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Bill Stenger, left, with his attorney, Brooks McArthur, outside the federal courthouse in Burlington in May 2019. Vermontbiz photo.
By Mike Donoghue, reporter for Vermont Business Magazine The former president of Jay Peak Resorts is asking a federal court to overturn a $250,000 restitution order in an EB-5 fraud case because of newly filed evidence that Vermont officials did not act when told of serious investment problems for the proposed bio-medical facility. in Newport.
Newport’s defense attorneys said in newly filed court filings that state documents finally obtained last month for William Stenger clearly confirm their belief that Vermont officials were alerted by the U.S. Securities and Exchange Commission in early 2015 about financial issues.
Then-Department of Financial Regulation officials, including then-Commissioner Susan Donegan and her deputy Michael Piciak, should never have allowed marketing for the proposed biomedical research facility in Newport to begin, said defense attorneys Brooks MacArthur and David Williams. Gravel & Shea Law Firm in Burlington.
The SEC and the Food and Drug Administration were deeply concerned, Williams and MacArthur wrote in their 18-page motion, which has 291 related exhibits.
“When the DFR commissioner lifted the ban on the marketing of the ANC Bio-VT project in April 2015, the newly disclosed memos confirm that senior DFR officials were aware that the project was riddled with fraud and misrepresentations related to the project’s performance projections. And FDA approval of medical devices manufactured at the project’s Newport facility was unreliable,” McArthur and Williams wrote.
The Movement Notes Former DFR General Counsel David Cassetti admitted to preparing a special memo for Donegan on April 13, 2015, for a private meeting with Elizabeth Miller, Governor Peter Shumlin’s chief of staff.
Attempts to reach Donegan, who lives out of state, and Picciak, who was elected Vermont’s state treasurer in November, were unsuccessful.
Stenger was released from federal prison on March 22 after serving nine months of an 18-month sentence for defrauding large foreign investors. Newport’s early release to house arrest was due to health and Covid concerns and was made by the Bureau of Prisons over objections from federal prosecutors in Vermont, officials said.
In the year In the year Stenger pled guilty in August 2021 to a felony charge of knowingly and intentionally providing false documentation to the Vermont Regional Center (“VRC”) in January 2015 promoting the Jay Peak Biomedical Research Park EB-5 investment project. Known as Annecy Vermont.
The AnC Vermont project is expected to raise $110 million from 220 immigrant investors to build a biotechnology facility in Newport. EB-5 immigrant investors can qualify for permanent resident status — as well as seeking a “green card” — for up to $500,000 in business creation.
In the year He was detained in Vermont by the Vermont Division of Financial Regulation after learning details of an SEC investigation that began in May 2013.
The arrest caused grief as unpaid contractors made the life of the current government. Shumlin is frustrated that he is unable to pay workers or purchase materials for the project, the complaint states.
DFR eventually gave the green light to further commercialize the project.
Williams and MacArthur said the DFR approval was knowing that co-defendant and principal Ariel Kiros misappropriated and misappropriated investment funds.
“What’s interesting to me in the memos is what the SEC told Deputy Commissioner Pieciak and Kiros was running a Ponzi in early February 2015, yet his department found him competent to approve the scheme 3 months later,” Williams said in a phone interview.
McArthur and Williams wrote that newly released information shows that SEC investigators warned Pieciak as early as Feb. 4, 2015.
“Quiros misappropriated $20 million in ANC Bio VT investor funds to pay off a margin loan that Quiros took under the guise of using the EB-5 investor fund to purchase Jay Peak Resort in June 2008,” they wrote.
SEC investigators also said there were other concerns about more than $20 million in Piciak, who served as the state’s liaison to the EB-5 project. The concerns include “job projections, pending FDA approval for medical products, ownership of certain equipment and a real estate deal for land in Newport.”
Stenger was ordered to pay $250,000 in restitution to a group of 36 investors who invested $500,000 in exchange for fraudulent EB-5 program resident immigration cards.
Chief Federal Judge Geoffrey W. Crawford said at the time of his April 2022 ruling that the ANC project in Vermont was “complete fiction” and was never built. “The project was a ghost,” Crawford said. From 2012 to 2016, the defendants raised $85 million from 169 investors.
Stenger helped several businesses in the Northeast Kingdom, based in part on false claims made to government officials in cooperation with the Immigration Reform Program.
Williams, during his sentencing hearing, focused on the counterfeiting claims. Donegan called him to the stand to review documents and emails and explain that the state is not protecting investors.
Many of the emails focused on correspondence with Stenger, Piciak, former Commerce Secretary Patricia Moulton and other members of the government’s Shumlin staff, chief of staff Liz Miller and legal counsel Sarah London.
MacArthur, reached at his office on Sunday, confirmed the points made in the petition filed in US District Court on Thursday.
MacArthur accused Stenger of killing Quiros, 67, of Key Biscayne, Fla. and recently from Puerto Rico and William Kelley, 74, of Weston, Fla. They were able to enrich themselves. MacArthur Cyrus received “tens of millions.”
MacArthur has repeated throughout the affair that Cyrus and Kelly were his business partners and cheaters.
Crawford sentenced Kiros to five years in prison and has since rejected a reduced sentence request. Kelly was sentenced to 18 months in prison.
Cyrus and Kelly were ordered by the court to return more than $8.3 million.
A fourth defendant, Jong Win Choi, also from South Korea, Alex Choi, has been on the run from a federal indictment filed in May 2019. The U.S. Attorney’s Office in Vermont gave up and dismissed the 10-count indictment in June 2022.
Choi was convicted in South Korea of financial fraud in 2016 in connection with AncBio Korea, according to the Vermont lawsuit. The proposed Vermont venture is modeled after a project in Korea, officials said.
The defendants said the Vermont project would create at least 2,200 jobs for the economically depressed northeastern state. Newport has one of the highest unemployment rates.
United States Attorney Paul J. Van de Graaff says many people have been scammed by Stinger, including the New York Times, where he produced a 5-minute video marketing the scam program.
Prosecutor Van de Graaff, 35, rejected Stenger’s proposal to impose any sentence under house arrest.
Stenger received 120 pages of letters of support from all over Vermont, including current and former legislators, former Chamber of Commerce officials, educators and attorneys. Van de Graaf says few, if any, fully understand Stinger’s behavior.
Federal sentencing guidelines had recommended a prison term of 11 to 14 years, but a plea agreement with Stenger reduced the maximum sentence to 5 years.
Bill Stenger returned home after being released from prison
Bill Stenger pleaded guilty to charges of forgery.
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