Updated at 4:28 p.m.
BURLINGTON — Ariel Quiros, the former owner of Jay Peak Resort, has been ordered to serve five years in prison, the longest sentence of a trio of defendants who pleaded guilty for their roles in a massive EB-5 fraud scandal that rocked Vermont.
Judge Geoffrey Crawford handed down Quiros’ sentence Friday in federal court in Burlington. The judge also ordered Quiros to pay $8,338,600 in restitution.
The sentence is less than the roughly eight-year maximum prison term that could have been imposed under a plea deal Quiros had reached with prosecutors. With earned good time, Quiros would need to serve 85% of his prison term, or a little more than four years.
Quiros, 65, who now lives in Puerto Rico, showed little emotion and stood with his hands clasped in front of him as the sentence was delivered.
“I deeply regret being involved in the case,” Quiros told the judge before his sentence was decided.
Quiros then apologized to the court, the government and the people of Vermont, adding that he was “fully responsible” for his actions.
In announcing his sentencing decision, Crawford called the case the largest fraud the state has ever seen — “at least that’s come to light,” he added.
Quiros was ordered to begin serving his prison sentence on July 26.
A presentence report prepared by the federal probation office calculated that under sentencing guidelines, which are advisory, Quiros would have faced between 12.5 and 15.5 years had the plea deal not capped his maximum sentence to eight years in prison.
In August 2020, Quiros entered guilty pleas to three of the dozen counts against him. Those charges were conspiracy to commit wire fraud, money laundering and concealing of material information.
Quiros was indicted in May 2019 along with Bill Stenger, then the president of Jay Peak, and William Kelly, a longtime friend and adviser to Quiros. They were all charged in connection with a proposal to build a $110 million biomedical research center in Newport, known as AnC Bio Vermont.
Stenger and Kelly were each sentenced by Crawford earlier this month to 18 months behind bars.
Kelly was also ordered to pay $8.3 million in restitution, but he and Quiros share that responsibility. One or the other or both must pay that amount.
A fourth defendant also named in the indictment, Jung Weon (Alex) Choi, of South Korea, remains at large.
Despite raising more than $80 million from 169 foreign investors, the biomedical center project was doomed from the start due to fraud, and almost no work took place at the Newport site, according to regulators.
The investors each put in at least $500,000 through the federal EB-5 investor visa program and in exchange would receive green cards, or permanent U.S. residency, provided their investment could be tied to creating a required number of jobs.
In 2016, three years before the filing of criminal charges, federal and state regulators brought civil enforcement actions accusing Stenger and Quiros of misusing $200 million of the more than $450 million they raised from foreign investors through the EB-5 program.
More than 800 EB-5 investors from over 70 countries poured their money into a series of eight development projects, some to provide massive upgrades to Jay Peak Resort and others for projects in Newport and at Burke Mountain Resort.
Regulators, in court filings, said Quiros siphoned off about $50 million for himself, using some of the money to pay his taxes and to buy luxury items, including a ritzy New York City condo.
‘Brought the house down’
Prosecutors termed Quiros the “wheeler-dealer” of the trio — in it for the money and unwilling to stop the “gravy train” from moving forward.
Assistant U.S. Attorney Paul Van de Graaf, a prosecutor in the case, did not recommend a specific jail sentence for Quiros.
He did say during Friday’s hearing that the sentence should be “substantial” but also one that took into account the cooperation Quiros provided to prosecutors as the first of the three defendants to reach a plea deal.
Quiros in the past has been referred to in court filings as the “mastermind” behind the fraud that was committed.
Van de Graaf said he had a more “nuanced” view, adding that while Quiros was “drunk” on being rich, “others were handing him the bottle.”
The prosecutor said Quiros was the one who profited the most from the fraud in the AnC Bio case, estimating his take at between $30 million and $37 million.
Attorney Neal Taylor, representing Quiros, argued that his client should receive a sentence similar to the five-year terms handed down to the two other defendants in the case.
Taylor said the cooperation and information Quiros provided as an “insider” and the first to reach a plea in the case aided in the prosecution of Kelly and Stenger — and ultimately plea agreements with them, as well.
The defense attorney said his client’s assistance “brought the house down.”
Melissa Damian, the lead attorney who represented Quiros for several years in the civil actions brought by regulators and other related lawsuits, was the only witness Taylor called to the stand to testify on his client’s behalf.
Damian, who is now a federal magistrate judge in Florida, said that, from her first meeting with Quiros in 2017, he was looking for ways to cooperate with the court-appointed receiver overseeing the assets at the center of the fraud case, including the Jay Peak and Burke Mountain ski resorts.
Quiros eventually agreed to turn over $81 million in assets, including the two Vermont ski resorts, to the receiver to resolve the case brought against him by the Securities and Exchange Commisson.
Damian described Quiros upon first meeting him as “confused,” and “absolutely remorseful” once he understood what had happened was wrong.
Before hiring Damian to handle civil matters and Taylor to take on the criminal matters, Quiros had vigorously fought the allegations against him. He brought on new counsel in each instance after losing key rulings, including a motion to dismiss in the criminal case.
Pots and pans
In court Friday, Taylor said Quiros was a military veteran who spent nearly two decades of his life living in South Korea.
Quiros made his money before becoming involved in Vermont’s EB-5 projects as an importer and exporter of goods, focusing on pots and pans, Taylor said.
The defense attorney said that, while his client has been referred to as the “mastermind” of the fraud, it was Stenger who pulled the strings, since his client had “zero” knowledge of running a ski resort.
Later in the hearing, Crawford noted that he had presided over the cases against all three defendants.
“No one has been eager to take credit for leading the AnC Bio project,” the judge said, adding that Quiros “remains at the center.”
Quiros attended the hearing Friday alone, with only his attorneys accompanying him.
His legal troubles don’t appear to have ended with the prison sentence imposed Friday.
As he approached the door of the courthouse for Friday’s hearing, a man came up to him and handed him a manilla envelope.
“You’ve been served,” the man told Quiros.
Correction: This story has been clarified to explain that Quiros and Kelly jointly share responsibility for paying $8.3 million in restitution.
