty money in hand, the state is returning to the scene of the crime to fund economic growth.
Gov. Phil Scott announced the Newport Development Fund Thursday afternoon. It is a grant resource for projects, businesses, and organizations within the City of Newport. It will be financed by proceeds from the 2018 settlement agreement with Ariel Quiros, Sr. to the state and a $100,000 payment from Bill Stenger as part of his recent plea agreement.
In April 2016, Jay Peak and Burke Mountain resorts, both properties owned by Quiros, were stormed by the agents from the federal Securities and Exchange Commission.
A years-long case began, first with civil complaints against Quiros then Stenger and other parties associated with Quiros to a lesser extent. Settlements were reached in those cases with both SEC and Vermont officials.
Quiros was accused of masterminding a “Ponzi-like” scheme in which he defrauded hundreds of immigrant investors who had been promised both financial gains in a series of developments and business undertakings — and guaranteed green cards when their investments yielded promised job creation in Vermont’s Northeast Kingdom.
Investors had engaged with Quiros and Stenger and their associates through the federal immigrant investment opportunity known as EB-5.
The grand jury indictment two years ago alleged that the men conspired to embezzle investors’ funds and more.
At that time, the indictment alleged the defendants had worked to defraud investors in the AnC Bio Vermont business project which was a promised biotech facility planned for Newport. Another very visible fraud reminder remains downtown where properties were bought and razed to make way for a hotel. The scheme collapsed before anything was built.
In the years since the major plans collapsed, the community and local governments have been working to identify transformative replacement projects to ensure Newport stays competitive and attractive to developers and investors.
“The creation of the Newport Development Grant and the Discover Newport Business Grant programs is an important step in helping the City of Newport’s economic recovery from the failed EB-5 projects of 2016,” said David Snedeker, executive Director of Northeastern Vermont Development Association (NVDA). “NVDA, the regional planning and development corporation, stands ready to work with developers considering transformative projects for the community.”
“The City is pleased to see a fair-handed way to distribute these funds directly into the very community that was harmed by the failed projects,” said Laura Dolgin, city manager of Newport. “The design of this program is intended to create a long-term sustainable economic benefit to the community and that seems like the best solution to help put some closure on the matter.”
The NDF will be used for the specific purpose of creating economic development opportunities within the city.
The Agency of Commerce and Community Development has worked with the City of Newport and the NVDA to create two grant programs:
• The Newport Development Grant Program, a competitive grant with a minimum request of $50,000, for the purpose of assisting impactful projects that align with city and regional plans. Attention will be given to ensure the use of NDF dollars are effective, relevant and informed by current and anticipated economic development opportunities, which would create jobs for residents of Newport and its surrounding areas. Increased consideration will be given to properties and entities that can demonstrate they have been adversely impacted by the EB-5 failed projects.
• The Discover Newport Business Grant Program, a set-aside funding opportunity of the NDF, aimed at incentivizing businesses to expand or locate within the City of Newport, growing job opportunities and attracting visitors to the Newport area. This competitive business grant program will award $5,000 to $20,000.
The amount of money funding the programs is $1,529,215.71.
Currently, the NDF is accepting Letters of Intent to apply for these two programs. Interested applicants can find the eligibility criteria, application guidelines and the submission form on the Vermont Agency of Commerce and Community Development website: https://accd.vermont.gov/economic-development/funding-incentives/newportdevelopmentfund.
Dolgin said serious investment plans will succeed in the application process.
“Hopefully it’s stringent enough to have applications know we mean business, but flexible enough to make it accessible,” she said.