Ariel Quiros, center, arrives outside federal court in Burlington for his arraignment on charges pertaining to the EB-5 fraud case on Wednesday, May 22, 2019.
The attorney for Ariel Quiros, who is under indictment for allegedly bilking millions of dollars from investors, attacked the prosecution Friday with a litany of complaints about how the case is being handled.
Seth Levine, Quiros’ defense lawyer, told federal Judge Geoffrey Crawford that he questions whether his client can get a fair trial in Vermont.
In view of that concern, Levine said he will be filing a motion to move the trial out of state. In addition, he plans to raise issues about missing state documents pertaining to the case, possible conflicts of interest within the U.S. Attorney’s office, and why prosecutors continue to investigate the case in South Korea after having already filed an indictment.
“This case has been indicted, why is it still being investigated?” Levine, a lawyer with Levine Lee LLP based in New York City, said. “Ready, fire, aim is not how the criminal justice system is supposed to work.”
The defense attorney also argued for more specific facts in the charges against his client, complaining that citations made by prosecutors were so vague that they could refer to any one of the more than 800 foreign investors from 74 countries that were involved in the state-run Vermont EB-5 Regional Center.
Levine is especially troubled by the spoliation of records by state officials who ran the Vermont EB-5 Regional Center. In order to pursue a proper defense of his client, he said he may need to ask for evidentiary hearings to determine the scope of spoliation of state documents.
“What has been done to obtain materials that were not secured and that were obscured from view?” he said.
Assistant U.S. Attorney Paul Van de Graaf, the prosecutor in the case, said his office is not responsible for the state’s records. “[Levine] has to convince the court” that that’s the case.
Van de Graaf also contended that the evidence will be spelled out.
“This case is going to be about whether the things that were in writing were misstated or not,” Van de Graaf told the judge. “That’s going to be the core of what this case is.”
Levine shot back that prosecutors have made access to the facts difficult.
He and an attorney for another defendant, Bill Kelly, who is among four men indicted for wire fraud involving AnC Bio Vermont, a proposed biomedical facility in Newport, said the U.S. Attorney’s Office has provided hundreds of pages of documents that are in a format that is impossible to access without very expensive, specialized software.
“Part of the purpose, the tragedy of this case, is actually to not allow the full story of what happened to come out because it’s not helpful to the theory of the government,” Levine said.
That prosecutorial theory, Levine said, is to cast blame on those charged and not examine the role of state officials who ran the EB-5 program and were responsible for overseeing the Jay Peak Resort projects, which included AnC Bio Vermont.
“This case has been mixed up in the politics of the state and the players have a personal stake in the outcome,” Levine said.
Levine said he may invoke the Brady rule, which requires the prosecution to release evidence that is known to be favorable to the defendant.
Trial set for October 2020
The Friday hearing was the second held since Quiros, Jay Peak’s former owner, and two of his former business partners, Bill Stenger, Jay Peak’s past president, and Kelly, a key adviser to Quiros, were arraigned in May on federal criminal charges.
The indictment stems from a project to build a $110 million, state-of-the-art biomedical research center in Newport, AnC Bio Vermont.
U.S. Attorney for Vermont Christina Nolan discusses the criminal charges surrounding the AnC Vermont project at the site where the facility was supposed to be built.
The project developers face charges of wire fraud and making false statements to the government relating to the failed biomedical facility that never got off the ground despite raising more than $80 million from EB-5 immigrant investors seeking green cards.
The whereabouts of Jong Weon (Alex) Choi, operator of AnC Bio Korea and a business associate of Quiros who was also indicted in the case but did not appear for an arraignment with the other three men charged, is still unclear.
Choi did not attend the hearing Friday, and neither did an attorney who had earlier been appointed to represent him. Stenger and Kelly were granted waivers by the judge allowing them not to attend, though their attorneys did take part.
It was that South Korea facility operated by Choi that served as the model for the one planned in the Vermont community of Newport, just a short drive from the Canadian border.
Quiros was the only one of the four defendants in the courtroom Friday, and it was his lawyer, Levine, who spoke the most during the roughly 90-minute hearing.
At the last hearing in the case in July, Crawford set a tentative trial date for October 2020. At the hearing Friday, the judge talked about wanting to keep the parties on track for the trial date, prompting discussion from the attorneys about issues that needed to be resolved to meet that.
U.S. Attorney ‘not responsible’ for missing documents
Levine said a “serious” issue stemmed from an article in VTDigger last month that reported the state cannot locate four months worth of emails from James Candido, the former head of the state-run EB-5 center from May to October 2010, as well as other records.
“It’s troubling,” Levine said. “It goes right to the key question of the state’s responsibility, the federal government’s responsibility here.”
The judge then turned to Van de Graaf, the prosecutor.
“Mr. Levine has taken the position the state of Vermont is part of the prosecution team in this case, and we have a responsibility for the state documents,” Van de Graaf said. “We don’t believe that.”
The prosecutor added, “It’s our view that we’re not responsible for the state’s documents in this case. I think we’re going to have to litigate that if that’s Mr. Levine’s position.”
