Case 5:19-cr-00076-gwc Document 1 Filed 05/21/19 Page 1 of 33
`Case 5:19-cr-OOO76-gwc Document 1 Filed 05/21/19 Page 1 of 33
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`DISTRICT OF VERMONT
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`UNITED STATES DISTRICT COURT FOR THE
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`Criminal No.
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`UNITED STATES OF AMERICA
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`ARIEL QUIROS,
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`WILLIAM KELLY,
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`JONG WEON CHOI, aka Alex Choi, and
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`WILLIAM STENGER,
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`Defendants
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`The Grand Jury charges:
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`COUNT ONE
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`At all times relevant to this indictment:
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`The Defendants
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`1.
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`Defendant ARIEL QUIROS, from Florida, purchased the Jay Peak Resort in Jay,
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`Vermont in 2008. QUIROS had long-term business relationships with WILLIAM KELLY and
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`JONG WEON CHOI, aka Alex Choi.
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`Defendant WILLIAM KELLY, from Florida, had long acted as an advisor for
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`QUIROS and participated in various business ventures with QUIROS. In 2011, QUIROS made
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`KELLY Chief Operating Officer of the Jay Peak Resort.
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`Defendant JONG WEON CHOI, aka Alex Choi, from South Korea, ran AnC
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`Korea. In or about 2007, CHOI oversaw the construction of a biotechnology facility in Korea for
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`AnC Korea. In early 2013, CHOI was detained as part of a criminal investigation in Korea
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`relating to his operation of AnC Korea. He was released for a period during the second half of
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`Case 5:19-cr-00076-gwc Document 1 Filed 05/21/19 Page 2 of 33
`Case 5:19-cr-OOO76-gwc Document 1 Filed 05/21/19 Page 2 of 33
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`2013 and detained again for most of 2014. In 2016, he was convicted of multiple financial frauds
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`in Korea associated with his management of AnC Korea.
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`Defendant WILLIAM STENGER, from Vermont, managed the Jay Peak Resort
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`before QUIROS purchased it. STENGER knew QUIROS before the purchase and assisted
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`QUIROS with the purchase. After the purchase, QUIROS continued to employ STENGER as the
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`President and manager of the resort.
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`The Businesses
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`Jay Peak, Inc., a Vermont corporation, operated Jay Peak Resort, in Jay, Vermont.
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`Jay Peak Biomedical Research Park L.P. was a Vermont limited partnership
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`associated with the AnC Vermont EB-S project, a plan to operate a biotechnology facility in
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`Newport, Vermont. The limited partnership was supposed to construct and own the
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`biotechnology facility, purchase distribution rights for certain product-s from AnC Korea, and
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`then participate in the operations at the AnC Vermont facility. The project was never completed.
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`AnC Bio Vermont GP Services, LLC, was a Vermont limited liability company
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`that acted as general partner for the AnC Vermont project. Its managing members were QUIROS
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`and STENGER.
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`AnC Bio VT LLC was a Vermont limited liability company that developed and
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`sponsored the AnC Vermont project. Its managing members were originally QUIROS,
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`STENGER, and QUIROS’s son. In or about early 2015, QUIROS took over his son’s interest in
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`AnC Bio VT LLC.
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`AnC Bio, Inc., a Korean corporation, began operations in approximately 2009 as
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`the successor corporation to Bioheart Manufacturing, the corporation that owned the Korean
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`biotechnology facility. In or about 2009, AnC Bio, Inc. became a subsidiary of AnC Bio
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`Case 5:19-cr-00076-gwc Document 1 Filed 05/21/19 Page 3 of 33
`Case 5:19-cr-OOO76-gwc Document 1 Filed 05/21/19 Page 3 of 33
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`Holdings, Inc., a Korean publicly traded company. In or about 2013, after CHOI was detained in
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`Korea, he created AnC Biopharm, Inc., to appear as a separate business from AnC Bio, Inc.
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`CHOI controlled each of these corporations, which are here referred to collectively as AnC
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`Korea.
