Vermont Public is independent, community-supported media, serving Vermont with trusted, relevant and essential information. We share stories that bring people together, from every corner of our region. New to Vermont Public? Start here.

© 2024 Vermont Public | 365 Troy Ave. Colchester, VT 05446

Public Files:

For assistance accessing our public files, please contact or call 802-655-9451.
Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

Explore our coverage of government and politics.

Raymond James Settles For $145.5 Million With Jay Peak Receiver

Hilary Niles
Michael Goldberg, the federally appointed receiver in charge of Jay Peak (left), Gov. Phil Scott (middle) and Commissioner of Financial Regulation Michael Pieciak (right) announce the new, $145.5 million settlement with Raymond James at a press conference

The firm Raymond James & Associates has agreed to pay $150 million as part of a settlement announced by state officials late Thursday.

Jay Peak’s federally appointed receiver, Michael Goldberg, sought money from Raymond James because he claims the bank allowed Jay Peak’s owner, Miami businessman Ariel Quiros, to misuse and misappropriate hundreds of millions of dollars as part of an international securities fraud rooted in the Northeast Kingdom.

At a Statehouse press conference announcing the settlement Thursday evening, Gov. Phil Scott said this outcome “did not look possible at this time one year ago.”

The sweeping settlement, if approved by the federal judge in Miami overseeing the case, will pay all contractors and creditors in full, will repay many investors to the tune of more than $80 million, and will complete several projects at Jay Peak Resort.

Raymond James agreed to $150 million to settle the claim, but does not admit any wrongdoing. The total settlement includes $4.5 million the bank already paid the state pursuant to a separate settlement.

The Raymond James case stems from last April’s federal and state securities fraud charges against Quiros and Jay Peak’s longtime local president, Bill Stenger.

If approved by the federal judge in Miami, it will pay all contractors and creditors in full, will repay many investors to the tune of more than $80 million, and will complete several projects at Jay Peak Resort.

The men are accused of misusing at least $200 million — more than half of all the money they raised from over 700 foreign investors through the federal EB-5 Immigrant Investment Program. It was EB-5 funds that fueled massive expansions at Jay Peak Resort and the new hotel at Burke Mountain. Other NEK projects were planned, but did not come to fruition before the charges were filed last April.

Ariel Quiros is fighting the civil fraud allegations, but Bill Stenger settled with the federal Securities and Exchange Commission last year. A criminal investigation into both men’s activities is ongoing.

They allegedly ran what federal prosecutors called a “Ponzi-like scheme” in which money from later investors was used to back-fill shortfalls in earlier developments. Those shortfalls, allegedly, were caused by Quiros pilfering tens of millions of dollars from the resort for his own personal benefit — including even using investor money instead of his own to purchase Jay Peak in the first place, back in 2008.

Officials say Quiros orchestrated the whole scheme, and Stenger carried it out by way of numerous financial transactions. This put investor money into Quiros’s hands — when the money was supposed to stay tied to specific projects at Jay Peak, Burke Mountain and at the proposed AnC Bio biomedical facility in Newport.

And this whole alleged fraud, according to Goldberg, was facilitated by countless transfers of money among numerous Raymond James accounts.

Where will the money go?

According to Goldberg's law firm:

  • $67 million will repay remaining uncompensated investors AnC Bio.
  • $25 million will be set aside for attorney fees.
  • $19.6 million will fund remaining construction of the Stateside development at Jay Peak. Up to $2.2 million of this will be used to satisfy existing contractor liens.
  • $15.3 million will repay the IOU to Jay Peak's first investors, who funded the Tram Haus Lodge.
  • $10 million will be posted in a separate interest-bearing escrow account, for use if needed to repay up to 20 Burke Mountain investors in the event they're ineligible for green cards due to complications related to the case.
  • $6.6 million will satisfy contractor claims against the Burke Mountain project, and to repay other debt on the Burke Mountain Hotel.
  • $5.1 million will satisfy past-due debts at the remaining Jay Peak projects and at the Burke Mountain Hotel.
  • $1 million will refund the $500,000 investment of two investors in Burke Mountain whose I-526 petitions were denied prior to the date of the SEC Action.

Goldberg struck a similar agreement for improperly diverted funds last fall with Citibank, which agreed to pay $13.3 million to the receivership estate. Goldberg used those funds to keep Jay Peak Resort and the ski area at Burke Mountain afloat, to repay some of the contractors who were owed money, and to cover Goldberg’s own legal expenses.

He said several lawsuits against other parties are still in the making, but he declined to offer specifics.

He said the AnC Bio investors were prioritized for repayment because investors in the other Jay Peak projects will be paid back when the resort eventually sells -— a prospect he sees in the offing this fall. But since nothing ever got built at the proposed AnC Bio biomedical park in Newport, those investors have no other recourse for repayment.

The AnC Bio investors also have no claim that their investments created American jobs — and that’s a key requirement under the EB-5 visa program. Releasing them from their AnC Bio investments, therefore, may give them a chance to put their $500,000 elsewhere, in exchange for green cards, or permanent American residency.

The other investors primed for repayment under the proposed settlement are Jay Peak’s first: The 35 foreigners who collectively put $17.5 million into the Tram Haus Lodge. In 2013, Quiros and Stenger unilaterally converted their equity shares in the hotel to debt. In other words: the men turned their ownership stakes into an unsecured IOU from Quiros.

Goldberg announced Thursday that those investors would be repaid in full under the settlement he negotiated.

Some ongoing class action lawsuits have signed off on the settlement, implicitly agreeing to its terms.

The Raymond James settlement agreement, as the Citibank settlement before it, includes what’s known as a “bar order.” If approved by the federal judge in Miami who’s overseeing the case, the bar order would prohibit any further legal action against Raymond James related to the alleged Jay Peak fraud.

Stakeholders such as other investors, contractors or vendors likely will have a chance to weigh in on the settlement and bar order before they’re finalized.

Meanwhile, an early investor has filed his own lawsuit against Jay Peak’s former parent company, Saint-Sauveur Valley Resorts. Tony Sutton charges that the company either did know, or should have known, that Quiros was allegedly using investor money to buy the resort.

Update 10:30 p.m. 4/14/2017: This post has been updated to include more details about what the settlement money will be used for, as well as how much of the settlement money will be paid to all contractors and creditors.

Hilary Niles is an independent investigative reporter, data journalism consultant and researcher based in Montpelier.

Hilary is an independent investigative reporter, data journalism consultant and researcher based in Montpelier. She specializes in telling stories of how public policy shapes people's daily lives.
Latest Stories