In exclusive interview, Bill Stenger discusses regrets in EB-5 investment fraud scandal
In a few days, Bill Stenger, 73, will report to a federal prison in Massachusetts. There he’ll serve an 18-month sentence after pleading guilty to a felony charge for his role in the Northeast Kingdom EB-5 scandal. It was the largest financial fraud in Vermont’s history.
“I saw myself as someone who had an opportunity to change the economy of a region using a federal program that I fully believed in,” Stenger said in an exclusive interview with VPR. “I know what went wrong, and I should have done more at the time, and I regret I didn't.”
In a wide-ranging interview before he is scheduled to report to Federal Medical Center Devens in Massachusetts, Stenger says he hopes to do some writing and reflecting during his prison sentence. And he acknowledges the years of legal jeopardy has left him in financial straits — he owes $250,000 in restitution, and is going to have to find work once he is released.
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“I hope my health is good,” he said. “And I hope I can continue to be part of a constructive working life. There's a lot that I want to do and still believe in in my community. Hopefully I'll have an opportunity to demonstrate that.”
Stenger and his partner Ariel Quiros, the former owner of Jay Peak, proposed a slew of projects throughout the Northeast Kingdom — ranging from an indoor waterpark at Jay Peak to a biomedical facility in Newport — all funded through the federal EB-5 program. The program promised investors green cards if they invested $500,000 in economic development projects.
Some of the projects proposed by Stenger and Quiros did get built, while others, like the biomedical facility and a mixed-use development in downtown Newport, were never finished.
“I have enormous regret that those two projects did not come to fruition,” Stenger said. “And I feel personally responsible for that.”
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In 2016, the Securities and Exchange Commission alleged the developers embezzled more than $200 million from investors and filed a civil case against them. Quiros was accused of taking tens of millions of dollars for personal use, including paying off debts, financing his purchase of Jay Peak and buying a luxury Trump condo in New York City.
Eventually federal prosecutors filed criminal charges against Stenger, Quiros and two of their associates— William Kelly and Alex Choi. The indictment focused on the AnC Bio project, which prosecutors said was almost a total fraud.
Kelly will spend 18 months in prison, and Quiros got five years after they pleaded guilty, while Choi is still at large. In August 2021, Stenger pleaded guilty to making false statements about the AnC Bio project to a government agency.
Stenger was not accused of taking money for personal use, but prosecutors said he transferred funds to Quiros and was aware of the fraud.
“My biggest regret is not paying more attention to it,” Stenger said. “I was co-general partner, I should have paid more attention to it. I thought I could trust him, and I was wrong.”
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In the interview, Stenger also talked about his history at Jay Peak, why he didn’t speak up about the fraud, and the state’s oversight role.
An edited transcript follows:
Bill Stenger: I've lived in Newport since 1985. Fast forward to 2012, I’m coming up on 28 years of living in that area and seeing what kind of economic issues that community deals with every day. It's the poorest county in Vermont, and every socioeconomic indicator that you measure is worse there than anywhere else in Vermont. I felt that if there were projects in Newport, or in the case of Burke, something there and I could continue to bring capital to Vermont, then I felt this is a once-in-a-lifetime opportunity to change the economy of that region forever.
Liam Elder-Connors: There was a Seven Days story in August of 2015, where you kind of brushed aside a lot of those concerns that were being raised and just were pretty emphatic that these projects were going to happen. Did you believe that these projects were going to happen? Or were you trying to do some damage control? Were you aware that there were some problems going on at that point?
Anytime the SEC asks to learn more about what you're doing, you have to pay a lot of attention. I learned in 2014 that Alex Choi, who was involved in the AnC BioProject, I learned actually from the state of Vermont, that he was having issues in Korea with his company. And the article that you're referring to in Seven Days had a lot of different things in it that were not AnC Bio-related. At that particular time, there were a lot of shots being fired. And I'm thinking we've got in the case of AnC Bio, we've got a foundation that we're about to start, Burke Mountain Hotel was under construction, Jay Peak’s projects were finishing up. We had literally hundreds and hundreds of investors whose business investment needed to be looked after.
So I'm trying to keep projects moving, trying to deal with some concerns I had with what was going on in Korea. Yet, those things in Korea were not supposed to have any significant impact on the project at Newport. The huge disappointment was that the funding that Quiros had control over was being misused. And my biggest regret is not paying more attention to it. I was co-general partner, I should have paid more attention to it. I thought I could trust him, and I was wrong.
So I think I'm still wondering, though, at what point did you know that there was something seriously wrong with these projects, that there was this fraud going on? Because it's just hard, I think for a lot of folks, not just me …
I know. One of the things that you need to understand is all the housing of funds was in Florida, at Raymond James, not here. What most people find hard to believe, and I understand this — we're up here in Vermont, running the ski areas, building the projects, paying the bills. He's [Quiros is] responsible for where the funds are, what accounts they're in, making sure that when we submit invoices to get paid, that they get paid. And I was trusting that that was being done properly. And I got concerned, really concerned in 2015, when the [Jay Peak Hotel Suites] Stateside project was short of funds.
So when that happens, why not go to the state or talk to the SEC?
