$150 Million Settlement Reached To Reimburse Jay Peak And Burke Mountain Creditors
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Governor Phil Scott, Vermont Department of Financial Regulation (VDFR) Commissioner Michael Pieciak and Jay Peak Receiver Michael Goldberg today announced a $150 million settlement agreement with financial firm Raymond James Financial, Inc., over its role in the alleged fraud relating to EB-5 projects in Vermont’s Northeast Kingdom.
This sum includes $4.5 million from a settlement VDFR reached in June 2016, and $145.5 million the company agreed to pay in a settlement, executed today. The settlement agreement will be filed in the U.S. District Court in Miami, Fla., early next week and is subject to final approval by the Federal Court.
“This is significant for the hundreds of businesses, contractors and investors that have been harmed by this alleged fraud,” said Gov. Scott. “I want to thank our Department of Financial Regulation and Mr. Goldberg for their work in securing these settlement funds, which will make whole many of the impacted individuals and businesses. There is still more work to do to seek justice in this matter, but this is an important step that means a lot for the state and the Northeast Kingdom.”
Settlement funds will be used to pay approximately 42 contractors, 513 trade creditors and 169 project investors who were financially impacted by the alleged fraud.
The impact in Vermont will be significant, with 241 Vermont-based businesses, nonprofits and municipalities receiving approximately $9.06 million. Burke Mountain Academy will receive $3 million for a deferred compensation agreement entered when it sold the Burke Ski Resort in 2005, $1 million of which will be used to construct a new ski lift. An additional $17.5 million will be used to complete cottages, a recreation center and fields as part of the Stateside Hotel at Jay Peak. Vermont-based DEW Construction will serve as the contractor for these projects.
“DFR is tremendously pleased with Mr. Goldberg’s efforts to achieve this settlement for Vermont businesses and municipalities, and all those impacted in this matter,” said Commissioner Pieciak. “To achieve this type of a settlement – one that fully reimburses all unpaid creditors in a year’s time – is truly unique, and it also represents the largest recovery settlement ever for an EB-5 fraud case.”
All 42 contractors who were owed money for work completed on the Stateside Hotel and Burke Mountain Hotel and Conference Center projects will be fully reimbursed, receiving a total of approximately $5.8 million. This settlement supersedes a previous repayment arrangement for contractors announced in January 2017, meaning all contractors will be paid 100 percent of their claims. The settlement also repays approximately 513 businesses, nonprofits and municipalities that were owed money for products and services previously provided to Jay Peak, totaling approximately $5.1 million.
Approximately 169 investors in Tram Haus Lodge at Jay Peak and AnC Bio – a biomedical research facility planned for Newport – will receive $81.2 million, representing a full repayment of their investment. An additional $1 million will be used to refund three Burke investors whose I-526 Immigrant Petition by Alien Entrepreneur was denied related to an investor-specific matter. The Receiver will hold $10 million for Burke investors in the event the United States Citizenship and Immigration Services (USCIS) – which oversees EB-5 projects at the federal level – determines construction of the hotel does not create sufficient jobs for all investors.
“Repayment of contractors, municipalities and businesses has been a top priority for me, along with ensuring the ongoing viability of the resorts in support of the local economy, and this is an important milestone towards those goals,” said Goldberg.
The settlement agreement was filed on the one year anniversary of the date securities fraud charges were filed against Jay Peak owner Ariel Quiros and resort President and CEO Bill Stenger.
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