Ariel Quiros, center, arrives outside federal court in Burlington for his arraignment on charges pertaining to the EB-5 fraud case on May 22. Photo by Glenn Russell/VTDigger
BURLINGTON — The attorney for the man federal prosecutors termed the mastermind of a scheme to defraud investors in a Northeast Kingdom project says he is weighing a request to move the trial out of Vermont, in part due to high-profile officials’ connections to the case.
Those top officials include two former governors and the three members of Vermont’s congressional delegation, according to attorney Seth Levine, a lawyer with Levine Lee LLP based in New York City and representing Jay Peak’s former owner Ariel Quiros.
Sens. Patrick Leahy, D-Vt., and Bernie Sanders, I-Vt., and Rep. Peter Welch, D-Vt., had been backers of EB-5 projects that have now landed the developers of them in a criminal courtroom. The links of those top officials to the state’s legal system and judiciary could taint Quiros’ ability to obtain a fair trial in Vermont, his attorney contends.
Levine said he believed there are “a lot of issues” about trying his client in Vermont. And, the defense attorney said, there has been “suffocating publicity about the case” for several years.
He spoke about the possibility of seeking to move the criminal fraud case against his client out of Vermont during a hearing in the case Friday in federal court in Burlington.
The hearing was the first held since Quiros and two of his associates, Bill Stenger, Jay Peak’s former president, and Bill Kelly, a man described as a key adviser to Quiros, were arraigned in May on federal criminal charges.
The charges stem from a project to develop a biomedical research center in Newport, AnC Bio Vermont, several years ago.
At the Friday hearing, which mostly focused on scheduling, Judge Geoffrey Crawford setting a tentative trial date for October 2020.
Assistant U.S. Attorney Paul Van de Graaf, the prosecutor in the case, also told the court that a grand jury is continuing to investigate the matter.
Meanwhile, the whereabouts of Jong Weon (Alex) Choi, the operator of AnC Bio Korea and a business associate of Quiros who was also indicted in the case but did not appear for an arraignment with the other three men charged, remains a bit of a mystery. He did not attend the hearing Friday.
Quiros, who resides in Florida, was the only one of the three defendants who have been arraigned in the case to attend the hearing Friday. Both Stenger and Kelly had filed and were granted waivers by the judge allowing them not to attend, though their attorneys did take part.
Quiros, Stenger and Kelly have all pleaded not guilty to federal charges, including counts of wire fraud and making false statements to the government about the AnC Bio Vermont project, which has since been termed by federal regulators “nearly a complete fraud.”
More than $90 million was raised for the Vermont AnC Bio project from over 160 immigrant investors through the federal EB-5 visa program. But nothing was ever built.
The 14-count indictment came more than three years after state and federal regulators filed civil lawsuits against Quiros and Stenger alleging the two men misused $200 million of the $350 million they raised through the EB-5 program.
The money was raised over an eight-year span to fund massive redevelopment projects, including hotels and waterparks, at Jay Peak, as well as in the Northeast Kingdom towns of Burke and Newport, where the biomedical research facility had been planned.
Levine was the most vocal of the defense attorneys during the hearing Friday, including telling the judge early on that a change of venue motion may be coming.
Currently, Levine said in court, the prosecution’s witness list includes a “fairly large number” of public officials, including two former governors, Democrat Peter Shumlin and Republican James Douglas.
Levine added that the members of Vermont’s congressional delegation “are involved in the facts” in the case.
Douglas, Shumlin and Leahy all played a role in trying to bring AnC Bio Korea to Vermont as supporters of the effort.
The ties of those high-ranking officials in Vermont to legal system in the state may affect Quiros’ ability to get a fair trial, Levine said.
Levine would not comment further about the change of venue motion after the hearing.
The issue of the role of top state officials in the scandal was first raised by Quiros’ attorney in a civil case.
Melissa Visconti, a Florida attorney who represented Quiros in that civil matter, used an “unclean hands” argument to mitigate civil allegations brought by the Vermont Attorney General’s Office more than three years ago against his client.
Eventually, those civil cases were settled with no further litigation on the state’s role or the involvement of the congressional delegation in the largest fraud case in Vermont history.
At the arraignment for Quiros in May, Levine also suggested that documents from the prosecution’s investigation could expose the role of state’s officials in the scandal, shifting blame away from his client.
Investigation ongoing
Van de Graaf told Judge Crawford during the hearing Friday that a federal grand jury remains empaneled in the case.
“The grand jury is still at work?” Crawford asked.
“Yes,” Van de Graaf said. “We have an ongoing investigation.”
The prosecutor wouldn’t answer questions after the hearing about what exactly the grand jury is looking into, or seeking, as part of the case.
He did say during the hearing that prosecutors have made a request for information that they have not yet obtained.
“We think the best place to do that is through a grand jury motion,” he said.
Trial date
Attorneys talked about the “complex” and “complicated” nature of the case, which involves “massive” amounts of discovery material, including documents, emails, and recordings. The investigation, according to the lawyers, has spanned several years and involves records from this country as well as other places around the world.
Van de Graaf said he wanted the trial to take place sometime in the spring or fall of 2020. Some of the defense attorneys suggested that the fall of 2020 would make a better option, with the judge agreeing to set a tentative trial date in early October.
The lawyers said they expected the trial to last between four and six weeks.
Crawford said he would set status conferences about every eight weeks to ensure that the case remains on schedule.
Where is Choi?
Choi, who has been described in court filings as a “hidden partner” in the Northeast Kingdom EB-5 scandal, has not yet appeared in court despite being indicted with the three other defendants in May.
In addition to the Vermont case, Choi’s AnC Bio Korea was the focus of an investor fraud scheme in South Korea. The Vermont project was pitched by the developers as similar to that South Korean development.
Choi was convicted in South Korea in 2016 of financial fraud associated with AnC Bio Korea, according to the indictment brought in Vermont.
He has filed in the Vermont case an application for public defender services, which is sealed, and he has obtained a court-appointed attorney, John Mabie of Brattleboro.
“What can you tell us Mr. Van De Graaf?” Judge Crawford said to the prosecutor during the hearing Friday.
“Well, he’s obviously been indicted. He could, if he wanted to, voluntarily come to the United States,” Van de Graaf said of Choi. He added, “The extradition process is a tool that we can use to get people here.”
“The government’s view on this matter is that until he appears either with an extradition or voluntarily, the court shouldn’t really worry about Mr. Choi’s presence,” the prosecutor said.
Crawford then asked Mabie, Choi’s court-appointed attorney, if he had anything to say on the matter.
“There’s really nothing much to report,” Mabie said. He said that he had been “in touch” with Choi and Choi wanted him to attend the hearing Friday.
The U.S. Department of Justice is also working with its counterparts in South Korea to obtain documents related to Choi’s criminal case in that country through a Mutual Legal Assistance Treaty, Van de Graaf told the judge.
Read the story on VTDigger here: Quiros defense mulls motion to move criminal case out of Vermont.