A federal program promised to bring foreign investment to remote parts of the country. It soon became rife with fraud.

When the scheme became public, Vermont’s governor said, “We all feel betrayed.”Illustration by Álvaro Bernis

As the general manager of the Jay Peak ski resort, Bill Stenger rose most days around 6 A.M. and arrived at the slopes before seven. He’d check in with his head snowmaker and the ski-patrol staff, visit the two hotels on the property, and chat with the maintenance workers, the lift operators, the food-and-beverage manager, and the ski-school instructors—a kind of management through constant motion. Stenger is seventy-five, with white hair, wire-rimmed reading glasses, and a sturdy physique that makes him look built for fuzzy sweaters. He told me recently, of skiing, “I love the sport. It’s a dynamic sport, and, if it’s properly taught, it is life-changing.” On April 13, 2016, he had finished his morning rounds and was drinking coffee with the head of the snow-grooming department when his assistant called. “You need to come over to the office right away,” she said, sounding nervous. “Some folks from the S.E.C. are here.”

Stenger shows an ability to cling to optimism even when the facts don’t warrant it. He didn’t panic at first. “For all I knew, they were coming to take a tour of the place,” he told me. He drove down to the cluster of trailers that served as the resort’s administrative hub and noticed five or six black S.U.V.s in the parking lot. Inside the office, his staff was standing around awkwardly. A lawyer named Jeffrey Schneider told Stenger that the Securities and Exchange Commission was seizing the resort from Stenger’s business partner, Ariel Quiros. It was also seizing Burke Mountain, another ski hill owned by Quiros, an hour away. At that moment, Quiros’s office in Miami was being raided by S.E.C. agents. Schneider handed Stenger an eighty-one-page document alleging that Stenger and Quiros had committed fraud.

Jay Peak sits at the northern end of Vermont, twenty minutes from the Canadian border, and has one of the heaviest snowfalls in the region. It was, for many years, an obscure hill known for deep powder and glade skiing, visited primarily by locals, Canadians, and hard-core enthusiasts. “You could look around at the guests and see people with a lot of duct tape on their equipment,” Mark English, a real-estate agent in the area, told me. “Someone who was addicted to skiing, but didn’t necessarily have a lot of money—that’s who came to Jay Peak.” The area was relatively poor, and jobs were scarce. But, in the early two-thousands, Stenger developed a scheme to expand the resort and create jobs. He raised money using the EB-5 visa program, which aimed to channel foreign investments into businesses that created jobs for Americans, especially in rural or economically depressed parts of the country. For five hundred thousand dollars (the amount has since risen to nine hundred thousand), foreign investors and their families became eligible for green cards, so long as that money succeeded in creating at least ten jobs. “On balance, it’s a good program,” Stephen Yale-Loehr, a law professor at Cornell, said, “in that projects that couldn’t find traditional bank financing have been able to use EB-5 money to get their projects off the ground.”

Stenger persuaded Quiros to back his plan to use EB-5 funding to transform the property into a four-season resort, with a golf clubhouse, an ice rink, an indoor water park with a retractable glass roof, and a wave pool. Quiros later bought Burke Mountain, and hoped to develop that property as well. At Stenger’s urging, he had also acquired a plot in the town of Newport, where Stenger lived, with plans to build a vast biotech facility that would manufacture sophisticated medical products, including dialysis machines and artificial organs (such as portable heart-lung pumps and synthetic livers). They predicted that, all together, the projects could create about ten thousand new jobs. Stenger flew around the world, wooing foreign investors with the promise of a green card. In total, he raised three hundred and fifty million dollars. “Had the plan I was working on been completed, it would have transformed this community forever,” he said.

The S.E.C. accused Stenger and Quiros of perpetrating a “massive” fraud, misusing more than half the money raised. Quiros had allegedly funnelled much of it through a variety of shell companies, and back into his own pocket—pilfering fifty million dollars, for example, to pay his taxes and to buy a condominium in Trump Place, in Manhattan, among other things. Stenger was not accused of stealing money himself. But, according to the S.E.C., he had presented fraudulent job and revenue projections for the projects to encourage further investment, and then looked the other way as Quiros enriched himself. Peter Shumlin, Vermont’s then governor, who had once described Stenger and Quiros as “miracle-makers,” held a press conference at the statehouse, and said, “We all feel betrayed.”

