William Kelly, who prosecutors say tried to ‘outwit’ regulators, gets 18 months in prison in EB-5 fraud case

William Kelly arrives at his sentencing hearing for his role in the EB-5 fraud case in U.S. District Court in Burlington on Wednesday. Photo by Glenn Russell/VTDigger

Updated at 6:02 p.m.

BURLINGTON — William Kelly, termed by prosecutors the “consummate fixer” who worked at trying to “outwit” regulators, has been sentenced to 18 months in prison and three years of supervised release for his role in the largest fraud case in Vermont history.

Kelly, a close associate and key adviser to Ariel Quiros, Jay Peak’s former owner, was sentenced Wednesday by Judge Geoffrey Crawford in federal court in Burlington.

The judge also ordered Kelly to pay $8.3 million in restitution, though Quiros, who is to be sentenced next week in the case, may also be on the hook for a share of that amount. 

“I really wish I could take back all my wrongdoings,” Kelly told Crawford before the sentence was imposed, later adding, “I will live with the consequence of this until the day I die.” 

Kelly, 73, of Fort Lauderdale, Florida, said his actions would “pain me forever” and that he would work hard to regain the trust of the people he had harmed.

“My job is (to) do my sentence, get back to work, and pay the investors back,” he told the judge.

Crawford, in handing down the sentence, said Kelly had worked to “trick” and “stall” investigators, allowing the fraud to continue.

The judge spoke directly to Kelly as the hearing drew to a close.

“I’m sorry to have met you under these circumstances,” the judge told him. “I wish you the best of luck.” 

The judge ordered Kelly to begin his jail sentence June 21, with a recommendation that he report to a federal “prison camp” in Miami. 

Asked for comment as he walked out of the courtroom, Kelly replied, “Just, I’m sorry.”

‘In it for the money’

Kelly, who had previously lived in Weston, Florida and served as an “assistant in executing decisions,” later took the lead in developing what regulators have termed a “Ponzi-like” scheme, according to prosecution filings in the case.

He was indicted along with Quiros, a Miami businessman, and Bill Stenger, Jay Peak’s former CEO and president, in May 2019 for his role in a failed biomedical research facility proposed for Newport in Vermont’s Northeast Kingdom.

Kelly received the same 18-month sentence given to Stenger last week for his role in the financial scandal that turned into the largest fraud case in the state’s history.

Quiros, the first of the trio to reach a plea deal, is set for sentencing next week, with prosecutors allowed under agreement to ask for a prison sentence of up to a little more than eight years.

In a sentencing document filed late Tuesday afternoon, prosecutors did not indicate their preferred sentence for Quiros.

Instead, they asked the judge to “determine what it would consider an appropriate sentence without considering Quiros’s cooperation and then imposing a sentence substantially below that amount of jail time.” 

During Kelly’s sentencing hearing on Wednesday, his lawyer Robert Goldstein asked the judge to sentence his client to six months in prison followed by home detention.

Goldstein argued there is nothing short about a six-month jail term, as even a day of prison time sends a strong message when someone hears the doors close behind them.

“You never forget that sound,” the defense attorney said. 

Goldstein said Kelly was a “first-time offender” who had led an “extraordinary” life. Kelly was a Vietnam War veteran and spent a decade serving as a firefighter and rescue worker who had always looked for ways to help those in need, Goldstein said.

He said Kelly and his wife have been living on a financial “precipice” that would only worsen with an extended term of incarceration.

Also, according to the defense attorney, Kelly had substantially cooperated with prosecutors as they headed toward a trial for Stenger. That trial was called off when Stenger reached a plea deal.

“Mr. Kelly deserves a sentence below Mr. Stenger’s,” Goldstein said. 

Paul Van de Graaf, a prosecutor in the case, didn’t request a specific amount of jail time for Kelly.

The prosecutor called on the judge to hand down a sentence shorter than the 18-month prison term Stenger received, but more than the six months Goldstein had sought for his client.

“Mr. Kelly’s culpability is not as great as Mr. Stenger’s,” the prosecutor said, and with Kelly’s cooperation he would have served as a “very useful witness” had Stenger’s case gone to trial.

Van de Graaf described Kelly as “brilliant” and a “transactional” person.

“Mr. Kelly was in it for the money,” the prosecutor said.

Bill Kelly arrives at his sentencing hearing for his role in the EB-5 fraud case in U.S. District Court in Burlington on Wednesday. Photo by Glenn Russell/VTDigger

‘He makes good decisions’

Prosecutors described Kelly’s role as “wide-ranging” and “central” to the fraud case.

According to court filings, from 2012 to April 2016, Jay Peak Biomedical Research Park in Newport, also called AnC Bio Vermont, raised $84.5 million. That money came from 169 foreign investors, who each put in at least $500,000.The foreign investors also paid administrative fees totaling about $8 million. 

Those investors hoped that through the federal EB-5 visa program they would be eligible for green cards, or permanent U.S. residency, if each of their investments could be tied to the creation of a certain number of jobs.

The project’s proposed revenue streams included renting out clean rooms for research and selling artificial organs and stem cell products. 

Kelly, as part of his plea agreement, admitted that along with his co-defendants, he lied to investors about the use of their funds, as well as the number of jobs that would be created and the time for creating those jobs.

He also admitted that between March 2013 and October 2014, according to prosecutors, he helped funnel over $47 million in AnC Bio Vermont investor money to Jay Construction Management, a Quiros-controlled entity.

Kelly, according to prosecutors, knew that Quiros had used $21 million of the AnC Vermont investor funds sent to Jay Construction Management for personal expenses other than AnC Bio Vermont.

Kelly and Quiros had a business relationship dating back nearly three decades. 

“He’s made some hard decisions that sometimes those of us around him have a hard time following,” Kelly said of Quiros in a 2014 interview with VTDigger. 

“But he makes good decisions,” Kelly added, “and we do follow them because we know at the end of the day they’re the right decisions.”

‘Wasn’t his money to take’

The criminal charges against Kelly, Stenger and Quiros were filed more than three years after federal and state regulators brought civil actions against Stenger and Quiros. 

Those actions accused Stenger and Quiros of misusing $200 million of the more than $350 million they raised from foreign investors for massive upgrades at Jay Peak and other projects in Vermont’s Northeast Kingdom.

The civil actions brought to a stop the biomedical research facility project in Newport, which despite raising $84.5 million from foreign investors had almost nothing to show for it. 

Kelly is mentioned in the civil enforcement actions but not named as a defendant.

The actions included claims that a company owned by Kelly, North East Contract Services LLC, was paid $7.9 million by Quiros “for construction supervision services that do not align temporally with, and far exceed, the value of payments made to contracted suppliers.”

Also, the civil actions stated, North East Contract Services’ “practice” was to keep 32% of that money, with 68% going “to various entities owned or controlled by Quiros.”

Crawford, in imposing the same 18-month prison term for Kelly as he had for Stenger, said Wednesday he took several factors into account, including his previous law-abiding life and military service.

The judge said while the amount that Kelly illegally profited in the case was in dispute — either about $1 million as Kelly’s lawyer contended or the more than $4 million the prosecution had claimed — he shouldn’t have taken any funds that he was not entitled to. 

“It wasn’t his money to take,” the judge said.


Leave a Reply

Your email address will not be published.