VERMONT – Fraud charges and an asset freeze against Ariel Quiros and Bill Stenger were announced Thursday by the Securities and Exchange Commission after the case was unsealed in a federal court in Miami. Governor Shumlin, Department of Financial Regulation (DFR) Commissioner Susan Donegan, Attorney General William Sorrell, and Secretary Patricia Moulton announced in a press conference Thursday afternoon that state charges have also been filed. This stems from investigations dating back to as early as 2008.
“We allege that since 2008, the defendants have defrauded hundreds of millions of dollars from hundreds of investors,” said Commissioner Donegan. “The duty of my Department is to ensure that Vermont’s securities laws are followed, and that investors are protected. We are committed to ensuring that justice is served, and will continue to work closely with our federal partners as this matter proceeds.”
A federal judge granted the SEC’s request to place a “temporary restraining order to freeze [Ariel] Quiros’ assets, and prohibit Quiros and [Bill] Stenger from involvement in the EB-5 projects while the federal case is pending.”
In documents released, Quiros and Stenger are accused of misusing more than $200 million from foreign investors garnered through the EB-5 Immigrant Investors Program. In addition, the SEC alleges that Quiros used $50 million in funds for personal use to purchase an condominium at the Trump Place in New York City valued at close to $2 million, pay taxes of a company he owns, back a personal line of credit to pay his personal taxes purchase both Jay Peak and Q Burke Resorts, and buy another unrelated resort.
Federal Court documents say “this is an emergency action the Commission is bring to stop an ongoing, massive eight-year fraudulent scheme.”
The EB-5 program gives investors the chance for permanent residence within United States borders that create a certain number of jobs, but thanks to the SEC’s request, both Quiros and Stenger cannot take part until the investigation is complete.
In a press release by the SEC, the court has appointed Leisure Hotels and Resorts out of Kansas City to oversee the properties to prevent further spending of investor’s dollars.
“As far as they’re [the public] are concerned, there is no change,” says Steve Olson, CEO of Leisure Hotels and Resorts. “The property will continue to operate. All that has happened is for a temporary period of time control as been exchanged.”
As for Quiros and Stenger, neither of them will face jail time at this time. Instead, penalties could include large fines and restrictions of business dealings. Both have been removed from their duties at both Jay Peak and Q Burke.
In a press conference this afternoon at the Statehouse, Governor Shumlin said this is a difficult day for Vermont.
“We all feel betrayed,” Shumlin says.
Shumlin, a major supporter of the EB-5 Program, says he regrets close ties with the developers but doesn’t believe much could’ve been done.
Attorney General William Sorrell filed documents with the Vermont State courts today. Those documents outline similar complaints against Quiros and Stenger.
“Vermont law prohibits unfair and deceptive acts and practices in commerce. There is no different standard when the marketing is to those residing overseas. This is early in a massive and complex case. We will continue to expend the necessary resources to see that justice is done,” said Attorney General Sorrell.
In a press release issued by Shumlin’s office, it was stated that Michael Goldberg, a lawer from Miami will oversee and administer the assets of the EB-5 projects at issue in the federal and state complaints. As a receiver, he will act as a neutral party who will “work to preserve all assets and property at issue while the litigation is pending and to keep the resports operational with minimal, if any disruptions, to employment and services.”
Quiros has looked to fund seven projects, with his most recent being a $110 million biomedical research center to be built in Newport, VT. Around $75 million has been raised for the biomedical center, but court documents say, “no work on it other than site preparation and ground-breaking, and are years behind their original construction and revenue schedule.”
At Q Burke Mountain, general contractor of Peak CM, Jerry Davis, has placed a lien on the Hotel and Conference center citing unpaid invoices totaling several million dollars. News7 reached out to Davis for comment, but never heard back from him.