As Stenger read the document from Schneider, federal agents fanned out across the resort, and experts secured the computer systems. Jay Peak was handed over to a court-appointed “receiver,” who would safeguard the property for investors while the case proceeded. The staff was instructed to continue in its duties as normal, and guests didn’t seem to notice anything unusual. After Stenger finished reading the complaint, he stood up and slammed it on the table. “I don’t know anything about this,” he said, adding, “I need to call my wife.” Schneider recalled that Stenger seemed shocked, and that his eyes started to water. Stenger, he told me, “was either very surprised by what he was reading, or he was acting very surprised by what he was reading.”

Rural Vermont is not alone in its struggle to create jobs. Population density is an important factor in generating economic prosperity, putting more remote areas at a disadvantage. In the past fifty years, major metropolitan regions such as Austin and New York have benefitted from a virtuous cycle. The presence of educated workers attracts employers, and vice versa, creating diverse and well-paying jobs. In rural areas, and even in smaller cities such as Detroit and Buffalo, globalization has led key employers—auto or textile manufacturers, say—to leave, prompting more businesses to close, ushering in a downward spiral. In the late nineties and the two-thousands, for example, the influx of cheap furniture from Asia caused half the jobs to disappear from North Carolina’s furniture-manufacturing industry. Robeson County, in the south of the state, once hosted thriving factories; the poverty rate there is now more than twice the national average. Throughout the country, the widening wealth gap between rich city dwellers and everyone else has created, in a sense, two parallel societies, helping to fuel political polarization. During the last Presidential election, Joe Biden won fewer than five hundred counties, but, according to one estimate, they together represented about seventy per cent of America’s economic activity; Donald Trump won five times as many counties, but they represented only about thirty per cent of the nation’s economic activity.

Once an area is in decline, the trajectory is hard to change. Arthur Woolf, a retired economics professor at the University of Vermont, pointed to Hardwick, a town of three thousand people in central Vermont, which fostered an artisanal-food-based economy that local leaders hoped would bring business to the area. A premier cheese producer, Jasper Hill Farm, is there, and the surrounding area hosts several fancy breweries, an organic-vegetable purveyor called Pete’s Greens, and several farm-to-table restaurants. One local wrote a book called “The Town That Food Saved,” which described how the model could be replicated elsewhere. But five years ago Woolf researched the claims of Hardwick’s boosters, and found that the effort hadn’t made a substantial difference to local employment in the previous fifteen years. “These are long-term structural factors that are really hard to reverse,” he told me.

The idea behind the EB-5 program was that visa-seeking foreigners might be more willing to pour money into low-income areas than domestic investors. After the program was signed into law, in 1990, ten thousand green cards were set aside each year for people willing to invest. Doug Bereuter, then a Republican congressman, framed the law as a violation of American values, noting that he was saddened to learn that American citizenship was “for sale to the highest bidder.” But the arrangement also had its fans. “The EB-5 program, in a nutshell, is a job-creation program,” Matt Gordon, who runs the E3 Investment Group, which advises foreign investors, told me. “You have wonderful people who are immigrating to America, and they’re investing their capital with U.S. entrepreneurs.”

In the first decades of the program, a tiny fraction of the visas were used. But, over the years, a few changes made it more attractive. Congress allowed for pooled investments—the combining of funds to finance larger, potentially more lucrative developments. It also made the job-creation requirement more flexible: a foreign investor could now claim that jobs were created “indirectly” because of the money. After the 2008 financial crisis, banks and other institutions pulled back on their lending, leaving entrepreneurs desperate for cash. Those familiar with the EB-5 program saw this as an opportunity. An army of middlemen—legal advisers and brokers—began scouting for projects in need of funding, recruiting foreign investors, and, when the deals went through, earning finders’ fees amounting to tens of thousands of dollars per investor on a given project. Initially, some of these middlemen were former federal immigration officials. Harold Ezell, a former commissioner for the Immigration and Naturalization Service who became an immigration consultant, told the Times, “We’ve done a great job with boat people, and I think that a few yacht people are not going to hurt America.”

