8/18/2019 SEC Complaint 2
1/81
n ~ . , . _ ,
~ ~ _
~
UN1Tl+I)
STATES
DISTRICTCOURT
SOITTHERN DISTRICTOFFLORIDA
CASENO.
SECURITIESAND
EXCHANGE
COMMISSION,
P l l i ~ i t i f f ,
V.
ARIEL
QUIROS,
WILLIAM
STENGER,
JAY
PEAK, NC.,
Q
ESORTS,
NC.,
,TAY
PEAK
~O TEL
SUITES
.P.,
JAYI'LAKHOTEL
UITESCHASE I
L.P.,
JAY
PEAKMANAGEMENT
NC.,
JAYPEAK
ENTHOUSESUITES . . P . ,
JAY
PEAK
GP
SERVICES,
NC.,
JAYPEAK
GOLF
Nll
MOUNTAINSUITES
.P.,
JAY
PEAK
GP
SERVICESGOLF, NC.,
JA Y
PEAK
ODGE
AND TOWNHOUSES .P.,
JAY
PEAK
GP
ERVICESLODGE, NC.,
JAY
PEAK
~4TEL
SUITES
STATESIDE .P.,
JAY
PEAKGP
S.ERViCES
STATESIDE,
NC.,
JAY
PEAK
IOMEDICAL
RESEARCH
PARK .P.,
AnCBIO
VERMONT
GP
SERVICES,
LC,
Defendants,and
JAY
CONSTRUCTION
MANAGEMENT NC.,
GSIOF
ADE OUNTY,
NC.,
1~70RTH
EAST
CONTRACT
ERVICES, NC.,
Q URKE
MOUNTAIN
2ESORT,
LC,
Relief e f e n c l a n t t s .
F L
D
y
_
D.C.
P
2
1 6
STEVEN
M.
LARIMORE
CLERK
.S.
DIST.
CT .
S.
D.
f
FLA.
—MIAMI
COMPLAINTFOR NJUNCTIVE
AND 1
HL
R
RELIEF
I l a i n t i f F
S e c u r i t i e s and
Exchange
Commission
a l l e g e s
a s
f o l l o w s :
1 .
INTRODUCTION
1 . This
i s
an
emergency a c t i o n
t l a e
Commission
i s
b r i n g i x l g t o
s t o p an
angaing,
8/18/2019 SEC Complaint 2
2/81
massive e i g h tyear f r a u d u l e n t sch eme
i i
w l l i c t ~
t } Z e
M i a 1 ~ ~ i
owner
and
t h e
c h i e f
e ; ~ e c u t i v e o~ a
Vermont
s k i
r e s o r t
ha v e
s y s t e m a t i c a l l y
l o o t e d
m o r e
t h a n
S0
a n i l l i o n of t h e mor e
t h a n .
350
m i l l i o n
t h a t
has
been
e a
s e d
fiom hundreds
of
o r e i g n
i n v e s t o r s
t h r o u g h
t h e U . S . .
C i t i z e n s h i p
and
Imxni~r a t i o n S e r v i c e ' s
EB
- S
Immigrant
n v e s t o r Program.
2 .
The f r a u d u l e n t sch eme
s p a n s
s e v e n
l i m i t e d
p a r t n e r s h i p
s e c u r i t i e s o f f e r i n g s
a l l
c o n n e c t e d t o Jay Peak, I n c . , a
Vermont
s k i
r e s o r t t h a t
i s wholly own e d by
Miain
- b a s e d Q
R e s o r t s ,
I n c . , which
i n
t u r n i s a wn e d b y
M i a i n i
businessman
A r i e l Q u i r o s .
Q u i r o s
and
W i l l i a m
S t e n g e x , h e p r e s i d e n t
and CEO
f
ay
Peak, r e
p r i m a r i l y
r e s p o n s i b l e f o r
t h e
f r a u d u l e n t scheme.
3 .
