Merrill Lynch To Pay $4.5 Million To Resolve Claims Related To Jay Peak Visa Investor Scheme

Merrill Lynch Jay Peak Ski Resort Class Action Lawsuit Overview: 

• Who: Merrill Lynch has agreed to pay $4.5 million to investors of the Jay Peak Ski Resort and the state of Vermont. 
• Why: Merrill Lynch oversaw accounts run by the masterminds behind a visa EB-5 scheme that defrauded Jay Peak investors out of $350 million.
• Where: The settlement agreed was submitted in Florida federal court.

Merrill Lynch has reached a $4.5 million settlement agreement with investors and the state of Vermont to resolve claims related to a $350 million EB-5 visa fraud scheme involving the state’s Jay Peak Ski Resort. 

The investment management company will pay $4 million to the defrauded investors and $500,000 to the state of Vermont under the proposed settlement agreement. 

Merrill Lynch had been accused of overseeing accounts used by Jay Peak’s then-owner Ariel Quiros and then-CEO William Stenger to defraud investors trying to get EB-5 visas.

In 2016, the U.S. Securities and Exchange Commission accused Quiros and Stenger of running the scheme to defraud hopeful investors over an eight-year period. 

Quiros would agree to a permanent injunction in 2017 after it was discovered he had misused $50 million of investors funds for personal expenses and in order to purchase a separate ski resort. 

Jay Peak Later Handed Over To Court-Appointed Receiver To Be Sold To Reimburse Investors

The Jay Peak Ski Resort was later handed over to the court-appointed receiver, Michael I. Goldberg, so it could be sold to help reimburse the defrauded investors after Quiros agreed to settle with the SEC without admitting or denying its allegations. 

Quiros would eventually go on in 2020 to plead guilty for charges including money laundering and conspiracy to commit wire fraud. 

Goldberg, who the SEC says has been able to get the resort’s finances straightened out, said on Thursday that he “diligently investigated” all of the potential claims that could have been brought against Merrill, before deciding to settle. 

“The receiver’s investigation revealed that the receiver’s potential claims against Merrill involve disputed facts that would require substantial time and expense to litigate, with significant uncertainty as to the outcome of such litigation and any ensuing appeal,” Goldberg said, according to the proposed agreement. 

A separate class action lawsuit involving a ski resort was lodged against ski resort operator Alterra in 2020 over allegations it refused to give refunds to season-pass holders following COVID-19-forced closures. 

Did you lose money after investing in the Jay Peak Ski Resort? Let us know in the comments! 

The plaintiffs are represented by Jeffrey C. Schneider of Levine Kellogg Lehman Schneider & Grossman LLP.

The Merrill Lynch Jay Peak Ski Resort Class Action Lawsuit is SEC v. Quiros et al., Case No. 1:16-cv-21301, in the U.S. District Court for the Southern District of Florida. The receiver’s case is Michael I. Goldberg v. Mitchell Silberberg & Knupp LLP et al., Case No. 19-cv-21862, in the U.S. District Court for the Southern District of Florida.

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