As federal investigators continue to look into allegations that the owners of Jay Peak Resort in Vermont misappropriated about $200 million of investors’ funds, the court-appointed manager currently overseeing the resort’s operations says that the resort may be forced to shut down due to lack of available funds.
Jay Peak owner Ariel Quiros of Miami and president Bill Stenger of Newport, Vermont, stand accused in state and federal complaints of operating a “Ponzi-like” fraud wherein they misused more than $200 million of the roughly $400 million they brought in from foreign investors, purportedly to further develop the resort.
Stenger has denied any wrongdoing, and Quiros has asserted in sworn testimony to the The U.S. Securities and Exchange Commission that the resort has been extremely profitable in recent years.
But attorney Michael Goldberg, who is operating as the receiver of Jay Peak (as well as its sister property, the Q Burke Mountain Resort), says that due to staggering amounts of financial mismanagement, Jay Peak may soon be forced to shut down.
Goldberg filed a court declaration on Friday saying the resort has very little cash on hand and “numerous upcoming expenses that will quickly use up available cash and, if additional money is not obtained, force the Receiver to shut down operations at Jay Peak.”
Goldberg filed the declaration on Friday in response to Quiros’ attempt to unfreeze the vast majority of his assets, which officials froze to allow for further investigation into the alleged fraud.
According to Goldberg, he needed to make sure the court understood that, if Jay Peak is to survive, he will need every dollar available to him.
“Quiros is trying to free up money to pay exorbitant expenses and legal fees,” Goldberg said in his filing, according to the Burlington Free Press. “If you give him that money it’s taking away from the money I need to open Burke and operate Jay Peak. Right now I do have sufficient money.”
Quiros is looking to unfreeze all but $50 million of his personal assets so that he can afford, among other things, $150,000 per month for his legal fees and more than $80,000 per month for living expenses.
Allowing Quiros to have that money, according to Goldberg, would be crippling to Jay Peak and reward a man who lied extensively about how profitable the resort was: In September 2015, Quiros claimed that Jay Peak made between $12-13 million in pre-tax profits “this year,” but Goldberg claims that number is closer to about $2 million.
“My assessment of the ski resort operations after examining the financial records available to me and meeting with former CFO George Gulisano and the accountants and management company I retained to examine and manage Jay Peak, is that the ski resort operations are currently losing money and in danger of not having sufficient funds to continue operating beyond the very immediate future,” Goldberg told the court.
As long as Quiros’ request is denied, Goldberg claims he is confident that he can keep the iconic Northeastern ski resort alive regardless of the dire financial situation.
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