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`Jay Construction Management, Inc. (JCM), a Vermont corporation with offices in
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`Miami, Florida, was created by the defendants in 2011. CHOI was listed as the Director and
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`President of JCM, but QUIROS controlled JCM. In 2014, QUIROS took formal ownership of
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`GSI of Dade County, Inc. (GSI), a Florida corporation, served as a corporate shell
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`for QUIROS’s personal business. QUIROS paid personal expenses through GSI bank accounts.
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`Q Resorts, Inc., a Delaware corporation, was organized in 2008 by QUIROS to
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`own JaylPeak, Inc. QUIROS was the sole owner, officer and director of Q Resorts.
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`North East Contract Services, LLC (NECS), a Florida limited liability company
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`owned by KELLY, was started in or about 2012 by KELLY with QUIROS’s approval to provide
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`construction supervision services for EB-5 projects.
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`EB-5 Foreign Investments
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`The EB-5 Immigrant Investor Program was created by Congress in 1990 to boost
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`the United States economy through job creation. EB-S immigrant investors have the opportunity
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`to become lawful permanent residents of the United States by investing in job-creating
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`enterprises in the United States. The particulars of the EB—S program vary by project and
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`location, but relevant to this indictment an immigrant investor could qualify for permanent
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`resident status (commonly known as a green card) by investing $500,000 in a commercial
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`enterprise approved by the Vermont EB-S Regional Center and by US. Citizenship and
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`Case 5:19-cr-00076-gwc Document 1 Filed 05/21/19 Page 4 of 33
`Case 5:19-cr-00076-gwc Document 1 Filed 05/21/19 Page 4 of 33
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`Immigration Services (C18). C18 made an initial assessment for approval of a project based on
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`whether an investor’s 1-526 application showed that the commercial enterprise would create
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`within the near future ten jobs for each investment. CIS considered a number of factors in
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`approving a commercial enterprise, including the credibility and financial Viability of the project
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`business plan. If approved, the investor could obtain a conditional green card. Two years after
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`receiving the conditional green card, the investor had to demonstrate to C18 in an 1-829
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`application that ten jobs had been, or would soon be, created to receive a permanent green card.
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`The State of Vermont ran a federally designated EB-S regional center. CIS
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`approved the Vermont Regional Center (VRC) and granted it authority to approve and monitor
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`EB-S projects in Vermont. VRC, in its capacity as a federally-approved and designated regional
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`center, in turn entered into memoranda of understanding with EB-S project sponsors. In this
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`regard, VRC assisted C18 in the regulation and administration of the EB-S investment program.
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`VRC was part of the Vermont Agency of Commerce and Community Development (ACCD)
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`until late 2014, when the Vermont Department of Financial Regulation (DFR) joined ACCD as a
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`partner in VRC.
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`The Jay Peak EB—S Offerings
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`The Jay Peak resort began a plan to use funds from EB-S immigrant investors to
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`support construction at the resort in 2006, before QUIROS bought the resort. Between 2006 and
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`2012, over $250 million in investor funds were raised to build facilities at Jay Peak as part of six
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`different EB-S projects. The EB-S projects were marketed in a variety of ways, including through
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`its website, immigration attorneys, and overseas and domestic meetings and seminars with
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`prospective investors.
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`Case 5:19-cr-00076-gwc Document 1 Filed 05/21/19 Page 5 of 33
`Case 5:19-cr-OOO76-gwc Document 1 Filed 05/21/19 Page 5 of 33
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`Each EB—5 investor became a limited partner in a limited partnership associated
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`with a specific project. Each investor signed a limited partnership agreement with the general
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`partner, which gave the general partner certain control over the use of partnership funds. At the
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`same time, according to the limited partnership agreement for the AnC Vermont project, the
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`general partner had certain obligations to the limited partners, including a duty not to borrow or
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`commingle investor funds or acquire property with investor funds that did not belong to the
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`limited partnership without consent, and a duty to inform limited partners of any investigation or
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`event that could have a material adverse impact on the partnership. Each AnC Vermont investor
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`was also required to pay an administrative fee for the sponsor for the EB-5 project. The offering
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`materials for the AnC Vermont project stated that the administrative fees were to be used for
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`expenses associated with the project.
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`18.
