There is no Unicode byte order mark. Cannot switch to Unicode

If you are not able to change the xml file encoding as

<?xml version="1.0"?>

Alternatively, you can read the xml content directly as raw xml instead of loading it with xml path.

XmlReader.Create(new StringReader(File.ReadAllText(fileName)));

If you use XmlDocument;

var xmlDoc = new XmlDocument();
xmlDoc.LoadXml(File.ReadAllText(filePath));

The reality of your file's encoding appears to conflict with that specified by your XML declaration. If your file actually uses one-byte characters, declaring encoding="utf-16" won't change it to use two-byte characters, for example.

Try removing the conflicting encoding from the XML declaration. Replace

<?xml version="1.0" encoding="utf-16"?>

with

<?xml version="1.0"?>

You may also be able to load the file into a string as a work-around using LoadXML().