Soon, brokers were holding meetings for investors at fancy hotels around the world. “People like to have a second passport,” Gordon told me. China has been the largest source of investors, and, recently, Gordon has noted an increase in demand. When I asked why, he said, without hesitating, “Oh, fear,” and noted that China’s President, Xi Jinping, has, in the past decade, been “at war with the wealthy class, and people are genuinely afraid.” EB-5 funding has supported worthy projects. In rural West Virginia and Pennsylvania, it helped create two opioid-addiction treatment centers. A development at the Sugarbush ski resort, in Warren, Vermont, ran out of conventional funding in 2008, but was completed with EB-5 funding, saving an estimated eight hundred and sixty jobs. “We paid back the investors in about a decade,” Sugarbush’s former owner told me.

Over time, though, people began to put the program to more creative uses. In 2015, the developers behind Manhattan’s Hudson Yards raised at least $1.2 billion in EB-5 financing for a project that included a luxury shopping mall, condos, and an office tower. It was the most expensive real-estate development in U.S. history. The Times described it as a “vast neoliberal Zion.” In order to qualify for the most favorable tier of EB-5 financing, available only to areas with high unemployment, New York’s economic-development agency hired an economist to create a map with a string of census tracts that awkwardly stretched to include Central Park as well as a cluster of housing projects at the northern end of the city. “They called it ‘the Snake,’ ” Michael Gibson, an EB-5 investment adviser, told me. “The minute they figured out they could do this census-tract manipulation—really gerrymandering—all of this blew up.”

Other projects employed the same strategy. A hundred-and-fifty-million-dollar Waldorf-Astoria was completed in Beverly Hills using a redrawn map of twelve connected tracts. A Chinese-themed hotel complex and casino called Resorts World went up in Las Vegas, financed through almost a billion dollars in EB-5 funding. In 2016, Jared Kushner’s family used the program to build a fifty-story Trump-branded luxury-apartment building in New Jersey. The following year, Kushner’s sister Nicole Kushner Meyer pitched another such development to a ballroom full of potential investors in China. An ad for the event read, “Invest $500,000 and immigrate to the United States.”

Bill Stenger lives in a comfortable two-story house in Newport, Vermont, overlooking Lake Memphremagog. The space is lined with dark wood and crammed with candles, flowers, and a painted sign that reads, “A Day at the Lake with Friends & Family . . . Priceless.” When I visited him there recently, the two of us sat at the dining table, which was covered with files from his years marketing Jay Peak. Stenger grew up in Corning, New York, where he spent his childhood winters coasting down hills on wooden skis. In 1964, he went to Mont Tremblant, in Quebec—his first experience at a real ski resort. Stenger said, of his first run, “When I got to the bottom and looked back up and saw the fresh tracks, I had such a rush that I’ll never forget.” In 1975, he began working in the ski industry. He taught his wife, a nurse named MaryJane, to ski at Killington, one of Vermont’s better-known ski areas.

Stenger has trouble containing his passion for the sport. He cites a theory advanced by John Kitchin, a neurologist who left medical practice to spend his days rollerblading blissfully on the San Diego boardwalk. Kitchin believes that lateral movement of the sort involved in rollerblading and skiing stimulates the otolith, a piece of calcium carbonate that sits on a person’s inner ear and triggers feelings of flow and euphoria. Stenger said, of ski slopes, “People are there to have a wonderful time with their families, their kids. There’s nothing negative about it.”

In 1984, Jay Peak’s owner, Jacques Hebert, brought Stenger on as the resort’s general manager. Jay Peak was beloved, but it lacked proper snowmaking equipment, and the lifts required upgrades. “I was excited to go to a place that needed help,” Stenger said. Close to the mountain, there were few places to stay, and this restricted the number of people who could visit. Stenger always hated the month of April, the end of the season, when he had to lay off hundreds of people. Virgil Starr, a diminutive seventy-three-year-old maintenance worker, told me that his wife, mother, daughter, and all four of his brothers had worked at the resort in some capacity. Each spring, when Starr was laid off, he took a job at a local plywood factory, but he preferred laboring outdoors at Jay Peak. He said, of the resort, “Working here kept me young and spry and occupied.”

In the nineties, Stenger started sketching out an ambitious redesign that would make the resort viable year-round. “The thing I loved about this master plan was that it would allow me to keep my employees,” he said. He shopped for potential backers, starting with some of the Canadian bankers who skied on the mountain. Joseph Gresser, the editor of the Barton Chronicle, a local paper, told me that every few years Stenger would announce that he’d found someone to help transform Jay Peak into a four-season resort. “And, every time, something happened,” Gresser said. “They looked at the underlying numbers and decided it wasn’t a good investment. There was a recession. Whatever.” Jay Peak is in a part of Vermont known as the Northeast Kingdom. Tom Kavet, an economist for the Vermont state legislature, told me, “There have been many state programs that have tried to bring jobs to the area, but nothing really worked.”