A mong .
o t h e r t h i n g s ,
Q u i r o s ,
S t e n g e r ,
and
t h e
companies
t h e y
run
t h a t
have
o v e r s e e n t h e
development a c i d
c o n s t r u c t i o n of h e Jay P eak r e s o r t have
misused
mor e
t h a n 200
m i l l i o n
—more h a n
h a l f
of
l l
m o n e y
r a i s e d
from
i n v e s t o r s . Q u i r a s
o r c h e s t r a t e d
a i s d
S t e n g e r
f a c i l i t a t e d an i n t r i c a t e
w e b
of r a n s f e r s
between
t h e
v a r i o u s
D e f e n d a n t s and
R e l i e f
D e f e n d a n t s t o
d i s g u i s e t h e f a c t
t h a t
t h e
m a j o r i t y of
h e
seven
p r o j e c t s were
e i t h e r o v e r
budget
o r
e x p e r i e n c i n g
s h o r t f a l l s .
These
s h o r t f a l l s
were d u e i n l a r g e p a r t t o Q u i r o s
p i l f e r i n g .
t e n s of i l l i o n s
of o l l a r s
~f
n v e s t o r
m o n e y
o r h i s
own
s e .
4 .
S i ~ z c e
2008,
u i r o s
has m i s a p p r o p r i . a t e r 3 s n o r e t h a n : D S O
m i l l i o n
i n
i ~ l v e s t o r
m o n e y
t o ,
a m o n g
t h e r
t h i n g s :
(1)
i n a n c e
h i s
p u r c h a s e of
h e Jay
P e a k
r e s o r t ;
(2)
back
a
e r s o n a l
l i n e
of
c r e d i t t o pay h i s
income
t a x e s ;(3)
u r c h a s e
a
l u x u r y
c o n d o n n i n i u i n ; (4) pay t a x e s of a
comp any
he
owns;
and
(5}
b uy a n
u n r e l a t e d
r e s o r t .
He
m p r o p e r l y
used a d d i t i o n a l
i n v e s t o r funds t o pay
d o w n
and
pay
o f f
m a r g i n .
o a n s
( i n c l u d i n g paying n e a r l y 2 . S
m i l l i o n
i n
margin
i n t e i
° e s t
he
s e t
u p
i n
t h e
n a m e
of
h e
Defendant
c o m p a n i e s a t a
b r o k e r a g e
f i r m .
5 . T l ~ e
EB
- 5
i n v e s t m e n t program g i v e s f o r e i g n i n v e s t o r s t h e
chance t o e a r n
permanent
e s i d e n c e i i i
t h e U x i i t e d
S t a t e s
t h r o u g h
i n v e s t i n g i 1
U.S. p r o j e c t s t h a t
c r e a t e
a
c e r t a i n
8/18/2019 SEC Complaint 2
3/81
numbe
r
of o b s .
Q
u i r a s ,
S t
e i a g e r
a i d
t h e
o
t h e r
D e f e n d
a n t s
made
num
erous
m i s r
e p r e s e n
t a t i o n s
c i d
m a t e r i a
l o m i s s i
o n s
t o
t
h e s e .
f o
r e i g n i n v e s t o r
s .
mong
t
hem were
t e l l i n g
i n
v e s t o r s
t
h e
D e f e n d a ~ i t s
would
o n l y u s e
i n v e s t o r
money
o
f i n a n c e t h e
s p e c i f i c p r o j e c t t o
which
e a c h
i n v e s t o r
c o n t
r i b u t e d .
The
D
e f e n d a
n t s
f u r t h e r
a s s
u r e d
i n v e s
t o r s t h a t S t
e n g e r , t h
e
de
a c t
o
g e n
e r a l
p a r t n e r
f o r
t
h e
f i r s t
s i x
p r o j e c t s
, h
ad c o n t
r o l of
n v e s t o r
f u n d
s .
I n r e a l i
t y
S t e n g e r
e x t
r e m e l y
r e
c k l e s s l
y
c e d e d
c o n t r o l
of
n v
e s t o r
f u n d s
t o Q u
i r o s .
H
e
i d
a l ~ n o
s t
n o t h i
n g
t o manag
e
i n v e s t o
r
money
,
ev
en w h
en
o
n f r o n t e
d w i t h
r e d f l a g
s of u i r o s
m i s u
s e .
6 . The
i r s t
s i x
p r o j e c t
s f o
r
which
t h
e
D
e f e n d a
n t s x a
i s e d
m
oney
were l l
p a r t of
a
k i
r e s o r t
and accompanying
f a c i l i t i e s
l o c a t e d
c l e a r
J a y ,
Vcrmant.
