by Timothy McQuiston Vermont Business Magazine United States District Court Judge Darrin Gayles in Miami today signed off on releasing the assets of Ariel Quiros for the purpose of paying off more than $81 million to settle claims in the Jay Peak EB-5 fraud case. The assets include both the Jay Peak and Burke Mountain resorts, several properties in the Northeast Kingdom, and, among other bank accounts and assets, two condos in Manhattan, one on 5th Avenue and the other at Trump Place.
The court-appointed receiver, Michael Goldberg, plans to sell the resorts to help pay back the foreign investors in the several EB-5 projects. Investors had put up $500,000 each plus fees. The resorts could go on sale as early as May. Quiros also agreed to pay other settlement costs, bringing his total to about $84 million.
Ariel Quiros at the groundbreaking for the AnC Bio facility in Newport, which was never built. VBM photo.
In filings with the Court, the Securities and Exchange Commission had asked the Court to modify the asset freeze on Quiros (DE 11, 238) for the limited purpose of allowing the transfer of: (1) real property owned by Quiros or corporations he controls; and (2) frozen funds from certain Citibank accounts to the Court-appointed Receiver.
The transfers will be to satisfy Quiros’ disgorgement obligations under the Final Judgment the Court entered against him earlier this month. As described below, the transfers are contemplated in the Final Judgment, which lists specific properties and cash that Quiros must disgorge.
The Commission filed the civil action in April 2016, alleging, among other things, that Quiros and numerous corporate defendants violated the anti-fraud provisions of the federal securities laws. As part of emergency relief the Commission requested, the Court imposed a freeze on all assets in which Quiros held a direct or indirect interest. (DE 11.) The court continued the asset freeze in its preliminary injunction order. (DE 238.)
As a result of a day-long mediation, the Commission staff and Quiros agreed on a proposed settlement of the case against him in November 2017. (DE 428.) After the five SEC Commissioners approved the settlement, the Court granted the Commission’s motion to enter a Final Judgment against Quiros. (DE 447, 450.)
The Final Judgment, among other things, holds Quiros liable for $81,344,166 in disgorgement. (DE 450 at 1.) To satisfy that liability, Quiros is required to disgorge a specific list of real properties as well as cash in certain Citibank accounts.
Id. at 2. Specifically, the Final Judgment lists the following properties and cash to be disgorged:
Because the asset freeze remains in effect until Quiros satisfies his disgorgement obligations (DE 450 at 3-4), the Commission asked the Court to modify the asset freeze to allow the transfer of the specific amounts from the Citibank accounts as well as for Quiros to transfer the specific real property set forth above to the Receiver.
The Final Judgment specifies that all disgorgement payments and transfers are to be made to the Receiver for the benefit of defrauded investors. (DE 450 at 2.)
The Court order directs Citibank to cooperate with the Receiver in making the transfers (the Final Judgment already directs Quiros to cooperate with any property transfers).
The order also makes clear that the asset freeze is being modified solely for the purpose of making the transfers described in this motion, and that the asset freeze remains in effect for all other purposes, including on any amounts remaining in the Citibank accounts listed above.
Certificate Of Conferral
Pursuant to Local Rule 7.1(a)(3), the Commission conferred with attorneys for Quiros, the Receiver, and Citibank, all of whom do not oppose this motion. The Commission did not consult with attorneys for Defendant William Stenger, the former president of Jay Peak and Quiros’ business associate, as the relief requested does not affect him.
Stenger separately will pay $75,000. The SEC concluded that Stenger did not materially benefit from the alleged fraud.
Source: US District Court Case 1:16-cv-21301-DPG Document 456 Entered on FLSD Docket 02/26/2018.