Merrill Lynch is the latest investment firm to reach a settlement with regulators over the messy Jay Peak ski resort visa fraud scheme, agreeing to a settlement in two parts Thursday: one for $4 million with the Jay Peak receiver and the other for $500,000 in lieu of a penalty with the Vermont Department of Financial Regulation, which will be provided directly to the receiver for investor restitution.
Merrill's settlement with the receiver appointed by the Securities and Exchange Commission stemmed from potential claims related to the "management and oversight" of brokerage accounts opened by Jay Peak's owner, Ariel Quiros, at Merrill, according to a court filing Thursday. Beginning in 2014, Quiros had more than a dozen brokerage accounts at Merrill Lynch, according to the receiver.
Raymond James and Citibank had previously reached settlements in the matter.
The Vermont regulator alleged that Merrill Lynch’s administration of the accounts represented potential violations of the Vermont Securities Act, according to a statement Friday from the Department of Financial Regulation.
The investigation "revealed that the receiver’s potential claims against Merrill involve disputed facts that would require substantial time and expense to litigate, with significant uncertainty as to the outcome of such litigation and any ensuing appeal," according to the court filing. The U.S District Court for the Southern District of Florida will need to approve the settlement.
In 2016, the SEC filed a complaint claiming fraud against Quiros and Jay Peak president William Stenger, alleging that they and their companies made false statements and omitted key information while raising more than $350 million from investors to construct ski resort facilities and a biomedical research facility in Vermont.
The complaint alleged that Quiros and Stenger "controlled and utilized" their various businesses to defraud foreign investors who invested in certain limited partnerships under the federally created EB-5 visa program. That program helps foreigners obtain permanent residency by investing in job-creating developments in the U.S.
A Merrill Lynch spokesperson said the firm had no comment on the matter beyond the court filing.
In 2017, Raymond James Financial Inc. reached a $150 million settlement in the financing of the failed Jay Peak ski resort and related real estate development.
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