Jay Peak's EB-5 Receiver Says Pending Deal Will Have Far-Reaching Effect
One year ago, federal and state prosecutors brought securities fraud charges against Jay Peak developers Ariel Quiros and Bill Stenger for misusing funds raised through the federal EB-5 immigrant investment program.
Now, the man appointed to run the resorts says he’s close to announcing a deal that will affect everyone involved in the case.
Federally appointed receiver Michael Goldberg has traveled a long road to get here. When Goldberg first arrived at Jay Peak last spring, he could tell the people who worked there were anxious about the future of the resort.
"I think our employees would tell you that they were understandably very nervous last April when I stepped in," Goldberg says.
The resort was rudderless. Its owner, Miami businessman Ariel Quiros, was locked out of the business. He and longtime president, Bill Stenger, faced dozens of charges of state and federal securities fraud.
Jay Peak was also running out of money as it headed into summer — its slow season.
"And we’ve never missed a payroll. We’ve paid em all," Goldberg says. "We had a great season. Our employees are the best, most loyal employees that I’ve ever dealt with in any case."
Goldberg did that by securing a settlement with Citibank for $13.3 million — money he contends Quiros had wrongfully diverted.
Goldberg used the money to keep Jay Peak, and its sister ski area Burke Mountain, afloat. The money paid Goldberg and his legal team, too. And it repaid a portion of the money owed to numerous contractors and vendors.
"[W]e've never missed a payroll. We've paid em all. We had a great season. Our employees are the best, most loyal employees that I've ever dealt with in any case." — Michael Goldberg, federally appointed receiver in charge of Jay Peak
But $13.3 million was just a fraction of Jay Peak’s urgent debt. Goldberg estimates the sum of money he’s still trying to reclaim and repay is in the neighborhood of $100 million.
"Maybe a little bit north of that, too," he adds.
And in the coming days Goldberg says he’ll announce a significant development in the case:
“We’re in a position where we expect to make some good announcements that will make people say, 'Wow. How far they’ve come in the last year,'" Goldberg says. "And I expect people will be pleasantly surprised. I’m hopeful. And at this point as I sit here right now on April 7, I’m extremely optimistic that within in the next week or two, everybody will understand what I’m referring to.”
VPR has learned of speculation within the EB-5 industry that there will be a settlement with major financial institution, but that’s not independently confirmed.
Goldberg is careful to say that $100 million is the total amount of money he’s trying to get. That's not necessarily the dollar figure of any single settlement Goldberg may be announcing in the coming days.
He says he expects to continue to investigate the case, and he hopes to find additional sources of funds. That could include settlements with any one of the many financial institutions that may be culpable in the tangled web of transactions prosecutors say is a very picture of fraud.
"My announcement will affect everybody in the case ... And I think everybody — I'm not gonna say everybody, but every reasonable person will be very happy." — Michael Goldberg, federally appointed receiver in charge of Jay Peak
So, we may not hear about $100 million settlement this week or next. But overall, that’s what Goldberg is going for. It includes about $5.5 million still outstanding for contractors, plus money for vendors. Also: Roughly $67 million for investors in AnC Bio, the biomedical project that never progressed beyond the shell of a building.
Goldberg is also looking for funds to complete projects at Jay Peak — which is key not just for the resort, but potentially for creating the necessary jobs in order for investors’ green cards to be approved under the terms of the EB5 program.
"My announcement will affect everybody in the case. And I expect that everybody will understand what I’ve been doing for the last, you know, 11 months," Goldberg says. "And I think everybody — I’m not gonna say everybody, but every reasonable person will be very happy.”
Most likely, investors will have time to review the settlement before it’s finalized by a federal judge.
They’ll also get to weigh in on whether any settlement Goldberg negotiates should include what’s known as a “bar order” — essentially, a ban on any further legal action, once any settlement does go through.
Hilary Niles is an independent investigative reporter, data journalism consultant and researcher based in Montpelier.