Jay Peak and Q Burke owners charged with fraud, feds take control of resorts


Jay Peak and Q Burke Taken Over by SEC
Owners Ariel Quiros and Bill Stenger have been accused of operating a Ponzi scheme involving $200 million in fraud.

Following a raid of offices, the Securities and Exchange Commission (SEC) has frozen the assets of Jay Peak and Q Burke and filed fraud charges against the owners. In addition, the State of Vermont has filed a civil suit.

Quiros and Stenger have been stripped of their authority at Q Burke and Jay Peak while investigations continue. The SEC has appointed a receiver over the companies to stop any additional spending of investor assets. Leisure Hotels and Resorts of Kansas City has reportedly been selected to run the businesses in the meantime. No arrests have been made, but state criminal charges are "entirely possible," according to an official.

According to the SEC, “in Ponzi-like fashion, money from investors in later projects was misappropriated to fund deficits in earlier projects. More than $200 million was allegedly used for other-than-stated purposes, including $50 million spent on Quiros’s personal expenses and in other ways never disclosed to investors.”

The State of Vermont Attorney General announced State of Vermont v. Ariel Quiros, William Stenger et. al., following the government raid and securing of Q Burke’s offices.

According to the complaint, $200 million of the $350 million EB-5 funding raised was misused.

EB-5 funds were allegedly redirected to:
- Purchase Jay Peak Resort
- Purchase Q Burke Resort
- Obtain a personal line of credit to pay personal income taxes
- Pay taxes for an unrelated Quiros company
- Purchase a luxury condominium in Trump Place New York
- Pay margin loan interest and fees
- Pay margin loan debt

Senators Bernie Sanders and Patrick Leahy were public promoters of the projects, while Governor Peter Shumlin came under fire for travelling with Stenger on an EB-5 fundraising trip to Asia. Shumlin refused to respond to a request to release e-mails pertaining to his involvement.

In 2007, the Vermont EB-5 Regional Center was rechartered. Under the EB-5 program, a foreigner can invest $1 million in an approved United States business (which must then create jobs), in exchange for a green card. With the Northeast Kingdom labeled a Targeted Employment Area, the minimum investment is cut in half to $500,000, making participating rural businesses such as Jay Peak more attractive.

The Quiros/Stenger ownership group has been in place at Jay Peak since 2008. Its first large EB-5 funded project, the Tram Haus Lodge, opened in December of 2009. A $27 million indoor water park opened two years later.

Quiros purchased Burke Mountain in 2012, renaming it Q Burke in 2013.
Ground was broken for the Q Burke Hotel in June 2014 and for AnC Bio in May 2015. While construction was completed at Q Burke Hotel for what was to be a winter 2015-16 opening, VTDigger reports no work has been conducted at AnC Bio. 11 liens were placed on the idle hotel due to non-payment.


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Jesus, can this actually be true?  so much for the EB5 program

This just posted by Jay.....

Sorry we took a few extra minutes reaching out folks. As you may have heard, we here at Jay Peak will be working with Leisure Hotels and Resorts (LHR) to continue managing Jay Peak same as it ever was. Current ownership is working with state and federal officials surrounding their ongoing investigation relative to the EB5 Foreign Investment Program. That process is distinct and not connected to the day to day operations of the mountain, indoor waterpark, golf course, lodging or any of our amenities that continue to be available on a daily basis here. Our longtime CMO Steve Wright has recently been named General Manager and he, along with LHR will be responsible for the day to day operations of the resort. 

We are anticipating our busiest summer on record with music, conferences, almost 70 weddings and a host of other business segments and we look forward to keeping on. It is an awkward time for us on the ground as well and we appreciate you giving us some room to figure all of this out. We will absolutely keep you in the loop as this takes more shape and appreciate your support as we move toward a much more sustainable future. We will be operating for skiing and riding this week and through the weekend with Ski School reopening for Sat. April 16th and have decided to continue operations through next week, weather permitting on both sides of the mountain, through the 24th. We’ll take a look at conditions thereafter and make a call about going for May.

Again, thanks so much- we appreciate your support more than you know.

