Quiros Alleges Stenger Participated in Failed Hostile Takeover of Jay Peak
SEC depositions reveal allegations of a hostile takeover, a death threat, and possible perjury.
Wednesday, May 4, 2016,

A failed hostile takeover of Jay Peak, death threats, executive disagreements, and possible perjury are amongst the many things revealed in Securities and Exchange Commission documents pertaining to the Jay Peak-Q Burke alleged EB-5 Ponzi scheme.

Patrick Leahy and Bill Stenger
(Patrick Leahy and Bill Stenger)

A Federal program created by Senator Ted Kennedy and championed by Senator Patrick Leahy, EB-5 allows immigrants to obtain a green card in exchange for investing $500,000 in a government endorsed business that creates ten jobs. In the case of the Jay Peak program, 20% to 25% of the investment was taken by developers and agents as fees.

Shortly after President Bill Stenger started an EB-5 program at the Jay Peak, he facilitated the sale of the resort from MSSI to company led by Ariel Quiros. Jay Peak EB-5 projects quickly ramped up in scale thereafter.

Years later, with the Jay Peak EB-5 empire booming and key political figures in Vermont turning a blind eye, the SEC was preparing to depose three business owners and a banker involved with the case.

The first subpoena was issued on February 7, 2014 to Raymond James & Associates Branch Manager Joel Burstein. Burstein was once Quiros's banker and son in law, and is the father of Quiros's grandchild.
One month later, Jay Peak owners Ariel Quiros and Bill Stenger were subpoenaed, along with North East Contract Services owner and Jay Peak COO, attorney William Kelly.

Burstein was the first to be deposed in March 2014, followed by Stenger and Quiros in May 2014, Kelly in July 2014, and Stenger and Quiros again in September 2015.

The Alleged Failed Hostile Takeover of Jay Peak
Bill Stenger
(Bill Stenger in Jay Peak Magazine)

According to Quiros's sworn deposition, just prior to the termination of Rapid USA Visa's relationship with Jay Peak, agent Douglas Hulme and Bill Stenger attempted hostile takeover of Jay Peak. According to Quiros, Hulme was trying to "put everything into that company [Jay Construction Management] that his foreign investors would buy through a hostile takeover, takeover Jay Peak. I would've lost it."

Quiros told the SEC questioners, "my famous friend, Douglas, who I just met four or five times him, him and Bill Stenger put a plan together - this is only now my talking off the records." When reminded the deposition was on the record, Quiros continued, "Oh, it's all on the record. It's okay - that they wanted to take over Jay Peak from me."

When Quiros acquired Jay Peak in 2008, he claimed he gave Stenger a 15% share of the company, plus another 1% per subsequent year for five years. However, a result of the alleged takeover attempt, Quiros claims he took away Stenger's ownership interest.

"I immediately took the shares away from Bill Stenger. That's why I own a hundred percent. When David Rosenbaum and George and their accounting team explained everything to me, I called up the phone within ten seconds and withdraw the shares of Bill Stenger immediately."

"I wanted to shake them both"

According to Quiros, Hulme stole $18 million before a series of meetings that resulted in the termination of Rapid USA's Visa relationship with Jay Peak.

The meetings, which also involved Jay Peak CFO George Gulisano, were described by Quiros as, "like Vietnam. I thought I was in Korea again. They started to fight and bicker."

In his deposition, Stenger also recalled tense meetings: "I have to say that my CFO was a little bit headstrong, too. And, frankly at the end of those two days of meetings, I wanted to shake them both."

Both Quiros and Stenger viewed Hulme negatively in their depositions.

According to Stenger, "when Mr. Hulme was at Jay Peak in late December, he left Jay Peak for a couple of days and went down to our competitor at Mount Snow in the southern part of the state and began a relationship with them while he's still working with us. Totally, un - I mean, I found out about it because our industry is a small industry."

Quiros's view of Hulme was more blunt, saying, "he controlled it all from A, B, and C. He controlled the State. He controlled the government. He controlled Bill Stenger. He was so - he was a tyrant - no - tyrant? He was a tyrant."

Quiros went on to say, "when this SEC gets over with, I'm going to go over after that man, I promise you. I will kill that man for what he did."

Margin Loans Using EB-5 Funds
The Miami Jay Peak Headquarters
(The Miami Quiros Jay Peak Headquarters)

A cornerstone of the SEC's lawsuit is the allegation that margin loans were taken out with EB-5 funds as collateral, a strategy that Quiros described in detail. Quiros and Burstein both stated that Stenger participated in margin loan conversations.

