February 9, 2017

MONTPELIER – The State of Vermont has released a cache of public records related to the state’s participation in the EB-5 program after VTDigger, represented by the ACLU of Vermont and Timothy Cornell of Cornell Dolan, P.C., sued for their release. VTDigger’s lawsuit alleged the state improperly withheld the records in violation of Vermont’s public records law. After the lawsuit was filed, the state finally released the EB-5 records and on Tuesday, lawyers for VTDigger and the State voluntarily dismissed the case.

The EB-5 program allows foreign entrepreneurs who make specified financial investments in the United States to apply for lawful permanent resident status. In April 2016, the State and the federal Securities Exchange Commission filed civil suits against several individuals and corporate entities alleged to have misused, in a “Ponzi-like” scheme, more than $200 million of these investor funds marked for projects in Vermont.

In light of these allegations, the United States Citizenship and Immigration Services (USCIS), the federal agency that administers the program, launched a review of the State’s continued participation in the program. To determine when the State learned of the potential wrongdoing, VTDigger filed a public records request for communications between the State and USCIS pursuant to that review.

But the State refused to release any records, claiming that they all fell within an exemption for records that “are relevant to litigation to which the public agency is a party of record,” in reference to the ongoing EB-5 state enforcement action.

VTDigger filed suit on October 18, 2016, alleging that the state’s claim to a blanket exemption was overbroad. One month later, the State disclosed a 131-page document composed of a 25-page letter to USCIS and various attachments. Although the document was heavily redacted, the state was eventually compelled to provide legal explanations for each redacted portion. With that information, as the state’s enforcement action proceeds, VTDigger will be able to assess whether the litigation exemption can lawfully continue to be claimed.

“The public records act is about ensuring that the government is accountable to the people it serves,” said Lia Ernst, ACLU-VT staff attorney. “Messes like the EB-5 scandal demonstrate the need for greater transparency in Vermont government, and yet overbroad exemptions to the public records law keep the public in the dark. In this case, Vermonters deserve to know what happened, what the State knew about alleged misconduct, and when it knew it.”

“Too often, the State of Vermont has hidden large secrets behind narrow exemptions,” said Cornell. “This case served notice that when they do this, we will call them on it.”

VTDigger has several more requests for records related to Vermont’s EB-5 program pending. Anne Galloway, founder and editor of VTDigger, said, “As VTDigger has done for years, we will continue to vigorously investigate and report on the EB-5 scandal.”