Courts & Corrections

UPDATED: Raymond James agrees to pay $150 million in EB-5 fraud settlement

Michael Goldberg
Michael Goldberg, the court-appointed receiver in the EB-5 fraud case, speaks at a Statehouse news conference Thursday with the governor beside him. Photo by Michael Dougherty/VTDigger

The court-appointed receiver overseeing properties in northern Vermont at the center of an investor fraud scandal has reached a nearly $150 million settlement with the brokerage firm he says “aided and abetted” one of the developers in carrying out a “Ponzi-like” scheme.

Michael Goldberg announced the agreement with Raymond James and Associates Inc., a securities broker-dealer based in Florida, at a Statehouse news conference late Thursday afternoon.

Watch online
Find VTDigger video of the announcement here.

The sweeping settlement, signed by the parties earlier Thursday afternoon, will be used to pay 42 contractors, 513 vendors and 169 investors who took losses as a result of the alleged fraud.

For more than a year, contractors and vendors had been owed millions for their work on projects in the Northeast Kingdom region that were funded through the federal EB-5 immigrant investor program.

The money will also be used to refund scores of foreign investors who put money into projects that were never built or were not constructed as pitched. The alleged fraud jeopardized the immigration status of investors who sought green cards, because job creation targets required for permanent U.S. residency were not met.

“What a difference a year makes,” Goldberg told a large crowd of reporters at the press conference. “A year ago, I was actually sitting in the airport Miami … I didn’t really know what Jay Peak was, I hadn’t skied in 35 years.”

Exactly a year ago, the U.S. Securities and Exchange Commission brought civil charges alleging that the two developers, Ariel Quiros and Bill Stenger, misused $200 million in EB-5 immigrant investor funds. Federal regulators say the two men used investor money to buy Jay Peak Resort in a deal facilitated by Raymond James.

On Thursday, Goldberg thanked Raymond James for stepping up and taking responsibility for their actions.

Ariel Quiros
Ariel Quiros at a groundbreaking for AnC Bio Vermont in May 2015. File photo by Anne Galloway/VTDigger

“The way they approached this cannot be ignored,” the receiver said. “They basically set an example of how firms caught in this situation should react and that can’t go unnoticed.”

Asked what Raymond James’ total exposure may have been had the case gone to trial, Goldberg replied, “Clearly they felt they had exposure. They’re writing a big check. Lawyers can posture and I don’t want to get in what their total exposure was.”

“At least $150 million,” added Gov. Phil Scott, who also spoke at the press conference.

The governor praised Goldberg for keeping the Jay and Burke resorts up and running, employing hundreds people through the ski season.

“While this is very positive news,” the governor added, “each of us understands that we still have a lot of work to do to repair the damage done, further restore the faith in the EB-5 program and bring justice to this case.”

Scott and Goldberg spoke at a podium to reporters Thursday as lawmakers from across the Northeast Kingdom stood behind them.

The settlement, if ultimately approved by a federal judge, would provide protection for Raymond James against future claims from the receiver and from investors in the EB-5 funded projects.

Raymond James resolved claims by Vermont regulators for $4.5 million last year, plus a $1.4 million administrative penalty.

Raymond James admits no wrongdoing as part of the settlement.

“It’s without any admission of anything,” Goldberg said. “We made allegations, and that’s all they were.”

VTDigger has been reporting on allegations of fraud at Jay Peak since July 2014. Find all our stories here.

Companies from across the state’s Northeast Kingdom, where the alleged fraud case played out, will receive benefits from the settlements, as will firms across the state, from Barre to Brattleboro, Burlington to Rutland.

Unpaid contractors will receives a total of $6.4 million from the settlement. Also, Lyndonville Electric Department will be paid $350,000 and Vermont Electric Cooperative will receive $380,000. In addition, the sewer department for the towns of Jay and Troy will get $167,000 owed for wastewater treatment services.

“Each of these entities, each of these companies will be paid 100 cents on every dollar that they were owed,” Scott said. “While this does wipe the slate lean for the individuals, businesses and communities harmed by this alleged fraud, it is very, very encouraging news.”

Raymond James, in a statement issued after the close of financial markets late Thursday afternoon, said the settlement represents a just resolution of the case.

“We believe this resolution is fair and representative of our commitment to redressing the victims’ losses in this case,” Jonathan Santelli, Raymond James executive vice president and general counsel, said in the statement.

