Raymond James & Associates Inc. will pay $150 million in settlement of a suit accusing two Vermont ski resorts of misappropriating the bulk of $350 million obtained through the EB-5 immigrant investor program. The parties said this settlement would facilitate project completion or the return of funds. The suit, pending in the Southern District of Florida, alleged Raymond James and former branch manager Joel Burstein conspired with Ariel Quiros, owner of the Jay Peak and Q Burke ski resorts in northern Vermont; Jay Peak CEO William Stenger; and People’s United Bank in a Ponzi scheme to cheat 836 foreign investors out of at least $200 million of the funds raised for improvement projects.
That money was invested through the EB-5 program, which provides green cards to foreign nationals who invest at least $500,000 in an American project that creates at least 10 U.S. jobs. Tucker Ronzetti, of Kozyak Tropin & Throckmorton LLP lead interim class counsel, stated:
We are pleased that our lawsuit and the work of the receiver resulted in an excellent outcome for the investor class. It will help ensure investors can keep their green cards in projects where that is possible, or receive a rapid return of funds where that is not possible, so they may quickly invest in other viable EB-5 projects.
The lawyers pointed to several benefits in the proposed settlement, which was reached in conjunction with Michael I. Goldberg, the court-appointed receiver for Jay Peak and its related entities. In exchange for resolving Raymond James & Associates’ portion of the litigation, the financial company, which is a subsidiary of Raymond James Financial Inc., will provide a $150 million fund that the receiver will use under a proposed plan to complete certain construction projects or to provide full principal refunds to investors no longer eligible to receive green cards through these projects or where the projects are no longer feasible.
Goldberg, the receiver, said in a statement, that includes $67 million that will be used to return the $500,000 principal investment each investor made in the Jay Peak Biomedical Research Park LP. The receiver, according to the statement, will also be able to satisfy the claims of trade vendors and contractors.
According to filings the company made with the U.S. Securities and Exchange Commission (SEC), the $150 million includes $4.5 million that Raymond James has already paid in a settlement with the state of Vermont, and the balance will be paid in two installments of $90.7 million and $54.8 million. The company said it had accrued $50 million as of Dec. 31 and that the settlement allows it to share in the proceeds of certain third-party recoveries the receiver may obtain. The investors will continue with the case against Quiros and People’s Bank. The SEC has also brought a separate action against Quiros and Stenger.
The investors are represented by Thomas A. Tucker Ronzetti, Harley S. Tropin, Dyanne E. Feinberg, Rachel Sullivan, Maia Aron and Tal J. Lifshitz of Kozyak Tropin & Throckmorton LLP; Paul Aiello, Michael P. Bennett and Jeremy R. Kreines of Bennett Aiello; Daniel C. Girard and Adam E. Polk of Girard Gibbs LLP; and Kathleen M. Donovan-Maher, Steven Buttacavoli, Mark A. Delaney and Nathaniel L. Orenstein of Berman DeValerio. The case is Daccache et al. v. Raymond James & Associates Inc. et al. (case number 1:16-cv-21575) in the U.S. District Court for the Southern District of Florida.