[W]illiam Kelly works mainly out of an office in his sprawling $1.75 million home in South Florida.
The 7,474-square-foot residence is located on Stallion Lane in the town of Weston, which bills itself as one of the Sunshine State’s “most desirable communities, both residential and corporate.”
Kelly, 67, spent more than seven hours in July 2014 in the Miami office of the U.S. Securities and Exchange Commission. He was there to answer questions about his role in the development of a $110 million biomedical center in downtown Newport, a remote Vermont town near the Canadian border and about 1,625 miles from his home office.
That development, now stalled, is one of several projects that are part of federal and state lawsuits alleging investor fraud leveled earlier this year against Kelly’s longtime friend and business associate Ariel Quiros, a fellow Florida resident, and Bill Stenger, of Newport.
Quiros and Stenger are developers of Jay Peak and other projects in the Northeast Kingdom, including the biomedical center.
One of the allegations regarding the biomedical center in the state lawsuit claims that North East Contract Services LLC, owned by Kelly, was paid $7.9 million by Quiros “for construction supervision services that do not align temporally with, and far exceed, the value of payments made to contracted suppliers.”
According to the lawsuit, NECS’ “practice” was to keep 32 percent of that money, with 68 percent going “to various entities owned or controlled by Quiros.”
The biomedical project, as a result of the “misuse and misappropriation” of funds, faces a significant budget shortfall, according to the lawsuit.
There is at least $84 million in outstanding construction work, the lawsuit states, but only $41 million left in available funds and fundraising capacity.
Allegations in the federal lawsuit mirror those in the state action.
Kelly and Quiros have been involved in numerous businesses together over the years, according to public record searches.
In one company, Technology Tree Inc., two investors filed a lawsuit in Texas alleging they didn’t get back all their money in 10 years. Quiros and Kelly eventually prevailed, winning the case on appeal.
“He’s made some hard decisions that sometimes those of us around him have a hard time following,” Kelly said of Quiros in a 2014 interview with VTDigger.
“But he makes good decisions, and we do follow them because we know at the end of the day they’re the right decisions,” Kelly added. “We’ve all been around long enough to know they’re the right decisions.”
Kelly’s deposition regarding the proposed biomedical center in Vermont took place July 24, 2014, and lasted from 10:22 a.m. to 5:57 p.m.
A 301-page transcript, marked as Exhibit 37, is attached to the SEC lawsuit against Quiros and Stenger.
In a background questionnaire prepared days prior the deposition, Kelly stated he served in the U.S Marine Corps and was a Vietnam veteran.
He earned a bachelor’s degree from the University of Massachusetts at Amherst in 1978 and a law degree from Western New England School of Law in Massachusetts in 1982, according to the questionnaire.
Asked if he ever held any professional licenses, Kelly responded that he did not.
He stated he was a self-employed consultant based in Florida as well as the chief operating officer of Jay Peak Resort, starting in August 2011.
In the deposition, two attorneys and an accountant asked questions on behalf of the SEC. Attorney David Gordon of New York, representing Kelly, only jumped in occasionally to raise issues of attorney and client privilege.
Kelly appeared confident in his answers.
He often referred to the questioners by their first name as he walked them through his role in the complex series of transactions involving his company.
Kelly said while he had an office in the same Miami building where Quiros’ offices are located, he wasn’t there much. He said he worked mostly from an office in his Florida home in Weston.
Kelly’s wife, Kelly D. Kelly, is listed as a registered agent with Deshazor Designs, a company with the same address as the couple’s residence in Florida, according to public records.
“Deshazor Design is a company that’s been in the design business for a number of years, and they provide services to me in terms of, for all intents and purposes, the lobby and customer acceptance area design,” William Kelly said in his deposition.
He added that the company had received funds for work at Q Burke Mountain Resort and the biomedical center project.
“They have been paid I believe $100,000 last year and $50,000 this year so far,” he said.
Kelly also told how he came to start North East Contract Services, the company embroiled in the federal and state probes.
“In 2011, Ariel Quiros asked me if I would be willing to form a company and staff a company that would assist in construction supervision for the sponsor of EB-5 projects, and I said yes,” Kelly said.
The state and federal lawsuits allege that Stenger, CEO and president of Jay Peak, and Quiros, owner of Q Resorts, a holding company that includes Jay Peak, misused $200 million in funding from immigrant investors.
In the federal EB-5 visa program, investors put up at least $500,000, along with a $50,000 administrative fee. In exchange, if each investment created 10 jobs, the investor became eligible for permanent U.S. residency.
For eight projects, six of which are at Jay Peak, Stenger and Quiros received $440 million in funds and fees from EB-5 investors.
The cases against Stenger and Quiros remain pending.