Risk & Compliance

Raymond James to Pay $150M Over Resort Fraud

The firm allegedly helped the owner and president of the Jay Peak ski resort misuse $200 million raised from immigrant investors.
Matthew HellerApril 14, 2017
Raymond James to Pay $150M Over Resort Fraud

Raymond James has agreed to pay $150 million to settle allegations that it helped the owner and president of a failed Vermont ski resort misuse hundreds of millions of dollars raised through the federal EB-5 Immigrant Investor Visa Program.

The case of the Jay Peak resort is the largest EB-5 fraud scheme in U.S. history and the settlement represents the largest recovery of EB-5 investor losses, according to Michael I. Goldberg, the federal receiver overseeing the resort.

Ariel Quiros, the owner of Jay Peak, and William Stenger, its president, raised more than $350 million from investors through the EB-5 program, which allows entrepreneurs to apply for a green card if they make a necessary investment in a project in the U.S.

In a lawsuit filed in May 2016, Goldberg alleged that Raymond James assisted Quiros and Stenger in misusing more than $200 million and stealing another $50 million by improperly transferring investment funds.

The settlement will be used to satisfy the claims of investors and creditors while at the same time allowing the receiver to complete construction of the resort. “While this does not wipe the slate clean for the individuals, businesses and communities harmed by this alleged fraud, it’s very, very encouraging news,’’ Vermont Gov. Phil Scott said Thursday in announcing the deal.

Goldberg complimented Raymond James, which did not admit to any wrongdoing, for “stepping up to the plate from the very beginning of this case in an effort to do the right thing.”

“The way Raymond James approached this case is a benchmark for how other firms in a similar situation should handle such a case,” he said in a news release.

The receiver filed his suit on the heels of a U.S. Securities and Exchange Commission complaint that alleged Quiros and Stenger told investors they would use their money for projects connected to Jay Peak but instead, in Ponzi-like fashion, misappropriated the funds to finance deficits in earlier projects.

According to Goldberg, the scheme was facilitated by an “intricate web” of transfers of investment funds among numerous accounts that Quiros opened at Raymond James.