Crime and Justice

UPDATE: State settles with Jay Peak developers over EB-5 fraud case

Jay Peak

Jay Peak Resort. VTDigger photo

[S]tate officials on Thursday announced the details of Vermont's settlement with Jay Peak developers who masterminded a "Ponzi-like" scheme that bilked foreign investors of more than $200 million.

Attorney General TJ Donovan and Gov. Phil Scott called journalists to a press conference in the Northeast Kingdom to announce the settlement.

Ariel Quiros, who owned Jay Peak and previously settled with the federal securities agency $81 million, will surrender five Vermont properties in order to cover a $2 million penalty imposed by the state.

Bill Stenger will pay the state $100,000 over five years. He previously settled with the Securities and Exchange Commission for $75,000.

All of the money will go toward development projects in Newport.

The case has been pending since April 2016 when both state and federal regulators brought separate investor fraud lawsuits against the two men.

TJ Donovan

Vermont Attorney General TJ Donovan. File photo by Mike Dougherty/VTDigger

The federal case has already been resolved.

As part of those settlements, both men neither admitted nor denied wrongdoing.

The state lawsuit remained pending in Washington County Superior civil court.

In April, Washington County Superior Court Judge Mary Miles Teachout agreed to freeze Quiros’ remaining assets, over the objections of his attorney.

The state claimed that Quiros had roughly $8 million in assets left after the SEC settlement, mainly in property such as houses and condos, as well as bank accounts. The Vermont attorney general's office argued that the money should be recouped for investors and the freeze was necessary to prevent Quiros from draining what is left of his assets.

Melissa Visconti, a Florida attorney representing Quiros, argued at a hearing in Vermont that imposing such an asset freeze against her client would prevent him having funds needed to defend himself against the investor fraud allegations.

Bill Stenger Ariel Quiros

Bill Stenger, left, and Ariel Quiros at a ribbon cutting. File photo by Hilary Niles/VTDigger

Quiros and Stenger were accused in the state and federal lawsuits of misappropriating more than $200 million of the over $350 million they raised through the federal EB-5 immigrant investor program.

The money was meant to fund a series of massive upgrades at the Jay Peak ski resort as well as other projects in northern Vermont.

The lawsuits also alleged that in addition to misappropriating funds, Quiros “looted” through a “Ponzi-like” scheme another $50 million from investors for his own personal use, including the payment of taxes and the purchases of a New York City luxury condo.

Two of the projects headed by the developers that barely got off the ground were both in Newport, one was a multi-use downtown complex and the other was a more than $100 million biomedical research facility.

In Newport, a large hole still exists in the center of the town after a block was taken down before work stopped on the multi-use complex amid the EB-5 scandal.

Scott and Donovan are making the announcement Thursday afternoon regarding the EB-5 case only a short distance away from the hole, at the Newport City Dock.

Colin Meyn contributed reporting.

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