[F]ormer attorneys for Ariel Quiros, described by federal regulators as the “mastermind” of the largest alleged investor fraud case in the federal EB-5 program, are objecting to a proposed settlement with his insurer that would allow him to collect $837,500.
That’s because, the legal team says, they won’t be getting any of the settlement even though they racked up $3 million in legal bills defending the Jay Peak developer from fraud allegations before he fired them.
The court filing late last week by Quiros’ former legal team is the latest salvo in a long-running dispute over their unpaid bills since he terminated his relationship with them two years ago.
Earlier this year, a proposed settlement between Quiros and his insurer, Ironshore Indemnity, was reached, though a federal judge still must sign off on the deal.
Quiros has asserted that under a policy he and his businesses had with the Minnesota-based
insurance company that he was entitled to up to $10 million to defend himself from legal claims.
The insurance company disagreed it was responsible for coverage involving a fraud, but eventually agreed to the proposed settlement.
Now, the Miami businessman’s former attorneys are seeking to block that deal, saying that if it goes through a provision would prevent anyone from suing the insurance company, including the lawyers for their unpaid bills.
Those attorneys represented Quiros in depositions with the U.S. Securities and Exchange Commission before the SEC and state regulators brought separate lawsuits in April 2016 against him and his former business partner, Bill Stenger, then CEO and president of Jay Peak.
The SEC charged that the two ski resort developers misused $200 million of $450 million they raised through the federal EB-5 immigrant investor program. The money was used to fund massive upgrades at Jay Peak in a “Ponzi-like” scheme.
The attorneys represented Quiros through March 2017 when he fired them. Quiros’ former legal team have been fighting for payment of their unpaid bills ever since.
As part of that fight, Quiros’ former legal team has filed an action in federal court in New York against Ironshore Indemnity seeking funds under his policy to pay at least some of their unpaid legal bills.
Florida attorney Jeremy L. Kahn, on behalf of Quiros’ former lawyers, including the firms Leon Cosgrove LLC in Coral Gables, Florida, and Mitchell Silberberg & Knupp LLP, which has offices in New York City, Los Angeles and Washington, also recently submitted an objection to the proposed settlement involving Quiros and Ironshore.
“The current proposed settlement and request for a bar order provides for a bar against LC and MSK’s case against Ironshore with no consideration whatsoever to be paid to LC and MSK—while further enriching Quiros and Ironshore,” Kahn wrote.
“If approved,” the attorney later added in the filing, “LC and MSK will have received no compensation whatsoever for their defense of Quiros and for having a contractual claim against Ironshore forever barred.”
The $837,500 that Quiros would receive under the settlement with Ironshore is a small part of the amount he must pay to investors in the EB-5 program who were harmed by the fraud.
Quiros previously agreed to a more than $80 million settlement with federal regulators, surrendering properties he owed to meet that obligation, including Jay Peak and Burke Mountain ski areas in Vermont.
In addition, he agreed to turn over an estimated $2 million in properties to state regulators to resolve civil claims brought by the state of Vermont against him.
The proposed settlement with Ironshore totals about $1.9 million. In addition to the $837,500 set to go to Quiros, another $837,500 will go to the Jay Peak receivership which Goldberg oversees.
Stenger, who as an officer is covered by the policy, would receive a $225,000 payout, with that money to be used to pay for his attorneys’ fees in the cases brought against him.
That figure is $50,000 more than the $175,000 in state and federal civil penalties Stenger is required to pay as part of his settlement.
That case is pending in a federal court in Florida because that is where Quiros resides and many of his businesses are based.
Neither Kahn nor Goldberg returned messages this week seeking comment.