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`At around the time he bought the resort in 2008, QUIROS took control over the
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`Jay Peak-related EB-5 investor funds through bank accounts at Raymond James. QUIROS also
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`set up a series of loan accounts at Raymond James with EB-5 investor funds as collateral for the
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`loans. In February 2012, QUIROS set up a loan account in the name of Jay Peak, Inc., which
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`relied on collateral from a variety of Raymond James accounts containing EB-5 investor funds.
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`QUIROS used the loan proceeds for a variety of purposes, including personal expenditures and
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`EB-5 project costs. For example, in May 2012, QUIROS used approximately $7 million in loan
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`proceeds to purchase Burke Mountain ski area, where he set up an approximately $100 million
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`EB-5 project in 2013 to construct a hotel and other facilities. By 2013, QUIROS was using AnC
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`Vermont investor funds as collateral for the loan.
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`19.
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`By 2011, the defendants knew that Jay Peak’s EB-5 projects faced financial
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`problems resulting from the use of EB-5 funds raised for a particular project for purposes
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`Case 5:19-cr-00076-gwc Document 1 Filed 05/21/19 Page 6 of 33
`Case 5:19-cr-OOO76-gwc Document 1 Filed 05/21/19 Page 6 of 33
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`unrelated to that project, including costs associated with other EB-S projects, financial challenges
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`at Jay Peak resort, and QUIROS’S personal expenses. In 2011, the defendants agreed to use JCM
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`as a vehicle to commingle EB—5 investor funds from different projects.
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`The Scheme
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`20.
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`Between in or about the fall of 2011 andin or about April 2016, in the District of
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`Vermont and elsewhere, defendants ARIEL QUIROS, WILLIAM KELLY, JONG WEON
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`CHOI, aka Alex Choi, and WILLIAM STENGER knowingly and willfully conspired to devise a
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`scheme to defraud investors in the AnC Vermont EB-S project and to obtain money from these
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`investors by materially false and fraudulent pretenses, representations, and promises and to
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`execute that scheme by means of interstate and foreign wire communications, in violation of 18
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`U.S.C. § 1343. Moreover, during that period, the defendants in fact executed the scheme through
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`interstate and foreign wire communications, including some to and from Vermont.
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`21.
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`From the beginning, each of the defendants had certain responsibilities in
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`connection with the AnC Vermont scheme. QUIROS acted as the ultimate decision maker on
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`many project matters and controlled the money raised from investors. KELLY was QUIROS’s
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`key advisor and assistant in executing QUIROS’s decisions. CHOI was a hidden partner in the
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`project. He formulated the foundation of the business plan for AnC Vermont. CHOI’s company,
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`AnC Korea, was supposed to design the Vermont facility, provide the technology for AnC
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`Vermont’s operations, and use part of the completed facility. STENGER’s primary jobs were to
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`recruit investors and to use his personal connections and reputation to garner support from local,
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`state, and federal politicians. STENGER presented a variety of false and fraudulent statements
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`about the status of the AnC Vermont project to investors, VRC, and CIS. In marketing the
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`projects, STENGER and others highlighted VRC’s approval and monitoring of the project.
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`Case 5:19-cr-00076-gwc Document 1 Filed 05/21/19 Page 7 of 33
`Case 5:19-cr-OOO76-gwc Document 1 Filed 05/21/19 Page 7 of 33
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`STENGER also assumed the role of the general partner who authorized the expenditure of
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`investor funds to JCM, an entity used to commingle investor funds.
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`22.
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`The defendants misrepresented the true business relationship between QUIROS
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`and CHOI. QUIROS and CHOI were financial partners in control of the project. The transaction
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`with AnC Korea involved self-dealing.
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`23.
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`In 2009, the defendants had begun formulating a plan for a $50 million project to
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`build a biomedical facility in Vermont. Then in September 2011, QUIROS and CHOI discussed
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`doubling the price of the AnC Vermont project from $50 million to $100 million.
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`24.
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`In mid-2012, KELLY took the lead in developing the details for the fraudulent
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`business plan, which would be included in the materials provided to potential investors.
