Crime and Justice

Prosecutors say Jay Peak receiver’s $260M suit could impede grand jury probe

Jay Peak
Jay Peak Resort on Friday, June 7, 2019. Photo by Glenn Russell/VTDigger

Federal prosecutors say a lawsuit against the former legal team of the alleged mastermind of an investor fraud scheme in northern Vermont could hinder their ongoing criminal probe

Prosecutors are trying to block the $260 million lawsuit Michael Goldberg, the receiver of Jay Peak, filed earlier this year against Ariel Quiros’ ex-legal team. Goldberg claims those lawyers failed to take steps to stop the alleged investor fraud that has already led to criminal charges against the former Jay Peak owner and three associates.

“Proceedings should be stayed until the resolution of the criminal matter,” a group of federal prosecutors, including U.S. Attorney for Vermont Christina Nolan, wrote in a filing this week.

“Specifically,” the filing stated, “proceedings should be stayed for eleven months, the approximate length of time until the criminal trial has concluded, or until the criminal matter is otherwise resolved, if it is resolved prior to trial.”

The U.S. Attorney’s office brought criminal charges against Quiros and Bill Stenger, Jay Peak’s former president and CEO, as well as William Kelly, described as a key advisor to Quiros, in May. All pleaded not guilty.

The indictment accuses the men of fraud and making false statements to the government regarding a failed $110 million biomedical research center, AnC Bio Vermont, proposed for Newport. 

A fourth defendant, Jong Weon (Alex) Choi, the operator of AnC Bio Korea, is “at large,” according to federal prosecutors.

The criminal case is set for trial in October and is expected to run over a month.

Goldberg’s lawsuit includes claims of legal malpractice and breach of fiduciary duty against Quiros’ former legal team, lawyer David Gordon of New York City and the firm where he works, Mitchell Silberberg & Knupp, LLP.

VTDigger is underwritten by:

According to Goldberg’s lawsuit, Gordon and the firm were aware that “Quiros had directed the commingling of tens of millions in investor funds among the projects’ various phases and entities in an effort to cover construction shortfalls.”

Attorneys for Gordon and the MSK law firm have recently filed their own motion denying the allegations and seeking to have the lawsuit thrown out.

Quiros fired Gordon and other members of his legal team in March 2017, claiming he was not happy with their representation and they had overbilled for their services.

Goldberg, as receiver, manages many of Quiros’ assets tied to the fraud allegations against him, including Jay Peak and Burke Mountain ski resorts.

The criminal case and ongoing grand jury investigation into the investor fraud scandal in Vermont’s Northeast Kingdom will be “detrimentally impacted” if the receiver’s lawsuit is permitted to proceed at this time, Nolan and other federal prosecutors wrote in the recent filing.

Federal prosecutors have been tightlipped about the criminal probe for years, breaking their silence this spring at a press conference in Newport to announce the filing of charges against the AnC Bio developers.

At the time, prosecutors said the criminal investigation remained ongoing, but no additional charges have been brought against any other defendants.

Many past and present state officials, including those at the highest level of Vermont’s government, from past governors James Douglas and Peter Shumlin, to current U.S. Sen. Patrick Leahy have been tied to the investor fraud scandal due to their strong support of the state’s EB-5 program and backing of the projects headed by Quiros and Stenger over the years.

The filing submitted this week seeking to stay Goldberg’s lawsuit stated that Assistant U.S. Attorney Paul van de Graaf, who is prosecuting the criminal case in Vermont, will be submitting a “declaration” further explaining how allowing the civil lawsuit to proceed would hurt the criminal prosecution. 

“(D)ue to the sensitive and nonpublic information pertaining to an ongoing grand jury investigation contained in the declaration,” the filing stated, “the government requests that it be maintained as an ex parte and under seal submission.”

It is unclear if that filing has been submitted to the court. Goldberg’s lawsuit is pending in federal court in Miami, where Quiros resides.

Judge Marcia Cooke, who is presiding in the civil lawsuit brought by Goldberg, hadn’t ruled as of Friday afternoon on the filing by federal prosecutors seeking to delay that case from proceeding.

The filing from the federal prosecutors stated that Goldberg as well as attorneys for Quiros’ former legal team did not object to the stay in the proceeding to allow the criminal case to take precedent. 

The federal prosecutors, including Nolan, through a spokesperson, declined Friday to comment on the filing.

VTDigger is underwritten by:

Jeffrey Schneider of the Miami, Florida-based firm, Levine Kellogg Lehman Schneider + Grossman, who is representing Goldberg in the lawsuit, could not be reached Friday for comment. 

The state and the U.S. Securities and Exchange Commission brought their civil actions more than three years ago against Quiros and Stenger. Those lawsuits, which have since reached monetary settlements, accused the two men of misusing $200 million of the more than $350 million they raised through the EB-5 immigrant investor program.

That money was raised over nearly a decade for a series of projects in northern Vermont headed by Quiros and Stenger, including massive upgrades at Jay Peak ski resorts.

Stay on top of all of Vermont's criminal justice news. Sign up here to get a weekly email with all of VTDigger's reporting on courts and crime.


I believe in Democracy. And the only way to have a Democracy is to have journalism. We are discovering that journalism is the essential ingredient to a healthy Democracy. And I have discovered that the journalism needs to be funded. That's why I spend so much time supporting VTDigger and their work. It is the definition of "Essential."

Kevin Ellis, VJT Board Member

Alan J. Keays

Reader Footnotes

Please help move our stories forward with information we can use in future articles.

Readers must submit actual first and last names and email addresses in order for notes to be approved. We are no longer requiring readers to submit user names and passwords.

We have a limit of 1,000 characters. We moderate every reader note.

Notes about other readers’ points of view will not be accepted. We will only publish notes responding to the story.

For more information, please see our guidelines. Please go to our FAQ for the full policy.

About voting: If you see voting totals jump when you vote on comments, this indicates that other readers have been voting at the same time.
VTDigger Reader Footnotes are now closed on this story.
1 Comment
Newest Most Voted
Inline Feedbacks
View all comments

Recent Stories

Thanks for reporting an error with the story, "Prosecutors say Jay Peak receiver’s $260M suit could impede grand j..."