SAM Magazine—Burke, Vt., April 14, 2016—The last 24 hours have been dramatic in the Northeast Kingdom of Vermont, culminating with the Securities and 

Exchange Commission charging Q Burke and Jay Peak co-owners Ariel Quiros and Bill Stenger with fraud. The charges are the result of an investigation performed by the agency into the partners’ use of EB-5 foreign investor funds.

The SEC released a statement describing the fraud charges being brought against Stenger and Quiros, as well as Jay Peak, a company owned by Quiros called Q Resorts Inc., and seven limited partnerships and their general partner companies. The SEC is also freezing the company’s assets.

“The alleged fraud ran the gamut from false statements to deceptive financial transactions to outright theft,” said Andrew Ceresney, director of the SEC’s Division of Enforcement. “As alleged in our complaint, the defendants diverted millions of EB-5 investor dollars to their own pockets, leaving little money for construction of the [AnC Bio] research facility investors were told would be built and thereby putting the investors’ funds and their immigration petitions in jeopardy.”

The news release states: “Investors were told they were investing in one of several projects connected to Jay Peak Inc., … and their money would only be used to finance that specific project. Instead, in Ponzi-like fashion, money from investors in later projects was misappropriated to fund deficits in earlier projects. More than $200 million was allegedly used for other-than-stated purposes, including $50 million spent on Quiros’s personal expenses and in other ways never disclosed to investors.”

The SEC says Quiros allegedly used investor funds to purchase a luxury condo, pay his income taxes, and acquire “an unrelated ski resort.”

On Wednesday, authorities from an unidentified agency arrived at Q Burke and entered the administrative offices of the resort. It was reported that upon their arrival, door locks were changed. Ary Quiros, president and CEO of Q Burke and son of Ariel, told reporters he was “ordered” not to talk about what was happening at the resort, which he described as an “investigation.”

Earlier today, an email to staff from Jay Peak’s communications director said the SEC has appointed Leisure Hotels and Resorts to oversee management of Jay Peak and Q Burke until the conclusion of the SEC matter. The email also says Stenger and Quiros remain owners of the properties, but have “no authority” to conduct business there.

In a news conference today, Vermont Gov. Peter Shumlin expressed his disappointment in the situation. “This is obviously a difficult day for Vermont and for the many people, myself included, who are so invested in growing jobs and economic opportunity in the Northeast Kingdom," he said. The state has filed civil action against Quiros and Stenger similar to the SEC’s allegations.