UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO.: 16-CV-21301-GAYLES
SECURITIES AND EXCHANGE COMMISSION,
ARIEL QUIROS and WILLIAM STENGER, et al.
On April, 12, 2016, the United States Securities and Exchange Commission (“SEC”) filed an emergency action in the United States District Court for the Southern District of Florida against the Corporate Defendants and Relief Defendants identified above. As part of the action, the SEC filed a complaint and sought emergency relief, including an Ex-Parte Motion for a Temporary Restraining Order to Freeze assets and an Emergency Motion Seeking the Appointment of a Receiver. On April 13, 2016, The Honorable Darrin P. Gayles, United States District Judge for the Southern District of Florida, granted the SEC’s Emergency Motion Seeking the Appointment of a Receiver and issued an Order Appointing Receiver which appointed Michael I. Goldberg, Esquire as the Receiver over the Corporate Defendants and Relief Defendants. This means that the Court ordered Mr. Goldberg, in his capacity as the Receiver, to “take immediate possession of all property, assets and estates of every kind of the Corporate Defendants and Relief Defendants” (collectively, “Receivership Entities”). On April 19, 2016, the Receiver filed an Emergency Motion to Expand the Receivership to include Q Burke Mountain Resort, Hotel and Conference Center L.P. and Q Burke Mountain Resort GP Services, LLC as “Additional Receivership Entities” and on April 22, 2016, the Court entered an order granting the Receiver’s motion.
The SEC’s complaint alleges that the Corporate Defendants misused millions of dollars of investor funds intended for EB-5 development projects. The complaint also alleges that investor funds were unlawfully diverted, or misused, between and among various EB-5 projects over many years. The fraud allegedly began when millions of dollars of investor funds intended for the first two EB-5 projects at Jay Peak – the Tram Haus Lodge (Phase I) and the Jay Hotel and Pump House (Phase II) – were used instead to purchase the Jay Peak Resort in 2008. Over the next seven years, investor funds were allegedly funneled through a complex web of accounts, which facilitated the misuse of funds among projects. In a typical EB-5 project, investor funds are raised and used to complete a specific project described in the project’s Private Placement Memorandum (PPM) or offering document.