A view up the mountain from the Hotel Jay at Jay Peak Resort on Friday, June 7, 2019.
Levine responded the prosecution has been investigating the case for more than three years and potential witnesses include two Vermont governors and members of the state’s congressional delegations.
Those officials include former Govs. Peter Shumlin, a Democrat, and James Douglas, a Republican, as well as Sen. Patrick Leahy, a Democrat, all of whom had been past backers of the state’s EB-5 program and projects headed by the developers charged in the case.
“How is it possible, this man,” Levine said of Quiros, “stands indicted in a case where the prosecutors are saying they’re not responsible to get state documents about the state program that is the subject of this indictment.”
The defense attorney said he was “greatly concerned” the prosecution doesn’t even know what information may be out there regarding the state-run program.
“The government has not scoured the record about a state program where the responsibility for these acts relies on state officials and state and federal politicians,” Levine said.
“The documents we are talking about are documents of the witnesses, the governors, the state officials — how could it be that we’re standing here and this information cannot be secured,” he added. “If the only answer is, ‘That’s not our job,’ sort of what I just I heard, then we have a profound due process problem here.”
Crawford asked Levine to file a written motion on the matter, adding, “That gives me something to work with one way or the other.”
Levine reiterated during the hearing his intention to file a motion for a change of venue, seeking to have the trial moved out of Vermont.
At the last hearing, Levine said the links of so many top officials in Vermont to the case could taint his client’s ability to obtain a fair trial in the state.
He added that he believed that there is a possible conflict issue with the U.S. attorney’s office, the federal authorities prosecuting the case.
The prosecution, Levine said, recently provided the defense with some documents regarding a past recusal of a U.S. attorney from the case, though he didn’t name that person.
“It frankly raises a number of issues that are troubling,” Levine said. “We’re happy to file papers on it if we need to. We had hoped that the government will provide a more complete accounting of what happened here and various conflicts in the office.”
Levine declined to further comment on the matter outside the courtroom after hearing.
Van de Graaf, the prosecutor, did say after the hearing that he “obviously” didn’t believe his office has a conflict in the case.
“We’re still here, but I’m not going to comment,” he added.
Conflict of interest?
The connections in the case throughout the state also included the U.S. Attorney’s office.
Eric Miller, who had been the top federal prosecutor in Vermont, was recommended by Leahy for the position in 2015, shortly after Elizabeth Miller, his wife, left her job as chief of staff for Shumlin.
Elizabeth Miller had served in the Shumlin administration for about five years at that point. A whistleblower brought allegations of fraud to the attention of the regional center and the administration in February 2012.
Shumlin and Leahy both wrote letters of support for the AnCBio Vermont project in the fall of 2012 that were included in the offering memorandum for foreign investors. Many of the immigrants said they would not have invested in AnCBio if not for the support of the governor and the senator.
At the time of the filing of the 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.
No charges were brought while he served in the post into 2017, before he was replaced by Chirstina Nolan, the current U.S. attorney for Vermont.
Downtown Newport’s Big Hole on Thursday, August 15, 2019, where buildings were demolished as part of the developers’ AnCBio plan.
Attorney Robert Goldstein, representing Kelly, told the judge during Friday’s hearing that the prosecution has turned more than 3 million pages of discovery material, or between 1 and 2 terabytes.
“It is a staggering amount of material,” he said.
To make all the information searchable and usable would require software and hosting it on a third-party site that the defenses attorneys estimated could cost between $10,000 to up to $40,000 a month.
“Literally, you go into a folder, and see some other folders, where you see more folders, leading to more folders,” Goldstein said of certain discovery material.
“I wanted to just flag it as an issue,” he said. “I think it’s going to be a Herculean challenge for the defendants to try to understand, review and of course, try to digest what we have and don’t have.”
He said given all the material the October 2020 trial date is “very aggressive.”
Van de Graaf countered that much of the information has been provided to the defendants in past civil cases.
“These defendants, it’s not the first time they’ve engaged with some of these documents,” he said. “Mr. Quiros and Mr. Stenger were involved in litigation with the (U.S. Securities and Exchange Commission) and the state for years.”
Many of the documents, the prosecutor added, are duplicates that are provided because they came from different sources.
“We’re producing everything to the defense,” Van de Graaf said, adding, “I believe that key documents in this case are not that hard to find.”
The judge set the earliest deadline of Oct. 14 for Levine to file a motion for a change of venue.
Levine told Crawford to expect a lengthy filing due to the substantial news coverage of the EB-5 scandal in Vermont over many years.
“We’ve all read the coverage as it’s rolled out,” the judge replied. “It’s really the legal argument and about what to do about it.”
- Ariel Quiros
- Bill Stenger
- Vermont EB5 Regional Center
- UNITED STATES SECURITIES AND EXCHANGE COMMISSION
- Jay Peak - AnC Bio Vermont
- Patrick Leahy
- Peter Shumlin
- 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
Subscribe for News
Join Professionals on EB5Projects.com →
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. EB5Projects.com 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.