Receiver for Jay Peak Resorts Declines $93 Million offer from Bellwether Asset Management and Elicits Further Investigation

Dylan Cautela |
Our mountain culture is dying, will you let it go so easily?
The Jay Peak tram in all its winter glory. Source Hotel-r.

In the spring of 2014 the Securities and Exchanges Commission (SEC) began investigation and a trial against Bill Stenger and Ariel Quiros. Stenger and Quiros are two major developers who took part in a large portion of the redevelopment for Jay Peak Resorts and its affiliates as well as other projects in the Northeast Kingdom and facilities throughout New England including a biomedical research laboratory. Together they gathered hundreds of millions of dollars worth in funds through the federal EB-5 program, which allows overseas investors to move to the United States in exchange for creating jobs and stimulating the economy with their direct investments.

Stenger and Quiros proceeded to misuse and wrongfully allocate their holdings towards personal gains and debt created by previous development causing continued and pending development to fall short of its marks. The SEC has now announced federal fraud charges against the developers and has continued to seize information and freeze assets pending further investigation.

“Instead, in Ponzi-like fashion, money from investors in later projects was misappropriated to fund deficits in earlier projects.  More than $200 million was allegedly used for other-than-stated purposes, including $50 million spent on Quiros’s personal expenses and in other ways never disclosed to investors.”

-The Securities and Exchanges Commission

Source: SEC Press Release

Protecting our investments and opportunities through education and advocacy.
Securities and Exchange Commission’s logo. Photo source: iapp.

In the month of August a “Letter of Intent to Purchase Shares and Associated Assets” was filed to a federal court in Miami by The Bellwether Asset Management group to buy Jay Peak Resorts and its subsidiaries. The properties are currently in holding at Q Resorts, a company under ownership of Ariel Quiros, and cannot be sold without approval from a federal judge. They are currently under receivership with Michael Goldberg, a court appointed receiver, who replied to the document.

“’The property is not being sold to Bellwether. We’re not even selling it at this point,’ Goldberg said in an email Tuesday. ‘It was an unsolicited offer.’”

-Michael Goldberg, Receiver for Jay Peak Resorts

The golden hour starting to light up the mountain side and bring out Jay Peaks splendor.
The full scale of Jay Peaks resort operations. Photo from Jay Peak Resort.

The document filed specifies a purchase price of $93 million to be paid in two segments, $60 million due at the signing and $33 million once all of the company and its belongings had been turned over. The document also stated that Bellwether would purchase the 9,232 “outstanding” shares belonging to Jay Peak Inc. along with all of its properties.

Accompanied with the purchase document came an attachment listing associated assets belonging to Jay Peak, which include a water park, wedding barn, restaurants, and the ski resorts amongst other things. However, some big-ticket items such as the Jay Peak Hotel were skipped over. Also, leasing rights and permits to the Newport airport as well as all recorded files pertaining to Jay Peak were requested by Bellwether. As reported by the SEC, there are some discrepancies pertaining to the value of all the holdings.

“The appraisal’s stated value of Jay Peak at $87 million was based in part on a projection that Jay Peak’s revenues would increase by about five percent from 2014-15 to 2015-16. In reality, through the first 10 months of fiscal year 2015-16, Jay Peak’s revenues declined by five percent. That fact alone caused Dr. Jindra, the Commission’s valuation expert, to revise the resort’s current value to about $44 million.”

-Securities and Exchanges Commission

Source: Jay Peak Receivership Document 152.

For most resorts these days it's all about the money.
At either price point that’s a big bag of money. Photo credit BGD Legal.

Further study of the Bellwether Asset Management group has uncovered some suspicious information. The address listed in the letterhead for this business does not match any on records. There is a company in California under that name and another with a similar title, Bellwether Business Group, located in Nevada.

The address listed matches a company called Bellwether Global Corporation but the director, according to Florida secretary of state’s office, is Henry W. Johnson and this does not match that of the director listed on the filed purchase document.

However, Henry W. Johnson does cultivate some more mysterious information. A public records search reveals that he is associated with multiple business practices, several of which retain the same Boca Raton address.

Pretty fancy office for a non-existing company.
The location of the supposed offices belonging to Bellwether Asset Management group. Photo courtesy of Pebbent.

All of this along with the current case against Quiros and Stenger, which remains open, leaves one extremely skeptical about the offer made by Bellwether. At any rate, Jay Peak Resort will remain open and operational and if forecasts are correct, should be doused in wonderful white flakes before too long!

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