The firm has since beefed up its anti-laundering control systems, including adding staff and increasing training to better spot suspicious activity.

Most of the investors at Jay Peak Resort won’t receive any immediate financial benefit from the settlement reached Thursday. That’s because facilities for six phases of the resort — Hotel Jay, Penthouse Suites, Golf and Mountain Suites, Lodge and Townhomes, and Stateside — were constructed and are up and running.

Only investors in the Tram Haus Lodge will be paid in full because they held promissory notes for the property.

AncBio Vermont investors will also be paid off through the settlement. That’s because the money they invested in a biomedical center in Newport was never built and was used instead to backfill projects at Jay Peak.

The receiver will use settlement money to complete the partly constructed Stateside condos.

That leaves the Jay Peak Resort unencumbered for a future purchaser. Debts associated with both properties, such as the unpaid bills to contractors, are being resolved with the Raymond James settlement.

When the properties, Jay Peak and Burke Mountain, are eventually sold, the remaining 670 or so investors will receive proceeds from the transactions, Goldberg said.

The receiver said he had no idea at this point how much either property would sell for, or whether the investors would get all of their money back.

“They could go for $100 million, they could go for $500 million,” he said. “I don’t know the price right now.”

Goldberg said with the recent consolidation in the ski industry and the sale of three resorts in Vermont already, Jay Peak and Burke ski areas are “heading into a good market.”

“The goal is for us to build up the revenue and profits,” Goldberg said. He said that Jay Peak quadrupled profits last year and should end up with a surplus of about $9 million this year. Burke Mountain took a loss of $2 million.

Goldberg, an attorney with the Akerman LLP, of Fort Lauderdale, Florida, was appointed by a federal judge last April to the post of receiver. In that role, he oversees Jay Peak Resort and other properties in the Northeast Kingdom after state and federal regulators accused Quiros, the owner of the ski area, and Stenger, the resort’s former CEO and president, of 52 counts of securities fraud.

Goldberg filed a separate lawsuit in May against Quiros, the brokerage firm Raymond James, and Joel Burstein, Quiros’ former son-in-law, who served as the branch manager of a Raymond James office in Coral Gables, Florida.

That lawsuit accuses the financial services company and Burstein of helping Quiros develop a scheme to commingle and “steal investors’ funds for his own use in breach of partnership agreements.”

Burstein and Raymond James allowed Quiros to borrow $100 million in investor funds for margin loans.

The terms of the settlement announced Thursday call for Raymond James to pay the receiver in two installments, with the first $91.7 million to be followed by a $53.8 million payment, for a total of $145.5 million.

Including the state settlement, the financial services company will pay out $150 million for the fraud claims.


EB-5 investors put roughly $440 million (including administrative fees) into projects pitched by Quiros and Stenger over an eight-year period at the Jay Peak and Burke Mountain resorts, as well as projects that never materialized in Newport, including a $110 million biomedical research center.

A breakdown of the settlement with Raymond James announced Thursday shows that the receiver will use the Vermont settlement of $4.5 million to pay contractors owed for work they performed on the Stateside condo village project at Jay Peak, known as Phase VI.

Funds from the first settlement installment from Raymond James of $91.7 million will be broken down as follows:

$5.1 million to cover unpaid expenses associated with Jay Peak projects, including debt for services provided by vendors to Jay Peak Resort and Burke Mountain Hotel.

Jay Peak, Stateside Townhouses
Stateside Townhouses under construction at Jay Peak. VTDigger file photo

• $19.68 million to finish the Stateside project, with $2.2 million used to pay off contractor liens on that project. Vermont-based DEW Construction, which had earlier bid and been selected for the project, will serve as the contractor.

• $67 million for investors not covered in a previous settlement regarding the AnC Bio Vermont research facility, which was never built. Earlier this year, a federal judge approved returning $17.75 million to investors whose money was never spent but held in escrow for the project.

A breakdown of the $53.8 million second payment from Raymond James shows:
• $15.39 million to satisfy all obligations to investors in the Tram Haus Lodge, or Phase 1.

• $6.6 million to cover $3.6 million in contractor claims for work building the Burke Mountain Hotel & Conference Center, and a $3 million “obligation” due to Burke Mountain Academy in deferred compensation from when it sold the ski resort in 2005. About $1 million of that total will go to construct a new ski lift at the resort.

• $10 million for up to 20 investors who put $500,000 each into Burke Mountain projects who are not eligible to apply for permanent residency because of lack of job creation associated with the investments.

