The man in charge of overseeing Jay Peak and Burke Mountain resorts as they emerge from an investor fraud scandal is seeking approval for more than $3 million in federal Paycheck Protection Program funds to help keep the resorts afloat during the Covid-19 pandemic.
Michael Goldberg, the court-appointed receiver managing the Northeast Kingdom resorts as well as other assets tied to their indicted former owner, Ariel Quiros, filed a court motion last week asking a judge to approve acceptance of the loan, which can eventually be forgiven if jobs are preserved.
City National Bank has approved a loan under the PPP program for $3,253,997, according to the filing.
“To execute the loan documents,” the filing added, “the Receiver must first obtain this Court’s authorization.”
Both resorts had to end the ski season early this year due to the Covid-19 pandemic, and other operations have been significantly curtailed at the resorts since as a result of the coronavirus.
Goldberg couldn’t be reached Friday for comment.
The federal loan program was established as part of a relief package passed by Congress earlier this year to help small businesses across the country survive the Covid-19 pandemic.
Currently, according to the filing, in the resorts’ “limited” operations, 90 to 115 employees are involved in various tasks at the mountain, including sales, Jay Peak’s water park, hotels, and food and beverage services for guests.
If the now-closed Canadian border opens in November in time for the winter ski season, according to Goldberg, at least 85% of the PPP money would be used to significantly increase staffing to between 180 and 345 employees.
“However, the Receiver does not have to use (the) proceed of the PPP loan if conditions do not change,” the filing stated. “Thus, the loan proceeds provide a reserve that is available if needed.”
There is still a great deal of uncertainty over when, and if, the Canadian border will open to allow potential guests to travel to the resort, which is located a short distance south of Vermont’s northern boundary. Canadians make up a large percentage of visitors to the resort and if they can’t travel into the United States that will have a significant impact on Jay Peak and Burke Mountain.
“Through this motion,” according to the filing, “the Receiver seeks authorization to close on the loan so that the proceeds are available to supplement the Resort’s cash flow, specifically as it relates to payroll expense, so that they can hopefully weather the COVID-19 storm substantially impacting all travel related businesses.”
Goldberg’s request to accept the loan requires the approval of Judge Darrin Gayles, who is presiding in a federal court in Florida over a civil enforcement action brought more than three years ago against Quiros and his former business partner, Bill Stenger, Jay Peak’s past president.
That case was brought in Florida because that is where Quiros resides and many of his businesses are located.
According to that action filed by the U.S. Securities and Exchange Commission, Quiros and Stenger misused $200 million of the more $350 million raised from immigrant investors funds through the federal EB-5 program visa program.
The money had been raised over nearly a decade to pay for massive upgrades at Jay Peak and additional projects in other communities in northern Vermont, including a proposed biomedical facility in Newport known as AnC Bio Vermont.
Monetary settlements have been reached to that case by both men, and as part of that, Quiros agreed to surrender an estimated $81 million in property to the federal government, including Jay Peak ski resort.
Last year, both Quiros and Stenger, as well as two other business associates were indicted in Vermont on federal fraud charges tied to a separate project from Jay Peak in the Northeast Kingdom, a proposed $110 million biomedical research facility in Newport.
That project never got beyond initial site work. Federal regulars say it was “nearly a complete fraud.”
An attorney for Quiros recently stated at a recent hearing in that criminal case that his client intends to plead guilty to changes against him. Meanwhile, Stenger is contesting the allegations, and is expected to stand trial sometime next year.