Soon, Stenger learned about the EB-5 program. He teamed up with the administration of Howard Dean, the governor at the time, to create the nation’s first federally authorized regional EB-5 center operated by a state. The center promised to monitor any such projects. In 2006, Hebert, Jay Peak’s owner, suddenly died. Stenger set out to find a buyer for the resort, and started talking with Ariel Quiros, a Jay Peak condo owner. Quiros has rounded shoulders and a cool gaze. He grew up in Harlem and has said that, as a child, he sold Chiclets gum to classmates to make money. “When you have to survive, that’s when you become an entrepreneur,” he later told VTDigger, a local news site. He served in the military and was stationed in South Korea, where he met his wife. Quiros has said that, after leaving the Army, in 1980, he worked as a fixer, helping the Korean government develop trade with American companies. Eventually, he settled in Miami and ran an import-export business. “I was kind of a deal maker,” he later told the S.E.C. in a deposition. “I was always trying to make the Koreans understand what the Americans are trying to think . . . and vice versa.” (Quiros could not be reached for comment.)

Stenger’s son, Andrew, the facilities director at Jay Peak, said that he distrusted Quiros and his associates “from the get-go.” A former state official told me, “I left our first meeting feeling like I needed to take a shower.” But Stenger was impressed by Quiros’s wealth. “He always went to the retail shop and bought a lot of clothing,” Stenger said. “He was a big tipper, a big spender, and the staff liked him.” One of Stenger’s lawyers, Brooks MacArthur, told me, “When presented with someone with status, Bill Stenger is like a kid meeting Mickey Mantle.” Gresser said that Quiros was “the guy central casting would send over if you were looking for someone to play a dodgy character. No one would have believed him, except that Bill Stenger vouched for him.”

Stenger had already helped to raise $17.5 million from foreign investors for the expansion of Jay Peak. He encouraged Quiros to buy the resort, and offered an incentive: as a sort of developer fee, Quiros would get a payment amounting to about fifteen per cent of the construction budget—totalling millions of dollars. In 2008, Quiros bought Jay Peak for about twenty-five million dollars. Stenger was made C.E.O., and Quiros gave him a fifteen-per-cent ownership stake in the resort, which could grow to twenty per cent in five years. Quiros consolidated the project’s finances at a bank called Raymond James, based in Florida, where his former son-in-law, Joel Burstein, was employed as a broker. Looking back, the fact that Quiros was having a relative conduct the project’s finances should have raised questions. But this is one of several subjects about which Stenger claims ignorance. “I did not know much about Raymond James,” he told me. “I didn’t know that its banking department was relatively small compared to its investment department. My bad.”

In the years that followed, Stenger proved a wildly successful fund-raiser. He worked with an EB-5 consultant named Douglas Hulme, who connected him with investors abroad and received a fifty-thousand-dollar “administrative fee” for each investor he found. Stenger flew business class to Japan, China, Vietnam, the United Arab Emirates, South Africa, Colombia, Brazil, Bolivia, Argentina. Many of the potential investors were women and their college-aged children, which Gordon, the investment adviser, told me is typical: wives often go abroad with their children, while husbands continue to work in their home countries. Stenger liked most of the investors he met, and invited many to stay at Jay Peak and “see what they were a part of”; when a Russian “oligarch knockoff” offered a million dollars in cash as an investment, though, he refused.

Often, state officials from the Agency of Commerce and Community Development, which housed Vermont’s regional EB-5 center, joined Stenger on the trips. They touted their robust oversight, saying that they were monitoring the investment activity and collecting regular reports. Stenger made several thousand dollars’ worth of donations to Patrick Leahy, Vermont’s longtime senator, and Peter Welch, then a congressman. Leahy wrote Stenger a letter, later included in marketing materials, which noted, “Your vision, and the vision of your investors, has helped put several hundred people to work in a region devastated by a global recession.” Leahy—who Stenger said became a “pretty close friend”—even popped in on an investor meeting in Ireland to praise the project, and brought Welch to another such meeting in Vietnam. “Between you and me, when a U.S. senator acknowledges you, that’s a plus,” Stenger told me. (Leahy and Welch did not respond to requests for comment.)

