In today's New England stunner, the federal Securities and Exchange Commission announced formal charges of fraud against the owners of everyone’s favorite quaint ski resorts in Vermont, Jay Peak and Q Burke Mountain Resort.
Resort owners Ariel Quiros and Bill Stenger are accused of using new investor money — which totals in more than $350 million — to pay deficits owed to previous investors instead of physical projects. According to the SEC, more than $200 million of that total money was used for “other-than-stated purposes” — which includes a $50 million purchase of a luxury condo in New York City’s Trump Place for Quiros.
Assets of the ski resorts stemmed from initial fundraising through the federal EB-5 program, which allows foreign residents who raise a minimum of $500,000 into a local economic development project to have their green card applications fast-tracked. Quiros and Stenger purchased Jay Peak, the larger of the two mountains — which often gets rated for having some of the East’s best terrain — in 2008. “Those two resorts were known in the East for reporting the most snow every season, but people suspected that they weren’t getting as much snow as they’d say,” says Nate Steinbauer, a Vermont native and lifelong skier. “Maybe this has nothing to do with the fraud, but they’re not so good with numbers up there.”
Steinbauer, along with the rest of the skiing community in Vermont — which is known for being tight-knit—was shocked when he heard the news of the scam. “Vermont community is built on honesty and integrity—it’s a mountaintop place where everyone looks out for one another,” he says. “The entire state is like one big small town. I’m surprised they got away with it for so long.”
It's been a huge jolt for locals and other local resorts alike (and it's unclear what will happen with the resort and its employees). “It’s an unfortunate surprise,” says Jamey Wimble, president and general manager of Mad River Glen ski area in nearby Waitsfield. “I feel terrible for the employees, but the ski community is outstanding here and we help each other in hardship. I hope this has no effect on that.”