​Accused EB-5 Visa Fraud Organizer Reaches $84 Million SEC Settlement

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Jay Peak Vermont ski resort. Courtesy photo[/caption] ​

A Miami businessman has reached an $84 million settlement with the Securities and Exchange Commission after he was accused of organizing ​an EB-5 visa fraud by recruiting investment in development at Vermont's Jay Peak ski resort. The agreement filed Friday covers $50 million in investor funds that Jay Peak owner Ariel Quiros was accused of misdirecting to his personal use and $30 million held back from two Jay Peak construction projects, which jeopardized visa eligibility for as many at 700 investors from 74 countries. Company president William Stenger of Newport, Vermont, reached a separate agreement requiring him to pay a $75,000 civil penalty. The SEC noted it didn't claim Stenger personally profited from the alleged fraud. The agreements carry no admission of wrongdoing. Investors were told their money would be spent on construction at the Jay Peak resort and the creation of a nearby biomedical research center. But the SEC charged Quiros used investor funds to buy a second ski area, Burke Mountain, and two luxury New York condominium purchases. Quiros must turn over Jay Peak and 16 other pieces of property under the settlement. The condo units are at the Setai Fifth Avenue and Trump Place on the Upper West Side. Quiros also surrendered rights to $417,000 in cash seized after the SEC case was filed in 2016. The property will go to the court-appointed receiver, Akerman partner Michael Goldberg of Fort Lauderdale, who has negotiated other settlements on behalf of investors. He had no comment by deadline. Steven Peikin, co-director of the SEC's enforcement division, credited Goldberg with turning around Jay Peak's finances. "The case will result in hundreds of investors receiving significant portions and, in some cases, all of their investments returned to them," he said. Under the EB-5 program, foreign investors are entitled to U.S. visas for them and their immediate family when they put $500,000 into rural areas like northern Vermont and $1 million in other areas where at least 10 new jobs are created. The Jay Peak investors worried they might lose access to the special visas unless the stalled projects resumed. "In pursuing fraudulent actors, we seek not only to hold wrongdoers accountable, but also to return as much money as possible to victims," said Eric Bustillo, the SEC's regional director in Miami. "This settlement achieves both objectives by stripping Quiros of the proceeds of his fraudulent scheme and requiring him to turn over valuable property for the benefit of harmed investors." The proposed settlement with Quiros calls for $81.3 million in disgorgement, $2.5 million interest and a $1 million civil penalty. The SEC reserves the right to ask U.S. District Judge Darrin Gayles in Miami to order Quiros to surrender any assets that weren't disclosed in his sworn responses to commission questions. Quiros and Stenger will be barred from participating in any other EB-5 offerings. Quiros also is barred from serving as an officer or director of a public company. Goldberg reached other settlements previously to help the investors and get Jay Peak back in order. A $150 million settlement was reached with Raymond James, which held Quiros accounts, and a $13 million settlement was reached with Citibank, which gave Quiros a line of credit. Quiros was represented by Melissa Visconti of Damian & Valori in Miami. "We are very pleased to have taken another significant step in resolving all claims against Mr. Quiros," she said in a statement. Colson Hicks Eidson partner Bob Martinez, who represented Stenger, had no comment by deadline. The SEC litigation was led by Robert K. Levenson and Christopher Martin and supervised by Andrew O. Schiff. The investigation was conducted by Brian Theophilus James, Tricia D. Sindler, Michelle Lama, and Mark Dee and supervised by Chedly C. Dumornay. The Vermont Department of Financial Regulation and the state attorney general's office also assisted in the investigation.