United States v. Quiros

UNITED STATES OF AMERICA v. ARIEL QUIROS, WILLIAM KELLY, JONG WEON CHOI,and WILLIAM STENGER, Defendants.

Case No. 5:19-cr-76

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF VERMONT

January 28, 2020

ORDER ON MOTION TO TRANSFER VENUE AND TO ADDRESS CONFLICT ISSUES

(Doc. 71)

The Grand Jury's May 2019 Indictment charges defendants Ariel Quiros, William Kelly, Jong Weon Choi, and William Stenger with fourteen counts arising from an alleged scheme between fall 2011 and April 2016 "to defraud investors in the AnC Vermont EB-5 project and to obtain money from these investors by materially false and fraudulent pretenses, representations, and promises . . . ." (Doc. 1 ¶ 20.) The case is currently scheduled for an October 2020 trial in Rutland, Vermont with the jury to be drawn from the Southern Jury Division, which consists of Vermont's six southernmost counties. (See Doc. 45 at 2.)

Currently pending is defendant Ariel Quiros's Motion to Transfer Venue and to Address Conflict Issues. (Doc. 71.) He asserts that he cannot receive a fair trial in the District of Vermont due to "inflammatory pretrial publicity." (Doc. 71-1 at 7.) He further argues that the United States Attorneys involved in prosecuting this matter—former U.S. Attorney Eric Miller and current U.S. Attorney Christina Nolan—"have conflicts of interest that require dismissal of the Indictment or, at minimum, an evidentiary hearing." (Id. at 9.) Finally, Mr. Quiros contends that the court should evaluate whether to recuse itself on grounds of relationships with state and federal political leaders whom Mr. Quiros asserts are expected to be witnesses in the case. (Id. at 10.)

Defendants William Kelly and William Stenger have joined Mr. Quiros's motion. (See Docs. 73, 74, 75, 76.)¹ The Government opposes the motion (Doc. 78) and Mr. Quiros has filed a reply (Doc. 87). The court heard argument on the motion at a hearing on December 20, 2019, at which time the court took the motion under advisement. (See Doc. 98 (transcript).)

Background

Defendants' Motion to Transfer rests on pretrial publicity in this case. Defendants have compiled a list of more than 1,300 print, television, radio, and internet stories that "relate to the Jay Peak and AnC Vermont Projects, or the civil and criminal cases relating thereto." (Doc. 71-2 ¶ 2; Doc. 71-3 (list of 1,343 media stories).) The Government argues that Defendants' list is overinclusive—the Government does not concede that all of the listed media stories are relevant to Defendants' motion. The court concludes that it is unnecessary to discuss each of the 1,343 media stories cited, and instead focuses its analysis on media coverage in general and a selection of media accounts, especially those that the parties have highlighted.

The portion of Defendants' motion seeking relief for allegedly conflicted prosecutors relies on "relationships" between Mr. Miller and Ms. Nolan and between "the key federal and state officials involved in the relevant events." (Doc. 71-1 at 72.) Defendants note that Vermont Senators Patrick Leahy and Bernie Sanders, Vermont Representative Peter Welch, and former Vermont Governors James Douglas and Peter Shumlin "participated in marketing and promotional events" and that "letters written by Senator Leahy and Governor Shumlin wereincluded in the AnC Vermont Project offering materials." (Id. at 11.) Defendants also point out that Senator Leahy and Governors Douglas and Shumlin "made multiple foreign trips to solicit investors for the Jay Peak and AnC Vermont Projects." (Id.)

The Government agrees that "[s]tate and federal politicians supported Jay Peak's proclaimed success"; that they "posed in photographs so that Vermonters would link them to this good news"; and that Senator Leahy and Governor Shumlin "sign[ed] letters of support for the AnC Vermont project that the defendants included in the marketing materials." (Doc. 78 at 4-5.) The Government also does not dispute that some or all of these political figures are potential witnesses in this case.

Additional facts are set forth as necessary below.

Analysis

I. Venue: Whether a Presumption of Prejudice Arises from the Pretrial Publicity

Under Rule 21 of the Federal Rules of Criminal Procedure, "[u]pon the defendant's motion, the court must transfer the proceeding against that defendant to another district if the court is satisfied that so great a prejudice against the defendant exists in the transferring district that the defendant cannot obtain a fair and impartial trial there." Fed. R. Crim. P. 21(a). "Transfer is a limited exception to the constitutional rule that the trial of crimes 'shall be held in the State where the said Crimes shall have been committed.'" United States v. Fell, No. 5:01-cr-12-01, 2017 WL 10810028, at *2 (D. Vt. Jan. 3, 2017) (quoting U.S. Const. art. III, § 2, cl. 3). "Ordinarily, the key to determining the appropriateness of a change of venue is a searching voir dire." United States v. Jacques, No. 2:08-cr-117, 2011 WL 1706770, at *4 (D. Vt. May 4, 2011) (internal quotation marks omitted). "In rare cases, however, pretrial publicity may be so prejudicial and inflammatory as to give rise to a presumption of prejudice." Id.

