Quiros Surrenders Jay Peak and Burke in SEC Settlement
As part of the settlement, former CEO Bill Stenger will pay a $75,000 fine.
Friday, February 2, 2018, NewEnglandSkiIndustry.com
In a Plaintiff’s Unopposed Motion For Entry Of Final Judgments released today, former Jay Peak and Burke Mountain owners Ariel Quiros and Bill Stenger have reached a civil settlement with the United States Securities and Exchange Commission, "without admitting or denying the allegations." The settlement does not preclude the two from being criminally charged at a later date.
Under the terms of the settlement, Ariel Quiros will surrender ownership of Jay Peak and Burke Mountain ski areas, amongst many other properties. In addition, Quiros agrees to pay a $1 million fine, while former CEO Bill Stenger agrees to pay a $75,000 fine.
The funds generated are to be allocated to defrauded Jay Peak EB-5 investors, as well as lawyers associated with the case.
Quiros will see his personal asset freeze lifted upon paying his fine, surrendering his properties, and signing over funds in 10 bank accounts. In addition to the ski areas, Quiros' properties include real estate in Vermont and two condominiums in New York.
The total value of the property and funds Quiros will transfer is $83,859,964.
Stenger, a political science major at Syracuse University, started working at at Jay Peak in 1985 and in 2008 recruited Ariel Quiros to purchase the resort from Mont Saint Sauveur International. Following the acquisition, the group's EB-5 immigrant investor proposals expanded throughout the Northeast Kingdom with a planned price tag of $500 million. Meanwhile, Stenger and Quiros started a massive campaign of contributing to politicians, paying for their international junkets, and arranging press conferences and committee appearances to boost investor interest.
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.
The SEC took control of the properties on April 13, 2016, alleging that Quiros and Stenger were running a Ponzi scheme that was defrauding investors. The businesses were placed in receivership under Michael I. Goldberg, with Leisure Hotels and Resorts of Kansas City appointed to run the resorts.
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 banker Joel Burstein both stated that Stenger participated in margin loan conversations.
The resorts remain under control of the government appointed receiver.