By: Maximilian Ritter
Correction: Last week we erroneously wrote the following story with the headline stating that Jay Peak and Q Burke may close. In fact, Jay Peak and Q Burke will remain open for business, despite the warning by Michael Goldberg, Jay's appointed attorney, that if additional funds are not obtained it may be forced to shut down. His statement was a worst-case scenario, and was taken out of context below.
Update: At a news conference Wednesday, Goldberg said there is enough money to keep operations running, and that several investor groups have expressed interest in funding the projects so they can be completed.
After reporting last week that the owners of Vermont’s Jay Peak and Q Burke Resort, Ariel Quiros and Bill Stenger, had misappropriated millions of dollars in investment funds, a federally appointed attorney involved in the case has determined both operations to be financially insolvent, a.k.a., broke.
Michael Goldberg, the attorney who has taken on official ownership of the properties as a federally appointed receiver, stated Friday that there was not enough cash on hand to cover operating costs in light of upcoming court and legal fees. Goldberg also stated in a court statement posted on his website, “If additional money is not obtained, it would force the Receiver to shut down operations at Jay Peak and eliminate any possibility of Q Burke opening.”
Goldberg filed an emergency motion in court on Friday to loan up to $750,000 from the defendants to continue operation of the resorts as long as possible.
On April 12, the Federal Securities and Exchange Commission (SEC) and the State of Vermont filed fraud charges against Ariel Quiros and Bill Stenger for misuse of over $200 million in foreign investment funds raised through the EB-5 program. This program was set up to incentivize international funds by granting visas and residency status to investors. Both the SEC and the State of Vermont are continuing to pursue actions to recover lost investment funds.
Original Story from 4/14/2016
After one of the worst snow years on the East Coast, two resorts are facing a challenge far worse than lack of snow. The Federal Securities and Exchange Commission (SEC) has filed fraud charges against Ariel Quiros and Bill Stenger, owners of Jay Peak and Q Burke Mountain resorts. Both mountains are located in the Northeast Kingdom region of Vermont, and are a large part of the local economy. The owners allegedly misused millions of dollars raised under the EB-5 immigrant investor program, a government program that provides green cards and legal status to foreigners investing in parts of the country struggling economically.
The money was supposed to be used to support Quiros’s Northeast Kingdom Development Initiative, a development effort to revitalize northern Vermont’s economy through renovations at the two ski areas, a new biotech facility, and an airport in the city of Newport.
In a case unsealed Thursday morning in federal court in Miami, the SEC alleged that both owners made false statements and omitted key information in regards to their use of over $350 million in investment funds. Investors were led to believe they were investing in ski resort infrastructure projects at Jay Peak and Q Burke Mountain as well as a biomedical research facility, but instead the money was used to pay Quiros’s personal expenses and fund deficits in earlier projects. Quiros allegedly used some of the money to buy a luxury apartment at Trump Place in New York City.
In this morning’s SEC press release, Andrew Ceresney, Director of the Division of Enforcement, stated that the Ponzi-scheme fraud “ran the gamut from false statements to deceptive financial transactions to outright theft…leaving little money for construction of the research facility investors were told would be built and thereby putting investors’ funds and their immigration petitions in jeopardy.”
According to local news outlet WCAX, the state of Vermont has opened a secondary investigation and has filed similar fraud charges. Vermont governor Peter Shumlin held a press conference outlining the charges, adding that he does not expect significant job losses related to case, but that the EB-5 program will be placed under greater scrutiny. Both the state of Vermont and the SEC are pursuing actions to recover investor funds from Quiros, Stenger, and their companies.
At this point it is unclear what will happen to the two ski resorts, pending the outcome of the investigations and case.