Sixty million of the $76 million winning bid to buy Jay Peak ski resort will go to foreign investors who lost money in a financial scandal that rocked the state.
That’s according to a recent filing from Michael Goldberg, the court-appointed receiver who has been overseeing the Northeast Kingdom ski resort since April 2016, when lawsuits were filed alleging investor fraud among the Jay Peak developers
There are 529 eligible investors, according to the filing, with the payout amounting to about $113,421 per eligible investor — roughly 22% of their original $500,000 investment.
Goldberg stated that with bond debt, season pass obligations and prepaid lodging, the $76 million winning bid will result in net proceeds of a little over $67 million.
Money from the sale, Goldberg’s filing stated, will be doled out on a “pro rata,” or proportional, basis to defrauded investors who put money into projects headed by Ariel Quiros and Bill Stenger, later deemed by federal regulators a “Ponzi-like” scheme.
“The $60 million represents the vast majority of the net proceeds of the recent, Court-approved sale of the Jay Peak resort, with only a small amount held back at this time for payment of potential taxes and other costs,” Goldberg stated.
Federal Judge Darrin P. Gayles approved Goldberg’s plan for divvying up the money in a ruling Wednesday.
Each foreign investor put at least $500,000 into projects headed by Quiros and Stenger with the hope that the money would meet job-creating requirements permitting them to obtain permanent U.S. residency through the federal EB-5 visa program.
“Because each investor gave an identical $500,000 to the Jay Peak entities through the EB-5 program, a pro rata distribution is appropriate to identically partially compensate each investor,” the filing stated.
Goldberg could not be reached for comment.
State and federal regulators began enforcement actions against Quiros and Stenger in April 2016, resulting in the resort landing in court-appointed receivership with Goldberg in charge.
According to the enforcement actions, the developers were accused of misappropriating $200 million of the more than $350 million they raised from foreign investors for massive upgrades at the ski resort through the EB-5 program.
Three years after the civil enforcement actions were brought, Quiros, Stenger and William Kelly, a key adviser to Quiros, were indicted on federal criminal charges related to a separate plan to build a $110 million biomedical research facility in nearby Newport.
All three eventually reached plea deals in connection with that failed project that landed them in prison.
Last fall, Goldberg put the resort up for sale through an auction, with Pacific Group Resorts Inc., a Utah-based company, submitting the winning bid.
The money from the sale is not all defrauded investors will see returned. Some have already received funds from other court settlements related to the case and additional money may be provided from future settlements and restitution.
It's unclear what the final percentage of their $500,000 investors will eventually see returned as the receivership continues.