How to Bilk Foreign Investors

When we were living in Montreal and my kids were young, we used to take them to the Jay Peak Ski Resort in Vermont. Little did I know that one of the owners was stealing millions of dollars that were supposed to be invested in the park.

In the early 2000s Jay Peak was underdeveloped in a rural area of Vermont. A man named Bill Stenger teamed up with a wealthy partner named Ariel Quiros to purchase it for $26 million. They wanted to transform Jay Peak into a four-season resort with skiing, golf, an ice rink, an indoor water park, and a wave pool. They also planned to build a sophisticated biotech facility nearby. The projects were supposed to create more than 10K jobs. Maybe the huge level of ambition and the price tag should have been a red flag.

The plan depended on a U.S. government program called EB-5. The EB-5 aims to channel funds from foreigners into projects in underdeveloped areas of the country. At that time, a foreign investor could dedicate $500K to a project for a number of years and get a green card. The basic requirement was that the project had to generate at least 10 jobs. People in many foreign countries were desperate for passports so there was a ready pool of possible funding. For instance, Jared Kushner’s family used EB-5 to finance the building of a fifty-story Trump luxury apartment building.

Stenger traveled all over the world to raise investor funds to use the EB-5 program for Jay Peak. Soon, hundreds of people began constructing the hotel and indoor water park. Senator Patrick Leahy and Congressman Peter Welch were big supporters. No one was concerned that Ariel Quiros, his other partner, controlled all the finances through a bank in Florida. Not until huge amounts of money went missing. In 2015, Jay Peak was out of money.

Quiros apparently padded expenses, created false financial reports, and skimmed off more than $100 million from the accounts by running the expenses through dozens of entities. The FBI eventually put it together and both Quiros and Stenger went to prison.

More than 600 foreign investors lost money and many never got green cards because of project failure. But the park is operational and was sold to a resort group in 2022 for much less than the amount that was invested. Quiros is still in prison, but Stenger was released and has gone back to work for Jay Peak. He says he’s broke and had no knowledge of the scam. Really?