A series in 4 parts
Editor’s note: This series was originally published in December 2020.
Since then, more documents have been made public, including an interview by former Vermont Gov. Peter Shumlin with the FBI regarding the fraud and a lengthy court filing by federal prosecutors outlining former Jay Peak President Bill Stenger’s alleged involvement.
Stenger was sentenced in April 2022 to 18 months in prison and ordered to pay $250,000 in restitution after admitting to providing false documents in connection to AnC Bio, one of the economic development projects explored in this series. Former Jay Peak Chief Operating Officer Bill Kelly was sentenced to 18 months in prison and ordered to pay $8.3 million in restitution after pleading guilty to conspiracy to commit wire fraud and concealment of material information related to AnC Bio.
No one would have recognized the man with icy eyes and a military bearing who drove through rural Vermont in 2007 with his lawyer in tow.
Few people would know the Floridian’s name years later, even when his plans took off and money flowed in abundance, until it all crumbled in the largest fraud the state had ever seen.
In anonymity, Ariel Quiros brought his real estate attorney, Fred Burgess, on a tour of the mountainous area near the Canadian border that’s known as the Northeast Kingdom. Laced with lakes and expansive forests, the Kingdom, as locals call it, is a silent fortress of natural beauty, hardscrabble dairy farms, and people eager for a return to prosperity.
Quiros had been buying property here for years. He drove, showing Burgess farmland and a parcel where he planned to build a house for himself overlooking a picturesque valley.
Quiros was an extraordinarily private person, Burgess recalls, but shared with his attorney that some of his fondest memories were of childhood summer vacations in Vermont. Quiros, semi-retired and approximately 50 years old, still knew the area well.
The main event was a tour of Jay Peak ski resort, which was up for sale after the previous owner’s death. A buyer would get more than the land and buildings: When the deal finally closed in 2008, the resort came with $18 million in the bank, earmarked for planned expansions.
Quiros didn’t have the funds, government officials would later conclude, but found a way to buy the resort through a shell game that took investigators years to understand.
But the theft didn’t stop there. Before investigators woke up to what was going on and spent months tracking the missing money, Quiros went on a buying spree.
Twelve years later, Quiros pleaded guilty to federal charges including conspiracy to commit wire fraud, admitting one piece of what investigators say was a scheme to bilk $50 million out of a federal economic development program while convincing Vermont’s poorest region that it was all for them.
Burgess has not been in touch with Quiros for years but has watched the case unfold from Florida.
“I can’t imagine that there was this whole master scheme,” Burgess recalled in a recent interview. “I don’t know what happened.”
This report draws on more than 155,000 documents that were released by the state of Vermont upon the conclusion of civil court cases. Together with interviews, the documents create the most detailed picture to date of how Quiros built an illusion that left locals with a hole in the ground.
Quiros, Stenger partnership started with handshake deal
It was winter, and there was a power vacuum at Jay Peak. The previous owner, a Canadian, had died. The ski resort was poised for expansion, but his family and business partners weren’t up for the project. They wanted to offload the ski resort, their only American property.
Southern Florida resident Ariel Quiros had for years traveled north to enjoy his ski-in, ski-out condo at Jay Peak and had long been friends with the ski resort’s general manager, Bill Stenger.
He first offered to help find a buyer for the resort. But while Quiros grew more familiar with Jay Peak, including the resort’s $18 million in investor funds already in the bank, Quiros and Stenger decided his Korean business contacts wouldn’t be a good cultural fit.
“We scrapped that idea and we ran with it ourselves,” Stenger told the Free Press in 2013.
The resort sits in Vermont’s northeast corner where spruce trees grow thick and jobs are hard to come by. Though quiet and unassuming, Quiros would show a willingness to back any expansion or embellishment, whatever the price. Politicians and businessmen welcomed him as the savior the region needed.
Stenger would become a key partner in Quiros’ new venture. The two of them found a kindred business spirit in one another.
Quiros had approached Stenger in the late 1990s and said he wanted to buy a home at Jay Peak Resort — if Stenger could set aside the nicest lot. There was no contract, only a handshake between the two men for a deal worth $300,000.
“I knew when he bought this house on a handshake, here’s a guy I can do a deal with,” Stenger recalled in a 2013 interview.
Stenger was a leader in the local community who paired resort management with entrepreneurship. At one point, Stenger had studied to be a priest, but instead got married and worked as an insurance salesman before getting involved in the ski business.
At Jay Peak, he had become adept at selling expansion plans to investors — and to local politicians, including a Vermont governor, who sung his praises when he was nominated for citizen of the year, and the powerful long-serving U.S. Sen. Patrick Leahy, who considered him a personal friend.
Quiros had a reputation as a wealthy businessman — with a background of U.S. Army overseas service, more than a decade working in South Korea, and then a business that he described as importing wire, blue jeans and other items from South Korea — but had in recent years tried a handful of entrepreneurial ventures that never got off the ground.
He’d paid to restore three World War II Jeeps and told the man who did the work that he wanted to drive around the world with his son and daughter being documented by television crews. The Jeeps never left the warehouse.
