The Fraud at Jay Peak
"Why is a nation like the United States, founded on principles of equal opportunity for all, granting special immigration status to those who are capable of paying for it? Should we now change the wording of the famous Emma Lazarus poem at the Statue of Liberty to read, “… give me your huddled masses, yearning to be free, and willing to drop a half million to help us develop our ski areas …” John Reilley in a commentary on VTDigger
This is a story that goes back about eight years when Jay Peak was owned by a Montreal based company called Mount Saveur International. From 1978 to 2008, this Quebec company ran Jay Peak, taking whatever profits back across the border. The company arranged for weekend tour buses to take skiers from Montreal to the mountain. The ski mountain lis located in northern Vermont, not far from the Canadian border, and about 87 miles from Montreal. Many Quebeckers have had vacation properties for years at the base of the mountain. Jay Peak was heavily advertised as a skiing destination in Montreal, even though the mountain is in Vermont.
Then, in 2006, the principle owner of Mount Saveur International, Jacques Hebert, died. The remaning shareholders wanted to dump the ski area. It had never made that much money for them. The long time mountain manager, Bill Stenger had a good relationship with the Quebec company, but of course he did not have the money to buy the mountain. That is until Miami based businessman Ariel Quiros came along.
How Stenger and Quiros became owners of Jay Peak
Ever since the death of Mount Saveur International's chairman, Stenger had been wanting to find a way to buy the mountain. He had already become involved in the EB-5 program at this point and had already secured money from investors to develop the mountain. But when he offered to buy the mountain with EB-5 money, Mount Saveur International turned him down saying it would be an illegal transaction. So it was not until 2008, when Stenger and his new business associate, Ariel Quiros are alledged to have hatched a plan to buy the mountain by "washing" the $18 million of EB-5 money so its origins would be difficult to trace in the purchase.
The April, 2016 Securities and Exchange Commission (SEC) complaint against Stenger and Quiros says that the money originally came from EB-5 investors . These investors had been told that their money was exclusively for Jay Peak development. Under the terms of the federal EB-5 program foreign investors who want to obtain landed immigrant status in the US, can buy that status if they invest a minimum of half a million dollars into a development project in any poor area of the country. Each $500,00 project must provide at least 10 new jobs.The SEC says the money wasn't used for development but instead for the purchase of the mountain from Mount Saveur, International, in direct contravention of federal law. At the time, the change of ownership did not attract official scrutiny and officials in Washington had no reason to question the sale since at the time there was virtually no policing of the EB-5 program. From this point on, the SEC says, Jay Peak became a ponzing like scheme with each further development being paid for by investors who thought they were buying into an earlier investment. Eventually the scheme involved local communities like Newport and Burke Mountain and of course the politicians. Gov. Peter Shumlin and U.S. Sen. Patrick Leahy, both Democrats, had been the most prominent supporers for the development.
The outcome of this scandal will take several years to play out. What will the bilked investors do about it? There has to be whole series of hornets nets out there! Expect class action law suits to be levelled at any one and any organization that can be targeted by the legal profession. Expect the State of Vermont to be sued, and any offficals who ever had anythign to do with the affair. Will Jay Peak and Burke Mountain ever recover?
The Ponzi Map filed by the State of Vermont in connection with the fraud. Click on the map to see detail
Incomplete condos at Stateside in JayPeak, frozen for the moment under court order
Keep up to date with the excellent in depth reporting of this affair by Anne Galloway and other staff at VTDigger
View a slide show of some of the effected properties on DroneflyNewengland.com
This website has been set up by the reciever to provide continuing information about court filings jaypeakreceivership.com