Updated at 7:41 p.m.
BURLINGTON — Bill Stenger spent years hobnobbing with some of Vermont’s most prominent political and business leaders as president and CEO of the Jay Peak ski area, traveling the state and overseas with plans to economically transform the Northeast Kingdom.
On Friday, he walked out of federal court in Burlington convicted for his role in one of the largest of those projects, which was later termed by regulators “nearly a complete fraud.”
Standing before Judge Geoffrey Crawford, Stenger agreed that he submitted false information to the government about that project he and his business partners had planned for Newport. It never got off the ground before authorities brought it to a halt.
Stenger faces up to five years behind bars at a later sentencing hearing, though his attorneys can argue for a lesser sentence.
Attorneys for Stenger filed paperwork earlier this week laying out the terms of the plea agreement for the former Vermont Chamber of Commerce’s Citizen of the Year.
The Newport resident has been under criminal indictment since May 2019 stemming from his role in a massive project to construct a $110 million biomedical research facility in Newport, known as AnC Bio Vermont.
Despite raising more than $80 million from more than 160 foreign investors seeking permanent U.S. residency through their investments, little visible work was ever done in making that project a reality.
Stenger on Friday formally admitted to the false document charge. Prosecutors agreed as part of the plea deal to dismiss the remaining charges against him, including several other false document and fraud counts.
Stenger, wearing a dark blazer, blue shirt, striped tie and beige pants, stood straight at the defense table as he addressed the judge, his hands clasped at his waist.
Crawford, after explaining to the 72-year-old Stenger all the rights he was giving up by entering the plea agreement, asked him how he wanted to plead to the felony charge.
“Guilty,” Stenger replied.
Specifically, according to that charge, Stenger “knowingly and willfully” submitted a document to the government on Jan. 9, 2015, with false statements related to the proposed AnC Bio Vermont’s sales projections and business plan.
Also, according to the charge, that document “omitted uncertainty about the FDA approval process.”
The plea agreement heads off what was expected to be an eight-week trial that had been set to start in October.
Two of Stenger’s former business associates have already reached plea deals with prosecutors and are awaiting sentencing.
Ariel Quiros, Jay Peak’s former owner, was termed by prosecutors as the decision-maker of the group in the failed AnC Bio Vermont. Quiros pleaded guilty last summer to charges of conspiring to commit wire fraud, money laundering and concealing information to the government.
William Kelly, who prosecutors said was a key adviser to Quiros in the AnC Bio Vermont project, pleaded guilty to conspiracy to commit wire fraud and concealing information to the government.
Quiros faces eight years in prison, while Kelly faces three years. At their sentencing hearings, their attorneys will be permitted to ask for any lesser prison terms.
When asked for his reaction to the expected guilty plea during a press conference Friday, U.S. Sen. Patrick Leahy said: “I feel for the people who are suffering from this. I think the prosecutor has done a good job.”
The Vermont Democrat had championed the federal EB-5 visa program and the AnC Bio project along with other state leaders.
Stenger speaks out
For the first time since the indictment against him was returned more than two years ago, Stenger spoke publicly about the case following the hearing.
He stood alongside his attorney Brooks McArthur and in front of a group of reporters outside the courthouse — and he did so despite his attorney advising him not to talk.
Stenger, however, stated he had something to say.
“Since this whole issue erupted, I’ve spent every day that I could trying to help Newport through the trials that it’s going through,” Stenger said, adding with his voice breaking, “I live there. I care about that city.”
He said since regulators brought enforcement actions against him and Quiros more than five years ago, he has done “everything I have possibly been able to do” to help Newport.
Stenger added, “I daresay the community would agree with that.”
Stenger talked of the projects that did get built with money raised through the EB-5 program, including massive upgrades at Jay Peak from a water park to new hotels.
“One of the things that’s been lost in a lot of this is what’s at Jay Peak,” Stenger said. “It’s a world-class resort thanks to the EB-5 program and the hundreds of investors.”
Despite his client moments earlier admitting to a felony charge, McArthur struck a positive and upbeat tone in addressing reporters.
“About two years ago we were here, came out of this courtroom after [an] arraignment where we said Bill Stenger did not engage in a fraud,” McArthur said. “Today, nine of the 10 counts, all of the fraud counts, are on the way to being dismissed.”
McArthur called Quiros and Kelly “the real fraudsters,” and termed Quiros a “clown.” He said they both took advantage of his client as they carried out fraud with millions of dollars of investor money.
“They have spent their lives conning people,” McArthur said, adding, “They cooked up this scheme.”
McArthur said he had looked forward to Quiros taking the stand and testifying against his client.
“Ariel Quiros has a hard time saying his name honestly,” the defense attorney said.
McArthur then railed against those who gave statements earlier this week critical of his client, including Michael Pieciak, commissioner of the Vermont Department of Financial of Regulation.
“I don’t know what Mike Pieciak is doing, I think Mike Pieciak is grandstanding,” McArthur said. “I think when we all arrive back here at sentencing Mike Pieciak will have to answer some questions as well.”
In a statement released Wednesday when news of the plea deal became public, Pieciak said, “The Jay Peak developers, including Mr. Stenger, routinely provided” the government with “false, misleading, and fraudulent information throughout the course of our dealings.”
