Updated at 5:49 p.m.
Bill Stenger, Jay Peak’s former CEO and president, has reached a plea deal with federal prosecutors in the criminal case against him.
According to paperwork filed Wednesday in federal court in Vermont, Stenger plans to plead guilty to a single charge of providing a false statement to the government. Other counts of providing false statements, as well as all of the fraud charges brought against him, would be dismissed.
A hearing is set for Friday where Stenger can formally enter his guilty plea to the single charge, and a sentencing date would then be set.
At sentencing, prosecutors can ask for a sentence of up to five years in prison, the maximum allowed for the offense. Stenger’s attorneys can argue for a lesser sentence.
He also faces the possibility of up to three years of supervised release and a fine of up to $250,000.
Brooks McArthur, one of Stenger’s defense lawyers, declined comment when reached on Wednesday.
Federal prosecutors, through a spokesperson, also declined comment on Wednesday.
Stenger had been set to stand trial in October; the trial was expected to run eight weeks.
Stenger was indicted in May 2019 — along with two former business partners: Ariel Quiros, Jay Peak’s former owner, and Bill Kelly, a key adviser to Quiros — in connection with a failed project to build a $110 million biomedical research facility in Newport.
The project never got off the ground, even though the developers raised more than $80 million from more than 160 foreign investors.
Both Quiros and Kelly have already reached plea deals with prosecutors and are awaiting sentencing.
Quiros faces up to eight years in prison when he is sentenced and Kelly faces up to three years. In both cases, their attorneys can ask for lesser sentences.
Neil Taylor, an attorney for Quiros, said he believed his client’s earlier willingness to plead guilty in the case and cooperate with prosecutors played a key role in also resolving the Stenger case. He was initially told of Stenger’s plea deal by a reporter on Wednesday.
“I can’t say that’s a surprise,” he said.
Quiros was “the first one to step up and take responsibility for what happened,” Taylor said.
“As a result,” Taylor said, “he set in motion a chain of events that, given the forthright testimony he was going to deliver, resulted in the resolution of a very large and extensive case.”
Asked how he knew his client’s testimony was a key factor in resolving Stenger’s case, Taylor replied he based it on his experience as a federal prosecutor.
“When somebody like Ariel Quiros in a case like this steps forward and announces his intentions to cooperate,” he said, “the co-conspirators are in trouble.”
Taylor said he didn’t read too much into prosecutors dropping all but one of the charges against Stenger.
“While people may draw inferences from what a plea agreement is,” he said, “the fact of the matter is Mr. Stenger still faces a considerable amount of prison.”
Robert Goldstein, an attorney for Kelly, declined comment when reached Wednesday.
Michael Pieciak, commissioner of the state’s Department of Financial Regulation, issued a statement Wednesday saying he was “pleased” Stenger had taken responsibility for his deceptive statements to the government.
“Mr. Stenger’s guilty plea helps bring accountability and closure to the Northeast Kingdom, the investors, and all those impacted by the EB-5 fraud,” Pieciak’s statement read.
In an interview later Wednesday, Pieciak said that while all but one of the charges against Stenger were dropped, including those dealing with financial matters, he still faced the possibility of up to five years in prison.
“If you look at the amount of prison time that he potentially could receive, up to five years, that’s a significant sentence,” Pieciak said.
The commissioner added that Quiros, who he termed the mastermind of the fraud scheme, faced a harsher sentence because he benefited more, siphoning off millions meant for projects to pay for his “lavish” lifestyle.
“Our investigation did not find that money went to Mr. Stenger,” Pieciak said. “He didn’t buy the Trump condo, he didn’t buy the Fifth Avenue condo, he didn’t buy airplanes; that was all Mr. Quiros.”
The criminal charges against Stenger, Quiros and Kelly came more than three years after federal and state regulators brought civil enforcement actions against Stenger and Quiros.
Those cases accused the two business partners of misusing $200 million of the more than $350 million they raised through the federal EB-5 visa program from foreign investors. The money had been raised to go into massive upgrades at Jay Peak as well as other projects.
The civil actions brought to a halt the biomedical research facility project, known as AnC Bio Vermont, planned for Newport.
Federal regulators later termed that project “nearly a complete fraud.”
Both Quiros and Stenger eventually reached monetary settlements in those civil cases, with neither admitting wrongdoing,
The criminal charges brought in May 2019 by federal prosecutors all related to the failed AnC Bio Vermont project.
Quiros was termed in the indictment as the decision-maker of the group, while Kelly played the role of his key adviser. Stenger’s role was in marketing the projects to potential EB-5 investors, according to the indictment.
Foreign investors who put at least $500,000 into a qualified EB-5 project become eligible for green cards, or permanent U.S. residency, provided their investment met the program’s job-creation requirements.
The specific criminal count Stenger is set to plead guilty to Friday had charged him with “knowingly and willfully” submitting a document with “false, fictitious, and fraudulent” statements in it to the government on Jan. 9, 2015.
That letter, according to the charge, represented that a third party had analyzed sales projections and a business plan when that was not the case. Also, the charge stated, a timeline about “product commercialization” had “omitted uncertainty about the FDA approval process.”
If Judge Geoffrey Crawford accepts the plea agreement, Stenger would stand a convicted felon, a dramatic fall from grace for one of the most prominent members of the state’s business community.
Stenger, a Newport resident, was named the Vermont Chamber of Commerce Citizen of Year in 2011. He was also key to getting support for the Jay Peak and ANC Bio projects from high-profile Vermont politicians, including U.S. Sen. Patrick Leahy, D-Vt., and former governors Jim Douglas, a Republican, and Peter Shumlin, a Democrat.
In April 2016 when the federal and state enforcement actions were brought, Leahy called Stenger a friend and said he would feel betrayed if the allegations proved true. Leahy, through a spokesperson, declined comment Wednesday on the news of Stenger’s plea agreement.
Newport Mayor Paul Monette, reached Wednesday, said he had not been aware of the plea deal for Stenger and declined to comment on it.
Jong Weon “Alex” Choi is a fourth named defendant in the criminal indictment returned in May 2019. Choi, who is from South Korea, has not appeared at any of the court proceedings. Prosecutors have said only that he remains at large.
He was convicted in South Korea in 2016 of financial fraud associated with AnC Bio Korea. The Newport biomedical project, AnC Bio Vermont, was pitched by developers as a replica of a South Korean development Choi headed.
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