Construction began on Jay Peak’s hundred-and-twenty-room hotel and its indoor water park. “Things went crazy,” Starr, the maintenance worker, told me. “It was just phenomenal.” Rob Conrad, a local contractor, said, “They started having to hire housekeeping and maintenance services for those buildings. It was a boon to the community.” Governor Shumlin told me he was impressed: “There were hundreds and hundreds of people working there in hard hats, creating jobs.”

Stenger’s public profile rose enormously. He served on the governor’s economic council, and was granted the Citizen of the Year award by the Vermont Chamber of Commerce. He continued to live in the same house and collect the same salary as he had as general manager, around two hundred thousand dollars a year. But he was confident that, once the expansion was complete, his ownership stake would make him wealthy. Quiros, meanwhile, bought two expensive apartments in Manhattan. Between 2012 and 2016, he donated thousands of dollars to the state Democratic Party and to Shumlin, and the two became close. Quiros liked to project power around the governor, suggesting at one point, according to Shumlin, that he might be able to arrange for Vermont to access cut-rate heating oil through his Venezuelan contacts. In 2013, Shumlin took Quiros up on an offer to stay in one of Quiros’s Manhattan apartments while visiting the city, and stayed there again to celebrate his daughter’s birthday. (“I don’t like spending taxpayer money,” Shumlin told me. “So, when anyone offered me their place as governor, and I could stay with them or in their apartment, I did it.”) Shumlin also joined Stenger during two fund-raising trips, including one that passed through Beijing, Shenzen, Ho Chi Minh City, and Shanghai.

Insiders, though, were beginning to raise questions. Jay Peak’s chief financial officer, a C.P.A. named Mike Du Pont, who snowboarded in his spare time, later told government agents that Stenger struck him from the beginning as “in over his head.” Quiros controlled who had access to the financial statements. When Du Pont finally got to look at one, he noticed an irregularity: some of the investor funds were not available, because Quiros had used them as collateral on a margin loan. Du Pont quit, and was replaced by an accountant named John Carpenter, who was given the title of “controller.” He, too, was denied access to the statements. He became concerned that money raised for specific construction projects was being used to cover other expenses, something he believed was a violation of the company’s agreements. “There has been so much co-mingling of funds via transfers . . . that this has become quite a mess,” he wrote in an e-mail to Stenger. Carpenter eventually quit, too. (Du Pont and Carpenter did not respond to requests for comment.)

For publicly traded companies, news that a C.F.O. and his replacement had resigned in swift succession would likely be interpreted as a sign of trouble. But Jay Peak’s development continued apace. In 2012, Quiros surprised Stenger with the news that he had just purchased the nearby Burke Mountain, for ten million dollars. As Stenger recalled, Quiros said that investors in Korea had provided the funds; Quiros renamed it QBurke and installed his son as C.E.O.

Stenger told me that he was unhappy with the purchase, and felt that Quiros had rushed into it. But this doesn’t seem to have tempered his ambition. He soon persuaded Quiros to launch an even bigger project: a six-hundred-million-dollar plan to develop the town of Newport. The idea was almost comical in scale. It included a seventy-five-thousand-square-foot facility to be operated in partnership with AnC Bio, a Korean biomedical firm that was run by a friend of Quiros’s. The facility would make medical products and offer clean rooms for medical research. Stenger and Quiros also planned to build a hotel, a conference center, and a residential and retail complex, and to expand the local airport. Stenger hoped the effort would transform the town into a mini Silicon Valley.

The idea that highly paid scientists and executives would want to live in rural Vermont struck some locals as unlikely. Newport’s major employers include a helmet-manufacturing firm, the public-school system, and a state prison. Woolf, the University of Vermont economist, told me, “It’s a depressed city. There’s a lot of poverty, and there’s not much going on there.” But Stenger insisted that Newport’s location—within several hours of Quebec City, Montreal, and Boston—would be a draw. In a video for the Times, which accompanied a glowing article about the project, he noted, “No one would ever have the faith to invest in here in any meaningful way because it’s so out of the way. .. . But we are, because we are from here. We have a vision.” Senator Bernie Sanders, Leahy, Welch, and Shumlin all attended a press conference announcing the Newport project. Patricia Moulton, the former secretary of Vermont’s Agency of Commerce and Community Development, told me, “For a lot of people in the community, it was, like, ‘Finally, we’re going to get our piece of the economic activity.’ ”

