Feds seek to keep EB-5 criminal fraud trial in Vermont

Jay Peak developers Ariel Quiros, left, and Bill Stenger were indicted May 22, 2019, in federal court in Burlington. 

Federal prosecutors say the criminal fraud case against former Jay Peak owner Ariel Quiros and three of his associates should stay in Vermont, disputing defense arguments that press coverage has been “inflammatory” and alleged conflicts with the prosecutor’s office make a fair trial in the state impossible. 

Lawyers for Quiros have argued in an earlier filing that the media reports had painted their client as a “villain,” and links to the case of high-ranking leaders warrant moving the case out of Vermont.

A filing by the prosecution this week stated that the news articles cited by the defense “are predominantly factual in nature and do not prejudge the defendants’ culpability.” 

Assistant U.S. Attorneys Paul van de Graaf and Nicole Cate wrote in their motion opposing the bid to have the trial moved out of Vermont that jurors can be adequately screened through the “voir dire” process where attorneys question them about their knowledge of the case and the players involved.

“The government is confident that the Court can and will conduct voir dire in a manner designed to ensure the identification of unbiased jurors,” the prosecution filing stated.

Quiros and Bill Stenger, Jay Peak’s former CEO and president, as well as two of their partners, were indicted in May on federal criminal charges related to the biomedical center project, known as AnC Bio Vermont, that had been proposed for Newport. 

The criminal charges leveled against the project developers include wire fraud and making false statements to the government regarding the failed biomedical facility.

The project never really got off the ground despite raising more than $80 million from 169 foreign investors through the federal EB-5 immigrant investor program.

Stenger, and another defendant in the case, William Kelly, who has been called by prosecutors a “key advisor” to Quiors, have since joined Quiros in arguing to have the case moved out of Vermont. 

A hearing on whether the case should be moved is set for Dec. 20. 

Quiros’ attorney, in a filing last month, included more than 150 exhibits, featuring news articles from outlets around the state that they say showed how extensively the case has been covered in Vermont. 

“Spurred on by the Government and other federal and State politicians who have scapegoated Mr. Quiros to deflect attention from their own involvement in the charged conduct, the Vermont media have convicted Mr. Quiros before he has had his day in Court,” the filing added 

“Not only has the media branded this case as the ‘Kingdom Con’ and ‘the largest fraud’ in Vermont history,” the filing stated, “but Mr. Quiros has become Vermont’s public enemy No. 1.”

The prosecutors discounted the influence press coverage of the EB-5 scandal in Vermont would have in selecting a fair and impartial jury to hear the criminal case.

The prosecutors added that any trial in the case would take place in federal court in Rutland, with a jury selected from a pool drawn from the southern part of the state, not in northern Vermont where the scandal generated greater attention.

The prosecution filing stated that while Quiros’ attorneys contend that VTDigger “appears to have run more stories on the allegations in the case than any other outlet,” its readership is limited in the southern part of the state.

The prosecutor, citing VTDigger’s online media kit, wrote that the news organization’s monthly statistics show approximately 9.17% of its readers live in Southern Vermont. 

Those numbers were gathered by VTDigger in June 2018. Currently, about 18.5% of the news organization’s readers live in the region, according to data from Google analytics.

The prosecution cited similar statistics for other news outlets who have regularly reported on the EB-5 scandal. 

Quiros’ attorneys had pointed out in their filings that WCAX-TV has repeatedly headlined stories related to the case with the phrase “Kingdom Con.” 

The prosecutors wrote that they didn’t believe that was cause to move a trial out of Vermont. 

“Referring to the alleged conduct underlying the indictment as a ‘con,’ a massive fraud, a Ponzi scheme, or any other pithy descriptor is hardly so prejudicial as to deprive Quiros of the fair and impartial jury to which he is entitled,” according to the prosecutors.

Rep. Peter Welch, Bill Stenger, Sen. Patrick Leahy, Sen. Bernie Sanders, Gov. Peter Shumlin, Ariel Quiros and Bill Kelly in September 2012.

Quiros’ lawyers also claimed that investigators in the criminal probe, including U.S. Attorney for Vermont Christina Nolan, “actively steered away from the federal and State officials.” 

Quiros’ lawyers specifically point to Sen. Patrick Leahy, D-Vt., as a big backer of the EB-5 financed projects in Vermont.

But prosecutors, in their filing this week, dispute that any political connections prove their criminal probe has been tainted.

“Quiros’s criticisms of the government’s investigation are not relevant to Ms. Nolan’s supposed bias in favor of Senator Leahy,” the prosecutors wrote.

“Quiros fails to explain how Senator Leahy’s actions — and by extension any alleged consideration of them by Ms. Nolan — have any bearing on whether Quiros is guilty of the charged offenses,” the filing added.

It was Leahy who recommended Nolan, whose office is heading the criminal investigation, for the post of the top federal prosecutor in the state. Nolan was later appointed to the position by President Donald Trump.

The recent prosecution filing stated that although Quiros’ lawyers claim that Leahy is a key witness who can prove their client’s innocence, investigators had a different opinion and “simply did not consider Senator Leahy a key witness.”

