William Stenger, the former president of Jay Peak resort, was sentenced Thursday to 18 months in federal prison for his part in a massive foreign investor fraud case.
Stenger also was ordered to make $250,000 in restitution to a group of 36 investors that were swindled by making investments into the EB-5 program that provides residential immigration cards in exchange for $500,000.
Stenger had helped develop several businesses in the Northeast Kingdom based in part on false claims made to government officials in conjunction with the immigration enhancement program.
Chief U.S. District Court Judge Geoffrey W. Crawford told Stenger, 73, he would be under federal supervision for three years once he is freed from prison.
Crawford agreed to allow Stenger to self-report to prison on June 7. The court will recommend Stenger serve his time at the Federal Correctional Institution in Devens, Mass. because it has a hospital facility. With good time he could be freed after 15 months.
Brooks McArthur, one of Stenger’s defense lawyers, had argued Stenger should be sentenced to home confinement. He said he thought records show Stenger did not make any money off the fraud. McArthur said Stenger needed to take care of his wife of 50 years, Mary Jane, 73, of Newport.
Assistant U.S. Attorney Paul J. Van de Graaf countered Stenger needed to be held accountable and asked for a five-year prison sentence. Van de Graaf said Stenger may not have enriched himself as much as other co-defendants, but he still lives in a $500,000 home in Newport and collected a $200,000 annual salary – high standards for the Northeast Kingdom and Newport area.
Van de Graaf also had wanted the full $1.6 million in restitution for the administrative fees the investors had paid originally. Crawford ruled Stenger’s portion was $250,000. Van de Graaf said many people got scammed by Stenger, including the New York Times that produced a five-minute video that was used to market the fraudulent program.
“Home confinement is not warranted,” said Van de Graaf, a 35-year prosecutor.
Several mentions were made about the large stack of supportive letters for Stenger – about 120 page coming from all across Vermont, including current and former legislators, former chamber of commerce officials, educators and lawyers. Van de Graff said few, if any, fully understood the specifics of Stenger’s conduct.
The federal sentencing guidelines had recommended a prison sentence somewhere between about 11 and 14 years, but under the plea agreement the maximum sentence was capped at five years.
Stenger pleaded guilty in August 2021 to a felony charge of knowingly and willfully submitting a false document in January 2015 to the Vermont Regional Center (“VRC”) as part of his promotion of the Jay Peak Biomedical Research Park EB-5 investment project, also known as AnC Vermont project in Newport.
The AnC Vermont project was expected to raise $110 million from 220 immigrant investors to construct the biotechnology facility in Newport. EB-5 immigrant investors could qualify for permanent resident status — also known as seeking a “Green Card” — by investing $500,000 in a commercial venture to create jobs.
The AnC project in Vermont was “complete fiction” and was never built, Crawford noted. “The project was a ghost,” Crawford said. He noted the defendants still raised $85 million from 169 investors between 2012 and 2016.
McArthur maintains Stenger’s co-defendants, Ariel Quiros, 66, of Key Biscayne, Fla. and William Kelley, 73, of Weston, Fla. were the ones to enrich themselves. McArthur said Quiros received “tens of millions.”
Michael Goldberg, who was appointed the receiver in the case six years ago, testified Thursday he worked closely with Stenger to try to make things right. Goldberg said he kept Stenger on the payroll until the federal indictment, but then had to fire him because of “optics.” He said there was no evidence Stenger had taken any money he was not entitled to receive.
Goldberg said that was in sharp contrast to Quiros, who pocketed a considerable amount of money and continued to make claims long after the collapse of the project.
McArthur had previously called Quiros and Kelley career con men and fraudsters.
Quiros is facing more than eight years in prison when he is sentenced next week. He pleaded guilty in August 2020 to charges of conspiracy to commit wire fraud, money laundering and the concealment of material information.
Kelly, who is due for sentencing on Wednesday, reached a plea deal that could get him up to three years in prison. He has pleaded guilty to two felony counts: conspiracy to commit wire fraud and concealment of material information.
A fourth defendant remains on the run in the federal case in Vermont, officials have said. Jong Weon Choi, also known as Alex Choi of South Korea, was named in the indictment. Choi was convicted in South Korea for financial fraud in 2016 in connection with AncBio Korea, the Vermont indictment noted. The proposed Vermont venture was tailored after the project in Korea, officials said.
The defendants had claimed the project would create at least 2,200 jobs for the economically deprived Northeast Kingdom. Newport has one of the highest unemployment levels.
The AnC Vermont fraud involved two aspects: the defendants’ misrepresentations about job creation and future revenues, and the defendants’ misuse of investor funds.
Defense lawyer David J. Williams focused much of the morning on the false job claims. He tried to show the state and regulators had failed to do their jobs. He called former Department of Financial Regulation Commissioner Susan Donegan to the stand to review documents and emails.
Many of the emails centered on communications with Stenger, her former deputy commissioner Michael Pieciak, who is now in the commissioner’s seat; former Commerce Secretary Patricia Moulton, and other members of Gov. Peter Shumlin’s staff, including Chief of Staff Liz Miller and legal counsel Sarah London.
During the morning, three of the victims were allowed to testify by virtual hearing. At least one blamed the lack of proper oversight on the state of Vermont, one thought Stenger should not go to prison for his crimes and a third investor remains upset with Stenger because when she made a special trip to the United States to meet Stenger he looked her in the eye and lied, she told the court.