I totally agree with you. I look back on it now. And I said to myself, and I've said that — I've said this to myself a hundred times, maybe a thousand times. When I became suspicious in 2015, I should have done something, I should have gone to seek legal help and advice and I didn't. I thought that I could get the projects finished. I thought that I could solve the problem myself, and I was naive, and I was foolish to think I could do that.
Why didn't you do something about it at that time?
Because at the time I had a hotel in Burke that was unfinished. I had a hole in the ground in Newport. I had a project at AnC Bio that was under construction, and a building had been semi-demolished to prepare for the construction. The state was reauthorizing both projects to go forward again. I was taking that reauthorization as their approval to move forward.
(Michael Pieciak, the former commissioner of the Department of Financial Regulation, disagrees with Stenger's assessment. Pieciak, as deputy DFR commissioner, led the department inquiry into the EB-5 projects.
“It's pretty hard for me to believe that that's a truthful statement from Bill Stenger,” Pieciak said in a recent phone interview. “There were pretty rigorous controls around that money. And they couldn't use it until our independent forensic auditor looked at how all the money in that project was being spent.”)
Do you think that you were purposefully putting up blinders because you wanted to finish these projects?
To be honest with you, I think there's some truth to that. I'm a half-full kind of guy. I'm optimistic. I believed in the projects, I wanted to see them come to fruition, because I knew what impact it would have on Orleans County, and Caledonia County, especially at Burke. I thought I could solve the issues, but I also was not aware of the scope of some of them. So I couldn't fix what I didn't know.
You mentioned that you felt like when the state reauthorized the projects — the AnC Bio and Burke — to continue raising funds, I mean, though they were putting them in escrow, that you felt they were kind of giving their blessings somewhat to the project.
That's kind of how I looked at it.
One of the questions has always been how much the state knew or should have known about the fraud that was going on? I mean, did you ever have conversations with people in the ... the governor, with Gov. Shumlin, with the administration about moving these projects along?
There were a lot of back and forth discussions about the projects that were being proposed. Most of that was lawyer to lawyer. I'm not a lawyer, I didn't participate in hardly any of those discussions. And you know, that's an area that's still being debated. So I'm going to sort of steer clear of the what the state knew and when, because I don't honestly know all the answers to that.
It seems like Ariel Quiros at least had some direct connections with the governor based on some of those FBI summaries that came out.
You’ve read what you’ve read.
I'm wondering for you what the last six years have been like, from April 16, when that SEC complaint first became public in 2016, to where we're at now.
Every day, from May 1985 till the day the SEC came, I would drive from Newport to Jay Peak, and back. When you live in a community that long, and you're involved in everything, on the school board, on the hospital board, at a time president of the local chamber of commerce, Vermont Ski Area Association president, you're immersed in your community well beyond your job. My kids went to school in the community, my wife worked in the community, so I was totally immersed in trying to make that region more successful financially and in every other way. And I saw the projects at Jay, and I saw the EB-5 program as an incredible opportunity to financially advance that region.
So to your question of, you know, what's it been like the last six years — to live those first 30 years, believing in your community and wanting to do whatever you could do to help it grow and evolve positively, to see all of that turned into what's referenced as the biggest fraud in the history of Vermont — to say it's a heartbreak is an understatement. … But what’s been built at Jay, what is at Burke Mountain now in terms of its hotel, so the legacy that Jay Peak represents today is one of a remarkable four season resort — some bumps along the way.
My biggest regret is AnC Bio’s failure, and the fact that Main Street in Newport, although what was torn down needed to be torn down — but I have enormous regret that those two projects did not come to fruition. And I feel personally responsible for that.
When you were sentenced in federal court, the judge said that you gave the fraud credibility and essentially made it possible. How you feel about that, that assessment.
I've worked in Vermont since 1985, and I had built the trust of a lot of people. And I deserved that trust, because I worked hard at things to make my community better. And when I look at what transpired, my failure to pay enough attention to the details of the funding — I have no one to blame but myself. And the trust that I got from a lot of different directions, although it was justified and earned, in this one area that you're talking about, the financial attentiveness to these projects, especially at the end, I was wrong. I saw myself as someone who had an opportunity to change the economy of a region, using a federal program that I fully believed in. And as I said, I know what went wrong, and I should have done more at the time, and I regret I didn't.
What does it feel like to know that you're going to be going to prison in two weeks?
I am deeply concerned about my family. Not because they won't be able to weather the time that I'll be gone, but because I've put them in this situation. I will be able to survive this and go through it and make the best of it because that's what I have to do. But my wife doesn't deserve this. And my kids, who I adore, and my grandchildren, who all live in Vermont — they, up until 2016, they thought their grandfather did some good things. And they still do, they still do. But I'm heartbroken over it for them.
What do you hope or plan to do when you're released?
Well, I'll be three weeks shy of being 75 years old. And because of the penalties that have been levied and the legal fees that have been paid, I will have to find a means of support. I'll have to work. I hope my health is good, and I hope I can continue to be part of a constructive working life. There's a lot that I want to do and still believe in in my community. Hopefully I'll have an opportunity to demonstrate that.
VPR’s Kevin Trevellyan provided technical support for this interview.
Have questions, comments or tips? Send us a message or get in touch with reporter Liam Elder-Connors @lseconnors.