Recognizing that this case has not yet reached the voir dire stage, Defendants urge the court to find a presumption of prejudice. (Doc. 71-1 at 47 & n.36.) "A presumption of prejudice 'applies when . . . the community has been so saturated with inflammatory pre-trial publicity that it pervades the proceedings and overrides notions of fairness in the determination of guilt or innocence.'" Jacques, 2011 WL 1706770, at *5 (omission in original) (quoting United States v. Washington, 813 F. Supp. 269, 271 (D. Vt. 1993)). Such a presumption "attends only the extreme case." Skilling v. United States, 561 U.S. 358, 381 (2010).

The court considers multiple factors when evaluating a motion for change of venue. The relevant factors include: (a) "[r]ecent, widespread and highly damaging publicity"; (b) "[w]hether the prosecution has been responsible for the publicity"; (c) "inconvenience to the government and the administration of justice"; and (d) "whether a substantially better panel can be sworn at another time or place." Fell, 2017 WL 10810028, at *3; see also 2 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure, Fed. Rules of Crim. Proc. § 343 (4th ed.). The court also considers:

1) the size and characteristics of the community in which the crime occurred; 2) the absence of a confession or other blatantly prejudicial information in the news coverage; 3) the passage of time between the crime and the trial; and 4) the jury's actual ability to acquit the defendant of some of the charges.

Jacques, 2011 WL 1706770, at *6 (citing Skilling, 561 U.S. at 381-84); see also Fell, 2017 WL 10810028, at *3 (discussing Skilling).² The defendant moving for a change of venue has the burden of proof on these issues. Fell, 2017 WL 10810028, at *3; see also Washington,813 F. Supp. at 275 ("The burden is on the defendant to make a satisfactory showing that a transfer is warranted.").

A. Timing, Saturation, and Nature of Publicity

Defendants note that the Jay Peak projects began to receive some adverse publicity in 2014. (See Doc. 71-1 at 22-23.) But the nature of the publicity changed when the United States Securities and Exchange Commission ("SEC") announced a civil suit against Mr. Quiros on April 14, 2016. (Doc. 71-76.) In that announcement, the SEC described its allegations as follows:

The SEC alleges that Ariel Quiros of Miami, William Stenger of Newport, Vt., and their companies made false statements and omitted key information while raising more than $350 million from investors to construct ski resort facilities and a biomedical research facility in Vermont. Investors were told they were investing in one of several projects connected to Jay Peak Inc., a ski resort operated by Quiros and Stenger, and their money would only be used to finance that specific project. Instead, in a Ponzi-like fashion, money from investors in later projects was misappropriated to fund deficits in earlier projects. More than $200 million was allegedly used for other-than-stated purposes, including $50 million spent on Quiros's personal expenses and in other ways never disclosed to investors.

(Id. at 2.) Defendants characterize the SEC's announcement as "hyperbolic" and "inflammatory," and note that numerous subsequent news reports mentioned Mr. Quiros by name and referred to or adopted the SEC's "Ponzi" language. (Doc. 71-1 at 26, 49.)³

The State of Vermont brought its own enforcement action against Mr. Quiros and Mr. Stenger in state court on April 14, 2016. See State v. Quiros, 2019 VT 68, ¶ 7. Also on that date, Vermont Governor Peter Shumlin led a press conference announcing both the SEC and Vermont actions. At the press conference, Vermont Attorney General William Sorrell remarkedthat the State was alleging a "massive and complex fraudulent enterprise." VTDigger, Officials: Quiros and Stenger Diverted $200 Million from EB-5 Investors, YouTube (Apr. 14, 2016), https://www.youtube.com/watch?v=JXXrNtjq8Pc, at 21:59-22:03.⁴ Later at the press conference, Governor Shumlin stated: "We all feel betrayed" and that "It's a dark day for Vermont." (Id. at 38:22-25.) Senator Leahy also issued a press release on April 14, 2016 stating: "I'm shocked and saddened by what state and federal investigators have found" and that "[f]raud and abuse cannot be tolerated." (Doc. 71-62 at 2-3.)

According to Defendants, the SEC's April 2016 announcement and the subsequent press conference resulted in a "media frenzy." (Doc. 71-1 at 27.) And, Defendants contend, the publicity has continued through 2019. (See id. at 33-46.) The Government concedes that "the press has reported on the significant developments in both the civil and criminal cases, and published some editorials or other commentary" but maintains that the media coverage does not "give rise to the...