After debts and costs are paid, Jay Peak Resort’s $76M winning bid leaves $67M for defrauded EB-5 investors

Jay Peak
Pacific Group Resorts takes ownership of the Jay Peak Resort ski area as it emerges from a financial scandal that landed its past owner and company president in prison. File photo by Glenn Russell/VTDigger

After subtracting closing costs, bond debt, season pass obligations and prepaid lodging, the $76 million winning bid to purchase Jay Peak Resort will result in net proceeds of a little over $67 million.

That’s according to a recent filing from Michael Goldberg, the court-appointed receiver who has been overseeing the Northeast Kingdom ski resort since April 2016, when allegations of investor fraud among the Jay Peak developers rocked the state. 

Pacific Group Resorts Inc., a Utah-based company, initially submitted a $58 million “stalking horse” bid for the resort over the summer, and Goldberg worked to drive the price up by seeking other bidders.

Eventually, two more unnamed bidders joined Pacific Group in an auction in September, with Pacific Group prevailing with a high bid of $76 million. 

After the sale closed earlier this month, Goldberg submitted a filing in federal court in Florida where a civil enforcement action was brought against Ariel Quiros, a Miami businessman and Jay Peak’s former owner, and Bill Stenger, the resort’s past president.

Goldberg’s filing stated that from the $76 million winning bid, $67,290,080 in net proceeds was deposited into a receiver’s trust account. Money from the sale, Goldberg has previously stated, will be doled out on a “pro rata” basis to defrauded investors who put money into projects headed by Quiros and Stenger, later termed by federal regulators a “Ponzi-like” scheme. 

Subtracted from the $76 million purchase price, according to Goldberg’s latest filing, was $5,585,844 for the Pacific Group’s “assumption” of the resort’s outstanding bond debt. Further reducing the sale proceeds: $1,686,613 in season pass obligations and $2,208,154 in prepaid lodging for funds previously received by the seller that Pacific Group is obligated to honor, along with “traditional closing costs,” the filing stated. 

While the resulting total is less than $67,290,080, Goldberg said in an email Tuesday that number still accurately reflects the net proceeds from the sale. 

“We also had some credits,” he wrote. ”I was only setting forth some of the major debits.”

Pacific Group Resorts owns other ski areas in the United States and Canada, including Ragged Mountain in New Hampshire and Powderhorn Mountain Resort in Colorado.

Mark Fischer, Pacific Group Resorts’ executive vice-president and chief financial officer, said in a statement after the Jay Peak sale that the company expects the staff and winter operations at the ski resort to remain largely unchanged from past years.

“It fits our strategy of geographic diversification in a strong ski market and has a proven

team of dedicated staff who have created and embraced a strong mountain culture that is clearly resonating,” Fischer added in the statement.

State and federal regulators began enforcement actions against Quiros and Stenger in April 2016, resulting in the resort landing in court-appointed receivership. Regulators accused the two developers of misappropriating $200 million of the more than $350 million they raised from foreign investors for massive upgrades at the ski resort through the federal EB-5 visa program. 

Those enforcement actions were resolved with monetary settlements with Stenger and Quiros, which included Quiros surrendering his ownership stake in Jay Peak.

Three years after the civil enforcement actions were brought, Quiros, Stenger and William Kelly, a key advisor to Quiros, were indicted on federal criminal charges related to a separate plan to build a $110 million biomedical research facility in nearby Newport. All three eventually reached plea deals in connection with that failed project that landed them in prison.

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