McArthur wouldn’t say what sentence he would seek for his client but indicated he would try to avoid a stint behind bars.
“Our sentencing recommendation will be a non-incarcerative jail term,” the defense attorney said.
Asked if he believed his client was getting off light for his role in the state’s largest financial scandal, McArthur again pointed blame at Quiros and Kelly.
People who say his client was getting only a “slap on the wrist,” McArthur said, should understand that the prosecutors looked at millions of documents and determined he did not commit a fraud.
Assistant U.S. Attorney Paul Van de Graaf, a prosecutor in the case, declined to comment following the hearing, including to answer questions about whether he would seek the maximum jail sentence for Stenger of five years in prison.
A statement released later Friday afternoon from the U.S. Attorney’s Office for Vermont stated that the prosecution would not seek a fine or the forfeiture of any assets from Stenger, “but instead will focus on seeking a restitution order for victims.”
It’s unclear how much restitution Stenger could afford to pay.
More than a year ago, after Stenger submitted a form indicating his finances, the judge granted the Newport resident’s request for court-appointed counsel at taxpayer expense.
Inside the plea deal
Van de Graaf, a prosecutor in the case, laid out to the judge during the hearing Friday what he called a creative resolution to a complicated case.
He said the prosecution in court filings and during a hearing will present evidence of Stenger’s broader role in the fraud scheme outlined in the other counts of the indictment that would be dropped as part of the plea deal.
The goal, Van de Graaf said, was to present “relevant conduct” committed by Stenger before handing down a sentence. The charge Stenger was admitting to, the prosecutor told the judge, was a “small part of a bigger story.”
He added, “The court needs to have an understanding of who did what.”
That evidentiary hearing, according to Van de Graaf, could run up to two weeks and include testimony from other players, including Quiros and Kelly.
Stenger’s defense could also call their own witnesses, raising the possibility of state and elected officials or others involved in the financial scandal taking the stand.
In addition to Leahy, the series of projects headed by Stenger and Quiros over nearly a decade had the strong backing of many officeholds, including former Gov. Peter Shumlin, a Democrat, and former Gov. James Douglas, a Republican.
Assistant U.S. Attorney Nicole Cate, another prosecutor in the case, also addressed Crawford, speaking for about 10 minutes as she presented the specific details of the charge Stenger was admitting to have committed.
Those details were also later released as part of the statement put out by the prosecution following Friday’s hearing.
According to Cate, Stenger had submitted several documents to the state-run Vermont EB-5 Regional Center in order to allow him to market the AnC Bio project to foreign investors.
Investors had to each put up at least $500,000 into the project and provided it met job-creating requirements would become eligible for a green card, or permanent U.S. residency.
Stenger’s submission of Jan. 9, 2015, Cate said, addressed financial projections and a timeline for product development and sales.
Stenger admitted as part of the charge he pleaded guilty to Friday that engaged a “third-party consulting firm” to conduct a market demand study as well as analyze the market for AnC Bio products and services.
However, the prosecutor said, the third-party firm, which Cate did not name, was never asked to review or offer an opinion on the financial projections of the development.
“Although the consulting firm had not assessed the project’s financial projections,” according to a statement issued by the prosecution after hearing, “the project lead ultimately signed a letter that falsely asserted that, based upon the consulting firm’s market analysis, the financial projections in the AnC Vermont business plan appeared reasonable.”
Stenger knew, that statement added, that the consulting firm had not analyzed the financial projections.
“Nonetheless,” according to the statement, “Stenger provided the letter to the VRC as part of the January 9, 2015, package of materials in support of reopening project fundraising.”
Also as part of the charge Stenger pleaded guilty to, according to the statement, he admitted he knew that the project’s three lines of business — clean room rentals, sales of stem cells and sales of artificial organs — each needed the approval of the U.S. Food and Drug Administration.
In seeking the go-ahead from the Vermont EB-5 Regional Center to continue marketing the AnC Bio Vermont project, Stenger “caused to be modified” a timeline he received from Jong Weon “Alex” Choi, another co-defendant in the case, Cate told the judge.
Choi, who is from South Korea, has not appeared at any of the court hearings in the case, and prosecutors say he remains at large. He was convicted of financial fraud in 2016 in South Korea in connection with AnC Bio Korea, which AnC Bio Vermont was being modeled after.
In changing that document timeline, according to the statement from the prosecution, Stenger had the initial year changed from 2012 to 2015, reflecting the delays in the project’s development.
“He also had four prominent red boxes, which contained text that read ‘Need to consult with FDA or experts in FDA’s regulation,’ removed from the timeline,” the prosecution statement read.
“As modified,” the statement added, “the timeline downplayed uncertainty and lack of progress on FDA approvals, supporting the narrative that the AnC products would become profitable and create jobs in a short time.”
The AnC Bio Vermont project, aside from site work, never materialized, leaving many of the investors out not only their $500,000 investments but their chance to obtain green cards.
McArthur, asked after Friday’s hearing why his client submitted a document with false statements to the government, said of Stenger, “He had great optimism that all of those things would come true when he provided those statements. That’s why he did it.”
The defense attorney added, “I’m saying he knew they were false at the time, with great optimism that once the project started that all of those predictions would come true.”
Grace Benninghoff contributed to this article.
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