Jay Peak bombshell

[mister moose]

It’s odd that Stenger is the lone holdout at this point. Something tells me that he is going to plead guilty now that he’s alone,

Or not. The reason Stenger hasn't accepted a plea deal is because the sentence being offered is more than Stenger thinks he'll get in court. (If some of the charges are an over reach, then there is also the issue of pleading to a crime you didn't commit, but this is really a subset of any plea negotiation.) Guilty or innocent, it all comes down to that.

 

[fbrissette]

I have not been following this. Do we have any idea when burke and jay are going to be sold?

As far as I know, Burke has not been put for sale yet. They are still trying to pimp up the financials. Jay Peak has been for sale for more than two years. Oviously, COVID screwed up the schedule and I would think that the current conditions are not conducive to a sale that would be favourable for the General Receiver, whose job is to get the best possible deal to refund the EB5 investors.

We have now started a 6th year with Jay Peak under receivership, which is probably not ideal. To be fair however, from my perspective, Jay Peak has been really well managed during this period,

I am rooting for Alterra Corp.

 

[thetrailboss]

I have not been following this. Do we have any idea when burke and jay are going to be sold?

Jay is on the market. Bids were submitted. The Receiver was disappointed.

Burke is not on the market and will not be until the job quotas are met for the investors. That is going to take a while.

 

[thetrailboss]

We have now started a 6th year with Jay Peak under receivership, which is probably not ideal. To be fair however, from my perspective, Jay Peak has been really well managed during this period,

Surprisingly, I can say the same about Burke. It's pretty sad actually.

I am rooting for Alterra Corp.

Be careful what you wish for.

 

[VTKilarney]

Or not. The reason Stenger hasn't accepted a plea deal is because the sentence being offered is more than Stenger thinks he'll get in court. (If some of the charges are an over reach, then there is also the issue of pleading to a crime you didn't commit, but this is really a subset of any plea negotiation.) Guilty or innocent, it all comes down to that.

Except that federal sentencing guidelines really hammer you if you take your case to trial rather than admit guilt. It's a very risky game that Stenger is playing. My guess is that he pleads guilty. It's possible that he can't accept that he is going to see the inside of a jail cell.

Jay is on the market. Bids were submitted. The Receiver was disappointed.

I thought that some offers were withdraw due to Covid. I could be wrong, though.

 

[jimmywilson69]

If Stenger was cooperating with the Feds, its possible they are waiting for him to plead until everyone else has been sentenced.

This is what's happening for the guy who was the head of the college admission scandal. He is free right now since he basically turned on everyone that has been charged. He won't be sentenced until all of the other people have either plead guilty or have been convicted in trail. that is also a RICO case which I don't believe the EB-5 thing is being handled under that process.

 

[VTKilarney]

If Stenger was cooperating with the Feds, its possible they are waiting for him to plead until everyone else has been sentenced.

That's a very good point.

 

[VTKilarney]

It gets even worse for the state regulators.

Documents: State knew about EB-5 scheme when it greenlighted Burke and AnC Bio

Despite evidence that the Jay Peak developers had misused money from EB-5 investors, Gov. Peter Shumlin pressured officials in March 2015 to reinstate the suspended Burke Mountain and AnC Bio Vermont projects, allowing the developers to defraud more investors, records show.

vtdigger.org

 

[thetrailboss]

It gets even worse for the state regulators.

Documents: State knew about EB-5 scheme when it greenlighted Burke and AnC Bio

Despite evidence that the Jay Peak developers had misused money from EB-5 investors, Gov. Peter Shumlin pressured officials in March 2015 to reinstate the suspended Burke Mountain and AnC Bio Vermont projects, allowing the developers to defraud more investors, records show.

vtdigger.org

So here's a good summary:

In the summer of 2014, ACCD hired outside counsel to investigate financial improprieties at the Northeast Kingdom ski area. The report to the agency from the law firm Lord Locke has never been made publicly available.

By November 2014, the secretary of the commerce agency was made aware that Quiros had leveraged margin loans against money from investors that was supposed to have been held in escrow. A month later, John Kessler, general counsel for the commerce agency, was subpoenaed by federal regulators.

And.....

In early 2015, former Department of Financial Regulation Commissioner Susan Donegan identified violations of securities fraud, according to a court filing from investors. Then-Deputy Commissioner Mike Pieciak subpoenaed bank records showing that Quiros had illegally purchased the resort in 2008 using investor money that was supposed to be used for construction of the Tram Haus Lodge. Documents also showed Quiros later took out tens of millions of dollars in margin loans against EB-5 investor funds for seven other projects in the Northeast Kingdom.

But....

Despite an ongoing Securities and Exchange Commission investigation and material findings from two state agencies, Shumlin in March 2015 asked state officials at the financial regulation department, the commerce agency and the Vermont Attorney General’s Office to lift a hold on two of the last remaining projects — Burke Mountain and AnC Bio Vermont, a proposed biomedical research facility.