• Up to $1 million to refund two Burke investors who each invested $500,000 in Burke Mountain projects but whose residency petitions were denied prior to the filing of the SEC lawsuit against Quiros and Stenger in April 2016.

• $25 million to set up a fund to reimburse costs and compensate attorneys representing investors in class action litigation or other legal proceedings. Investors have brought several legal actions, including a proposed class action lawsuit pending in federal court in Miami led by investor Alexander Daccache, of Brazil.

Daccache invested $500,000 in 2010 in the Penthouse Suites project, which is part of the Hotel Jay.

According to the Daccache lawsuit, the action was brought on behalf of a proposed class of 836 people who invested more than $400 million in the projects headed by Quiros and Stenger.


In his lawsuit in May, Goldberg alleged Raymond James “aided and abetted” Quiros in a Ponzi-like scheme in which he misused $200 million of the $350 million in investor funds from seven of eight projects raised through the EB-5 program. In addition, Quiros stole $55 million to pay for his own personal expenses, according to allegations filed in court.

Bill Stenger
Bill Stenger, CEO of Jay Peak.

Goldberg says Raymond James improperly converted money from six Jay Peak limited partnerships and the planned biomedical facility in Newport into collateral for loans. Those loans, according to court records, allowed Quiros and Stenger to “disguise the fact” that most of the seven projects “were either over budget or experiencing shortfalls.”

Goldberg, in the lawsuit, alleges that Raymond James profited from the scheme, ultimately earning money on margin loan interest.

Quiros had sole authority over the Raymond James accounts. Burstein was the listed broker, according to the SEC.

The misuse of funds, according to court records, began in June 2008, when the SEC says Quiros used investor money to purchase Jay Peak Resort from Mont Saint-Sauveur International.

MSSI had collected $24.5 million from investors for an EB-5 program to fund upgrades at the resort, including the Tram Haus project, known as Phase I, and the Hotel Jay, Phase II.

From December 2007 to May 2008, MSSI raised $17.5 million from 35 investors for Phase I and $7 million for Phase II. Bill Stenger, CEO of Jay Peak, managed the escrow accounts and facilitated the transfer of funds to Raymond James from People’s United Bank.

In the spring of 2008, Quiros negotiated a stock transfer in which MSSI moved the assets of Jay Peak to his company, Q Resorts. In preparation for the closing on the purchase of the Jay Peak resort, Quiros asked MSSI to open brokerage accounts for the Tram Haus and Hotel Jay projects with Burstein at Raymond James, the lawsuit alleges.

At the time of the bank transfer, MSSI said in a letter that the money “may not be used in any manner, including as collateral or a guarantee, to fund the purchase of the Jay Peak Resort.”

Goldberg alleges in his lawsuit that Quiros directly used $21.9 million in investor funds to buy Jay Peak.

“Raymond James knew that the monies in the Jay Peak Limited Partnership accounts were investors’ funds and could not be used by Quiros for Quiros’ purchase of Jay Peak,” Goldberg writes. “Despite the fact that MSSI clearly explained to Quiros and Stenger that they could not use investor money to purchase Jay Peak, Quiros — aided by transfers made by Stenger and Burstein and Raymond James — did exactly that.”

Quiros, in a later deposition with the SEC, testified that “Raymond James was a great supporter of mine. They’re the ones who developed my banking structure in 2008.”

Goldberg asked the court to award compensatory damages, to be determined at trial, “at the maximum rate allowable.”

The SEC case and the separate lawsuit Goldberg brought against Quiros, Raymond James and Burstein are both pending in federal court in Miami, where Quiros lives and many of his businesses are located.

Two investors are also suing Saint Sauveur Valley Resorts, alleging that the company “aided and abetted” the alleged fraud.

VTDigger began reporting on claims of securities fraud involving the Tram Haus investors in July 2014.

Stenger has settled his case with the SEC, while Quiros is challenging the SEC allegations. He also recently fired his legal team and obtained new counsel.

The agreement announced Thursday with Raymond James follows an earlier settlement in the case reached in October with Citibank for $13.3 million.

That settlement was over a legal dispute that began in March 2015 when Citibank extended a $15 million credit line to Quiros, which he backed with collateral from two of his companies.

Goldberg said Thursday additional settlements could take place with other entities, including additional financial institutions.

