Montpelier, Vt. – There was nothing but good news today for Jay Peak and Burke Mountain Resorts: $150 million has been released in a settlement of the EB-5 fraud case the resorts were embroiled in.
Michael Goldberg, the receiver courts appointed to manage the resorts in the wake of Federal Securities and Exchange Commission’s investigation, announced the major settlement this afternoon.
Raymond James, the brokerage and securities firm that worked with former owners Ariel Quiros and Bill Stenger, will be releasing $150 million in a settlement. Goldberg and the SEC have alleged that Quiros diverted or misused $200 million of the $350 million he raised through EB-5, an investment-for-visa program designed to attract foreign investment to rural areas.
The firm was a broker in what was an alleged “Ponzi” scheme whereby Quiros shifted investor funds that came in through the Federal EB-5 program from Jay Peak and Burke developments into other accounts. Quiros’ and his son-in-law, Joel Burstein, who worked for Raymond James are also being sued. Jay Peak’s former president Bill Stenger has already setttled.
The $145.5 million as well as a previously-released $4.5 million will go to pay contractors and vendors as well as investors in the associated ANC Bio facility in Newport that never came to life. It will also help pay for completion of Jay Peak’s Stateside cottages, new soccer and lacrosse fields (to help fill hotel rooms over the summer) and other developments around the resort. It will cover contractor debt at Burke Mountain and a $3 million “obligation” to Burke Mountain Academy, including $1 million to go toward a new lift.
The announcement came this afternoon at a press conference called by Governor Phil Scott. Scott ticked off the names of businesses and vendors who would now be paid for services and products that they had completed or been contracted for.
As bad as the news was last year for Jay Peak and Burke Mountain resorts, this year has seen a marked turnaround. “It’s been our best year ever,” said Jay Peak spokesperon JJ Tolland who noted that the resort had some of its busiest days with skier visits up more than 35 percent over the previous year.
So far, for the 2016/17 season, Jay Peak has received a whopping 491 inches of snowfall, which puts it within striking distance of Alta, Utah’s 521 inches.
The settlement also sets the resorts up for new ownership by clearing out much of the debt and contractor claims that have been under legal dispute. Goldberg noted that investment bankers (the same that handled the Stowe sale) have been lined up and he expects the sale of the resorts will happen in the first half of 2018.
Goldberg praised his team with a special nod to Jay Peak manager Steve Wright for running Jay Peak smoothly and profitably during this past year. Under Wright’s leadership, profits quadrupled and improvements that had been overdue, such as fixing the tram, were made. “There’s an employee party tonight at the resort,” Goldberg said. “It’s well deserved.”