As far back as 2013, the Securities and Exchange Commission issued a warning to investors about fraud in the EB-5 program. In February of that year, it halted a scheme in which a developer, Anshoo R. Sethi, raised a hundred and fifty-six million dollars, mostly from Chinese investors, for a zero-carbon-emissions hotel and conference center in Chicago. Sethi, who was only twenty-nine, misrepresented his résumé, pretending to have fifteen years of experience in the hospitality industry. He never even applied for most of the building permits, and blew millions of dollars on personal purchases, including a cosmetic-surgery procedure that he gave as a present to his girlfriend. Sethi pleaded guilty to wire fraud, and was sentenced to three years in prison and ordered to repay investors. (Sethi’s attorney did not respond to requests for comment.) A few years later, a lawyer named Victoria Chan pleaded guilty to fraud and money-laundering charges after raising fifty million dollars in EB-5 funding to build a hotel and a shopping center in California. The F.B.I. alleged that she had used the money to buy almost thirty million dollars’ worth of private properties across the state; it also alleged that some of the investors who obtained green cards were fugitives wanted for committing crimes in China. (Chan declined to comment.)

The whole program, it turned out, lent itself to dishonesty. Faraway investors were desperate to get to the U.S., and didn’t keep close track of where their money was going. The lawyers and brokers got large transaction fees and had little incentive to point out potential wrongdoing. “Everybody was making millions of dollars, but very few people wanted to speak the truth about the riskiness of these investments,” Gibson, the EB-5 adviser, said. There was almost no governmental oversight built in. Although regional centers were supposed to monitor spending, there was no mechanism to insure that they were doing it. Moulton, the former commerce secretary, said, “As one who’s worked with a lot of federally funded programs, this was probably the loosest and least regulated federal program I’d ever encountered.”

In 2011, Gibson wrote multiple e-mails to the head of Vermont’s regional EB-5 center, asking if it was actually conducting the audits of the projects that it claimed to be. The state, it turns out, had reviewed none of the projects’ quarterly reports, as it had said it would. In an e-mail from 2014, Shumlin blamed this partly on a lack of resources: “We are running our staff ragged with travel and responding to inquiries and now complaints.” He told me that outsiders had different ideas about what the state’s monitoring was supposed to entail: “ ‘Oversight’ is a very broad word. It means different things to different people.” A local resident who happened to be a nurse researched the AnC Bio project on her own and then sent a twenty-one-page footnoted report to the state attorney general’s office. The artificial organs that Stenger promised would be manufactured at the new facility were years away from F.D.A. approval and commercial viability. Quiros, she discovered, had been involved in several previous failed ventures, and was facing a pending lawsuit from some unhappy investors. (The suit was later settled on undisclosed terms.)

In 2012, Hulme, the visa broker Stenger had been working with, pulled out of the projects (after making eighteen million dollars in fees), and released a letter saying that his company “no longer [had] confidence in the accuracy of representations made by Jay Peak, Inc.” He then hired a lawyer and went to the S.E.C. with concerns that the projects’ money was being mismanaged. (Hulme did not respond for comment. Quiros later told investigators, “When this SEC gets over with, I’m going to go after that man, I promise you. I will kill that man for what he did.”) At about the same time, Stenger sent letters to a group of early investors telling them that, in an unusual move, their ownership stake in Jay Peak had been converted to an I.O.U., which Quiros would repay in the course of ten years. This struck several investors as theft, and they started complaining to state officials. Moulton said that, when she asked Stenger for an explanation, “he was brushing it off.” (Stenger denies this.) A few months later, Anne Galloway, the founder of VTDigger, published a story about the accusations being made by the investors.

Within the state government, there was a mounting sense of alarm. Several Korean-speaking interns had found online that AnC Bio, which had been described as a thriving biotech firm, was actually in serious financial trouble in Korea. Its headquarters had been auctioned off by the government, and the address in Seoul that it had been using on U.S. marketing materials apparently didn’t exist. That fall, Shumlin directed the state’s Department of Financial Regulation, which had subpoena power, to investigate. When Michael Pieciak, the department’s deputy commissioner, pressed those involved on the projects’ finances, they were evasive. “I remember the lawyer saying, ‘Well, Mr. Quiros is a man of untold wealth,’ ” Pieciak recalled. “It caught my attention.”

