Federal prosecutors say Bill Stenger should have acted sooner and missed his chance to challenge a $250,000 restitution order in the largest fraud case in Vermont history.
Stenger submitted paperwork last month, contending that newly discovered communications between state and federal regulators showed that state officials knew fraud was taking place when it allowed additional investors to pour more money into projects overseen by Stenger, the president of Jay Peak at the time, and Ariel Quiros, the ski resort’s owner.
Stenger and Quiros pleaded guilty to federal crimes stemming from one in a series of projects they headed, financed with money from foreign investors seeking green cards, or permanent U.S. residency, with their investments through the federal EB-5 visa program.
Stenger, in a filing last month, argued that he should not be on the hook for the $250,000 in restitution because state officials knew about the fraud and failed to take action to stop the project known as AnC Bio Vermont, a failed proposal to build a $110 million biomedical research facility in Newport.
Assistant U.S. Attorneys Paul van de Graaf and Nicole Cate, prosecutors in the case, filed a response last week, arguing that Stenger’s petition comes too late.
“The Petition asserts that it is based on ‘newly disclosed evidence’ consisting of two documents, when in fact Stenger’s counsel had the two documents since August 2019, more than two and a half years before Stenger’s sentencing hearing,” the prosecutors wrote.
“In addition to the factual inaccuracy regarding whether the two documents constitute new evidence,” the prosecutors added, “the Petition ignores the Court’s holding at sentencing that Stenger’s lies to the Vermont Regional Center (VRC) amounted to an independent proximate cause of the victims’ losses, regardless of any fault by the VRC in allowing the defendants to re-enter the market with the AnC project in early April 2015.”
Van de Graaf and Cate also wrote that, during his sentencing hearing, Stenger chose not to dispute “the majority” of the prosecution’s 100-page memorandum outlining Stenger’s relevant conduct in what federal regulators term a “Ponzi-like” scheme.
“Now,” the prosecutors wrote, “after his criminal case has concluded and he has been transferred out of prison, he attempts in the Petition to falsely disclaim his own significant responsibility for investor losses.”
The prosecutors have called on Judge Geoffrey Crawford to dismiss Stenger’s restitution request.
David Williams, an attorney for Stenger, called the prosecution’s arguments “absolutely shocking.” He said the prosecution does not challenge the merits of Stenger’s arguments but seeks to have the petition thrown out on procedural grounds.
“What’s interesting with the government’s response is that they don’t take issue with any of the facts set forth in our petition,” Williams said Wednesday.
As for not finding the documents earlier, he replied, “That’s easy to say when there are 6 million pages to go through, and our search engine didn’t pick it up.”
Williams said he expects to file his own reply to the prosecution’s filing, and then “the court is going to have to decide what to do.”
The federal prosecutors, through a spokesperson with the U.S. Attorney’s Office for Vermont, declined to comment Wednesday.
Over the objection of prosecutors, Stenger was released from prison in March after serving roughly nine months of an 18-month prison sentence. He is now serving the remainder of his prison term on home confinement.
“From the beginning of this case, the government produced material outlining the defendants’ frauds to the SEC (U.S. Securities and Exchange Commission) and the State, as well as the interactions between these two regulators,” the prosecution filing stated. “Stenger had every opportunity prior to his sentencing to fully appreciate the developing relationship between the SEC’s investigation and the State’s investigation.”
Prosecutors had sought much more in restitution during Stenger’s sentencing hearing, calling on the judge to make Stenger pay $1.66 million. Crawford eventually settled on $250,000.
Stenger, a Newport resident, was indicted in May 2019 in connection with the fraud. Quiros and William Kelly, a close friend and adviser to Quiros, were named in the same criminal indictment. All three later reached plea deals with prosecutors.
They were all charged for their alleged roles in the AnC Bio Vermont development, which never got off the ground, despite raising more than $80 million from over 160 foreign investors. Each investor put at least $500,000 into the project, hoping to obtain green cards if their investment through the federal EB-5 visa program met job-creating requirements.
Federal regulators later termed the AnC Bio project “nearly a complete fraud,” dashing the investors’ hopes of meeting job-creating requirements, obtaining permanent U.S. residency and getting their money back.
Stenger pleaded guilty to a single charge of submitting a false document to the government dealing with the project and its job-creating potential.