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Office of the Vermont Attorney General

Attorney General Files Motion to Dismiss EB-5 Claims Against State Defendants

October 10, 2017

CONTACT: Natalie Silver, Executive Assistant, (802) 595-8679

Attorney General TJ Donovan has asked the Lamoille Superior Court to dismiss a lawsuit brought by five EB-5 investors against the State of Vermont and ten current and former state employees.

Plaintiffs allege that they lost money invested in EB-5 projects run by Bill Stenger and Ariel Quiros. They claim that the State should have supervised these projects more closely and discovered misconduct including the alleged misuse of investor funds by Stenger and Quiros.

The State’s motion and supporting memorandum ask the Court to dismiss the complaint in its entirety. The memorandum argues that the claims against the individual Defendants should be dismissed based on legal principles that protect public employees who act in good faith within the scope of their employment. These protections are integral to the functioning of state and local government. They allow public employees to faithfully perform their duties without fear of reprisal or civil liability for every decision they make.

The memorandum also argues that the claims against the State itself have not been authorized by the Vermont Legislature. The Vermont Tort Claims Act allows persons harmed by state action to bring lawsuits against the State – subject to certain conditions and dollar limits. The memorandum argues that none of Plaintiffs’ claims satisfy the requirements of the Act, which is modelled on a federal law that has been copied by most states.

Also, the memorandum argues that the Complaint fails to satisfy Vermont’s pleading standards because it does not put Defendants on notice of any of the specific claims against them. For example, the Complaint does not specify any fraudulent activity by any Defendant. Finally, the State’s memorandum argues that the Complaint is expressly barred by the federal court order that appointed the Receiver in the SEC’s lawsuit against Quiros and Stenger. That order gives the Receiver “exclusive” authority to pursue claims for the benefit of investors.

The parties have agreed that Plaintiffs’ deadline for responding to the State’s motion is January 8, 2018.

Last modified: March 12, 2018