Home » Bill Stenger gets 18 months for role in AnC Vermont EB-5 case – Vermont Biz

Bill Stenger gets 18 months for role in AnC Vermont EB-5 case – Vermont Biz

by Arifa Rana

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Bill Stenger, left, listens as his attorney Brooks McArthur takes reporters’ questions following his initial arraignment in May 2019. VBM photo.
by Mike Donoghue, Correspondent, Vermont Business Magazine William Stenger, the former president of Jay Peak resort, was sentenced Thursday to 18 months in federal prison for his part in a massive foreign investor fraud case. This is six years to the day that federal agents raided the offices at Burke Mountain and Jay Peak Resort, of which Stenger was president.
Stenger also was ordered to make $250,000 in restitution to a group of 36 investors that got swindled by making investments into the EB-5 program that provides residential immigration cards in exchange for $500,000.
Stenger had helped develop several businesses in the Northeast Kingdom based in part on false claims made to government officials in conjunction with the  immigration enhancement program.
Chief U.S. District Court Judge Geoffrey W. Crawford told Stenger, 73, he would be under federal supervision for 3 years once he is freed from prison.
Crawford agreed to allow Stenger to self-report to prison on June 7.  The court will recommend Stenger serve his time at the Federal Correctional Institution in Fort Devens, MA, because it has a hospital facility.  With good time he could be freed after 15 months.
Brooks McArthur, one of Stenger’s defense lawyers, had argued Stenger should be sentenced to home confinement.  He said he thought records show Stenger did not make any money off the fraud. McArthur said Stenger needed to take care of his wife of 50 years, Mary Jane, 73, of Newport.
Assistant US Attorney Paul J Van de Graaf countered Stenger needed to be held accountable and asked for a 5-year prison sentence.  Van de Graaf said Stenger may not have enriched himself as much as other co-defendants, but he still lives in a $500,000 home in Newport and collected a $200,000 annual salary – high standards for the Northeast Kingdom and Newport area.
Van de Graaf also had wanted the full $1.6 million in restitution for the administrative fees the investors had paid originally. Crawford ruled Stenger’s portion was $250,000. Van de Graaf said many people got scammed by Stenger, including the New York Times that produced a 5-minute video that was used to market the fraudulent program.
“Home confinement is not warranted,” said Van de Graaf, a 35-year prosecutor.
Several mentions were made about the large stack of supportive letters for Stenger – about 120 page coming from all across Vermont, including current and former legislators, former chamber of commerce officials, educators and lawyers.  Van de Graff said few, if any, fully understood the specifics of Stenger’s conduct.
The federal sentencing guidelines had recommended a prison sentence somewhere between about 11 and 14 years, but under the plea agreement the maximum sentence was capped at 5 years.
Stenger pleaded guilty in August 2021 to a felony charge of knowingly and willfully submitting a false document in January 2015 to the Vermont Regional Center (“VRC”) as part of his promotion of the Jay Peak Biomedical Research Park EB-5 investment project, also known as AnC Vermont project in Newport.
The AnC Vermont project was expected to raise $110 million from 220 immigrant investors to construct the biotechnology facility in Newport. EB-5 immigrant investors could qualify for permanent resident status – also known as seeking a “Green Card” — by investing $500,000 in a commercial venture to create jobs.
The AnC project in Vermont was “complete fiction” and was never built, Crawford noted. 
“The project was a ghost,” Crawford said.  He noted the defendants still raised $85 million from 169 investors between 2012 and 2016.
McArthur maintains Stenger’s co-defendants, Ariel Quiros, 66, of Key Biscayne, Fla. and William Kelley, 73, of Weston, FL, were the ones to  enrich themselves.  McArthur said Quiros received “tens of millions.”
Michael Goldberg, who was appointed the receiver in the case six years ago, testified Thursday he worked closely with Stenger to try to make things right.  Goldberg said he kept Stenger on the payroll until the federal indictment, but then had to fire him because of “optics.”  He said there was no evidence Stenger had taken any money he was not entitled to receive.
Goldberg said that was in sharp contrast to Quiros, who pocketed a considerable amount of money and continued to make claims long after the collapse of the project.
McArthur had previously called Quiros and Kelley career con men and fraudsters.
Quiros is facing more than 8 years in prison when he is sentenced next week.  He pleaded guilty in August 2020 to charges of conspiracy to commit wire fraud, money laundering and the concealment of material information.
Kelly, who is due for sentencing on Wednesday, reached a plea deal that could get him up to 3 years in prison. He has pleaded guilty to two felony counts: conspiracy to commit wire fraud and concealment of material information.
A fourth defendant remains on the run in the federal case in Vermont, officials have said.  Jong Weon Choi, also known as Alex Choi of South Korea, was named in the indictment.  Choi was convicted in South Korea for financial fraud in 2016 in connection with AncBio Korea, the Vermont indictment noted.  The proposed Vermont venture was tailored after the project in Korea, officials said.
The defendants had claimed the project would create at least 2,200 jobs for the economically deprived Northeast Kingdom.  Newport has one of the highest unemployment levels.
The AnC Vermont fraud involved two aspects: the defendants’ misrepresentations about job creation and future revenues, and the defendants’ misuse of investor funds.
Defense lawyer David J Williams focused much of the morning on the false job claims.  He tried to show the state and regulators had failed to do their jobs.  He called former Department of Financial Regulation Commissioner Susan Donegan to the stand to review documents and emails.