Well, been watching this for a few years.  Always thought something had to be fishy in the waters up there, way too much development for what had never been huge draw areas.  My brother-in-law questioned why we bought at Sunday River and not Jay.  My answer was the development up there was unsustainable and I didn't want to buy into that blackhole.  Wish I had been wrong.  I wish all the employees of both resorts the best and that it doesn't sink one or both.  Jay is a great place, I have had my deepest powder days there anywhere (I always miss out when I go out West).  Burke will always have a special place in my heart as that is where I finally got Mrs. Machski addicted to this sport I love.

Surprised it took this long.  Have been watching this train wreck since 2011 or so and wondering how they weren't being shut down.  Took many immigrant families to the poor house - flat out stole their money and it looked like they were going to get away with it for a while.

The gig was up when they didn't start repaying the loans on the agreed schedule.  When challenged they gave the investors an IOU for $500,000 ... by email.  Seriously?  Then they dissolved the Tramhouse lodge/hotels partnership project without notifying any of the stakeholders.  EB-5 is a US government development program with very strict terms and conditions - the Tramhouse Group ignored every requirement.  You gotta wonder how people think they can so openly cheat the system and not get caught.   4 years ... finally.

Big competitive disadvantage for the rest of the NE mountains.  Jay was sucking up a lot of oxygen in the house.  

Had to look twice at the date of the press release in hopes this was an April fools joke....HOLY S#*#!

First visit there two summers ago and was blown away by the infrastructure...had heard rumblings about owners/assets, etc. but with nothing definitive. Surely this will also surface during this ongoing political saga we're all witnessing...Best to all those TRULY vested @ both resorts...

Sounds like they will be forced to liquidate.
Woyld be cool if Boyne bought Jay
Would be one way to get our water park. :)

I'd rather they spend a couple hundred million in Maine...

A couple hundred million?????

Jay peak sold for $50 million last I knew. I am sure its gone up with the investments but its also a fire sale. I am thinking it sells for well below value.

that still leaves over a hundred million for Maine (all new lifts for SR, L and SL). of course that would mean Boyne has a couple hundred million just kicking around.

And since they couldn't cobble it up to buy Solitude (which would have been a much bigger get for them), doubt they are in the game for JP. Add the fact that Burke will likely be a mandatory tag along, I don't see Boyne in on that. Add to the fact the CNL holdup on many of their operating resorts, they're pinched for now. I guess if the stars align correctly it could still happen, doubt Jay is sold outside of 18 months. The spider web of current ownership is quite large and needs to be mapped out first so there is some time.

That would be awesome though if Jay got added I to the mix. Even into the Max mix, that would make that add on mandatory for me every year regardless of Western trip plans.

Wheelie said:

A couple hundred million?????

Jay peak sold for $50 million last I knew. I am sure its gone up with the investments but its also a fire sale. I am thinking it sells for well below value.

that still leaves over a hundred million for Maine (all new lifts for SR, L and SL). of course that would mean Boyne has a couple hundred million just kicking around.

Jay Peak Tram Closed Until Repairs Are Made
Vermont Tramway Board will not allow the lift to operate.

Tuesday, May 24, 2016, NewEnglandSkiIndustry.com

The iconic Jay Peak Aerial Tramway cannot operate until repairs are made, according to Vermont Passenger Tramway Division.

When reached for comment today, Division Director Stephen Monahan confirmed the lift will not be permitted to operate for summer or winter operations until repairs are made. The tramway is the only lift that serves Jay Peak's summit lodge and upper 400 vertical feet of terrain.

The 60 passenger lift was installed by Von Roll in 1966 and is one of only two aerial tramways in New England. New cabins were installed in 2000 using a Community Development Block Grant and a Vermont Economic Development Authority Revenue Bond, for which Jay Peak President Bill Stenger credited Governor Howard Dean. The SEC has charged Stenger and Ariel Quiros with allegedly running a fraudulent Ponzi scheme with EB-5 immigrant investor funds.

According to the Burlington Free Press, the state brought in Doppelmayr to review the lift last year and found the lift to be carrying too much weight and that inspection records were lacking. While the state allowed the lift to continue running for the 2015-16 season, it will not permit further operation without repairs.

At an April 27 press conference, SEC appointed receiver Michael Goldberg questioned if the planned tramway repairs were necessary, suggesting a conflict of interest with the lift company. Goldberg is now requesting court approval to fund the $4.5 million overhaul.


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