Superior Court Judge Mary Miles Teachout.
A Vermont judge has agreed to a state bid to freeze the remaining assets of Jay Peak developer Ariel Quiros who recently settled a fraud case with federal regulators.
The ruling Wednesday capped the first courtroom hearing in a lawsuit brought by the state nearly two years ago and featured attorneys hurling barbs and attacks back and forth over confidential settlement negotiations and the state’s involvement in the fraud.
The state sought the asset freeze against Quiros, fearing that were it not in place he would drain what’s left of his assets and leave little money for defrauded investors to recoup their losses.
The federal court froze Quiros’ assets in April 2016. Once Quiros turns over assets needed to fulfill his recent $81 million settlement with the U.S. Securities & Exchange Commission, the freeze will be lifted. Quiros is turning over both Jay Peak and Burke Mountain ski resorts and a number of other properties as part of the agreement.
Defense attorneys for Quiros have attempted to settle the state case, but have not reached an agreement with the Vermont attorney general’s office.
The state has argued that Quiros will have roughly $8 million in assets left after the SEC settlement, mainly in property such as houses and condos, as well as bank accounts. The Vermont attorney general’s office, in its lawsuit, is pushing to recoup that money for the state.
Washington County Superior Court Judge Mary Miles Teachout decided to impose the asset freeze in a ruling from the bench after hearing oral arguments. “All of the elements for an asset freeze have been met,” Teachout said. It will go into effect after the federal settlement is completed.
The ruling came over the strong objections of Quiros’ attorneys. Melissa Visconti, who is representing the Miami businessman, told Teachout that she planned to ask for a reconsideration or an appeal of the ruling to the Vermont Supreme Court.
During the nearly three-hour hearing, Visconti argued that Quiros had already fully disgorged ill-gotten gains in the federal case and that there was nothing left for the state to sweep up. She pointed to a court filing to be submitted by Michael Goldberg, the court-appointed receiver in the Jay Peak case, that signals he is satisfied Quiros has turned over what he owed to defrauded investors.
Visconti also objected to the court’s decision because it made no allowances for Quiros to pay mounting legal fees or living expenses.
“It’s a complete asset freeze, which means he wouldn’t be able to pay his mortgage, his groceries, his electric bills,” said Visconti, who earlier in the hearing said that her client was “beyond broke.”
Teachout said a separate motion could be filed to address that matter. Under the federal asset freeze, Quiros had been allotted $15,000 a month in living expenses.
In addition to paying for lawyer fees, Visconti said when the asset freeze lifts in the federal case, Quiros will immediately be “saddled” with costs that have been building up over two years associated with the properties that will be unfrozen.
Visconti also told the judge that Vermont courts do not have jurisdiction to impose a freeze on assets outside of Vermont or outside the country. Quiros has five properties in Vermont and, in addition, owns properties in Colombia, the Bahamas, Puerto Rico, Colorado and Florida.
Assistant Attorney General Kate Gallagher, who is representing the state, was not aware that the asset freeze might not apply to properties outside Vermont and said she would research the matter before submitting a proposed order to the judge for consideration on Thursday. Visconti has until Friday to raise any objections.
Visconti also revealed that Goldberg and Quiros have nearly reached a settlement that would include a bar order preventing other parties from bringing a lawsuit against the Miami businessman for actions stemming from the fraud case.
“It says nobody can come after Mr. Quiros for anything related to Jay Peak entities because he’s already given it all back,” Visconti said.
Visconti said federal district court cannot prohibit a state entity from suing, “but it does include anybody else who is going to come after Mr. Quiros to sue him.” That’s important, she said, because it shows Goldberg is “satisfied Mr. Quiros has given everything.” No paperwork on the settlement has been filed in federal court in Miami where that case is pending, and Visconti declined to comment further on the matter following the hearing.
Melissa Visconti, an attorney from Miami representing Ariel Quiros, the former owner of Jay Peak Resort.
Lawyers for state, Quiros, both cite Goldberg affidavits
The hearing Wednesday followed a flurry of motions filed by both sides in the case in recent days, with the war of written words becoming increasingly heated between the parties. That ongoing exchange spilled over into the courtroom during the hearing.
- MICHAEL I. GOLDBERG vs The AM Wealth Management Group of Raymond James & Ariel Quiros & Joel Burstein
- State of Vermont vs Bill Stenger & Ariel Quiros
- UNITED STATES SECURITIES AND EXCHANGE COMMISSION vs Ariel Quiros & Bill Stenger
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