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`Immigrants who decided to invest in the project would, in turn, provide the business plan to C18
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`as part of their EB—S submissions. The fraudulent business plan described the planned business
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`operation, business projections, and the use of investor funds. KELLY and STENGER received
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`and used information from CHOI as the principal source for the business plan. QUIROS
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`reviewed and approved KELLY’s work. The plan was fraudulent in various ways, including two
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`major deceits: 1) secret embezzlement of investor funds; and 2) deceptions about the number of
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`jobs to be created by the project within several years and the proj ect’s ability to generate
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`revenue.
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`25.
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`In October 2012, QUIROS and STENGER entered into a memorandum of
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`understanding with VRC for the AnC Vermont project. In the memorandum, among other things,
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`VRC described its responsibility and duty to monitor the project, and QUIROS and STENGER
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`agreed to promote the project honestly and fairly.
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`Case 5:19-cr-00076-gwc Document 1 Filed 05/21/19 Page 8 of 33
`Case 5:19-cr-OOO76-gwc Document 1 Filed 05/21/19 Page 8 of 33
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`26.
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`The AnC Vermont project was supposed to raise and spend $110 million from
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`220 EB—5 investors, and to use $8 million from the project sponsor, AnC Bio VT LLC. Between
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`November 2012 and April 2016, the defendants convinced approximately 169 investors to invest
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`in the AnC Vermont EB-5 offering. Those investors each contributed a $500,000 capital
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`investment, for a total of approximately $85 million, plus an “administrative fee” of between
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`approximately $20,000 and $50,000, for a total of approximately $8 million. The AnC Vermont
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`facility, however, was never constructed. In late 2012, the defendants planned to use the building
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`plans for the AnC Korea facility to build the facility in Vermont. Almost immediately, the
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`defendants discovered that the Vermont facility could not be constructed without a new design.
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`Final designs for the AnC Vermont facility were never completed.
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`27.
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`To maintain their scheme, the defendants responded to inquiries from different
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`entities that monitored and regulated the AnC Vermont project. During the course of CIS review
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`of the project, CIS submitted two rounds of Requests for Evidence (RFEs) about the project
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`plans. The defendants answered the questions about the project on behalf of the investors. CIS
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`approved the first AnC Vermont I—526 submissions in June 2014.
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`28.
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`By mid—2013, the Securities and Exchange Commission (SEC) was investigating
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`whether QUIROS and STENGER had violated federal securities laws in connection with their
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`marketing of EB-5 projects and their use of EB-5 investor funds. In April 2016, the SEC sued
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`QUIROS and STENGER and successfully petitioned a federal court to appoint a receiver to take
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`responsibility for Jay Peak, Burke Mountain, and the EB—5 projects. The defendants lost control
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`of the AnC Vermont project at that time.
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`29.
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`In late 2013, as part of its responsibility to monitor the EB-5 projects in Vermont
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`for CIS, VRC began asking QUIROS and STENGER detailed questions about the AnC Vermont
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`

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`Case 5:19-cr-00076-gwc Document 1 Filed 05/21/19 Page 9 of 33
`Case 5:19-cr-OOO76-gwc Document 1 Filed 05/21/19 Page 9 of 33
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`project, including questions about AnC Korea, about QUIROS’s business relationships, and
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`about AnC Vermont’s business plan. In June 2014, VRC directed that the defendants suspend
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`offering and marketing of the AnC Vermont project. VRC demanded, among other things, that
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`QUIROS, KELLY, and STENGER prepare more detailed offering materials and provide a third—
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`party assessment of the financial projections in the business plan. The project was permitted to
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`go back into the investor market in or about April 2015 with several restrictions imposed by
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`VRC.
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`Secret Embezzlement
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`30.
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`In or about the fall of 2012, QUIROS, KELLY, and CHOI created a chart of the
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`purported use of the AnC Vermont project funds for inclusion in the project offering materials.
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`The use—of—fiinds chart contained a number of fraudulent statements designed to hide money that
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`they planned to be siphoned to QUIROS and CHOI. For example, the chart listed a $40 million
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`cost for “construction fit out and equipment,” referred to here as equipment costs, when in fact
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`QUIROS, KELLY, and CHOI planned to spend approximately $28 million on equipment with
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`the remaining $12 million going to QUIROS and CHOI. The chart listed $10 million to be paid
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`by investors to AnC Korea for distribution rights for the AnC Korea “products,” when in fact the
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`defendants knew that this value was inflated and decided by self—dealing. The chart listed
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`working capital of $16 million, when in fact QUIROS, KELLY, and CHOI planned that $6
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`million would be used for working capital and the remaining $10 million would be shared by
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`QUIROS and CHOI.
