NEWPORT — The Securities and Exchange Commission today announced fraud charges and an asset freeze against Jay Peak Resort and related businesses allegedly misusing millions of dollars raised through investments solicited under the EB-5 Immigrant Investor Program.
The SEC’s case was unsealed today in federal court in Miami, and the court has appointed a receiver over the companies to prevent any further spending of investor assets.
The SEC alleges that Bill Stenger, Ariel Quiros, and their companies made false statements and omitted key information while raising more than $350 million from investors to construct ski resort facilities and as well as the proposed AnC Bio facility in Newport.
Investors were told they were investing in one of several projects connected to Jay Peak Inc., a ski resort operated by Stenger and Quiros, and their money would only be used to finance that specific project.
Instead, in 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.
“This is obviously a difficult day for Vermont and for the many people, myself included, who are so invested in growing jobs and economic opportunity in the Northeast Kingdom,” said Gov. Shumlin. “Most of all, this is a difficult day for the hundreds of employees in the Northeast Kingdom who rely on Jay Peak, Q Burke, and the related projects that appeared to hold so much promise.”
According to the SEC’s complaint, Quiros improperly tapped investor funds for such things as the purchase of a luxury condominium, payment of his income taxes and other taxes unrelated to the investments, and acquisition of an unrelated ski resort.
“The alleged fraud ran the gamut from false statements to deceptive financial transactions to outright theft,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement. “As alleged in our complaint, the defendants diverted millions of EB-5 investor dollars to their own pockets, leaving little money for construction of the research facility investors were told would be built and thereby putting the investors’ funds and their immigration petitions in jeopardy.”
The SEC’s complaint charges Quiros, Stenger, Jay Peak, and a company owned by Quiros called Q Resorts Inc. as well as seven limited partnerships and their general partner companies with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
Four other companies are named as relief defendants in the SEC’s complaint for the purpose of recovering investor funds transferred into their accounts. The SEC seeks preliminary and permanent injunctions, financial penalties, and disgorgement of ill-gotten gains plus interest. The agency also seeks conduct-based injunctive relief against Quiros and Stenger along with an officer-and-director bar against Quiros.
“Like Governor Shumlin, I am stunned and disappointed with the SEC report on the allegations of fraud in the Northeast Kingdom EB5 projects,” Newport Mayor Paul Monette said. “We will continue to monitor these developments to evaluate the impact on the Newport City projects.”
WEll, well, what do you think of this? Disgusting isn’t it?
I kept telling folks “you’re getting a walk down the garden path”. No one believed me(except Tony Pomerleau). I said this 2 years ago and I feel badly for all the folks who hoped for jobs and a more prosperous future.
Plenty of people, especially those directly affected, thought this from the start. Thankfully Pomerleau kept possession of that property.
I think everyone is interested in more information- if you find anything else out, please share! Thanks for your reporting!
When this first started I said then that this is not going to go right. Someone is going to be lining their pockets instead of the money being used where it was supposed to be used. I never agreed with bringing in foreign investors and their families and workers over here. Now who is going to make up for all of this mess? Look at the beautiful buildings in Burke that are just sitting there and not being used. Before the Governor lets something like this happen again I hope he looks into it really hard. This had better not effect any of us financially.
When this first started I said then that this is not going to go right. Someone is going to be lining their pockets instead of the money being used where it was supposed to be used. I never agreed with bringing in foreign investors and their families and workers over here. Now who is going to make up for all of this mess? Look at the beautiful buildings in Burke that are just sitting there and not being used. Before the Governor lets something like this happen again I hope he looks into it really hard. This had better not effect any of us financially.
Maybe they can be cell mates with Bernie Madoff. Aparently they were not listening.
Well… so much for a commercial airport here in Newport!! )-:
Who was watching the hen house when the foxes were circling. Who had oversight, before this all fell apart? I would like answers to these questions as would many others. Now there is a bombed out hole in the middle of town with a chimney to remember the old days. Scrap the chimney, build a community center with swimming pools, workout rooms, etc. It’s a great opportunity to do something to benefit all.
What a surprise!! NOT!!
So Sad For my HomeTown Of Newport and all the Families in the Northeast Kingdom that was mislead. Who ever allowed this to pass? Ugh so horrible
If totally investigated with no stones unturned you will probably find that mr.shumlin, mr. Sanders, mr. Leahy and other cohorts of the political contingency in and around the nek will surface with some sort of involvement . The eb5 program has done absolutely nothing for the economics in the nek. Never has and never will and all those people know it.
Right from the start it didn’t take anyone with business sense to see this looming over the hairbrain idea of a water park and a golf course in northern Vermont. Everyone that has had Ideas on J peak has lost $ and some have ended up on boards of local banks.It wasn’t hard for these guys to fool the rubes in montpieler along with our reps in Washington. Just last fall leahy and his stooge welch were pushing for this program.Now they want to reboot the eb5 and fix the fraud. Another joke played on the NE Kingdom idiots in charge. Toni saw this coming
I have always missed Jay Peak pre-2007. Everything changed when this construction started – the staff were no longer as friendly and the attitude at the mountain changed. I no longer saw Jay as a different and special place, but more as another expensive and typical ski resport. It’s identity changed and not for the better. We no longer make the trips up there that we used to. This makes the situation even more sad.
When will the people in the NEK figure out they just can’t play ball with the self serving, criminal ‘big boys’?? I. too, was one who felt it was all too good to be true, and that poor Newport was being led down the garden path. A very, very sad day for Newport and the people who blithely worked for these two ….actually, I can not think of strong enough words to describe these 2 men.
This is a mess. But we cannot forget that jobs have been created and many of our folks rely on Jay Peak for employment. It is a great place to work and there are wonderful folks working there who make Jay Peak special. Let’s focus on the positive, the resort is and will be operating now and in the future and open for business. With or without the promise of development, there’s no more special place than where we live. We move forward…
One quarter of downtown Newport looks like Syria. We will have no new hotel, no new airport terminal, no new window factory (remember?), no Bio-facility, no aircraft manufacturer. All we have is a hole. All false hopes promised by a pair of snake oil salesman in an area where hope in the future is a rare commodity, are gone.
With the complicity of a state and local leadership that was either wowed by the bright lights, or plain incompetent, or involved in the scam, or all of the above. Due diligence and oversight by the people we elect to do just that was woefully inadequate.
And now, just around the corner, here comes Mal-Wart.
The final act is upon us.
And all Newport has to show, after all the hopes are dashed is a hole, like a needle hole in a junkies arm.
Maybe we can get another one of our beloved developers, Blittersdork, to put a few 500 foot turbines in Newport’s hole. Remember, because their work is for the public good, they are allowed to ignore zoning laws so they could fill that hole with turbines and actually get away with it!
you know they used the money to prop up Jay Peak, and they would have done the projects if the state had not frozen accounts! its foreign money! I don’t give a damn if they lost it, or used it as a way to keep their other businesses going, as long as jobs and growth were being fueled in Vermont!! You wait until you see all of the fraud coming out of other projects with EB-5 funding, its business!!
This is what you get when you believe that politicians, i.e. the government, creates jobs and wealth. They don’t, never have and never will. EB5 program is another Washington scam. There are no shortcuts to success, hard work and a free market lead to prosperity.