The S.E.C. had also started quietly investigating the projects, and soon the F.B.I. did as well. The lead F.B.I. agent on the case, Jennie Emmons, told me that she’d visited Jay Peak a few years earlier, on vacation with her kids. After driving through miles of remote farmland, she said, she was “blown away” to see the enormous scale of the construction happening on the hill. “Someone told me Chinese money had built this,” Emmons recalled. “The whole thing just sounded crazy to me.”

It quickly became clear that the Jay Peak project had been fraudulent from the start. According to the S.E.C., Quiros had illegally used EB-5 money to buy Jay Peak. In 2008, Stenger had already raised more than seventeen million dollars, earmarked for construction. Quiros’s former son-in-law, Burstein, wired the funds to an account controlled by Quiros, who then put them toward the purchase of the resort. Quiros used a similar scheme to buy Burke Mountain. (Burstein could not be reached for comment.) From then on, according to the S.E.C., Quiros ran the financial side of the operation like a Ponzi scheme, taking money from new investor rounds to fill the holes in the previous ones.

Quiros and two associates also created falsified financial projections with padded expense numbers: they listed forty million dollars for “construction fit out and equipment,” for example, when the real estimate was twenty-eight million, leaving twelve million to divide up among themselves. Quiros used the funds to buy hundreds of acres of land, and several homes in Vermont. “There were a million rabbit holes,” Emmons, the F.B.I. agent, said. In one document, Quiros and his conspirators planned out future illicit payments, including four million dollars for one of the associates and one million for Stenger. After months of work, state investigators created a chart showing how money had moved through dozens of different entities, and into Quiros’s pocket. It looked like a tangle of wires going every which way, and investigators referred to it as the “spaghetti map.”

Stenger’s defense is that he had no knowledge of what Quiros was doing with the money (a claim that investigators find implausible). He told me that, when he was later shown Quiros’s documents laying out plans for the secret payments, he was shocked—and also indignant that they imagined giving him so little. “The million dollars they had ascribed to me I found insulting, because I was entitled to a lot more than that, given what I was contributing,” he said. Still, investigators say that he promoted falsified projections, estimating, for example, that AnC Bio would sell almost three hundred million dollars’ worth of artificial organs in the first five years, even though the organs weren’t yet ready for market. Stenger said that he relied on third-party projections. “I live in Newport,” he told me. “How could I promote a facility that’s destined for failure in my own home town?”

Stenger insists that he had a sense that “something was going awry” only after he signed a new round of construction contracts, in 2015. Quiros told him that they had to slow down on creating new expenses; much of the money, Stenger recalled him saying, was “tied up in long-term notes.” This was odd, because the money was supposed to be sitting in a sequestered account. Soon, contractors started walking off the job because they hadn’t been paid. By this point, state officials were collaborating with the S.E.C. on its investigation. Nonetheless, officials allowed Stenger to continue trying to complete the projects, as long as investor funds were placed in escrow. “Our view was, a built hotel was better than a half-built hotel,” Pieciak told me. In marketing documents, Stenger downplayed the seriousness of the S.E.C.’s involvement, noting that the agency was reviewing all EB-5 projects and that “securities laws are being complied with.” He used these materials to raise almost forty million more dollars from investors in China.

According to Stenger, he hasn’t spoken to Quiros since the S.E.C. raid, in 2016. “I was stunned,” he said. When the S.E.C. receiver, Michael Goldberg, arrived to see the property, Stenger took him to the new Tram Haus Lodge, the golf clubhouse, the ice rink, the movie theatre–bowling alley, the indoor water park, and the wedding chapel, and to a collection of new bars, restaurants, and condos, all built with EB-5 money. Stenger drove Goldberg and his colleague Schneider to Burke, where the new hotel and conference center were nearly finished. “There was oil in the fry pans—it was that close to being operational,” Schneider recalled. Goldberg asked Stenger to continue working while the case proceeded, in order to retain his institutional knowledge. But, Goldberg told him, “the second I find you did anything wrong, you’re done.”

