Newport officials can only watch as charges filed in costly EB-5 scam

Local News
Newport still left with remnants of EB-5 scandal

As federal prosecutors announced new criminal charges in the EB-5 scandal, Newport Mayor Paul Monette said Wednesday that the town was “duped like everybody else” by the promise of millions in private investment.

“I’ll be honest with you,” Monette said, “when things started dragging on and on, I kind of deep down became suspicious, but in a way I didn’t, because the state hadn’t picked up on anything yet.”

New Developments in EB-5 Scandal

Monette was on hand Wednesday, in a vacant block in downtown Newport, as U.S. District Attorney Christina Nolan laid out fraud and conspiracy charges against Ariel Quiros, the former owner of Jay Peak, and William Stenger, a longtime Newport resident and the ski resorts’ former president.

Two other men face charges we well — Quiros’ adviser, Wiliam Kelly, and Jong Weon Choi, a businessman in South Korea. 

Quiros, Stenger and Kelly pleaded not guilty to the charges in a federal court in Burlington.

In 2011, prosecutors say, Quiros and Stenger began raising money for a proposed biomedical research park in Newport through the EB-5 program, which allows foreign investors to obtain green cards. By 2016, they had received more than $80 million from more 160 investors for the new facility.

Instead, prosecutors say, Quiros and Stenger siphoned off millions of dollars for their own pockets, all the while deceiving state and local officals about the project’s potential to bring jobs and revenue to Newport and the Northeast Kingdom.

In 2016, the federal Securities and Exchange Commission accused Quiros and Stenger of a “Ponzi-like scheme” to defraud investors and the program. The SEC and the two men settled the civil charges, with Quiros agreeing to pay an $82 million penalty; Stenger paid a $75,000 penalty.

The criminal charges filed Wednesday include wire fraud conspiracy and presenting false statements to the United States Citizenship and Immigration Services, which oversaw the EB-5 process. Quiros is also charged with money laundering.

Quiros’ lawyer Seth Lavine said his client looks forward to telling the full story. 

“We look forward to the truth coming out and we look forward to Mr. Quiros’ vindication,” said Lavine.

Brooks McArthur, Stenger’s attorney, said his client has lived in Newprio for 35 years “dedicated his life to the improvement of Vermont and the Northeast Kingdom. 

“He wanted to bring jobs, he wanted to bring economic vitality, and there is simply zero evidence that he benefitted in any way from engaging in the allegations that the U.S. government has put forth,” McArthur said.

But investigators said the men were motivated by greed.

“The defendants’ broken business promises have left not only a physical scar on the city of Newport, but also an intangible scar on the promise of economic development for the Northeast Kingdom and on the dreams of many hopeful immigrants,” said James N. Hendricks, the FBI special agent in charge of the Albany Field Office.

As for the undeveloped land, which is under federal receivership and will be sold, Monette said its future appears out of the town’s hands.

“The optimistic viewpoint is that it gets re-developed into a nice new building complex,” he said. “There have been some conversations about what we would like to see there,” he said.

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