Ariel Quiros, 63, and Bill Stenger, 70, stand accused of misleading foreign investors and EB-5 program regulators in order to embezzle millions meant for a biotechnology business in Newport that they proposed but never seriously pursued. Two of their business partners face indictments as well.
The men were charged with conspiracy to commit fraud, wire fraud and making false statements. Quiros, who federal authorities painted as the ringleader, was also charged with money laundering in connection with a $6 million payment to the Internal Revenue Service and the purchase of a $46,000 Jeep Rubicon.
The EB-5 projects brought in hundreds of millions of dollars from investors, much of which was used not to create jobs in the Northeast Kingdom, but to enrich the four men, authorities allege. In a civil lawsuit brought in 2016, the U.S. Securities and Exchange Commission described the projects as “Ponzi-like.”
Stenger, a longtime Vermont resident, was the front man, in charge of recruiting investors and using “his personal connections and reputation to garner support from local, state, and federal politicians,” the feds allege.
Quiros, of Miami, was the “ultimate decision maker,” according to the indictment.
A rift between Stenger and the other defendants was evident Wednesday. Stenger’s lawyer, Brooks McArthur, declared his innocence and claimed he had been duped.
“To a certain extent, this is a good day,” McArthur said to reporters outside of the courthouse. “He can finally tell his story.”
When Stenger was led before Magistrate Judge John M. Conroy, he was wearing handcuffs. Asked how he pleaded, Stenger responded, “Not guilty, your honor.”
“Bill Stenger has lived in the Northeast Kingdom for 35 years,” McArthur told reporters. “He has dedicated his life to the improvement of Vermont and the Northeast Kingdom. There is, in the strongest possible way we can say it, a denial that he engaged in any criminal activity at all.”
Feds have “zero evidence” that Stenger personally benefited from what is alleged, he added, vowing to vigorously defend him.
“Was he negligent in his oversight of people he trusted?” McArthur asked later. “He’s admitted to that. But does that rise to the level of his involvement in a criminal fraud?”
Stenger believes the other three defendants committed crimes. “He was shocked and it has caused him great sadness for what has happened in the Northeast Kingdom,” McArthur said.
The alleged scheme revolved around the federal EB-5 program, which offers permanent U.S. residency to foreign investors in exchange for half-million dollar investments in approved job-creating businesses.
AnC Bio Vermont collected $85 million from 169 investors, plus another $8 million in administrative fees. Yet final designs for the Vermont facility were never even completed.
Instead, according to the indictment, Quiros and Choi planned to “secretly skim off millions of dollars of investor funds.” At a 2012 meeting in Korea, Quiros and Choi documented their plan to split $34 million while giving another $4 million to Kelly and $1 million to Stenger, the indictment alleges.
Much of the money was diverted as collateral and to pay off Quiros’ other loans, disguised as invoices to the shell company. Almost none of it went toward the AnC Bio Vermont project.
U.S. Attorney Christina Nolan held a press conference in Newport Wednesday afternoon to discuss the case. She spoke near a cratered downtown block that serves as a reminder of the EB-5 project’s false hopes. The feds allege the defendants diverted funds from the AnC project for the down payment to purchase the Spates Block. It was to be another EB-5 project, but the plans unraveled.
Nolan said the AnC Bio Vermont project wasn’t designed to create jobs but to siphon millions to Quiros and his secret Korean business partner, Choi. The criminal investigation began in 2015. Nolan said her office made a strategic decision to focus on the AnC fraud, both for its scale and its place as the “culmination” of Quiros’ run of EB-5 endeavors.
Vermont politicians, including then-governor Peter Shumlin, had latched onto the prospect of job creation in the NEK. Shumlin vouched for the plans publicly. He said at the time that the project’s finances had been audited, which was not true.
Asked by VTDigger.org founder Anne Galloway, whose news outlet published investigations about EB-5, if prosecutors were looking into Shumlin’s misstatement, Nolan noted only that the businessmen had repeatedly lied to government officials in charge of overseeing the EB-5 program.
The initial SEC investigation of Quiros and Stenger started in mid-2013. The SEC sued the men in 2016, ultimately seizing control of the ski resorts. The indictment accuses the men of making false statements to the SEC in an effort to convince the commission to end its investigation.
Meanwhile, Stenger was telling investors that they’d start seeing returns in four to five years.
Kelly appeared Wednesday morning with his attorney for a 20-minute hearing before Judge Conroy. Asked how he pleaded, he answered, “Not guilty, sir.”
Assistant U.S. Attorney Paul Van de Graaf told the judge that the discovery process during the case was expected to be “significant, voluminous and complex.”
Kelly was released on $100,000 bond, on the condition that he have no contact with codefendants, victims or witnesses. Approached by reporters as he left the courtroom, he declined to comment.
Quiros’ arraignment followed. He, too, was led into court in cuffs. “Not guilty,” he said, when asked his plea. He described himself as retired. The judge allowed him to go free, with conditions similar to the ones set for the other defendants.
Quiros’ attorney, Seth Levine, noted that lawyers are expected to review “a great deal” of documents during discovery, including material related to Vermont’s “congressional delegation and former governors.”
