Jay Peak receiver presses ahead with resort’s sale

Jay Peak receiver presses ahead with resort’s sale

EB-5 Visa, EB5 Visa, EB5 Investments

The Hotel Jay is the signature project of the Jay Peak Resort expansion. The developers used EB-5 immigrant investor money to build the five-story hotel. An investor alleges that the fifth floor was double-sold to two sets of investors. 

A federal judge has approved a request by Jay Peak’s receiver to hire a company to help sell the Northeast Kingdom resort that’s been at the center of the largest EB-5 fraud case in the program’s history.

Michael Goldberg, appointed by the court to manage the resort since civil fraud allegations were leveled at the resort’s former owner, Ariel Quiros, more than two years ago, last month asked a judge overseeing that fraud case to allow him to hire a company to assist in the resort’s sale.

On Monday, federal Judge Darrin P. Gayles approved that request, permitting Goldberg to hire Houlihan Lokey, Inc., an investment banking and financial services firm headquartered in Los Angeles, California.

“This is the optimal time to market the Jay Peak Resort for sale,” Goldberg wrote in his filing.

The resort, Goldberg added, “has been ahead of its sales budget due primarily to favorable snow conditions and is significantly below budget in payroll and operating costs due to implementation of major labor and cost control initiatives.”

The receiver has said since last summer that he planned to begin marketing the resort for sale early in 2019, with a sale possibly taking place as soon as the coming summer.

“Under the terms of the proposed agreement,” Goldberg wrote, “Houlihan Lokey will be retained as the Receiver’s exclusive financial advisor and will provide financial advice along with investment banking services in contemplation of a possible transaction involving the sale of Jay Peak Resort.”

Goldberg could not be reached this week for comment.

Houlihan Lokey will be responsible for assisting Goldberg with soliciting prospective buyers and preparing information about Jay Peak Resort for potential buyers, according to the filing.

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Michael Goldberg at a Statehouse news conference in April 2017. 

The terms of the contract between Goldberg and Houlihan Lokey include:
• Houlihan Lokey’s fee for a transaction valued up to $100 million will be 1.5 percent of the transaction value or a $1 million minimum fee — whichever is greater.

• If the value of the transaction exceeds $100,000,000, then Houlihan Lokey’s fee for the first $100 million will be $1.5 million plus 3 percent of the transaction value above $100 million. A purchase price of $150,000,000 would result in a $3 million fee to the firm under the formula, according to the receiver.


A purchase price of $100 million is a great deal more than the $23.5 million Quiros bought the resort for in 2008, according to court filings.

Lawsuits brought by investors have accused People’s United Bank of allowing Quiros to use funds to purchase the ski resort that had been held in escrow accounts to fund certain development projects at the resort.

Since buying the resort, Quiros and his former business partner, Bill Stenger, Jay Peak’s former president, had funded massive upgrades at the facility, includings new hotels and a water park, paid for with funds raised through the federal EB-5 visa program.

According to separate lawsuits brought in April 2016 by state and federal regulators, Quiros and Stenger, misused $200 million of more than $350 million they raised from EB-5 investors.

Regulators said Quiros alone “looted” more than $50 million for himself for personal expenses, including buying a luxury condo in New York City.

Both Quiros and Stenger have since reached settlements — neither denying nor admitting fault — with the U.S. Securities and Exchange Commission and state regulators in the cases.

The proceeds from Jay Peak’s sale, according to Goldberg’s filing, will be distributed, on a “pro rata” basis, to the alleged defrauded investors.

EB-5 Visa, EB5 Visa, EB5 Investments

Burke Mountain Hotel and Conference Center in East Burke. 

Meanwhile, not part of the arrangement with Houlihan Lokey is the handling of the sale of Burke Mountain resort, another Northeast Kingdom ski area owned by Quiros and also entangled in the EB-5 fraud scandal and part of Goldberg’s court-appointed receivership.

Goldberg last year said the sale of that resort is on indefinite hold.

That move was made as the ski area continues to lose money and has failed to generate the required jobs needed for EB-5 immigrant investors to obtain the U.S. residency they hoped for when they each put $500,000 into building a hotel there.

The Burke Development Review Board on Wednesday did hear a proposal submitted by Goldberg, on behalf of Burke 2000 LLC, the resort’s parent company, to subdivide a property owned by the firm along Route 114 in Burke.

The proposal would create one lot of about 10 acres and two other lots of about 20 acres each, with each to be marketed for sale.

Goldberg did not attend Wednesday night’s hearing.

According to Andrea Kupetz, of Century 21 Farm & Forest of Burke, who presented the proposal, the lots are mostly undeveloped and had been purchased by a prior owner of the resort years ago when considering creating a different access road leading to the resort.

That proposal never went anywhere and nothing has happened with the property since, she said.

The Development Review Board took no action on the subdivision request after the presentation, which lasted about 15 minutes. The board is expected to issue a written decision.



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