(Liam Elder-Connors | Vermont Public Radio) – Bill Stenger, one of the architects of the Northeast Kingdom EB-5 investment scandal, was sentenced to 18 months in prison on Thursday following a day-long sentencing hearing. He also faces three years of supervised release and must pay $250,000 in restitution.
Stenger and three other men — including Florida businessman and former Jay Peak owner Ariel Quiros — were indicted on criminal fraud charges in 2019. Federal authorities focused their case on a scheme to build a biotech facility in Newport — one of many projects that the men undertook using the federal EB-5 program. The biotech facility was never built and prosecutors, in their indictment, said it was a total fraud and that the men embezzled millions of dollars from investors.
Stenger, the former president of Jay Peak ski resort, pleaded guilty in August to providing false documents to a federal agency.
Speaking in court prior to his sentencing, Stenger apologized to residents of the Northeast Kingdom, employees at Jay Peak ski resort and Burke Mountain, and the EB-5 investors.
“I let you down,” he said. “I got lost along the way. I fell into the trap that the ends justify the means.”
Prosecutors had asked the judge to impose a five-year sentence, the maximum allowed, and for Stenger to pay $1,664,928 in restitution.
During Thursday’s hearing, assistant U.S. attorney Paul Van de Graaf argued that Stenger’s prominence in Vermont allowed him to market the fraudulent biotech facility.
“Mr. Stenger was an excellent salesman,” Van de Graaf said. “He took advantage of his reputation.”
Brooks McArthur, one of Stenger’s attorneys, argued that Stenger should not get any jail time and instead be sentenced to home confinement. McArthur said that Stenger, unlike his co-defendants, didn’t enrich himself through the fraud scheme.
“Mr. Stenger’s primary motivation was betterment of the community, ” McArthur said. “He has always been someone who has done his best to improve the economic condition of the region.”
McArthur said prison would be detrimental to the health of the 73-year-old and that Stenger also needed to take care of his wife, who has health issues.
But Judge Geoffrey Crawford decided Stenger should serve some time in prison, though not as much as prosecutors requested. He said that Stenger’s age, health, family circumstances and the impact on the crime victims were all factors in his decision.
Crawford said that while it appears Stenger didn’t make money through the scheme, he was the public face of the AnC Bio project, which was “complete fiction.”
“Mr. Stenger made this fraud possible,” Crawford said while issuing the sentence. “He gave the fraud credibility we all now know it never should have had.”
Stenger will report for prison on June 7 and serve his sentence at the Federal Medical Center Devens, a federal prison in Massachusetts.
Two of Stenger’s former associates, who have pleaded guilty to fraud charges, are expected to be sentenced this month.
Quiros pleaded guilty in August 2020 to three charges, including money laundering and wire fraud. William Kelley, whom prosecutors describe as an advisor to Qurios, pleaded guilty to two charges in June. Alex Choi, the fourth man indicted by prosecutors, is still at large.
Stenger’s sentencing on Thursday marks the end of a chapter in what’s believed to be the largest case of financial fraud in Vermont history.
Qurios and Stenger were accused in 2016 of misappropriating more $200 million through the federal EB-5 program, which offers citizenship to foreign investors who put $500,000 into approved projects in economically depressed regions of the United States.
The money was intended for development projects in the Northeast Kingdom, including a waterpark at Jay Peak ski resort and a hotel at Burke Mountain. Some projects were completed but many, like the biotech facility and a mixed-used development in downtown Newport, were never built.
Qurios and Stenger have both settled state and federal civil suits, netting millions of dollars for economic development in the Northeast Kingdom. The properties connected to the EB-5 projects, including Jay Peak and Burke Mountain Resort, are under control of a court-appointed receiver.
The fraud allegations also raised questions about the state’s oversight of the EB-5 program and whether state regulators should have intervened sooner. The state was responsible for overseeing the EB-5 projects and marketing them. Prominent state officials, including former Gov. Peter Shumlin, went on international trips with Stenger to pitch the EB-5 projects to potential investors.
Officials at the Agency of Commerce and Community Development first raised concerns about Stenger and Quiro’s EB-5 projects in summer 2014. The Department of Financial Regulation, which took over regulation in January 2015, made a criminal referral to the FBI about a year later, though the developers were still allowed to raise funds for the projects.
A class-action lawsuit filed in August by several EB-5 investors alleges that state officials knew about the fraud but allowed it to continue.