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`31.
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`The defendants used JCM as the vehicle for controlling the secret embezzlement
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`from the investors. JCM was designated as a pass-through corporation for approximately $52
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`million that was supposedly to be paid to AnC Korea. Specifically, JCM contracted to act as the
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`

`Case 5:19-cr-00076-gwc Document 1 Filed 05/21/19 Page 10 of 33
`Case 5:19-cr-OOO76-gwc Document 1 Filed 05/21/19 Page 10 of 33
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`pass-through for the $40 million in equipment costs and $10 million in distribution rights
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`described above, as well as $2.1 million in design fees. The JCM pass-through allowed QUIROS
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`and CHOI to secretly skim off millions of dollars of investor funds for their own purposes.
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`32.
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`In November 2012, the defendants met in Korea to finalize details about the
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`project. During this visit, QUIROS and CHOI documented their plan to split $34 million. They
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`also documented that KELLY was to receive $4 million and STENGER was to receive $1
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`million in connection with the “management fee,” which was to be paid through NECS.
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`33.
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`Between March 2013 and October 2014, QUIROS, KELLY, and STENGER paid
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`over $47 million in AnC Vermont investor money to JCM, which were documented by eighteen
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`monthly invoices of $2.6 million each. Each monthly invoice listed monies due for
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`“architectural, engineering fees, and deposits for equipment.” QUIROS controlled the investor
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`money sent to JCM, and he could and did use those funds for a variety of purposes unrelated to
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`the AnC Vermont project. During this period, QUIROS forwarded less than $6 million from
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`J CM to AnC Korea.
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`34.
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`QUIROS, KELLY, and STENGER made the first payment of AnC Vermont
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`investor money to JCM in March 2013, in the amount of $2.6 million. Then in June 2013,
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`QUIROS, KELLY, and STENGER arranged for $10.4 million in investor money to be sent to
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`JCM to pay four $2.6 million invoices. No other AnC Vermont investor money was transferred
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`to JCM between June 2013 and late February 2014.
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`35.
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`In late 2013, QUIROS learned that he had to pay down the Raymond James loan,
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`which stood at over $21 million. He used money from JCM to make monthly loan payments of
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`$500,000 from October 2013 to February 2014. In or about February 2014, QUIROS learned that
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`he had to pay off the entire loan balance. In early March 2014, QUIROS used AnC Vermont
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`10
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`

`

`Case 5:19-cr-00076-gwc Document 1 Filed 05/21/19 Page 11 of 33
`Case 5:19-cr-OOO76-gwc Document 1 Filed 05/21/19 Page 11 of 33
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`investor money to pay off the approximately $19 million loan balance. To do this, in late
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`February, QUIROS, KELLY, and STENGER arranged for $18.2 million in AnC Vermont
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`investor money to be sent to JCM to pay seven $2.6 million invoices. When JCM received those
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`funds, QUIROS used the money to pay off the Raymond James loan.
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`36.
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`In May 2014, QUIROS was confronted about the Raymond James loan payoff
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`with AnC Vermont investor funds during sworn testimony with the SEC. At that time, QUIROS
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`claimed that the funds represented his profits from EB-S projects. After the testimony, QUIROS
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`and KELLY convinced AnC Korea representatives to sign declarations representing that AnC
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`Korea directed the use of $21 million to be paid from JCM to Jay Peak Inc., the entity used for
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`the RaymOnd James loan. The declarations also represented that AnC Korea would provide the
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`equipment, distribution rights, and architectural and engineering services to AnC Vermont
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`investors for $21 million less than their previous contract. The declarations were submitted to the
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`SEC, but they were concealed from investors, from VRC, and from CIS.
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`37.
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`Between late March 2014 and October 2014, QUIROS, KELLY, and STENGER
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`arranged for another $15.6 million in investor funds to be sent to JCM to pay six $2.6 million
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`38.
