Crime and Justice

Developers in EB-5 fraud case, all facing prison time, expected to square off in court

Ariel Quiros, left, and William Kelly, center, are expected to testify in the case against Bill Stenger, right. File photos by Glenn Russell/VTDigger

A courtroom showdown looms for three one-time Vermont business partners — two of whom are facing time behind bars and the third who’s fighting to avoid the same fate.

All have pleaded guilty to federal criminal charges linked to a failed $110 million development they headed in the Northeast Kingdom. Still to be determined are the prison sentences, if any, they will serve.  

A prosecutor in the case against Bill Stenger, Jay Peak’s former CEO and president, said he expects to call Ariel Quiros, the ski resort’s former owner, and William Kelly, a key adviser to Quiros, to testify at a pre-sentencing hearing in mid-October.

“We anticipate that Mr. Kelly [and] Mr. Quiros might both provide the court with their information,” Assistant U.S. Attorney Paul van de Graaf told Judge Geoffrey Crawford during a hearing Thursday in Stenger’s case, held via video. 

“You’ll be able to hear what they say about what happened,” the prosecutor told Crawford. 

The prosecutors say Quiros and Kelly are expected to bolster their argument that Stenger, their former partner, was aware of ongoing fraud in a series of projects spanning nearly a decade. Federal regulators later called the financing for those developments a “Ponzi-like” scheme.  

“We have two defendants who have admitted a scheme to defraud,” Van de Graaf told the judge, “and the question is, what is Mr. Stenger’s involvement in it?”

Stenger’s attorneys, David Williams and Brooks McArthur, have also subpoenaed several high-ranking state officials from the Shumlin administration to testify at the hearing, a time when the Vermont EB-5 Regional Center was supposed to be monitoring and overseeing the projects led by Stenger and Quiros. 

Those officials include:

  • Sarah London, who served as general counsel to then-Gov. Peter Shumlin.
  • Liz Miller, who was Shumlin’s chief of staff.
  • Patricia Moulton, then-secretary of the Agency of Commerce and Community Development.
  • Michael Pieciak, who was deputy commissioner of the state Department of Financial Regulation. He is now commissioner of that department.  

The Oct. 14 hearing — scheduled to run at least two weeks in federal court in Rutland — will focus on Stenger’s role in the massive fraud that involved hundreds of millions of dollars from more than 800 foreign investors. Those investors were seeking permanent U.S. residency through the federal EB-5 visa program, provided their investment met job-creating requirements. 

In the end, federal regulators halted the projects headed by three now-indicted developers. Many investors lost not only at least $500,000 each, but also their chances of obtaining green cards.  

Earlier this month, Stenger pleaded guilty to a federal charge of submitting a false statement to the government regarding AnC Bio Vermont, a proposed biotech research facility in Newport that never got off the ground, despite raising more than $80 million from more than 160 foreign investors.

Stenger has agreed to a plea deal that allows prosecutors to ask for a five-year prison term. Stenger’s attorneys can argue for a lesser sentence. One of his lawyers, McArthur, has said he will seek a sentence for Stenger that includes no jail time. 

Quiros and Kelly have also reached plea deals and are awaiting sentences. Quiros faces up to 97 months in prison, and Kelly as much as 36 months.

During Stenger’s pre-sentencing hearing, prosecutors and Stenger’s defense attorneys are expected to present competing evidence showing that either he was deeply involved in the alleged long-running fraud or was taken advantage of by a more savvy businessperson.

Van de Graaf, the prosecutor, said the hearing is intended to show, at least in part, how much money investors lost because of Stenger’s actions. The larger the loss, the harsher any prison term Stenger could face under federal sentencing guidelines. The guidelines are only advisory and not binding on a judge, though they are often given great weight during a sentencing hearing in determining a range of jail time.

“Really, we’ll just be focusing on the facts that give rise to the guideline calculation,” Van de Graaf said.

Prosecutors have not yet disclosed the size of the financial loss they believe Stenger is responsible for or the prison sentence they intend to seek for him. While the AnC Bio losses would be central to the case, the prosecution believes losses by other investors in earlier projects should be considered as well. For example, Van de Graaf said, several investors in a condo project at Jay Peak known as Stateside also had losses, as the developers failed to complete that development. 

Other developments throughout the Northeast Kingdom that Quiros and Stenger financed through the EB-5 program included new hotels and condos at Jay Peak, and a hotel and conference center at Burke Mountain Resort. 

“I think that will be something that probably the court should consider as part of the loss calculation,” Van de Graaf said. “But, I don't think we're going to be arguing that you need to go back and figure out the loss in all seven projects for the sentencing.” 

Stenger’s attorneys have maintained that their client was “duped” by Quiros, a Miami businessperson. They also contend in court filings that any financial loss attributable to Stenger is mitigated because state officials appeared to have helped perpetuate the fraud, knowing that fraudulent actions were happening but never alerting the investors or the public.

Crawford, the judge, took note Thursday that the prosecution had filed a 100-page document last week, making the case that Stenger was more than just a bystander to the fraud.

“It was an extremely good piece of writing,” Crawford told the prosecution team. “I recognize it’s one side of the story, and the defense has an equally compelling narrative.”  

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