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EB-5 Fallout: Bill Stenger Provides 563 Pages of Testimony, Defense To SEC

EB-5 Fallout: Bill Stenger Provides 563 Pages of Testimony, Defense To SEC

EB-5 Visa, EB5 Visa, EB-5 Investment

While allegations of wrong-doing only came to light this week, federal depositions with Ariel Quiros Sr. and Bill Stenger were taken nearly two years ago.

Documents were posted this week on the Vermont Department of Financial Regulation’s (DFR) website detailing the depositions.

Last week state officials accused Q Burke and Jay Peak partners Ariel Quiros Sr. and Bill Stenger of operating a “fraudulent scheme” using foreign investment money under the EB-5 program. All of the Quiros/Stenger projects have entered federal receivership except the Burke hotel and conference center. Authorities are taking steps to bring the Burke hotel under the same protection. An interim administrative team has stepped in at both Q Burke and Jay.

In separate SEC and state complaints filed in U.S. District Court in Miami and Superior Court in Barre last week, it is alleged that the partnership misappropriated and misused some $200 million of the $350 EB-5 funds dating to the very beginning of Quiros’ and Stenger’s partnership in 2008 at Jay Peak.

The civil complaints in the securities fraud case further allege that Quiros is suspected of personally siphoning off another $50 million for personal use.

Stenger’s depositions

Stenger’s depositions are among nearly 90 exhibits posted on the DFR website this week, totaling 563 pages across two lengthy documents.

He was first interrogated before the U.S. Securities and Exchange Commission (SEC) on May 21, 2014, in Miami.

The second half of Stenger’s deposition came nearly a year later, again in Miami, on Sept. 17, 2015.

Two SEC attorneys, Trisha Fuchs-Sindler and Brian James, and an accountant, Michelle Lama, questioned Stenger, with his attorney, David B. Gordon, present, the record shows. All three are representing the SEC’s Division of Enforcement, according to the documents.

Stenger explained that he joined Jay Peak in 1984 as executive vice president. He stayed on in 2008 when the resort was bought by Quiros from Mont Saint-Sauveur, at which time he was named president and CEO.

“Mr. Quiros, who is my partner and a friend, facilitated the purchase. And his banking relationships were largely with Raymond James, as were the other contributors to the purchase of Jay Peak,” Stenger said in 2014. “In 2008 in June, we were three months before the collapse of the banking industry in the United States. And we relied on, at Jay Peak, being a new company in the eyes of banks in a time-frame where banking opportunities were evaporating and especially a ski area that’s a seasonal business, I was very, very glad that Ariel Quiros had a really good banking relationship with Raymond James.”

“And we realized that because of that quality banking relationship that he had, that that was going to be a very helpful thing for us in what was horrible times,” Stenger said. “We were putting our funds in Raymond James, and Mr. Quiros was buying Treasury bills with the funds from the partnerships. And we were using the strength of his relationship with Raymond James to help - to help Jay Peak in its infancy under this new corporate structure,” he said.

The government allegations against the partnership claim that misappropriation of investor funds began on day one, when EB-5 investments from earlier projects were actually used to buy Jay Peak.

The SEC accountant asks Stenger to explain the nature of Quiros’ relationship with Raymond James.

“Well, he has businesses internationally,” responded Stenger. “He’s involved in international trade and commerce.”

Accountant Lama asked Stenger, “What funds did Quiros use to make the acquisition?”

Jay Peak was bought for $15 million and the new partners took on additional pre-existing debt, Stenger testified.

Stenger responded that there was a deposit made, and Quiros, attorneys, and Raymond James worked out transfers and “the debt was structured to be paid at other times.”

Lama pressed Stenger on whether it was investor funds that were moved to Raymond James and subsequently used to purchase Jay Peak.

Stenger said, “I don’t know which accounts he used, but I know the closing took place that day, and there were funds used from his Raymond James accounts to facilitate the sale, do the closing … He may have pulled them from various accounts.”

One of the SEC attorneys asked, “Do you recall any discussions specifically about investor funds not being used for collateral for a purchase loan?”

Stenger responded that he was running the ski area and working on the EB-5 investor program, and was not aware of the details of the closing funds.

The SEC officials asked Stenger if he believed it would be appropriate to use investor funds to make the acquisition. He responded, “that wouldn’t be appropriate.”

“…The project got built, and we accomplished an incredible task of buying a resort in 2008, investing and building a magnificent hotel and another magnificent hotel. And the exact account or how it was formulated, you should ask (Quiros) specifically, because he can, I’m sure, put great clarity on it. I cannot,” Stenger testified.

He said, “And I’m (a) little embarrassed that I don’t know all the details. I’ll tell you. You know, maybe I should. But you know when you have a partner that is the coordinator of the finance and that’s what he’s good at and that’s what he knows and it’s his relationship, I’m not going to micromanage him.”

An exhibit is entered into the record which states, “These funds were invested by immigrant investors in this limited partnership and must be held and/or used strictly in accordance with the limited partnership agreement,” related to Jay Peak.

Stenger responded, “…I didn’t believe and still don’t believe that we used those funds inappropriately.”

An accountant who worked as CFO at Jay Peak Resort in 2009, Michael Dupont, expressed concern about “…a shortfall compared to the summary statement supplied by Raymond James.”

Dupont was having difficulty getting bank statements, the SEC investigator continued, and he was concerned that Quiros had control over the accounts.

“There’s nothing wrong with me taking the proceeds from something I’m working on tomorrow and take care of a debt that I might’ve had yesterday, as long as the agreement indicates that I have the right to proceed or that benefit,” Stenger said. “We are a cyclical business, and some years you do great, and some years you may have stress.”

“I’m saying, you know, if you make the appropriate legal profit on something, whether it is a land sale or other agreed-upon elements of income, you’re entitled to do with those elements of income what you want,” Stenger says on the final page of the 2014 transcript of the SEC inquiry. ” …I mean, that to me is a fundamental of American business.”

Toward the end of his testimony, Stenger said, “Every single investor is going to get everything that they wanted to get, and in some cases more.”


Source: http://www.caledonianrecord.com/news/local/eb--fallout-bill-stenger-provides-pages-of-testimony-defense/article_f2c8bee4-1428-50d5-831a-b100c5f51362.html

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