NEWPORT — William Kelly, 72, of Weston, Florida, pleaded guilty to two felony charges in connection with his involvement in the Jay Peak Biomedical Research Park EB-5 investment project, also called the AnC Vermont project.
Kelly pleaded guilty to conspiring with co-defendants Ariel Quiros, Jong Weon (Alex) Choi, and William Stenger in a multi-year wire fraud scheme to defraud immigrant investors seeking green cards through the EB-5 program.
He also pleaded guilty to concealing material facts in a matter within the jurisdiction of a federal agency.
The AnC Vermont project was designed to raise $110 million from 220 immigrant investors in order to construct and operate a biotechnology facility in Newport.
EB-5 immigrant investors could qualify for green cards by investing $500,000 in a commercial enterprise approved by the Vermont EB-5 Regional Center.
In order to obtain a green card, each investor needed to demonstrate that his or her investment had created, or would soon create, ten jobs.
From 2012 to 2016, approximately 169 investors invested approximately $85 million in the AnC Vermont project, in addition to paying approximately $8 million in “administrative fees.”
During the plea hearing, Kelly admitted that he and his co-conspirators misled AnC Vermont investors about how investor funds would be used, about how many jobs would be created by the project, and about the timeline for this job creation.
For example, Kelly and others knew that it was necessary to demonstrate a plan to create at least 2,200 jobs in order to obtain USCIS approval of the AnC Vermont project and that USCIS approval and business revenues were both important to investors.
The jobs report for the project was directly based on hiring and financial projections generated by Kelly, Choi, and Stenger to justify the job creation number required for EB-5 approval.
Kelly knew that no one had assessed whether the purported financial projections in the project’s business plan were reasonable.
The job creation projections relied on three lines of business: cleanroom rentals, sales of stem cell products, and sales of artificial organs.
Between 2012 and 2016, Kelly and his co-conspirators maintained the job numbers in spite of the fact that no one associated with the AnC Vermont project was making progress toward identifying customers for cleanroom rentals, acquiring commercially viable stem cell products, or developing the potential artificial organs.
During today’s hearing, Kelly also admitted that between March 2013 and October 2014, he helped Quiros and Stenger pay over $47 million in AnC Vermont investor money to Jay Construction Management, a Quiros-controlled entity that was designated as a pass-through corporation for approximately $52 million that was supposed to be paid to AnC Biopharm.
AnC Biopharma was a company created and controlled by Choi in part to conceal Choi’s legal and financial problems.
During this period, Kelly knew that Quiros forwarded less than $6 million from JCM to AnC Biopharm.
Kelly knew that Quiros used approximately $21 million of the AnC Vermont investor funds sent to JCM to pay off a Raymond James loan that was used for expenses unrelated to the AnC Vermont project.
In addition to the wire fraud conspiracy charge, Kelly admitted helping conceal from the VRC that Quiros had used the $21 million in AnC Vermont investor funds for purposes unrelated to the AnC Vermont project.
In the plea agreement, Kelly agreed to cooperate in the government’s ongoing matters.
The plea agreement caps Kelly’s jail sentence at 36 months, so long as he abides by the terms of the agreement.
The government agreed that it would not recommend a fine or forfeiture, but instead focus on seeking a restitution order for victims.
The government requested that the court delay Kelly’s sentencing pending his ongoing cooperation.
Co-defendant Quiros pleaded guilty to wire fraud conspiracy, money laundering, and concealment charges in August 2020 and currently awaits sentencing.
Stenger has entered a not guilty plea to the pending charges, which are only allegations.
The court scheduled his trial for October 2021.
Choi remains at large.