Shumlin, who had befriended Quiros and received campaign gifts from the Miami businessman, wanted to allow the Jay Peak developers to promote the projects overseas to investors and to begin construction on the Burke ski area hotel.

That about sums it up.

 

[BenedictGomez]

It's obvious State of Vermont is knee-deep in this crime, which is why we'll eventually find out all the paper records have mysteriously vanished, the emails deleted, and the relevant hard drive(s) cannot be found.

Bank on it.

 

[BenedictGomez]

What does Stenger gain from employing the, "Burn this mother to the ground" legal defense?

Dont get me wrong, I'm thrilled to hear he's doing it, but isnt that risky?

 

[BenedictGomez]

"Vermont's EB-5 program is the safest one in all of America, because it's the only one that is government regulated"

I was just reminiscing about the above from circa 10 years ago.

 

[thetrailboss]

It's obvious State of Vermont is knee-deep in this crime, which is why we'll eventually find out all the paper records have mysteriously vanished, the emails deleted, and the relevant hard drive(s) cannot be found.

Bank on it.

I'm pretty sure we already saw that with one official's Emails that the State "could not locate."

 

[thetrailboss]

"Vermont's EB-5 program is the safest one in all of America, because it's the only one that is government regulated"

I was just reminiscing about the above from circa 10 years ago.

-P. Shumlin

 

[thetrailboss]

Jay Peak ski area receiver reaches $32.5M settlement with Quiros’ law firm

Vermont’s Financial Regulation commissioner says the settlement was reached with Mitchell Silberberg & Knupp LLP for its role in providing legal advice to former Jay Peak owner Ariel Quiros and the projects through the EB-5 visa program.

www.wcax.com

 

[JoeB-Z]

Jay Peak ski area receiver reaches $32.5M settlement with Quiros’ law firm

Vermont’s Financial Regulation commissioner says the settlement was reached with Mitchell Silberberg & Knupp LLP for its role in providing legal advice to former Jay Peak owner Ariel Quiros and the projects through the EB-5 visa program.

www.wcax.com

This will be interesting. Can this law firm pay? Most law firms are cash flow businesses. They don't keep reserves. They can go belly up in months. Any associates quit and the principals start to fight among themselves.

 

[VTKilarney]

This will be interesting. Can this law firm pay? Most law firms are cash flow businesses. They don't keep reserves. They can go belly up in months. Any associates quit and the principals start to fight among themselves.

The correct question is how much insurance did they carry? That’s who is going to pay.

 

[thetrailboss]

This will be interesting. Can this law firm pay? Most law firms are cash flow businesses. They don't keep reserves. They can go belly up in months. Any associates quit and the principals start to fight among themselves.

As said, it very likely is malpractice insurance that is footing the bill.

 

[JoeB-Z]

As said, it very likely is malpractice insurance that is footing the bill.

The agreement goes into that but how much is left of the insurance is unknown. Also, there are issues of abetting fraud and theft on the part of MSK. Malpractice insurance does not pay for that and insurance companies can play that card. I think if you read between the lines this settlement goes close to the insurance max and everyone wants to walk away.

"The policy is a “wasting” policy in the amount of Forty Million Dollars ($40,000,000.00), a significant portion of which has been used in connection with the defense of the Receiver Action, the Putative Class Action, other conduct related to the EB-5 Actions, and settlement negotiations with the Receiver and the Putative Class Plaintiffs."

 

[thetrailboss]

The agreement goes into that but how much is left of the insurance is unknown. Also, there are issues of abetting fraud and theft on the part of MSK. Malpractice insurance does not pay for that and insurance companies can play that card. I think if you read between the lines this settlement goes close to the insurance max and everyone wants to walk away.

"The policy is a “wasting” policy in the amount of Forty Million Dollars ($40,000,000.00), a significant portion of which has been used in connection with the defense of the Receiver Action, the Putative Class Action, other conduct related to the EB-5 Actions, and settlement negotiations with the Receiver and the Putative Class Plaintiffs."

So as to the amount going to the Receiver/entities, I am not sure where you are getting your information, but VT Digger has outlined that yes the settlement is for $32.5 million. https://vtdigger.org/2021/06/06/jay...s-32-5m-settlement-with-quiros-ex-legal-team/

Now, policy limits indeed could be $40 mill with the $7.5 mill paying defense costs. That would make sense.

As to covered losses, you are correct that fraud and theft are not normally covered "occurrences." That said, in a lot of cases the carrier will settle in order to cut the costs and uncertainty of litigation, even if some of the claims involve alleged fraud and theft.

If I had to guess, I would say that there was a negotiation in which the gap between the carrier and the Receiver was pretty far and the carrier finally said, "we have $32.5 million left. Take it or leave it."