Melissa Visconti, an attorney for Quiros, and Jonathan E. Minsker, representing People’s United, recently submitted separate filings laying out several arguments they believe should prevent the lawsuit from gaining class-action status.
“In this motion for class certification,” Minsker wrote, “plaintiffs seek to represent an additional 829 investors, claiming in the broadest sense that there was one ‘scheme’ to defraud and thus that all of the investors have ‘common’ issues as to which the named plaintiffs’ claims are ‘typical.’”
He added, “Notably, plaintiffs do not even attempt to identify how their claims could possibly be tried on a class-wide basis using the facts of the eight plaintiffs.”
That’s in part because different investors were putting money into different projects that had different agreements, both attorneys argue in their filings. Also, even for investors within the same limited partnership, the facts surrounding their individual investments differ, the filings said. As a result, the more than 800 investors lack a “common” claim, they added.
“Class actions are supposed to be vehicles for economically resolving claims for large numbers of injured plaintiffs on the theory that each has a claim with common facts and legal issues that can be resolved on a collective basis,” Visconti wrote in her motion.
She later added, “The proposed class consists of at least eight subsets of plaintiffs, and Plaintiffs simply have not established through evidence that these claims can be effectively resolved better on a class (basis) rather than an individual basis.”
The lawsuit accuses Quiros and Bill Stenger, the former CEO and president of Jay Peak, of taking part in a scheme to improperly use hundreds of millions of dollars from immigrant investors. The money raised through the EB-5 visa program was meant to pay for a series of development projects in Vermont’s Northeast Kingdom.
Minsker, the bank’s attorney, also argued in his filing that claimed damages are not “common” among the 837 potential class members.
“(They) want very different things from the litigation,” his filing stated, “with some more interested in financial gain and others more interested in receiving a green card, with one investor specifically stating ‘I don’t care about my money. Keep the money, just get my immigration status.’”
Neither Visconti nor Minsker could be reached Friday for comment. James J. Stricker, another attorney representing People’s United Bank, did return a phone call Friday but declined to comment.
The case is pending in a Miami courtroom because that’s where Quiros lives and many of his businesses are located.
The EB-5 projects Stenger and Quiros undertook over an eight-year period included large-scale upgrades at Jay Peak, a new hotel at Burke Mountain and two failed initiatives in Newport, the largest being a proposed $110 million biomedical research facility known as AnC Bio Vermont.
The U.S. Securities and Exchange Commission as well as state regulators brought investor fraud lawsuits against the two developers in April 2016. Stenger has resolved his case with the SEC, and Quiros is nearing a resolution in that matter.
The state case against the two men remains pending, as well as other civil lawsuits.
Attorneys for the investors in the proposed class-action lawsuit allege that People’s improperly managed funds from escrow accounts. The lawsuit claims the developers moved money designated for specific projects to accounts at a Raymond James brokerage firm branch in Florida belonging to another phase of the development.
The lawsuit alleges the bank knew the actions were “improper.” The bank has denied the allegations.
Stenger agreed to class certification of the lawsuit Oct. 20.
The lead plaintiff in the lawsuit is Alexander Daccache, of Brazil. He invested $500,000 in 2010 through the EB-5 program in a project known as Penthouse Suites, which is part of The Hotel Jay.
The proposed class comprises investors from all over the world, including Europe, Asia, India, the Middle East and Australia.
In a motion asking the judge to certify the lawsuit against Quiros and the bank as a class action, attorney Thomas A. Tucker Ronzetti wrote that the litigation will focus on a “common course” of conduct.
“The key issues at trial will be whether Quiros and Stenger misused and commingled investor funds, and whether People’s Bank aided and abetted Quiros and Stenger and breached duties owed to and escrow agreements with Jay Peak investors,” the filing stated. “Given that focus, the evidence that Plaintiffs will offer to prove their claims will be common to all class members.”
Minsker, on behalf of the bank, contends in his recent filing that investors themselves had been provided information that should have raised red flags.
“A sampling of the information that was not known to (People’s United Bank), but which information was provided to plaintiffs and was simply ignored,” according the filing, included:
• Partnership income tax returns showing $37 million held in Raymond James accounts, falling to zero the following year, without any meaningful construction taking place.
• Summaries, invoices, wires and reports of the general partner that the partnership paid more than $38 million to Jay Construction Management for work that it had not performed.
• Financial reports that even an investor who was a “chartered accountant” could not understand.
• Reports of projected revenues declining from $33 million to $6 million.
“While (People’s United Bank) recognizes that plaintiffs are not required to be attorneys or have intimate knowledge of all of the details of their claims,” Minsker wrote, “it is shocking how little plaintiffs know about the most basic of facts concerning their investments and their complaint.”
The filing added that the investors bringing the case should have done a better job of looking out for their interest.
“The simple fact is that plaintiffs completely and totally abdicated any responsibility for their investment, ignored all of the information they had that they now claim was so important, and ignored several operational and budgetary problems at their company,” Minsker wrote.
Also, a receiver appointed by the court in the SEC case to oversee Quiros’ assets has taken legal action and received settlements that are “more than sufficient” for the investors, through their partnerships, to become whole, according to the filing.
Those settlements include one reached earlier this year with Raymond James. That settlement totaled nearly $150 million, with a bulk of that money going to refund investors, as well as pay off contractor debts and complete unfinished projects.
In addition to opposing the bid to have the lawsuit declared a class action, attorneys for both Quiros and People’s United Bank have pending motions from earlier this year asking the judge to dismiss the case outright.
A hearing in the case is set for January in Florida.
