Is Jay Peak audit at best ‘a whitewash’, and ‘at worst a cover-up?’

  • Written by GCBI Team Posted on September 25, 2020 | Updated on September 25, 2020 | 2 min read

A retired lifelong CPA with auditing experience views the interim audit of Vermont’s largest fraud as, “at best, a whitewash,” and “at worst, a cover-up to protect the state from litigation and outright incompetence and negligence.” The former auditor sees direction to defer interviewing state employees until after the legal proceedings conclude as “entirely unacceptable to an auditor.”

The VTDIgger, a Vermont publication that has diligently followed the Jay Peak fraud — both the largest fraud ever in EB-5 program history as well as the largest Vermont fraud of any kind — has published an analysis of the recent state interim audit by a local resident with former Chartered Public Accountant and auditing credentials. Don Keelan, a former CPA for over 50 years, has reviewed the state audit and his analysis is scathing. 

The Vermont State Auditor’s Office published a 32-page “Interim Report on EB-5 Program” to address the state fraud and determine the state’s role in it.

Background of the biggest EB-5 fraud of all time

The EB-5 fraud began in 2006; but it wasn’t officially detected until 2012 when the Securities and Exchange Commission (SEC) made the discovery. The interim audit states that 854 EB-5 investors, mostly Asian, invested $427 million into the Vermont projects. About $250 million of that figure was misappropriated. State civil charges were settled for very insignificant amounts and no state criminal charges were filed. In addition, no state employee ever lost their job for the negligence and the lack of oversight of the Vermont EB-5 Regional Center. 

Keely sees this as an egregious problem — the state’s largest fraud ever, occurring under official state oversight, never resulted in an investigation by the Vermont Legislature.

The review is not an audit, but a ‘printout of dates’

Beyond his condemnation of the lack of a real investigation into the events, Keely lambastes the interim audit as “not an audit of what transpired. It is merely a printout of the dates, agencies, federal and state laws/regulations, and players during the fraud’s seven-year history.”

The former auditor fails to find any “findings” in the report. And further, he is at utterly odd’s with the state’s direction to its auditor: “On the advice and request of the Attorney General’s office, we agreed to defer interviewing current or former State employees until certain legal proceedings were resolved since they may be called as witnesses.” 


Such advice, Keely maintains, is “entirely unacceptable to an auditor.” He goes on to say that never in his fifty-year-plus career has he ever seen direction by a client to not interview the organization’s staff. 

Keely’s review of the proceedings are chilling; at, at best, he calls it an “interim whitewash. At worst, a cover-up to protect the state from litigation and outright incompetence and negligence.”

Beyond the contemplation of whether or not the state of Vermont is hiding something, it’s hard to ignore the conclusion of a lifelong auditing professional — if the victims of the fraud were local citizens instead of a foreign nationals, the state would have acted entirely differently.

Read the VTDigger article