Newport Biotech EB-5 Investors want their money back, documents show

Newport Biotech EB-5 Investors want their money back, documents show

EB-5 Visa, EB5 Visa, EB-5 Investment

Investors in a planned Newport biotech facility are asking for their money back, according to documents released by the state to VTDigger through a public records request.

In a March 15 memo, Bill Stenger, the developer of AnC Bio Vermont, told state regulators that investors who bought into the project several years ago have requested refunds.

In the latest dispute with the state over disbursement of EB-5 investor funds, Stenger and his partner, Ariel Quiros, say they want to issue refunds from money collected from new investors in the biotech facility. That money is held in escrow under an agreement with the state. The new investor funds were solicited after March 2015 under a conditional approval plan that allowed the developers to collect more money while the state conducted a financial review of the AnC Bio project.

That financial review is not complete, and state regulators have refused to allow the release of refunds from money held in escrow. The Department of Financial Regulation says Stenger and Quiros must issue refunds from some $71 million collected previously for the AnC Bio project.

EB-5 Visa, EB5 Visa, EB-5 Investment

In an email to VTDigger, Stenger said he and Quiros “are in active discussions with the state on these and other issues and have no comment at this time.”

Under EB-5 immigrant investor rules, Stenger and Quiros have 90 days to issue refunds.

Stenger won’t say how many investors are asking for refunds, information about how many investors have requested refunds was redacted from memos the state released, and Shumlin administration officials would not provide the total number.

Each immigrant investor has put up $500,000 for the project and $50,000 for administrative fees.

In all, Stenger and Quiros are seeking $110 million from 220 immigrant investors to build the biotech facility, which would be designed for stem cell research, clean room laboratories and the manufacture of organ replacement devices. Documents show that as of Jan. 30, 2015, the developers had raised $71 million from 128 investors who applied for I-526 temporary visas and who eventually hope to qualify for permanent residency through investments in the AnC Bio project.

The state prohibited the developers from soliciting investor funds for AnC Bio Vermont from August 2014 to March 2015. Officials suspended the project after questions were raised about the relationship of the Vermont project to an affiliated company in Seoul that sold its headquarters at auction in May 2014 to satisfy creditors. The state also suspended the Q Burke Hotel and Conference Center, another project under development by Stenger and Quiros, over roughly the same period.

In March 2015, the state gave the developers partial approval for AnC Bio Vermont under the condition that any new investments from immigrants be placed in an escrow account. State officials declined to say how many new investors have signed on to the project and the information has been redacted from documents provided to VTDigger through a public records request. (A similar condition was placed on Q Burke.)

Susan Donegan, commissioner of the Department of Financial Regulation, wrote in a March 25 memo that she agrees “the AnC Bio investors who have withdrawn from the project are entitled to a refund.”

However, the refunds, Donegan says, should not come from the escrow account, but from AnC Bio funds previously collected by the developers and transferred to Jay Construction Management, a company owned by Quiros.

The department, Donegan writes, “has many questions remaining about how AnC Bio funds have been spent to date. Until that project passes a financial review the AnC Bio investor funds cannot be released.”

Some of the money from previous investors was transferred from Jay Peak Biomedical Park (the investors’ limited partnership entity for AnC Bio Vermont) to Jay Construction Management. The money was for the purchase of $44.5 million in equipment for the manufacture of organ replacement devices and $10 million in distribution rights for the products, according to state documents.

Donegan suggests that the refunds could come from money not yet allocated by Jay Construction Management for equipment.

EB-5 Visa, EB5 Visa, EB-5 Investment

EB-5 Visa, EB5 Visa, EB-5 Investment

Stenger and Quiros took more than four months to refund an immigrant investor in Q Burke whose I-526 application was rejected by U.S. Customs and Immigration Service, according to documents from the state.


On May 15, 2015, the developers held a ceremonial groundbreaking for the 85,000-square-foot biotech facility, which was followed by initial preparation of the site.

Since then, construction of AnC Bio has been on hold. Stenger and Quiros have instead concentrated on the construction of Q Burke Hotel and Conference Center, a $50 million project that is now complete. The developers are continuing to raise investor funds to pay for construction of the hotel and have been in dispute with the state over the release of money from an investor escrow account.

Now Stenger wants to move ahead with construction of AnC Bio, and he is asking the state to remove restrictions on new investor funds in escrow. In his memo, he says documents for the state’s financial review have been provided to the accounting firm CohnReznick.

EB-5 Visa, EB5 Visa, EB-5 Investment

For AnC Bio to satisfy EB-5 job creation requirements, the biotech facility must be open in 2017, Stenger says, and “construction must be underway by this spring.”

“To proceed with construction this spring these investors’ funds must be put to work,” Stenger writes. “We can’t proceed with the developmental job creation of AnC Bio without access to this capital.”

But like Q Burke, the AnC Bio project has not passed a financial review, according to Donegan.

And until it does, Donegan says any release of new investor funds for construction of the biotech facility must be authorized by the state.


Litigation Cases


  • Vermont

Securities Disclaimer

This website is for informational purposes only and does not constitute an offer or solicitation to sell shares or securities. Any such offer or solicitation will be made only by means of an investment's confidential Offering Memorandum and in accordance with the terms of all applicable securities and other laws. This website does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or any invitation to offer to buy or subscribe for, any securities, nor should it or any part of it form the basis of, or be relied on in any connection with, any contract or commitment whatsoever. LLC and its affiliates expressly disclaim any and all responsibility for any direct or consequential loss or damage of any kind whatsoever arising directly or indirectly from: (i) reliance on any information contained in the website, (ii) any error, omission or inaccuracy in any such information or (iii) any action resulting therefrom.