State Reaches $5.9 Million Settlement With Financial Firm Connected To Alleged EB-5 Fraud

Jul 1, 2016
Originally published on June 30, 2016 12:29 pm

The Vermont Department of Financial Regulation has reached a $5.95 million settlement with the securities firm Raymond James and Associates over the firm’s handling of investments at Jay Peak, officials announced Thursday.

The settlement is related to fraud accusations at Jay Peak in which the resort’s owner, Ariel Quiros, and CEO Bill Stenger allegedly misused millions of dollars from foreign investors. The foreign investors were using the federal EB-5 program, which gives foreign citizens a fast-tracked path to legal residency in the U.S. if they make a job-creating investment in an economically-depressed region.

“In April, DFR identified violations of Vermont securities laws by the Jay Peak principals and projects, which resulted in the filing of a civil lawsuit in Washington Superior Court alleging fraud,” the department’s news release said. “DFR’s jurisdiction over Raymond James and its registered representatives is based on the licenses they hold to conduct the business of securities in Vermont.”

The department accused Raymond James & Associates of allowing Quiros to misuse funds that the firm knew were from foreign EB-5 investors.

Financial Regulation Commissioner Susan Donegan said in the release that the settlement helps recover some of the funds investors lost in the alleged fraud.

According to the release, $4.5 million of the settlement money will go to the federal receiver overseeing Jay Peak and the projects funded by foreign investments that were allegedly defrauded by CEO Bill Stenger and owner Ariel Quiros.

The release said another $200,000 of the settlement money will go to DFR to cover the cost of the department’s investigation, and $1.25 million will end up in the state’s general fund “as an administrative penalty.”

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