A federal judge approved an $8 million settlement stemming from a Jay Peak financial scandal, freeing up millions of dollars that a court-appointed receiver says he “desperately” needs for operation of two ski resorts in the Northeast Kingdom.
The proposed settlement was reached late last year in a lawsuit brought by a group of investors against immigration attorneys Carroll & Scribner, but the settlement was subject to approval by the judge in the case.
That lawsuit accused Ed Carroll and Mark Scribner of having a conflict of interest in serving as the immigration attorneys for investors while also working as the corporate lawyers for Jay Peak. Carroll and Scribner denied the allegations.
A federal judge approved the $8 million settlement earlier this week. In the settlement, the two attorneys admit no wrongdoing.
Michael Goldberg, the court-appointed receiver overseeing Jay Peak and Burke Mountain as they work to emerge from a massive investor fraud scandal, will receive the bulk of that settlement, $5.2 million, to keep the two ski resorts operating.
The investor fraud scandal has led to criminal charges against the developers of those two resorts: Ariel Quiros, former owner of Burke and Jay Peak; Bill Stenger, former Jay Peak president; and two of their associates.
According to a recent court filing, Goldberg plans to use the money to pay the operating costs of Jay Peak and Burke Mountain as they deal with the economic hardship of the Covid-19 pandemic that has spanned two ski seasons.
Goldberg could not be reached Thursday for comment.
The settlement also sets aside $2.8 million to refund immigration fees paid by 23 investors to Carroll & Scribner and to cover their own attorneys’ fees in litigating their case.
Goldberg was appointed the receiver managing the two ski resorts in April 2016, when federal and state regulators brought civil lawsuits against Stenger and Quiros that ended in monetary settlements.
More than 800 foreign investors poured hundreds of millions of dollars into a series of development projects headed by Quiros and Stenger over a decade. The projects included massive upgrades at Jay Peak and a new hotel and conference center at Burke Mountain.
Federal and state regulators accused the two developers of misusing $200 million of the more than $400 million raised through the EB-5 federal visa program to fund their projects. Regulators alleged Quiros stole $50 million for himself, paying for personal items including taxes on two luxury New York City condos.
Quiros has since pleaded guilty to federal criminal charges tied to one of the projects, AnC Bio Vermont, a failed biomedical research facility that never got off the ground in Newport despite raising more than $80 million from more than 160 investors.
Stenger has pleaded not guilty to charges against him in that case and is set for trial in October.
Judge Darrin P. Galyes filed his order this week in federal court in Miami, approving the $8 million settlement between the 23 investors and attorneys Carroll and Scribner. The federal judge in Florida was involved because that’s where the U.S. Securities and Exchange Commission sued Stenger and Quiros five years ago, leading to Golberg’s appointment as receiver. Quiros had been a Miami businessman.
In a twist, Raymond James & Associates filed a motion objecting to the settlement. The financial services firm had previously reached its own $150 settlement with the receiver for its role in the scandal, though the company admitted no wrongdoing. Raymond James was the financial firm Quiros used to carry out many of his transactions.
As part of that $150 million agreement, Raymond James argued in a court filing, it was entitled to 75 percent of proceeds to the receiver from third-party lawsuits. Goldberg disputed that Raymond James was entitled to any money from the recent settlement, since the proceeds are going to the investors, and he is simply disbursing the money for them and using the funds to keep up two of the most valuable assets they have: the two ski resorts.
Before a hearing on those arguments, Raymond James withdrew its objection, clearing the way for the judge to approve the deal.
Deborah Corbishley, a Florida attorney for Raymond James, could not be reached Thursday for comment.
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