SEC, Vermont Allege Jay Peak Resort Mishandled $200 Million
MONTPELIER, Vermont (AP) — The Securities and Exchange Commission and Vermont on Thursday filed civil fraud charges against partners in two northern Vermont ski resorts accused of using funds from foreign investors to develop an economically depressed area of the state for almost a decade.
The SEC and Vermont allege that Jay Peak, Inc. owners Ariel Quiros and Bill Stenger misused more than $200 million of investor funds intended for development projects in the Northeast Kingdom. Quiros also owns the Q Burke resort.
The SEC alleges the men funded the projects by using the federal EB-5 program, which helps foreign investors get U.S. residence in exchange for investments that lead to the creation or preservation of at least 10 jobs.
"The alleged fraud ran the gamut from false statements to deceptive financial transactions to outright theft," said Andrew Ceresney, director of the SEC's Division of Enforcement. "As alleged in our complaint, the defendants diverted millions of EB-5 investor dollars to their own pockets, leaving little money for construction of the research facility investors were told would be built and thereby putting the investors' funds and their immigration petitions in jeopardy."
In Miami, a federal judge granted the SEC's request to temporarily freeze Quiros' assets and prohibit Quiros and Stenger from participating in projects associated the EB-5 program while the litigation is pending. A receiver has been appointed to oversee the Jay Peak and Q Burke resorts.
Neither Stenger nor a spokesman for the Jay Peak resort returned a phone call seeking comment.
The SEC and state allege that Quiros, of Miami, misappropriated an additional $50 million of investor funds for his personal use, including more than $2 million to buy an apartment in Trump Place in New York, millions of dollars to pay personal income taxes and other expenses and more than $20 million to buy Jay Peak and the Q Burke ski resorts.
The Vermont Department of Financial Regulation alleges that an unrestricted pool of money was transferred between projects indiscriminately and "was used as a personal piggie bank," said DFR Commissioner Susan Donegan.
Stenger bought the Jay Peak resort in 2008 with the help of partners and he embarked on yearslong development that has upgraded the resort, building hotels, a golf course and water park. Stenger and Quiros embarked on a series of other developments in the Northeast Kingdom, making promises of thousands of jobs in construction and hundreds of permanent jobs.
Shumlin said it's unlikely two highly touted projects in Newport, one for a biotechnology company and a redevelopment of the downtown will not go forward.
The Democratic governor said he would work to protect the jobs and investors who are victims of the allegations.
"We all feel betrayed. It's a dark day for Vermont," Gov. Peter Shumlin said Thursday at a Statehouse news conference.
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Associated Press writer Wilson Ring contributed to this report from Montpelier, Vermont.
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