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Fraud case sentences Stenger to 18 months | News

William Stenger, the former chairman of the resort town of Jay Peak, was sentenced Thursday to 18 months in federal prison for his role in a massive foreign investor fraud case.

Stenger was also ordered to pay $250,000 to a group of 36 investors who were defrauded into investing in 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 statements made to government officials as part of the Immigration Enhancement Program.

U.S. District Court Chief Judge Geoffrey W. Crawford told Stenger, 73, he would be under federal supervision for three years once released from prison.

Crawford agreed to allow Stenger to declare himself in prison on June 7. The court will recommend that Stenger serve his sentence at the Federal Correctional Institution in Devens, Massachusetts, because it has a hospital. With time, he could be released after 15 months.

Brooks McArthur, one of Stenger’s defense attorneys, had argued that Stenger should be sentenced to home isolation. He said he believed the records showed Stenger made no money from the fraud. McArthur said Stenger had to take care of his wife of 50 years, Mary Jane, 73, of Newport.

Assistant U.S. Attorney Paul J. Van de Graaf countered that Stenger should be held accountable and asked for a five-year prison sentence. Van de Graaf said Stenger may not have gotten as wealthy as the other co-defendants, but he still lives in a $500,000 house in Newport and draws an annual salary of $200,000 – high standards for the Northeast Kingdom and the Newport area.

Van de Graaf had also wanted full restitution of $1.6 million for administrative fees that investors had originally paid. Crawford ruled that Stenger’s share was $250,000. Van de Graaf said many people were scammed by Stenger, including The New York Times which produced a five-minute video that was used to market the fraudulent scheme.

“Home confinement is not justified,” said Van de Graaf, a 35-year-old prosecutor.

Several mentions have been made of the large stack of letters of support for Stenger — approximately 120 pages from across Vermont, including current and former lawmakers, former chamber of commerce officials, educators and attorneys. . Van de Graff said few, if any, fully understood the specifics of Stenger’s conduct.

Federal sentencing guidelines recommended a prison term of 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”) in connection with his promotion of the Jay Peak Biomedical Research Park investment project EB-5, also known as the AnC Vermont project in Newport.

The AnC Vermont project was to raise $110 million from 220 immigrant investors to build the biotechnology facility in Newport. EB-5 immigrant investors could qualify for permanent resident status — also known as a “green card” — by investing $500,000 in a business venture to create jobs.

The AnC project in Vermont was “complete fiction” and never built, Crawford noted. “The project was a ghost,” Crawford said. He noted that the defendants raised another $85 million from 169 investors between 2012 and 2016.

McArthur contends Stenger’s co-defendants Ariel Quiros, 66, of Key Biscayne, Fla., and William Kelley, 73, of Weston, Fla., were the ones who got rich. McArthur said Quiros received “tens of millions”.

Michael Goldberg, who was appointed receiver in the case six years ago, testified Thursday that he was working closely with Stenger to try to smooth things over. 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 that Stenger took money he was not entitled to receive.

Goldberg said that was in stark contrast to Quiros, who pocketed a sizable amount of money and continued to make claims long after the project collapsed.

McArthur had previously called Quiros and Kelley career crooks and cheats.

Quiros faces more than eight years in prison when sentenced next week. He pleaded guilty in August 2020 to charges of conspiracy to commit wire fraud, money laundering and concealment of material information.

Kelly, who is due to be sentenced on Wednesday, has reached a plea deal that could land him up to three years in prison. He pleaded guilty to two counts: conspiracy to commit wire fraud and concealment of material information.

A fourth defendant remains at large in the Vermont federal case, officials said. Jong Weon Choi, also known as Alex Choi of South Korea, was named in the indictment. Choi was convicted in South Korea of ​​financial fraud in 2016 in connection with AncBio Korea, the Vermont indictment noted. The proposed venture in Vermont was adapted after the project in Korea, officials said.

The defendants had claimed that the project would create at least 2,200 jobs for the economically disadvantaged North East Kingdom. Newport has one of the highest unemployment rates.

The AnC Vermont fraud had two aspects: the defendants’ misrepresentations about job creation and future earnings, and the defendants’ misuse of investors’ funds.

Defense attorney David J. Williams focused much of the morning on the bogus employment claims. He tried to show that the state and the regulators had not done their job. He called former Department of Financial Regulation commissioner Susan Donegan to the stand to review the documents and emails.

Many of the emails focused on communications with Stenger, his former deputy commissioner Michael Pieciak, who now serves as commissioner; former Secretary of Commerce Patricia Moulton and other members of Governor Peter Shumlin’s staff, including Chief of Staff Liz Miller and Legal Counsel Sarah London.

In the morning, three of the victims were allowed to testify by virtual hearing. At least one blamed Vermont’s lack of proper state oversight, one thought Stenger shouldn’t go to jail for her crimes, and a third investor remains mad at Stenger because when she took a special trip in the United States to meet Stenger, he looked her in the eye and lied, she told the court.

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