Bill Stenger explains aspects of the AnC Vermont project at the groundbreaking in Newport in May 2015. Federal authorities would raid the offices of Jay Peak and Burke Mountain resort in April 2016 and take Stenger, Ariel Quiros (third from right), and William Kelley (eighth from right) into custody. Alex Choi (seventh from right) was also charged but has not been apprehended and charges have since been dropped against him. VermontBiz photos.
by Mike Donoghue, VermontBiz Correspondent
Vermont’s chief federal judge has struck down a request by former Jay Peak President William Stenger to have a $250,000 restitution order in his EB-5 immigration fraud case be forgiven due to claims of misconduct by state officials.
Chief Judge Geoffrey W. Crawford ruled in an 8-page decision that recent claims by the defense were not new and that he considered the issue had been resolved during Stenger’s sentencing in April 2022 in Burlington.
Defense lawyers David J Williams and Brooks McArthur of Gravel & Shea maintained they had been provided new evidence recently showing Vermont officials failed to act when told about serious investment problems for a proposed bio-medical facility in Newport pushed by Stenger and friends.
The information on which he relies to justify the timing of his motion is more than a year after the sentencing hearing has been in his attorneys’ possession for more than three years.
Stenger’s defense team immediately filed an appeal with the US Second Circuit Court of Appeals in New York City seeking a reversal to Crawford’s ruling.
The defense lawyers for Stenger said they believe state documents finally released after the sentencing clearly confirm earlier beliefs that Vermont authorities were alerted in early 2015 about serious financial concerns by the US Securities and Exchange Commission.
Department of Financial Regulation officials at the time, including then-Commissioner Susan Donegan and her then-deputy, Michael Pieciak, should never had allowed for the resumption of the marketing for a biomedical research facility planned for Newport, Williams and McArthur have said.
The US Attorney’s Office maintained the defense petition was fatally flawed because it is based on a faulty premise.
“The petition asserts that it is based on ‘newly disclosed evidence’ consisting of two documents, when in fact Stenger’s counsel had the documents since August 2019, more than 2 ½ years before Stenger’s sentencing hearing,” Assistant US Attorney Nicole Cate wrote.
Crawford said the defense was wrong and rejected the argument that the information was fresh.
“The defendant has failed to meet his burden of demonstrating extraordinary circumstances leading to a fundamental error in the prior criminal proceedings,” Crawford said about the sentencing for Stenger.
“The information on which he relies to justify the timing of his motion is more than a year after the sentencing hearing has been in his attorneys’ possession for more than three years,” Crawford said.
Williams said this week Stenger will keep fighting.
“I find it surprising that the US Attorney nor the US District Court seemed to care that high government officials would mislead both of them,” Williams said.
A federal grand jury indicted Stenger, a popular Newport businessman in May 2019 for 10 felony counts: six counts of wire fraud, three counts of making false statements and one count of conspiracy.
The charges stem from an ill-advised plan and promotion for the Jay Peak Biomedical Research Park EB-5 investment project, also known as AnC Vermont.
The judge had said earlier said the AnC Vermont project was “complete fiction” and it was never built.
“The project was a ghost,” Crawford said. He noted the defendants still raised $85 million from 169 investors between 2012 and 2016.
Stenger eventually 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 project.
Attorney Brooks McArthur discusses the case against his client Bill Stenger, left, following his arraignment in May 2019. VermontBiz photos.
Crawford sentenced Stenger to 18 months in federal prison for his part in the massive investor fraud case.
Stenger got to leave prison early due to health concerns in March after serving about 9 months.
The release to home confinement in Newport was related to health and COVID considerations and was made by the Bureau of Prisons over objections from federal prosecutors in Vermont, officials have said.
Crawford also placed Stenger on three years of supervised release conditions with the US Probation Office monitoring his conduct.
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 proposal was placed on hold by the Vermont Department of Financial Regulation in June 2014 after learning details about the SEC investigation that began in May 2013, records show.
The hold caused grief as unpaid contractors made the life of then-Governor Peter Shumlin miserable because they could not pay workers or purchase supplies for the project, the motion noted.
The defense motion noted former DFR General Counsel David Cassetty admitted he prepared a special memo on April 13, 2015, for Donegan for a private meeting with Elizabeth Miller, then-chief of staff for Shumlin.
I find it surprising that the US Attorney nor the US District Court seemed to care that high government officials would mislead both of them.
DFR eventually gave the venture the green light to further market the project.
Williams and McArthur said the DFR approval came even knowing that co-defendant and mastermind Ariel Quiros had misappropriated and misdirected investment funds.
“The newly disclosed memos prove that when the DFR commissioner lifted a hold imposed on the marketing of the ANC Bio VT project in April 2015, high ranking DFR officials were aware that the project was mired in fraud and that disclosures related to the project’s job projections and FDA approval of medical devices that were going to be manufactured at the project’s Newport facility were not reliable,” McArthur and Williams wrote.
The newly disclosed evidence demonstrates that the SEC investigators warned Pieciak as early as February 4, 2015, McArthur and Williams wrote.
“Quiros had misappropriated $20 million in ANC Bio VT investor funds to repay a margin loan Quiros had taken out to disguise his use of EB-5 investor funds to purchase the Jay Peak Resort in June 2008,” they wrote.
SEC investigators also told Pieciak, who served as the state’s liaison for the EB-5 project, that they had other concerns beyond the $20 million. The concerns included “the job projections, the anticipated FDA approval for medical products, the ownership of certain equipment and the real estate deal for the land in Newport,” the motion said.
The $250,000 restitution order for Stenger was directed for 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.
McArthur has continuously maintained Stenger’s co-defendants, Quiros, 67, of Key Biscayne, FL, and most recently from Puerto Rico and William Kelley, 74, of Weston, FL, were the ones to enrich themselves. McArthur has said Quiros received “tens of millions.”
McArthur repeatedly said throughout the case that Quiros and Kelley were career con men and fraudsters.
Crawford sentenced Quiros to five years in prison and has since denied a request for a reduced sentence. Kelly received an 18-month sentence.
Quiros and Kelly also have been directed by the court to make more than $8.3 million in restitution.
A fourth defendant, Jong Weon Choi, also known as Alex Choi of South Korea, remained on the run in the federal case from his indictment in May 2019 until the US Attorney’s Office in Vermont gave up and dismissed his 10 charges in June 2022.
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 Vermont project would create at least 2,200 jobs for the economically deprived Northeast Kingdom. Newport has one of the highest unemployment levels.
Assistant US Attorney Paul J Van de Graaf had wanted Stenger to pay $1.6 million in restitution for the administrative fees the investors had paid originally. 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.
Van de Graaf, a 35-year prosecutor, had rejected a proposal by the defense for Stenger to serve any sentence under home confinement.
Stenger had about 120 pages of supportive letters coming from all across Vermont, including current and former legislators, former chamber of commerce officials, educators and lawyers. Van de Graaf 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 for Stenger, but under the plea agreement the maximum sentence was capped at 5 years.
