William Stenger, left, and his attorney, Brooks McArthur, speaking to the media on Friday
Updated, 5 p.m.
Former Jay Peak president Bill Stenger, whom prosecutors have described as the frontman for a massive EB-5 fraud scheme in the Northeast Kingdom, admitted in federal court Friday that he submitted false documents to regulators.
As part of a plea deal, federal prosecutors dropped numerous other fraud charges brought against Stenger in 2019 in exchange for his guilty plea to the single count. The 72-year-old faces up to five years in prison, though his attorney said Friday that he will seek a sentence that does not include any prison time.
He's the third leader of the phony AnC Bio Vermont project to take a plea deal with federal prosecutors. The alleged mastermind of the scheme, Ariel Quiros, faces up to eight years on wire fraud, concealment and money laundering charges, while a third partner, William Kelly, faces up to three years for wire fraud and concealment. A fourth partner, Alex Choi, remains at large.
The men raised more than $85 million from foreign investors between 2012 and 2016 for a proposed biomedical facility in Newport that was to produce stem cell products and artificial organs. The facility was never built, and more than $47 million was diverted to a company controlled by Quiros.
Stenger leveraged his deep connections to garner support for the project from Vermont politicians. But he has maintained that he was not privy to Quiros' and Kelly's con — a line his attorney, Brooks McArthur, repeated on Friday afternoon.
Standing before a throng of reporters outside the federal courthouse in downtown Burlington, McArthur said the government's willingness to dismiss nine of 10 criminal charges was evidence that Stenger did not engage in the project's fraudulent aspects.
"He truly believed in the AnC Bio project," McArthur said. "It was Ariel Quiros and Bill Kelly who were the true fraudsters here."
Stenger admitted to sending false documents to the Vermont Regional Center in January 2015 as part of an effort to win over state regulators. Six months earlier, the VRC had forced the men to cease marketing the AnC project. Stenger sent information about the project's financial projections and timeline that painted a false picture of its prospects.
McArthur said Stenger knew the submittals were false, but sent them "with great optimism that once the project started, that all the predictions would come true."
As McArthur hammered Quiros as a "clown" and Quiros and Kelly as "serial con artists," Stenger told reporters that he'd tried to help Newport since the EB-5 project unraveled, leaving the city with a crater in its downtown.
"Since this whole issue erupted, I've spent every day that I could trying to help Newport through the trials that it's going through — through community development meetings, through supporting the schools and other economic development initiatives," a visibly emotional Stenger told reporters.
"I live there. I care about that city, and I've done everything I have possibly been able to do, in my own way, since 2016," he continued. "And I daresay that the community would agree with that."
During Friday's hearing before Chief Judge Geoffrey Crawford, the government's attorneys proposed a two-week hearing ahead of Stenger's sentencing during which evidence of his role in the scheme could be aired.
"This case is obviously complicated," Assistant U.S. Attorney Paul Van de Graaf told the judge, "and the court needs to have an understanding of who knew what ... when."
Quiros and Kelly, who agreed to cooperate as part of their plea deals, are expected to testify at the hearing, which could occur in October.
Prosecutors will not ask the judge to impose a fine or forfeiture against Stenger, the U.S. Attorney's Office said in a press release, "but will focus on seeking a restitution order for victims."