Quiros’ attorneys at hearings and in filings have highlighted Leahy’s close association with the EB-5 program in Vermont, and with Stenger, who had been a friend of the senator.

Leahy had tapped Stenger to testify before Congress about the benefits of the EB-5 program. In addition, the senator wrote a letter of support for the proposed AnC Bio biomedical research project, which was later found to be “nearly a complete fraud” by the U.S. Securities and Exchange Commission.  

Quiros’ attorneys had also noted that Eric Miller was recommended by Leahy to be U.S. Attorney in 2015. It was under Miller that the criminal probe began.

At the time of the filing of the U.S. Securities and Exchange Commission and the state civil enforcement actions against Quiros and Stenger in April 2016, Eric Miller said his office was investigating whether federal criminal charges should be filed.

U.S. Attorney Eric Miller with members of his staff in 2016. 

Eric Miller’s nomination came shortly before Elizabeth Miller, Eric Miller’s wife, left her post as chief of staff for then-Gov. Peter Shumlin in May 2015. 

Quiros’ attorney argued in their filing that Miller should have recused himself much earlier from the case as a result of his wife’s connection to the Shumlin administration. Quiros’ attorneys contend that the Shumlin administration were big backers of the developers and their projects.

“As the Government acknowledged,” Quiros’ attorney wrote in their filing, “Miller was recused in 2016. But it appears that Miller directed the investigation for a least a year during which the investigatory approach appears to have been shaped and tainted.” 

The prosecutors, in their response submitted this week, wrote that the criminal charges were brought well after Miller had left the office.

“Although Quiros repeatedly discusses former United States Attorney Eric Miller’s recusal from the investigation in 2016, this action says nothing about the bias of Ms. Nolan, the United States Attorney when Quiros was charged,” Van de Graaf wrote.

“Further,” the prosecutor added, “(the Department of Justice’s) decision to recuse Mr. Miller illustrates the impartiality of the investigation rather than any bias. Mr. Miller was recused three years before the charges were brought, when the federal criminal investigators had hardly begun speaking with potential witnesses.”

The filing does not specify why Miller was recused from the case.

Van de Graaf and Cate, through a spokesperson, declined comment. Attorney Seth Levine, Quiros’ lawyer, declined Friday to comment on the prosecution filing.  

Quiros’ lawyers have alleged that high-ranking state officials, including Shumlin and former Republican Gov. James Dougas, backed the series of EB-5 financed projects headed by the now-indicted developers.

The lawyers have argued that many of the more than 100 investors in the failed biomedical research center project have said they would not have invested in AnC Bio if not for the support of the governors, congressional members, and oversight of the project from the state-run EB-5 regional center.  

When problems arose with the projects, according to the Quiros’ legal team, those officials sought to walk away from Quiros and the projects he headed.

Prosecutors, in their filing this week, referred to Stenger as skilled at marketing and manipulation, bringing in political leaders to press conferences for the Northeast Kingdom projects that came with claims of hundreds of jobs. 

Alex Choi at a ribbon cutting for ANC Bio in 2015. 

“The federal and state officials, like the investors themselves, relied heavily on Stenger, a successful and charismatic businessman who posed as a savior for the Northeast Kingdom and touted the defendants’ false narrative about the AnC Vermont project,” the prosecutors wrote. 

“He and his co-conspirators knew that the politicians would flock to these press conferences and speak in support of the defendants’ vision,” the filing stated, adding, “The defendants used this public political support to further their scheme to defraud.” 

Quiros, Stenger and Kelly have all pleaded not guilty to the charges against them.

A fourth defendant in the criminal case, Jong Weon (Alex) Choi, was the operator of AnC Bio Korea and a business associate of Quiros.

Choi has yet to be arraigned on the charges against him and he hasn’t attended any of the hearings in the case. Federal prosecutors and his attorney have refused to reveal anything about his whereabouts. 

A trial in the case is tentatively set for October 2020.

https://vtdigger.org/2019/11/15/feds-seek-to-keep-eb-5-criminal-fraud-trial-in-vermont/

Mentions

• UNITED STATES SECURITIES AND EXCHANGE COMMISSION
• Vermont EB5 Regional Center
• Jay Peak - AnC Bio Vermont
• Ariel Quiros
• Bill Stenger
• Peter Shumlin
• Patrick Leahy

Litigation Cases

• United States of America vs Ariel Quiros & Bill Stenger
• Michael I. Goldberg vs Ariel Quiros
• MICHAEL I. GOLDBERG vs The AM Wealth Management Group of Raymond James & Ariel Quiros & Joel Burstein
• JAMES B. SHAW, JOHANNES EIJMBERTS, and LORNE MORRIS Individually and On Behalf of All Others Similarly Situated, vs The AM Wealth Management Group of Raymond James & Bill Stenger & Joel Burstein & Ariel Quiros
• ALEXANDRE DACCACHE, on behalf of himself and all others similarly situated vs Ariel Quiros & Bill Stenger & The AM Wealth Management Group of Raymond James & Joel Burstein
• State of Vermont vs Bill Stenger & Ariel Quiros
• UNITED STATES SECURITIES AND EXCHANGE COMMISSION vs Ariel Quiros & Bill Stenger

States

• Vermont