The state of Vermont has agreed to pay $16.5 million to settle all pending and potential lawsuits from foreign investors in development projects at the Jay Peak resort, the ski area that was shaken by a massive fraud case involving its former owner and president, officials said Wednesday.
In 2016, the federal Securities and Exchange Commission and the state alleged that former Jay Peak owner Ariel Quiros and former president William Stenger took part in a “massive eight-year fraudulent scheme.” The civil allegations involved misusing more than $200 million of about $400 million raised for various ski area developments from foreign investors through a visa program. The EB-5 program encourages foreigners to invest in job-creating ventures in the U.S. In exchange for a chance to earn permanent residency.
Quiros and Stenger settled civil charges with the SEC, with Quiros surrendering more than $80 million in assets, including the two resorts.
In 2019, Quiros, Stenger and Quiros’ adviser William Kelly were indicted over the failed plan to build a biotechnology plant using tens of millions of dollars in foreign investors’ money. Quiros was sentenced last year to five years in prison; Stenger served just over nine months in prison; and William Kelly was sentenced to a year and a half.
Foreign investors sued the state and its immigrant investor regional center, accusing it of inadequately supervising the projects.
The settlement announced Wednesday, if approved by the court, “will resolve all pending and potential lawsuits against the State that have been brought or could be brought by the approximately 850 investors in the Jay Peak EB-5 projects,” Attorney General Charity Clark said in a news release. The state will also continue to support investors’ pursuit of green cards. If that is successful, the overall settlement payment will be reduced by $4 million, Clark said.
“As I’ve said before, Vermonters, investors, and the State of Vermont were all deceived by the fraud of Ariel Quiros, Bill Stenger, and William Kelly,” Clark added. “This civil settlement will bring a global resolution to the State’s involvement in this matter, which will protect the State from additional EB-5 lawsuits, preventing further financial harm to Vermont.”
The $16.5 million will be paid over three years into the Jay Peak Receivership, which will distribute the funds. The investors paid over $400 million to the eight Jay Peak EB-5 projects.
Last month, the state agreed to a $750,000 payment to settle claims from eight Jay Peak investors.