When questioned by the SEC, Stenger initially denied any knowledge of margin loans. However, when presented with an e-mail from former CFO Mike Dupont questioning the Raymond James EB-5 accounts and margin loans, Stenger attacked his former employee, stating, "I will tell you, and I'll put it on the record, he's a depressive character. One day he's up, the next day he's down. And it was widely known. And it was one of his issues. He has a depression problem. And whether he got up that morning and was having a hissy fit and decided he was going to, you know, make an issue out of something, I don't know."

In a sworn statement, former Controller John Carpenter also described issues when asking Stenger questions about the accounts, stating, "Throughout my employment at Jay Peak, I experienced difficulty in obtaining access to the Raymond James account documents."

Carpenter left Jay Peak after less than two years, stating, "Ultimately, Mr. Stenger failed to alleviate my concerns about the additional cost growth and how it would be funded."

Differing Views of Compensation

While Quiros had a detailed recollection of the accrual and subsequent revocation of Stenger's ownership stake, Stenger had a different recollection.

"Well, I've always been told by my partner that I would benefit from twenty percent of the ownership of Jay Peak."

When asked about compensation, Stenger told the SEC he had an annual salary of $177,000, with no raises (even with the additional EB-5 projects), no bonuses, and that the only benefit he had was a car. Quiros, however, stated Stenger's salary was "approximately, two hundred and twenty-five, all in" and that, "I give him a hefty allocation for my Jay Peak stuff. He travels quite well. And, you know, it's not a bonus. It's a salary - it's not a salary. It's a cost expense that I take care of for him, all of it. He flies with his wife, with his family. He flies quite - he flies with a team of about ten men."

In addition, Quiros alleges that, using North East Contract Services funds, "we paid his taxes last year to the tune of a couple of hundred thousand dollars. I don't know exactly what amount that was. That money came from here. He had to pay his taxes."

The Purchase of Jay Peak Using EB-5 Funds
Bill Stenger and Bernie Sanders
(Bill Stenger and Bernie Sanders)

Early in his deposition, Stenger boasted about being invited by previous owners MSSI to assemble a team to purchase Jay Peak, and how Quiros shared his vision and "understood the blueprint."

However, as the SEC started to probe alleged wrongdoing involving the sale, Stenger distanced himself, stating, "I was running the ski area and dealing with the investment program. He was taking lead on bringing the funds together for the closing with Mont Saint-Sauveur. And I did not participate in much of that all because I was doing other things."

Quiros bragged about the deal he and Stenger put together to purchase the ski area, stating "I don't know if they understood about the EB-5 program because they, basically, left that much money on the table."

Quiros was angered by claims that he used EB-5 money to fund the purchase, stating, "What everybody's trying to get at is that I used other people's money to buy Jay Peak, and that is one hellacious false statement."

While the transaction was $25.7 million, Quiros claimed "two point five million, approximately, came out of my side." An SEC accountant claims the entire purchase was funded leveraging EB-5 funds.

Issues Between Quiros and COO

In an e-mail thread released by the SEC, Quiros and Kelly appeared to have a strained relationship.


"I called you about 8 times while I was in Vermont with NO answers or return phone calls. I called you as soon as I arrived back in Florida this morning to arrange to see you today. NO return phone call," Kelly responded, "If you are unhappy with my work or our communications with each other - we should do something about it."

Last Minute Legal Maneuvers

With his scheduled deposition timeslot about to end, William Kelly and his attorney left the room, returned, and suddenly had a recollection of a $26 million transaction the questioners had been asking about for some time.

The SEC's Brian James was shocked, stating, "So you take a break and you come in, and then your testimony is now very vivid and clear as to what Mr. Quiros told you about the moneys that were owed to by AnC Biopharm by JCM?"

James then asked, "So throughout the entirety, you had this knowledge, but you did not share because you thought it was an attorney/client issue," followed by, "You just shared it to us five minutes ago; although, we've been asking questions about these monies for the last seven hours?"

Kelly responded, "I did not know what I could and could not say or were privileged."

Kelly's attorney then moved to end the hearing, stating, "we haven't asked for a single break today, so we're done."

The same attorney wrapped up the Stenger's deposition by asking his client, "Do you think having been tired has affected your testimony this afternoon?"

"A lot of the questions are very complicated, and I'm struggling to follow some of them in making sure that I'm answering correctly," Stenger responded, "I answered them truthfully to the best of my ability, but I-some of the stuff's very confusing. And I- I acknowledge I'm struggling with this right now. I'm tired."

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