On May 22 a Federal grand jury indicted Jay Peak developer Bill Stenger for actions and omissions relating to the investments obtained through the Federal EB-5 immigration program. That program allows foreign investors to obtain legal resident permits in return for investing $500,000 in a development project that will bring a specified number of jobs to underdeveloped rural areas like the Northeast Kingdom.
Stenger was indicted along with his Miami-based financial partner Ariel Quiros and two associates of Quiros, his chief lieutenant William Kelly and Korean promoter Alex Choi. According to Anne Galloway’s report in VTDigger, which has carefully followed developments since 2013, the 14 count indictment accuses the four defendants of a wide-ranging fraudulent scheme to misuse investor funds for unlawful purposes. The three American defendants have pleaded not guilty to the charges.
Count one describes in detail the financial transactions of the four men. Counts two through nine are the charges of wire fraud, over telephone and email, that are the basis for Federal criminal jurisdiction. Count 10 charges that the four concealed illegal actions by Quiros, described with Choi as “the financial partners in control of the project”. Counts 11 and 12 charge Quiros, Kelly and Choi with concealing relevant information and misrepresenting the financial status of the proposed but failed AnCBio factory in Newport.
Counts 13 and 14 charge only Stenger with knowingly and willfully lying to federal authorities about a third-party analysis of sales projections for the AnC Bio Vermont business plan, and making false statements about a timeline for selling products from the biomedical facility “that omitted uncertainty about the FDA approval process.”
In September 2016 Stenger settled accusations by the Securities and Exchange Commission, without admitting guilt, by paying a $75,000 civil fine. He also paid a $100,000 fine in a settlement with the State of Vermont, whose Agency of Commerce and Community Development gravely mismanaged the regulatory process.
Last week federally-appointed receiver Michael Goldberg terminated Stenger’s consulting contract because of the indictment. In so doing, Goldberg said “The Receiver stresses that Mr. Stenger’s termination should not be interpreted as an indication that the Receiver believes that William Stenger did anything wrong…and, in fact, a forensic accounting performed by the Receiver’s professionals early in the case failed to uncover any funds wrongfully diverted to Mr. Stenger.”
The picture that emerges from all this is, as we see it, this: Bill Stenger was a well-respected, talented, and popular businessman sincerely interested in creating economic growth in the Northeast Kingdom. He saw an opportunity to use EB-5 investments to create developments in the Jay, Newport and Burke areas. He somehow fell in with Quiros and his associates, who took over the financial management while Stenger actually ran the Jay Peak ski area, hotel, water park, and condos, and did the bulk of the fund raising with the foreign investors.
As a partner, Stenger acquired responsibility for the financial misdeeds of the other partners but, burdened with his responsibilities as the developer on the ground, apparently neglected to raise any red flags if indeed he knew of the extent of those misdeeds. That makes him legally liable for his partners’ wrongdoing.
Stenger settled with the SEC for a modest civil fine of $75,000, suggesting that his illegal acts were more omissions than commissions. But now, having lost most of his assets in fines, and having because of the indictment lost his income as useful member of the receiver’s team, he faces costly legal bills to defend himself against charges of fraud largely committed by the out of state partners Quiros and Kelly, and Choi, now apparently in South Korea.
Count one of the indictment describes in detail a scheme which if proven in Court, will likely put someone in jail. But to us it looks like the government’s target is really Ariel Quiros and his associates, who masterminded almost all of the acts the indictment says were unlawful and fraudulent. Counts 13 and 14, about Stenger alone, seem to us to be more of a prosecutorial add-on than a major charge of willful criminality.
A jury may find Bill Stenger not guilty and that’s fine with us. If he is found guilty of something, we hope he receives lenient treatment, and can live out his years with the appreciation of many of his neighbors for the good things he accomplished for the Kingdom.