Back in April 2016, the Securities and Exchange Commission announced fraud charges and an asset freeze against a Vermont-based Jay Peak ski resort and related businesses allegedly misusing millions of dollars raised through investments solicited under the EB-5 Immigrant Investor Program. (Snowbrains has already published it here )
State of Vermont and SEC officials each filed civil lawsuits against resort co-owners Bill Stenger and Ariel Quiros, alleging that the two men used the EB-5 Immigration Visa program to defraud foreign investors in the resort’s expansion in what they’ve termed a “ponzi-like scheme”. They’re accused of diverting roughly $200 million to other projects not associated with the investment, while Quiros, of Miami, improperly tapped investor funds for such things as the purchase of a luxury condominium, payment of his income taxes and other taxes unrelated to the investments, and acquisition of an unrelated ski resort.
Later court appointed Michael Goldberg to be responsible for overseeing Jay Peak ski resort and Q Burke Hotel in the aftermath of the massive EB-5 fraud allegations in the Northeast Kingdom.
On August 31st Michael Goldberg asked a Florida court to approve a $13.3 million settlement reached with Citibank and end the bank’s part in the US SEC suit against the resort’s owner. According to the Burlington Free Press, in March Citibank extended a $15 million personal line of credit to Quiros, who used collateral accounts to secure it and improperly diverted investor funds from those accounts. Citibank, the banking unit of New York-based Citigroup Inc., has not admitted wrongdoing. It said Quiros had not paid back the line of credit.
The settlement with Citibank will end the Goldberg’s attempt to retrieve $17 million that Jay Peak owner Ariel Quiros deposited with Citibank before the SEC sued him for allegedly misappropriating investments made under the EB-5 visa program. A federal judge in Florida must approve the settlement. An approval hearing is scheduled for October 20 in Miami.
The money would be used to keep Jay Peak and the Burke hotel fully operational until they are sold and to pay some of the claims from vendors and contractors who worked on the hotel and various developments, Goldberg said. About $3.5 million was still owed to the contractor and subcontractors who worked on the hotel.
Goldberg also says he is hiring a Washington attorney to lobby Congress. He wants to change federal EB-5 laws in an effort to obtain permanent green cards for defrauded investors in Jay Peak projects.
According to WSJ , the EB-5 program is set to expire at the end of September and while several members of Congress have threatened to eliminate the program, others including Senator Patrick Leahy, have said they want to revamp EB-5 and create more safeguards against fraud.
According to Goldberg, the immigration status of Jay Peak investors has been jeopardized through no fault of their own, and he has pressed federal immigration officials to provide relief to the victims of the fraud. About 400 immigrant investors in the Jay Peak projects have conditional visas, but have not yet obtained permanent residency in the United States through the EB-5 visa program. In order to receive permanent green cards, the immigrants have to show that 10 jobs were created as a result of their investment.
So, let’s hope that the settlement will be approved and the resort will continue its operations!
