Months after it was revealed that the popular Jay Peak ski resort in Vermont was under investigation for funds it raised from foreign investors under a little-known federal loophole, federal officials have accused the ski resort of running a massive Ponzi-like scheme and stealing more than $200 million from investors.
As reported over the summer by VTDigger, Ariel Quiros, a Florida businessman who owns Jay Peak Resort, and Bill Stenger, the president and CEO of Jay Peak, drew the attention of federal officials by raising hundreds of millions of dollars through the controversial EB-5 Immigrant Investor Program for proposed expansions to Jay Peak Resort.
Under the program, foreign investors can legally obtain a green card and eventual permanent residency in the United States in exchange for a $500,000 business investment. Those investments are supposed to create a minimum of 10 U.S. jobs and are required to be in “at-risk” business proposals, meaning the investors aren’t guaranteed any return on investments.
A lack of program oversight has led to flagrant cases of fraud in the past. In 2013, a Chicago developer was prosecuted for taking $135 million from foreign investors to build the “Chicago Convention Center” but not constructing a single building.
A damning statement released by the United States Securities and Exchange Commission (SEC) announced that the SEC would bring charges of fraud against Quiros and Stenger and would implement an asset freeze as part of the investigation. The state of Vermont has also filed civil charges against the businessmen.
“This is an emergency action the Commission is bringing to stop an ongoing, massive eight-year fraudulent scheme,” states the federal complaint, “in which the Miami owner and the chief executive of a Vermont ski resort have systematically looted more than $50 million of the more than $350 million that has been raised from hundreds of foreign investors.”
The total amount that the SEC accuses the defendants of misusing is more than $200 million, $50 million of which was allegedly used for paying Quiros’ income taxes and for purchasing a luxury condominium at Trump Place in New York City.
“The alleged fraud ran the gamut from false statements to deceptive financial transactions to outright theft,” Andrew Ceresney, director of the SEC's Division of Enforcement, said in an SEC statement. “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.”
More than 800 immigrant investors were granted visas through investments in Quiros and Stenger’s alleged Ponzi scheme.
The Leisure Hotels and Resorts company has been appointed to run the resort as the investigation continues. Jay Peak said in a statement on Facebook that it hopes to keep the resort running, “same as it ever was.”
More from GrindTV