Many of the emails centered on communications with Stenger, her former deputy commissioner Michael Pieciak, who is now in the commissioner’s seat; former Commerce Secretary Patricia Moulton, and other members of Governor Peter Shumlin’s staff, including Chief of Staff Liz Miller and legal counsel Sarah London.
Also during the morning three of the victims were allowed to testify by virtual hearing.  At least one blamed the lack of proper oversight on the state of Vermont, one thought Stenger should not go to prison for his crimes and a third investor remains upset with Stenger because when she made a special trip to the United States to meet Stenger he looked her in the eye and lied, she told the court.
Background
The AnC Vermont project was the last in a series of projects valued at over $200 million in the Northeast Kingdom owned by Ariel Quiros and funded through the EB-5 immigrant investor program. The others included several projects at Jay Peak Resort, including a hotel, lodging, condos, an ice rink and the Pump House water park. At Burke, the Hotel Burke was completed and finally opened in September 2016, after the general fraud was disclosed. The raid by federal authorities and charges were presented by the federal government and the state on April 14, 2016.
According to court records and proceedings, the AnC Vermont project was designed to raise $110 million from 220 immigrant investors in order to construct and operate a biotechnology facility in Newport, Vermont.
EB-5 immigrant investors could qualify for permanent resident status (commonly known as a green card) by investing $500,000 in a commercial enterprise approved by the VRC, which had the authority to approve and monitor EB-5 projects in Vermont, and by USCIS.
In order to obtain a green card, each investor needed to demonstrate to USCIS that his or her investment had created, or would create within a few years, 10 jobs.
So, for the AnC Vermont project, it was necessary for Stenger and his co-defendants to demonstrate a plan to create at least 2,200 jobs in a short timeframe in order to obtain USCIS approval.
From 2012 to 2016, approximately 169 investors invested approximately $85 million in the AnC Vermont project, in addition to paying approximately $8 million in “administrative fees.”
Fundraising was never completed, and the AnC Vermont facility was never constructed.
Stenger pleaded guilty to submitting false documents to the VRC in January of 2015 as part of his effort to convince the VRC to allow him to continue marketing the AnC Vermont project.
As Stenger admitted during his change of plea hearing, due to VRC’s concerns about a number of aspects of the AnC project, Stenger had agreed with the VRC in late June 2014 to suspend offering and marketing of the project.
Stenger knew that he had to provide answers to questions from VRC about the project’s financial projections and about the status of US Food and Drug Administration approvals needed for commercialization of the products in order to be permitted to market the project again.
Stenger’s January 2015 submission addressed, among other things, these topics.
Both the financial projections and the FDA timeline impacted whether the project would create the number of jobs needed for the investors to obtain immigration benefits.
The AnC Vermont fraud involved two aspects: the defendants’ misrepresentations about job creation and future revenues, and the defendants’ misuse of investor funds.
Stenger’s guilty plea centered on the misrepresentation aspect of the fraud.
In connection with his sentencing, Stenger agreed not to dispute a broader set of facts asserted by the government in a sentencing-related brief, including that he participated in the misuse of investor funds along with co-defendants Ariel Quiros and William Kelly.
Their misuse of funds was principally caused by debts and cost overruns on earlier EB-5 projects, for which Stenger bore significant responsibility.
Stenger was the general partner for the EB-5 projects and assumed responsibility for how investors’ funds were used.
While Stenger was not principally responsible for executing the misuse of investor funds, he knew about and assisted in it.
Stenger hid the projects’ financial problems from the VRC, US Citizenship and Immigration Services (USCIS), and investors, and he repeatedly abused his position of trust to assure regulators and investors that the projects were successful, and nothing was wrong.
Co-defendant William Kelly pleaded guilty to wire fraud conspiracy and concealment charges in July 2021. His sentencing hearing is scheduled to occur before Chief Judge Crawford on April 20, 2022.
Co-defendant Ariel Quiros pleaded guilty to wire fraud conspiracy, money laundering, and concealment charges in August 2020. His sentencing is scheduled to occur before Chief Judge Crawford on April 29, 2022.
Both Quiros and Kelly agreed to cooperate in the government’s ongoing matters. Co-defendant Choi remains at large.
Nikolas P Kerest, United States Attorney, expressed his gratitude for the outstanding investigation assistance by the Federal Bureau of Investigation, IRS Criminal Investigation, the Food and Drug Administration, and for the assistance of the Justice Department’s Fraud Section and Office of International Affairs.
The prosecutors handling the case are Assistant US Attorneys Nicole Cate and Paul Van de Graaf.
William Stenger is represented by Brooks McArthur, Esq and David Williams, Esq. Ariel Quiros is represented by Neil Taylor, Esq and Robert Katims, Esq. William Kelly is represented by Robert Goldstein, Esq and Mary Kehoe, Esq.
RELATED ARTICLES
William Kelly pleads guilty to fraud charges related to the Jay Peak EB-5 AnC Vermont project
Quiros pleads guilty to Jay Peak EB-5-related fraud, faces 8 years
Stenger, Quiros indicted on multiple fraud counts
Quiros law firm settles case with Jay Peak receiver in EB-5 case for $32.5 million

 
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