The
most
r e c e n t
p r o j e c t , f o r
whi
ch t h e
D e f e n
d a n t s
c o n t i n
u e
t o r a i s
e
money
fr
om
u
n w i t t i n
g
i n v e
s t o r s ,
p u r p
o r t s t o
be
f o r a
n e a
r b y
1
10 m
i l l i o n
b
i o m e d i c
a l r
e s e a r c h
c e n t e r
t h a t
t h e
D e f e n
d a n t s
have
o p e r a
t e d a s
n
e a x l y a
c o
m p l e t e
f
r a u d . Th
e f f e
r i n g docu
ments
h e
D e f e
n d a n t s
a x e
p r o v i d
i n g t o
i
n v e s t o r
s
i n t h
a t
p r o j e
c t
a
r e
r i f e
w i t
h
m
a t e r i a l
m i
s s t a t e m
e n t s a
n d
o m i s
s i o n s .
These
i n c l u d e
bogus
c l a i m s
t h a t
t h e
D
e f e n d a
n t s
a r e
i n
t h e
p r o c e
s s
of
o b t a i n i
n g Foo
d
an
d Drug
A d m i n
i s t r a t
i o n a
p p r o v a l
f o r
t h e
r e s e a r
c h
c e n t
e r s
p r o d u c t
s .
I n
r e a l i t
y
t h e D e f e n
d a n t s
hav e
n o t
u n d e r
t a k e n
t h e
n e c e s s a
r y
s t e p s
t o
be
gin the
l e n g t
h y a
nd c u i n b e
r s o i n e
proc
ess
o
f
e t t i n g
rDA
p p r
o v a l . F
u r t h e r
e x a
c e r b a t i
n g
t h e i r
m i s s t
a t e m e n
t s t h e Defend
an ts
h av
e
b a s
e l e s s l y
p r
o j e c t e d
hu
ndreds
of m
i l l i o n s
of d
o l l a r s i n
reve
nue from t h e
x e s e a r
c h . c e i i t
e r
—
p r o
j e c t i o n
s
based
on FDA
pprov
al t
hey
have
done
v i
r t u a l l y
n
othing
o
o b t a i
n .
7.
s
a
r e s u l
t ,
althou
gh
t
h e
Defend
ants
have
r a i s e d
al
most t h r e
e
-
q u a r t e r
s
o
h e
mone
y o r t h e
r e
s e a r c h f a c i l i
t y ,
th
ey
hav e
done
almost
no
w ork
on t o t h
e r
tha
n s i t e
p r e p a r a
t i o n
a z ~ d
gro
und-
b r e a k i
n g
a
c i d a r e
y e
a r s
be
hind t h e i r
o r i g i n
a l c o n s t
r u c t i o n
and
rev
enue s c h e d
u l e .
Qu
iros h
as s e c r e t l
y used
mos
t
of
he
mo
ney
a i s e d
f
o r
th
e
r e
s e a r c h
f a c
i l i t y s
c o n s t
r u c t i o n
t o pay
8/18/2019 SEC Complaint 2
4/81
off a ~ d pay
d~wsl
a
margin
loan and t o
~ n i s a ~ p r o ~ ~ r i l t e
a ~ ~ ~ a° o x i l n a t e l y 30
i l l i o n f o r
h i s ow~1
u s e .
8 .
As
a
consequence
o f
h e
Defendants'
s y s t e m a t i c
misuse
o f
n v e s t o r
funds
from
the v a r i o u s Jay
Peak
p r o j e c t s , t k ~ e r e
i s
l i t t l e
m o n e y
l e f t in a ~ x y
o f
the
r e s e a r c h
f a c i l i t y ' s accounts
t o pay f o r i t s c o n s t r u c t i o n .
S i m i l a r l y the
s i x t h p r o j e c t ,
p a r t
o f the
s k i
r e s o r t ,
i s
nowhere hear
completion
and out o f
money.
I n v e s t o r s in those p r o j e c t s , who
o n t r i b u t e d $500,000
each,
r • e
i n
grave
danger
o f o s i n g
t h e i r investments
and having
h e i r
immigration
p e t i t i o n s
d e n i e d .