Quiros and Stenger both settled their charges with the S.E.C. The following year, the U.S. Attorney for Vermont indicted the pair. Both pleaded guilty; Quiros was sentenced to five years in prison, for wire fraud and money laundering, and Stenger was sentenced to eighteen months, for submitting falsified documents. (Burstein paid a civil fine while admitting no wrongdoing.) Paul Van de Graaf, a prosecutor on the case, characterized it as one of the most significant in the state’s history. “Many people in Vermont could not believe that something so bad had happened here,” he said. “We needed to show not only that it could but that it did.”

This past November, Stenger gave me a tour of Jay Peak. A brisk wind was blowing, and the ground was covered in the first snow of the season. While we visited the snowmaking room and the hotel, Stenger greeted employees warmly, asking detailed questions about their kids or ailing relatives. “Her dad works in the snowmaking division, and he’s a farmer,” Stenger said, about one employee. “He grows the best sweet corn.”

Just a few months earlier, Stenger had been released from a low-security federal prison in Ayer, Massachusetts, after serving half of his sentence. Quiros is still incarcerated. More than six hundred foreign investors lost money, and many never got their green cards, because of the projects’ failures. Felipe Accioly, an investor who moved to America from Brazil, is now at risk of being deported. “I lived in US for 10 years and I love the country,” he wrote to me. “However, I have lived the last 7 years” with officials “holding a dagger upon my head. . . . All I can do is pray and ask God to touch the heart of the immigration guys to be honest and fair.” The state recently settled a lawsuit with the projects’ foreign investors over its lack of oversight, agreeing to pay sixteen million dollars. Russell Barr, who represents the investors, said he is outraged that no government officials faced legal consequences: “If they were in private industry, they probably would have been locked up.” Stenger told me that he’s broke and filled with regrets. When I pushed him on how he could have missed such rampant fraud, and ignored so many signs that caught others’ attention, he claimed that he had been too busy to notice. “If you followed me around on a given day, running the resort, dealing with investors, raising money, thinking about the next project that was going on—my plate was overflowing,” he said, his lips trembling. “I look back on it now and say, ‘How could you be so naïve and careless?’ ”

Stenger takes comfort in the fact that the new, expanded Jay Peak is operational, which he sees as a sign that the development was justified. In 2022, it was sold to a resort group for seventy-six million dollars—significantly less than the amount that went into it. During the ski season, the restaurants and the lift lines are busy. But it’s a long way from paying off the investment. “A developer using their own money never would have built a hotel with two hundred and fifty million dollars in this part of Vermont,” Goldberg, the receiver, told me. “It was a bad business plan to begin with.” In 2022, Leahy and others in Congress made changes to the EB-5 program aimed at reducing the potential for abuse. The legislation limits a project’s ability to gerrymander maps, and sets aside funds to monitor for wrongdoing. Still, no one I spoke to felt that fraud in the program had been eliminated.

Stenger works for Goldberg occasionally, helping to sell the other properties. Currently, he’s trying to find a buyer for the flattened lot in downtown Newport where the hotel and apartments were supposed to be built—an area overgrown with weeds that townspeople refer to as “the hole.” He recently found a local snow-grooming-equipment manufacturer, Track, Inc., to occupy part of the intended AnC Bio building. When we visited, mold-remediation-spray equipment and giant fans were scattered around, left by workers. “Drugs are a big problem,” Stenger told me. “It’s hard to find reliable employees, and sometimes they disappear.”

The newly elected mayor of Newport, Linda Joy Sullivan, is optimistic that the town can become a magnet for tourists, and brushes off the idea that it has been permanently scarred. She envisions a quaint hotel and restaurant where the hole is, or even a museum. “Everybody calls it ‘the hole.’ I call it ‘the corner,’ ” she said. “I am working the best I can, and the most quickly that I can, to get this moving, but it doesn’t happen overnight.”

Van de Graaf, the prosecutor, told me that he doesn’t believe Stenger was motivated primarily by greed. But he makes his contempt clear when discussing him. “Stenger had a vision for making things better that was partly altruistic and partly driven by ego,” he said. “The mix of those things is for a psychologist to figure out, not for me.” Moulton, Vermont’s former commerce secretary, said she felt that he was at least partly driven by an ultimately flawed belief that he would bring positive change to the area. “Someday, there may be a syndrome named after this,” she said. “You just want to do good, and the ends may justify the means.” She added, “When everything went south, it was a bursting of a dream that I know a lot of people had. Every time I drive by it, I have to look away.” ♦

https://www.newyorker.com/magazine/2024/02/05/the-rural-ski-slope-caught-up-in-an-international-scam