Most recently, he had been investing in a Korean medical company called Bioheart.
Quiros’ speech patterns and mannerisms made him seem almost like a foreigner, said Fred Burgess, who served as Quiros’ real estate attorney when he set his sights on buying Jay Peak. He seemed a professional businessman: “A used car salesman, that’s not Ari,” Burgess said.
Quiros’ office in downtown Miami would have been large enough for 50 to 60 employees, Burgess recalled, but Quiros worked alone or with one other person most of the time. From there, Quiros managed a dizzying array of business ventures, usually relying on his close associates and a strict chain of command.
The Miami office served as a showroom for one of the initiatives, called Q Mirror, Burgess recalled. The mirror was a motion-activated device that would display an advertisement, dissolving into a mirror when someone got near enough to look closely.
Buying Jay Peak with (stolen) investor money
Quiros turned to his son-in-law, Joel Burstein, who worked at the brokerage firm Raymond James & Associates in Miami, to figure out how to buy Jay Peak in 2008. It would cost $26 million — and Quiros’ net worth was about $4 million, mostly consisting of his home near the beach, he would report the following year.
“There was a perception of Quiros that he was very wealthy,” said Michael Pieciak, who, on behalf of the state of Vermont, investigated the scheme that would unfold, “and I think that perception persisted throughout the entire fraud.”
Burstein had married Quiros’ daughter two years earlier and was eager to impress his father-in-law. The young broker first tried to convince Raymond James Bank — a separate entity affiliated with the financial firm — to finance the purchase with a loan. They refused.
“I hate these simple minded people,” Burstein complained to his boss. He tried again, this time explaining that the resort had money to use as collateral. Again, the bank refused, citing the complexities of federal rules and a lack of experience with ski resort finances.
Nevertheless, Burstein assured the Canadian sellers that Raymond James was on board to finance the deal.
Quiros convinced Stenger and his Canadian bosses to transfer Jay Peak’s $18 million expansion fund to Raymond James & Associates five days before the deal was set to officially close.The new Raymond James accounts would remain under the Canadians’ control until the day of the purchase, at which point Quiros would have the keys.
Burstein promised that none of the money would be used to buy Jay Peak. But that’s exactly what happened.
On the day of the purchase, eight minutes after getting sole control of the money, investigators concluded, Quiros transferred the funds through a series of his accounts in Florida. Then he turned right back around to pay the Canadians with their own money. (The Canadians would later face a lawsuit from investors who argued they failed to conduct due diligence on the deal.)
When questioned about the transaction, Quiros would later falsely claim that he was entitled to use investor money for this purpose: “I used their own money to buy Jay Peak,” he told the Securities and Exchange Commission. “If you think about what I did and how I did it, you guys are going to say, Quiros, you are a genius.”
Now in control, Quiros assembled his team: Stenger would function as the front person, schmoozing government officials and raising millions from investors.
Content in his Florida office, Quiros visited rarely. “I don’t need to,” Quiros told the Free Press in 2013. “Bill Stenger is my chain of command.”
Burstein would manage the wire transfers from Florida.
Quiros demanded that Burstein not communicate with Stenger about the Raymond James accounts: “ADVISE ME AND I WILL ADVISE BILL ACCORDINGLY ON ANY AND ALL MATTERS CONCERNING THESE ACCOUNTS,” Quiros wrote in an email.
Quiros would also rely on Bill Kelly, a longtime Florida sailing buddy with a friendly drawl who had been involved in many of Quiros’ businesses over the years. He would become chief operations officer of the resort and would create a company at Quiros’ request to supervise some of the construction.
Quiros had the ski resort and its investors’ millions — and a hole in the resort’s bank account he would need to fill.
‘WE ARE IN A CLOUD PROTECTED BY THE GOVERNMENT’
Jay Peak boasts the most snow of any ski mountain on the East Coast — but the key to Quiros’ con game was that it was connected to a unique source of capital: The federal economic development program known as EB-5.
EB-5 allowed foreigners to bypass the immigration lottery by investing $500,000 in job creation in needy areas in the United States. Lightly regulated and little-known, the program became to Quiros like Jay Peak’s snowmaking guns: a dependable, seemingly inexhaustible geyser of success. The resort’s initial $18 million had come from these foreign investors.
Documents show Quiros latched on to the EB-5 program and briefly considered using it to finance his own projects in Florida, such as student housing at a university.
Instead, after buying Jay Peak, Quiros and Stenger used the program to create new pools of money for projects in and around the ski resort — for a hotel, condominiums, a waterpark, a mountaintop restaurant, cottages on the edge of a golf course, and more.
The state of Vermont was tasked to oversee Jay Peak and other EB-5 projects through its commerce agency, but in practice functioned more as cheerleader than regulator.
Documents show state politicians, desperate for a fairy tale, failed to set up effective regulation to hold Quiros and Stenger to account until at least six years after the purchase. A full accounting of state officials’ role in the unfolding of the fraud is not yet known; the state is withholding key documents from the public until it fends off an ongoing lawsuit from EB-5 investors.
