BRATTLEBORO — Governor Peter Shumlin has named former Brattleboro resident Michael S. Pieciak commissioner of the Department of Financial Regulation.
“It's been mostly congrats,” the 33-year-old Michael Pieciak said with a laugh during a brief phone interview. “I'm happy to serve.”
The Department of Financial Regulation oversees the regulation of financial activities in the state and ensures consumers are treated fairly, Pieciak said. Shumlin appointed Pieciak to lead the department on July 5. His predecessor, Susan Donegan, left last month.
Pieciak grew up in the Brattleboro area. His family operates the accounting and tax firm Pieciak & Company, P.C., with offices in Brattleboro and South Hadley, Massachusetts. He graduated with a law degree from the University of Miami School of Law. Pieciak has practiced law at Skadden, Arps, Slate, Meagher & Flom LLP in New York and Downs Rachlin Martin in Burlington.
Roots in Vermont
After a childhood spent in Vermont, Pieciak said he left the state to experience life in the wider world.
He knew, however, that he'd eventually return once he'd experienced the “rigors” of living in New York City and working at law firms there.
A desire to contribute to the state that raised him motivated him to come home, Pieciak said.
Some in Windham County might remember Pieciak from his time as campaign manager for Attorney General William Sorrell in 2012.
Pieciak's interest in politics started when he was young. He said that he recently read through a letter from former Governor Howard Dean thanking Pieciak for grilling hot dogs during one of Dean's visits to Brattleboro. In another letter, Dean thanked the then-13-year-old for a $25 donation he made to the candidate's campaign.
The letter started as a generic thank you, Pieciak said. But at the bottom Dean wrote a personal thank you saying that $25 represented a lot of money to an early teen. The candidate told Pieciak that he hoped he'd do right by the gift.
Pieciak also served as executive page to Dean and as a Senate Judiciary Committee intern for Senator Patrick Leahy.
Exploring a new role
The Department of Financial Regulation has four branches: banking, insurance, securities, and captive insurance.
Captive insurance, explained Pieciak, pertains to insurance plans established in-house by one or more companies. Companies can receive financial and tax benefits through using captive insurance, he said.
Pieciak said these private insurance plans constitute an important part of the Vermont economy, generating a considerable amount of money in the state.
Vermont's captive insurance environment routinely earns the state a reputation as a good place to do business, he said.
“It's something we take great pride in,” Pieciak added.
According to Pieciak, the department he now leads generates about $100 million in revenue for the state's general fund annually. It's the second largest revenue-generating state agency behind the Department of Taxes. Most of the revenue generated by the Department of Financial Regulation comes through fees, fines, and registrations, he said.
Pieciak outlined an initiative for the department focusing on preventing elder financial abuse.
Vermont has the second oldest population in New England, behind Maine, he said. Scammers tend to target the elder demographic. Part of the targeting happens because the criminals take advantage of the elders' trust and good will, Pieciak said. In addition, the Baby Boomer generation holds a lot of the nation's wealth, he added.
Education for elders
The department's initiative would provide education to elders and their care givers and financial advisers on how to spot scams, identify abuse, stop abuse, and where to file a complaint.
A new state statute that became official in July mandates that financial professionals, like brokers and advisers, report suspected elder financial abuse, Pieciak said. He believes Vermont is the first state to require such reporting.
The Attorney General's office tends to deal with scams like “the grandparent scam” where someone sends an email claiming to be a grandchild asking for money, Pieciak said. His department is more concerned with dishonest financial professionals, friends, or family members taking advantage of elders.
In his previous role, Pieciak served as deputy commissioner heading the securities division. There Pieciak focused on economic development. He hopes to carry this focus to the whole department.
One of the initiatives he oversaw in the securities division was a rule change simplifying the state's Small Business Offering Exemption. This regulation allows Vermont startups to use local lenders. In a 2015 interview, Pieciak said that when he started at the Department of Financial Regulation, gathering local investments proved difficult. Before 2014, a businesses could raise only $500,000 from a maximum of 50 people (or $10,000 per investor).
New fundraising rules
Under the new Vermont Small Business Offering, companies can raise $1 million - or $2 million if the company uses audited accounts - from as many people as will invest, Pieciak said. This program allows small-business owners to raise money locally rather than seeking traditional loans investments through banks for venture capitalists, he said.
After the securities division updated its rules two years ago, it received fillings for nine local offerings. To Pieciak, that's a sign the program is working. In comparison, for the previous 15 years, the division received 14 filings.
“I find it to be a good alternative to other certain types of financing,” he said adding that not all small businesses owners have access to a rolodex of wealthy investors who can invest $10,000 or more.
Pieciak helped spearhead the state-level investigation - that eventually led to federal and state charges - into alleged fraud with EB-5 investment funding at the Jay Peak resort in the Northeast Kingdom.
Shumlin said in a recent news release, “[Pieciak's] intimate knowledge of the Jay Peak EB-5 investigation undertaken by the state is crucial as the case continues to work its way through the legal process. In addition to his good work on that front, [Pieciak] is a proven leader who will serve the Department well over these next few months.”
The Securities and Exchange Commission has alleged that Burke Mountain and Jay Peak ski resorts owner Ariel Quiros and CEO Bill Stenger misappropriated $200 million and misled more than 700 investors from multiple countries. The SEC has alleged that the funds came through the federal EB-5 program that opens a path to citizenship for those who invest at least $500,000 into approved U.S.-based projects that are expected to create jobs. Quiros and Stenger have denied the charges.
Pieciak said he wouldn't comment on ongoing litigation, but gave Shumlin credit for involving the Department of Financial Regulation and the Agency of Commerce and Community Development early in the EB-5 process.
Once these departments got involved, Pieciak said, issues with the resort's EB-5 funding quickly came to light.
“I'm very proud of our work on that front,” he said.
Pieciak also serves on the Vermont State Colleges Board of Trustees, is an observer-member of the SEC Advisory Committee on Small and Emerging Companies, and serves on multiple committees with the North American Securities Administrators Association.
Pieciak will serve as commissioner until at least January, when the next governor takes office.
“It's an honor to have been asked to serve,” Pieciak said. “I look forward to the challenges.”