Tuesday, August 15, 2017

Investigative reporting by small Vt. news site leads to fall of big businessman, federal fraud charges

Anne Galloway (Twitter photo)
Journalists at rural newspapers can feel like David fighting Goliath when covering local top dogs, but the story of how a small Vermont news outlet took down a local hero shows that any reporter can provide dogged, comprehensive coverage of a controversial issue—and prosper.

When Anne Galloway founded the nonprofit online news outlet VTDigger in 2009, she was its sole employee. But when one of Vermont's most important and beloved businessmen, Bill Stenger, announced a multi-million-dollar ski resort in 2012, she thought it was too good to be true. "It was to be built in a region known as the Northeast Kingdom — an impoverished area of the state near the Canadian border, mostly known for dairy and Christmas-tree farms — and it promised 10,000 jobs," Jessica Huseman reports for ProPublica.

Galloway's small crew threw themselves into the issue: they filed suit over records, published local people's complaints that the development felt scammy, reported on Stenger's close relationship with state oversight authorities, and gained the trust of disillusioned ski-resort investors who thought things looked fishy. Their persistence paid off. After four years and dozens of stories, the Securities and Exchange Commission filed federal fraud charges against Stenger and his Miami-based business partner Ariel Quiros. The SEC likened the project to a Ponzi scheme, saying in its complaint that Stenger and Quiros "collected millions of dollars from foreign investors, pocketed some and paid for past projects with the rest," Huseman reports. "Newer projects were left incomplete, and investors were left bilked." The criminal investigation is still ongoing, but civil charges were also filed. Stenger denied guilt but reached a settlement with federal regulators over the civil charges; Quiros' civil case has not yet been resolved.

Today, Galloway has a team of 11 reporters and an annual budget of $1.3 million. Almost all of it is because of the reputation they built for tough, watchdog journalism during their investigation into the ski-resort scam.

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