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`QUIROS, KELLY, and STENGER concealed from VRC, CIS, and investors
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`QUIROS’s misuse of investor funds that had been sent to JCM. Moreover, QUIROS, KELLY,
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`and STENGER made false and misleading statements to the SEC about the AnC Vermont
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`project to attempt to convince the SEC to end its investigation.
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`39.
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`In late 2014, VRC began asking questions about how AnC Vermont investor
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`money had been used. In late 2014 and early 2015, QUIROS and KELLY provided false and
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`misleading information to VRC about payments of investor funds to AnC Korea. For example, in
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`11
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`Case 5:19-cr-00076-gwc Document 1 Filed 05/21/19 Page 12 of 33
`Case 5:19-cr-OOO76-gwc Document 1 Filed 05/21/19 Page 12 of 33
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`February 2015, QUIROS and KELLY caused the representation that AnC Korea had been paid
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`the money that had in fact been used to pay off the Raymond James loan.
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`40.
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`In or about April 2015, VRC allowed QUIROS, KELLY, and STENGER to again
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`accept investor funds for AnC Vermont, subject to spending restrictions. The defendants were
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`not prepared to move forward with construction. The defendants concealed from past and
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`potential investors, from VRC, and from CIS that they lacked the money to construct and begin
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`operations at the AnC Vermont facility, even if they got approval to use the new, restricted
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`41.
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`At the same time that QUIROS, KELLY, and STENGER requested to continue
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`fundraising for the AnC Vermont project, QUIROS furthered his plan to misuse previously
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`raised investor funds. After QUIROS paid off his Raymond James loan in 2014, he looked for a
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`new financial institution that would loan him money. In early 2015, QUIROS established a
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`banking relationship with Citibank, which agreed to loan him money. QUIROS arranged a
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`Citibank loan account secured by $15 million in a JCM account at Citibank, most of which was
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`from AnC Vermont investors. QUIROS then borrowed almost $15 million through this loan
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`account, spending the money on matters unrelated to AnC Vermont, including a $6 million
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`payment to the Internal Revenue Service for QUIROS’s personal tax obligations in April 2015.
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`Because the $15 million ICM account was acting as collateral for QUIROS’s borrowing, it was
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`not available for AnC Vermont project expenses. In June 2015, less than a million dollars was
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`still available at JCM for project expenses from the approximately $47 million that JCM was
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`paid from AnC Vermont investor funds. Almost all of the AnC Vermont money sent to JCM had
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`been used for purposes unrelated to the project.
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`12
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`Case 5:19-cr-00076-gwc Document 1 Filed 05/21/19 Page 13 of 33
`Case 5:19-cr-OOO76-gwc Document 1 Filed 05/21/19 Page 13 of 33
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`42.
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`In November 2015, QUIROS secretly embezzled another $980,000 in AnC
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`Vermont investor fill’ldS. At that time, QUIROS had control of approximately $3 million of AnC
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`Vermont investor funds in an account at Citibank. QUIROS transferred $980,000 in investor
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`funds from the Citibank AnC Vermont investor account to his Citibank GSl account. Months
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`later, QUIROS submitted bogus documentation for the books of the AnC Vermont partnership to
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`authorize the payment. In early 2016, KELLY and STENGER participated in the fraudulent
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`authorization of this payment as a legitimate AnC Vermont expense.
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`43.
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`The defendants also misused administrative fees paid by AnC Vermont investors.
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`Contrary to the representations in the offering materials, the defendants used these fiJnds for
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`purposes unrelated to the AnC Vermont project. For example, in June 2013, STENGER,
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`QUIROS, and KELLY used $250,000 of these funds as an initial payment for the purchase of a
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`property known as the “Spates Block” in Newport, Vermont, where the defendants planned to
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`construct a future EB—5 project.
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`Jobs and Revenue Deceit
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`44.
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`The defendants created a fraudulent “party line” about jobs and revenues that they
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`presented to investors, VRC, and C18. The defendants based this party line on inflated revenues
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`and the job numbers they needed to achieve for CIS approval, ignoring the considerations
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`necessary for a realistic business plan. The defendants also understood that CIS approval and
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`business revenues were both important to investors. STENGE