By Ana Durrani
The State of Vermont agreed to a settlement amount of $16.5 million to resolve all existing and potential lawsuits filed by approximately 850 investors in the Jay Peak EB-5 projects scandal. The case has been called the largest fraud in Vermont’s history.
“The decision by the Vermont State government to pay $16.5 million to settle an EB-5 lawsuit confirms its negligent conduct in failing to provide oversight of the state-run EB-5 regional center,” says Bernard Wolfsdorf, an EB-5 immigration lawyer and past president of the American Immigration Lawyers Association. “The State of Vermont actively promoted what turned out to be one of the worst EB-5 fraud cases.”
Some 64 plaintiffs, the state, and the federal receiver for Jay Peak, Inc., et al., reached an agreement to settle the lawsuit involving eight Jay Peak EB-5 projects. The settlement agreement is conditional until it is approved by the court and would resolve 33 lawsuits by investors and a class action complaint by 121 investors who claim Vermont did not provide adequate oversight of the EB-5 program.
EB-5 settlement reached in Jay Peak case
Overall, the accusations pertain to the misappropriation of over $200 million out of a total of $400 million for various ski area developments for the Jay Peak EB-5 projects in Vermont’s Northeast Kingdom.
The $16.5 million payment will be structured over three years and paid into the Jay Peak receivership. The state also agreed to supporting investors’ pursuit of green cards, which could reduce the overall settlement payment by $4 million.
“As I’ve said before, Vermonters, investors, and the State of Vermont were all deceived by the fraud of Ariel Quiros, Bill Stenger, and William Kelly,” said Attorney General Charity Clark, in a statement.
The Federal Securities and Exchange Commission and the state say former Jay Peak owner Ariel Quiros and president Bill Stenger took over $200 million dollars from investors via the EB-5 program for ski area developments in a “massive eight-year fraudulent scheme.” Peak and Quiros plead guilty to charges related to the fraud and were sentenced to prison.
“This civil settlement will bring a global resolution to the state’s involvement in this matter, which will protect the state from additional EB-5 lawsuits, preventing further financial harm to Vermont,” Clark said.
Vermont agrees to settle in favor of EB-5 investors
Clark added that his team did not arrive at the decision lightly after spending several years of legal work with various attorneys.
“This settlement removes the state’s exposure to financial risk and gives Vermont the opportunity to move forward from this chapter,” he said.
In a separate agreement in June, the state agreed to pay $750,000 to settle claims brought by eight Jay Peak EB-5 investors.
The settlement was reached over a year since the introduction of the Reform and Integrity Act of 2022 (RIA), which aims to safeguard EB-5 investors from outright fraud and misappropriation of funds. Wolfsdorf called the RIA “a much needed effort to protect investors,” including placing new obligation on Regional Centers to do their job properly.
“The RIA has been a big step forward in providing strict oversight rules for Regional Centers and as a result the EB-5 program is now surging in popularity based in part on Congress finally doing its job, albeit 30 years later,” says Wolfsdorf.
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