Asked if there are any settlements talks ongoing with Quiros, the receiver replied, “Sorry, I don’t want to get into that right now.”

Then he added Quiros had recently changed lawyers, dropped an appeal and withdrew some motions.

“Perhaps,” Goldberg said, “maybe it would signal that he’s taken a different approach to things.”

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Alan J. Keays

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  • Paul Drayman

    This details released so far regarding this settlement help to show a slightly clearer view of how this fraud was pulled off and who were the central figures involved.

  • Neil Johnson

    Great news and great job for all the contractors. Really excellent work there.

    Question: If Vermont was in charge of making sure funds were properly used for the EB5 project… come nobody is looking at those in Vermont Government?

    The people in Vermont Government that were directly responsible for making sure funds were available and used properly and were also major spokesman for the actual deals? Wasn’t our sole job as EB5 agents to make sure the money was in the account? To make sure Shenanigans like this could never happen?

    Did I miss that somewhere?

    • Steve Baker

      You’re not missing anything other then an indictment. We actually paid state employees outstanding salaries and benefits that took the link in the handshake rather then do their job effectively

  • Steve Baker

    “admits no wrongdoing as part of the settlement.”
    That seems to be the phrase thrown around quite often.

    Either Government Bureaucrats take the 5th, Refuse to release documents, or Businessman and Past Owners admit no wrongdoing and pay up.
    Though this is a large amount of money, running through all the numbers leaves a money pit larger then the one in downtown Newport.
    And still…..not a single State Employee did anything wrong?

    • Jerry Kilcourse

      Another phrase used quite frequently where government officials are involved and don’t want to comment especially when it could be embarrassing to them is “confidentiality.”

  • Pete Novick

    Text quoted from the article:

    “Raymond James knew that the monies in the Jay Peak Limited Partnership accounts were investors’ funds and could not be used by Quiros for Quiros’ purchase of Jay Peak,” Goldberg writes. “Despite the fact that MSSI clearly explained to Quiros and Stenger that they could not use investor money to purchase Jay Peak, Quiros — aided by transfers made by Stenger and Burstein and Raymond James — did exactly that.”


    Here is Paragraph 65 from the SEC civil complaint filed against Quiros and Stenger:

    “65. In conjunction with those transfers, MSSI representatives on June 18 [2008] wrote a letter to the Raymond James broker and to others, explaining that the funds in the MSSI Raymond James Suites Phase I account were investor funds. The letter further stated the investor money could only be used in the manner specified in the Suites Phase I limited partnership agreement and could not be used in any way to pay for Q Resorts’ purchase of Jay Peak.”

    In sending that letter, MSSI’s attorneys handling the closing were performing due diligence.

    In Paragraph 65 above, the phrase, “and to others,” surely included Vermont state government authorities, and most likely the office of the Vermont attorney general.

    We still need to know who in the Vermont government received a copy of the letter and what actions they took, or didn’t take.

    There are perhaps many people, formerly and presently in state government, who would rather you didn’t know.

    Due diligence, indeed.

  • Judith Henault

    And to think that Bill Stenger is now (and has been for awhile) working for Goldberg in a paid position is really mind blowing. When did the SEC change its mind and allow him to speak about his situation?
    I do hope the contractors get paid but overall, this is a blatant travesty of justice.

    • Paul Drayman

      Not sure what you are saying about Stenger speaking of his situation. I don’t see that in this article. Is there another somewhere? Stenger is not working for Goldberg as far as I know, but Goldberg must feel that Stenger can be helpful at Jay Peak to the overall cause of keeping the resort afloat at this point. It appears that Goldberg’s work has had the desired effect so far.

      • Judith Henault

        There is another article where it clearly states that Goldberg has employed Stenger, Paul. Print sources also covered it.

        • Paul Drayman

          Judith, Goldberg is the court appointed receiver. In that situation, the court has temporarily taken over control of Jay Peak until the legal problems can be settled. Goldberg is an attorney who has been assigned by the court to assist it to this end. Stenger had been allowed to work for Jay Peak after the fraud charges were leveled against him. It’s strange, but the court obviously gave their permission. I’m not sure that he is still working there. Who really knows what the purpose was, but Goldberg seems to know what he is doing. Keep in mind that Stenger made a deal with the courts to “cooperate” with the investigation. That deal can be rescinded if Stenger does anything illegal or stops assisting in the investigation.

  • Judith Henault

    How long has Stenger been working for Goldberg and when did the SEC allow this?