The Securities and Exchange Commission has asked a federal judge to deny a request to lift a hold on the assets of Ariel Quiros who was accused last month of defrauding hundreds of immigrant investors.
Federal regulators on April 12 froze all of Quiros’ assets when they filed allegations that the Miami businessman misappropriated $200 million out of $350 million in investor funds in “a Ponzi-like” scheme. The SEC says Quiros lied to hundreds of unsuspecting investors in the Jay Peak EB-5 projects and put $50 million into his own pocket.
“Now, the immigration status and investments of hundreds of investors are at risk, there are severe shortages in the last two projects, and Quiros has nowhere close to the amount of frozen assets needed to repay his equitable liabilities,” regulators wrote in a filing submitted to U.S. District Court in Miami Friday.
Quiros asked Judge Darrin Gayles to lift the freeze altogether, originally claiming that he needed $87,000 a month for living expenses and more than $225,000 a month for professional expenses.
Gayles allowed the release of $41,000 last month.
Now Quiros claims he needs $100,000 a month for “so-called reasonable living expenses.” In addition, Quiros is seeking $300,000 for professional expenses related to his court case.
The SEC says of that amount, $90,000, is for luxury items, “non-necessities,” or “undocumented expenses.”
Attorneys for the SEC say “Quiros wants to victimize investors again by stripping out millions of dollars from the Court’s asset freeze, so he can spend the funds before the Commission can use them to help compensate defrauded investors for the staggering losses created by Quiros and the other defendants.”
The SEC filing shows Quiros wants, for example, $8,904 a month to pay for his daughter’s expenses, $5,000 a month for his son, $5,056 for leases on luxury vehicles, $3,000 for storage of a military vehicle collection, $6,665 for expenses related to his luxury New York condo and $6,650 for personal assistants.
Quiros also lists business expenses, including $15,000 a month for a restaurant and $15,583 for Vermont property taxes.
The SEC lawyers argue that the court should deny Quiros’ “outrageous request for living expenses to support his lavish lifestyle of, among other things, multiple homes, properties, and luxury cars, paying substantial sums to able bodied adult children that he is not legally bound to pay, paying personal assistants, funding a money losing restaurant, and paying approximately $45,000 a year for private elementary school.”
The SEC says the expenses are not documented, and even if the money had not been frozen by the court, Quiros doesn’t have enough cash on hand to pay the $400,000 a month in expenses anyway.
Federal regulators say, Quiros in no way addressed “the 800-pound gorilla in the room — how he can afford nearly $100,000 a month for so called ‘reasonable’ living expenses and more than $300,000 a month for attorney and accountant fees, when he does not have enough liquid frozen assets to cover one month of his proposed ‘reasonable’ living expenses and professional fees? Simply put, Quiros does not have enough frozen liquid assets to pay for the amount he has requested for lavish, outrageously high living expenses and professional fees.” (Emphasis from the SEC filing.)
Court precedent requires defendants to prove that funds released will benefit defrauded investors, the SEC lawyers say.
“Here Quiros has not shown how it is in the best interests of defrauded investors for him to maintain his exorbitant lifestyle,” the SEC writes. “This is especially true here, since to fund this lavish lifestyle, Quiros will squander the assets investors need to help them recoup the losses they have suffered from Quiros’ massive fraud.”