In a remote Vermont ski town, 3 execs raised $93M for a stem cell research campus. Prosecutors say it was all just a scam
The Jay Peak ski resort isn’t the most likely place you’d find a biotech research campus devoted to stem cell research and the development of artificial organs. Set in the rugged mountain area in Vermont’s Northeast Kingdom, it’s just a few miles from the Canadian border. And its slopes bring in skiers from the world over.
Just not a lot of biotech execs, unless they’re coming to hit the black diamonds.
Nevertheless, a resort owner and two of his alleged accomplices managed to raise $93 million to back construction of a biotech facility that was widely heralded as a big jobs creator. Even former governor Peter Shumlin touted the project, anxious to be aligned with an active developer as resort owner Ariel Quiros and president Bill Stenger presented themselves as.
But this week, a year after settling charges leveled by the SEC, Vermont U.S. Attorney Christina Nolan said it was all just a criminal con job, wrapped in lies. Quiros, Stenger and Korean partner Jong Weon Choi were indicted by a Grand Jury on the scam charges, which outline a scheme to siphon off much of the money they raised to pay off loans or line their pockets.
In late 2013, Quiros, in particular, was out on a ledge as Raymond James demanded repayment of a $21 million loan. According to the charges, he got that out of the biotech stash they had created through an EB-5 program — a federal plan that provides foreigners with a quick path to permanent residency if they make an “at-risk” investment in the US that creates at least 10 jobs.
To do that, prosecutors allege, the defendants came up with a phony estimate of the number of jobs that would be created. And they presented plans to make money from stem cell products and artificial organs as part of their business plan.
The defendants misrepresented their ability to market a heart regeneration stem cell therapy product. The product was not commercially viable and the defendants had no rights to such a product.Bill Stenger Jay Peak Resort via Youtube
In fact, there were no stem cell products, according to the indictment. There was no research. And they didn’t try to find a product. Same goes for the artificial organs they were going to sell, according to the plans they laid out in 2012 — a time when the bloom was already off the first rose of stem cell R&D.
Stenger and Quiros pleaded not guilty to the 14 charges, and their attorney vowed to pull out all the stops to prove their innocence. According to the federal prosecutor, Jong Weon Choi is still at large.
Social Media Image: Ariel Quiros HCA East Florida via Youtube and Bill Stenger Jay Peak Resort via Youtube