Outside the courthouse, Levine was critical of the case. “This should never have been brought,” he told reporters.
“The fact is that the story — the full story — has not been told by the government,” he said. “We look forward to the truth coming out. We look forward to Mr. Quiros’ vindication.”
Correction, August 28, 2020: A previous version of this story misidentified Stenger as a “native” Vermonter.
Read the indictment here:
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How does fraud work? How do cons con?
Long ago when the words like fraud and ponzi scheme were first floated out about the Jay Peak project (article in Seven Days ca 2012) I worked for a national non-profit with a chapter in Burlington. Our board had recently made the strategic decision to hire a wealthy Burlingtonian, a born in the hill district local, to run the chapter so as to ‘”attract the wealthy elite who just want to sit on their couch and write checks, not come out and support anything”. Bill Stenger and his “Chinese money” (as so many people referred to it at the time) was the big catch, if we could only get a donation from Bill’s millions if only, if only, if only. At a staff mtg, I mentioned the article in 7 Days that described a few people pulling out of the Jay Peak project and that they (the formerly involved guys) described it as a ponzi scheme and the guys running it were cons. My new hill-section boss almost fell off her chair when she heard me refer to Stenger in the same sentence as fraud. “Billy Stenger is NOT a conman!” She was furious at me for mentioning this-furious, I had blasphemed the elite. I’ve thought about her overreaction for years, every time a new bit of info came out, it was back to that reaction–the rich circling the rich, protecting Billy S from bad PR. And even in the last two years, an article quoted numerous local leaders saying Stenger could not be guilty of the con…”he is one of us” “he is a good guy” “he knows Vermonters”. How do cons con?
There are so many other players directly involved in this with little to no mention. The longer story aside from the (4) criminals , (2) in handcuffs, his honorable Bill Stenger & Ariel Quiros. State AG TJ Donovan, a politically appointed position btw, thus far & in perpetuity if he can get away with it, refuses to release FOI materials on this case. VT. officials have shown ZERO accountability on the EB 5 scandal. Thus far, thanks in no small part to a bought & paid for AG by the Montpelier Democrats, currently are enjoying a ” Stay out of Jail Card. ” Here is a short list of dirty politicians that turned a ” blind eye “: Senator Patrick Leahy, Congressman Peter Welch, Gov. Peter Shumlin, all facilitators & there are many more within State Gov’t. Very sad indeed. 🙁
With honor & pride to my Grand Father who was one the owners who established Burke Mtn, may justice be served.
All Quiros and Stenger have to do is repeat the phrases “Fake News”, “No Obstruction, no Collusion”, “Witch hunt” over and over and they should be fine. Doing this appears to be enough to sway weak minded people that they are innocent of any wrongdoing and are just being harassed .
Critics are universally panning the limited local release of “Bill and Ari’s Somewhat-Less-Than-Excellent Adventure” a dark, amateurish, and ultimately failed foray into the mis-matched, back-stabbing con-men, failed heist, former buddy-film genre.
its fair to say that Stenger and Quiros loathesome and morally bankrupt characters convey none of the goofy, whacky stoner charm that has endeared Keanu Reeves and Alex Winter to generations of movie-goers (Bill and Teds Excellent Adventure 3 – scheduled to open in theatres everywhere on 8/21/20).
Still, yesterdays perp walk scene, featuring a cuffed Ari and Bill shuffling into the Courthouse to plead not guilty, is sure to please many, and the script features some hidden gems that will likely stand the test of time:
Ari: “Strange things are afoot at the Circle K.”
Bill: “We’re in danger of flunking most heinously, Ari.”
Ari: “What if we were lying?”
Bill: “Why would we lie to ourselves?”
Ari: “All we are is dust in the wind.”
Bill: “Dust.”
Bill: “Wind.”
Ari: “Bill?”
The buzz around future episodes anticipates upcoming courtroom scenes where Ari’s “unclean hands” defense ensnares numerous government officials who green-lighted the deception & fraud, with cameo appearances by several familiar local celebs – Shumlin, Leahy Miller, Moulton, & MacLean for starters.
“Shumlin vouched for the plans publicly. He said at the time that the project’s finances had been audited, which was not true.”
Peter Shumlin said something that was not true? On a matter of significant importance with million of dollars involved? Like Humphrey Bogart’s “Rick” character in Casablanca: “I’m shocked, shocked! [to find that gambling is going on in here]” Not sure who has done more long-term damage to the credibility of the Vermont Democratic Party than Peter Shumlin (in combination with his handmaiden, Shap Smith).
Like many others, over the years following this case. This case does in fact hit close to home. This is only the beginning. Vermonters, not only those who live in the NEK (the area mostly affected) but other people throughout Vermont, want and need to know the truth. Over the years, I’ve ready many comments and had to bite my tongue, without proof. My Grandfather was one of the original owners to establish Burke Mtn. This is heart breaking in many ways. He was a true Vermonter, a hard worker and with an honest days pay, the days of the conservation camp. My Father telling me stories of when the toll road was built, he remembers, the family farmhouse. To this day, there is a home named after my Grandfather marked incorrectly, maybe someday this could be made right.