In total, Quiros would establish eight projects through the EB-5 program. Stenger helped him raise more than $400 million from foreign investors, who had signed on expecting to obtain a U.S. visa when each project was complete. For Quiros, every new initiative represented a stream of investor money that could fill in the balance sheet on money that went missing from a previous project.
“It’s not like a traditional Ponzi scheme where there’s nothing to show for it, where it’s like Bernie Madoff. Bernie Madoff wasn’t building anything, he gave you an account statement that was bogus,” Pieciak said. “Here they were showing you here’s the hotel, here’s the new hotel, here’s the new construction, so it was a more complicated way of disguising the fraud.”
It was a heady time. By late 2008, construction crews were transforming Jay Peak, adding hundreds of new beds for visitors.
Stenger, the affable face of the projects, secured letters of support from state regulators and politicians, who were eager to believe his promises that these projects would bring thousands of jobs to the downtrodden region. Then he traveled abroad and sold the projects to investors in China, Vietnam, South Africa, Venezuela, Egypt, Portugal and beyond.
Investors kept signing up, attracted by Jay Peak’s high success rate for immigration approval as well as the assurance that state officials had signed off on the projects and were overseeing their progress.
“We are the most successful EB-5 project in the USA right now,” Stenger wrote in an email to Quiros in September 2011, “and we must keep this momentum going while the market is so interested in Jay Peak and everything we are associated with.”
The empire grew as Quiros purchased a rival resort, Burke Mountain — again, with investor money that was earmarked for other projects — renamed it Q Burke, and put his son, Ary, in charge.
While progress ticked on, reality sometimes fell short of the dream that Quiros and Stenger sold to investors. One hotel was built missing 193 rooms compared to what had been promised; a condominium development and hotel was missing 15 rooms.
Discrepancies and missing financial statements frustrated a handful of experts inside and outside the business, but Jay Peak’s operation was able to push through the questions without setting off any major alarms.
“They were raising money hand over fist,” Pieciak said.
From the outside, Jay Peak represented everything that Congress had intended for the EB-5 program. A rural business was getting access to international capital. The region with the highest unemployment in Vermont was on track for 5,000 new jobs.
“What we are seeing today is something of extraordinary importance,” Sen. Bernie Sanders said at a September 2012 press conference about the projects, according to a report in the Orleans County Record.
Quiros sat stone-faced on the dais during the press conference, hardly uttering a word.
Sen. Leahy, the most senior member of the U.S. Senate and a champion of the EB-5 program, added, “It’s not going to cost taxpayers one cent.”
All who were there in 2012 seemed convinced of the projects’ success, and Quiros was triumphant.
“WE ARE IN A CLOUD PROTECTED BY THE GOVERNMENT,” Quiros had written to Burstein earlier that year as they tallied their plans. “READ BETWEEN THE LINES. ONCE IN A LIFE TIME OPPORTUNITY. FOR ALL OF US.”
This is the first of a three-part USA Today Network investigation that looks at how a massive fraud led to the downfall of a man, the disappointment of a community and a blemish on a Vermont’s state-run program to allow disadvantaged communities raise development funds from foreign investors.
How this article was reported
The Burlington Free Press reported this article based on the following sources:
More than 155,000 documents that have been released by the state of Vermont in response to public interest in the Jay Peak case. These include Securities and Exchange Commission depositions, emails by Quiros and Burstein, financial records for Quiros’ accounts and for Jay Peak, and some state government records. (The state continues to withhold records that relate to state officials’ role in overseeing and regulating the projects, because of pending litigation against the state.)
Federal and state court records in the civil cases against Ariel Qurios and Bill Stenger at U.S. District Court in Miami, Florida and at Vermont Superior Court.
Federal court records in the criminal cases against Quiros, Stenger, Kelly and Choi in U.S. District Court in Rutland, Vermont.
Interview with Jeffrey Schneider, an attorney who oversaw the 2016 raid at Jay Peak.
Interview with Michael Pieciak of the Vermont Department of Financial Regulation.
Interview with Fred Burgess, Quiros’ former real estate attorney.
Interviews with local officials in Newport, Vermont.
Interview with Eric Flachbert, former owner and founder of Numia in Newport, Vermont.
An unpublished 2013 interview with Ariel Quiros and Bill Stenger at Quiros’ home at Jay Peak.
Quiros, through his attorney Neil Taylor, declined to be interviewed or to answer a detailed list of questions by email. Quiros’ personal tax attorney, Ken Strauss, declined comment. Stenger declined to be interviewed for this story and through his attorney, Brooks McArthur, declined to comment in response to a written list of questions. Joel Burstein and Bill Kelly did not respond to requests for comment.
Peter Shumlin, the governor of Vermont from 2011-2017, declined to comment, citing pending litigation, as did John Kessler, an attorney at the Vermont Agency of Commerce and Community Development.
Frank Esposito, a data specialist at the Journal News in White Plains, New York, completed the technical work to make the 155,000 documents possible to search and analyze.
Read the full story of how a $400 million fraud happened in Vermont’s poorest region:
This article originally appeared on Burlington Free Press: How Jay Peak fraud became example of greed and flawed oversight