9 .
The Defendants a p p a r e n t l y
a r e hoping
t o
fund
remaining
c o n s t r u c t i o n o f h e
s i x t h
and
s e v e n t t z p r o j e c t s
through
ongoing
e f f o r t s t o r a i s e
money
fr om
new
n v e s t o r s
—both
i n
t h e
biomedical
r e s e a r c h
f a c i l i t y
and i n
a d d i t i o n a l
EB
- S
p r o j e c t s Quiros
i s
a t t e m p t i n g
t o
s t a r t .
To
stop
t h e Defendants' i l l e g a l
course o f
conduct and
prevent
f u r t h e r
fraud o n
i n v e s t o r s ,
the
C o m r n i s s i o l ~ i s b r i n g i n g
t h i s a c t i o n
and seeking
emergency
e l i e f ,
among t h e r
remedies.
1 0 . Through t h e i r
conduct, the
Defendants have each
v i o l a t e d S e c t i o n 17(a)
o f the
S e c u r i t i e s
Act
o f
1933
S e c u r i t i e s
Act ) ,
and
S e c t i o n 10(b)
and
Rule 10b-5
o f the
S e c u r i t i e s
Exchange Act
o f
1934 Exchange
~ 1 c t
) .
In
a d d i t i o n , Quiros v i o l a t e d
S e c t i o n 20(a)
o f
t h e
Exchange
Act
and
h e
and
Q
esorts aided
and
a b e t t e d v i o l a t i o n s
o f
ection
10(b) and
Rule
1 Ob-
5(b)
o f
the Exchange
Act.
T he
C om m i s s i on i s
seeking
s e v e r a l
f o rms
o f
r e l i e f ,
i n c l u d i n g
simultaneous
emergency
r e l i e f
o f
temporary
r e s t r a i n i n g o r d e r s ,
a s s e t
f r e e z e s ,
appointment
o f a
Receiver,
and s w o rn
a c c a u n t i n g s .
The
Commission
a l s o
seeks
p r e l i m i n a r y and
permanent
i n j u n c t i o n s and
c i v i l
m o n e y p e n a l t i e s
a g a i n s t
a l l
t h e Defendants,
and disgorgement o f
l l -
f a t t e n
gains
a g a i n s t t h e
Defendants
and
Relief Defendants.
I I . llEFENDANTS
ND
ELIEF
DEFENDANTS
A.
nefendants
0
8/18/2019 SEC Complaint 2
5/81
1 1 .
Jay Peak
i s
a
Ver m
ont c a r p o r a t i a n
w i t h
i t s
p r i n c i
p a l p l a c e o
f b u s i n e s s
a
n
J a y
Vermont.
Jay Peak o
p e r a t e s t h e Jay
Peak
R e s o r t
i i i
J a y
Vermo
nt, which
encompass
es
t h e
f i r s t
s i x p r o j e c t s
f o r
which
t h e
Defendants
r a i s e d
money.
Jay
Peek,
n c o n j u n c t i o n w i t h
o t h e r s
h a s
s e r v e d a s
t h e manager
o r d e v e l o p e r
of h e
p r o j e c t
s .
1 2 .
es
orts i s
a
Delawa
re
c o
r p o r a t i o n
w i t
h
i t s
o f f i c e s
i u
M i a n i i
F
l o r i d a . Q
R e s
o r t s
i s
t h e
1
00 p e r c e n t ow
ner of Jay
Peak
,
and
Quiros s
t h e
s
o l e
owner, f f i c e r and
d i r e
c t o r
ofQ e s o r t s .
Q
e
s o r t s
a c q u i r e d Jay Peak
fro
m a
Can adian
F i n n
i n
2008,
and Q u
i r o s
l e a s s i n c
e
o v e r s e e n
t h
e v a r i o u s Jay
Peak
r o j e
c t s
t h r o u g h
e
s o r t s .
1 3 .
Qniros,
,
e s i d e s i n
ey
i s c a y n e ,
l o r i d a . I n a d d i t i o n t o b e i n g . h e s o l e
owner,
o f f i c e r a ~ d d i r e c t o
r
of e s o r t s he i s
chairman
of Jay
Peak.
Thro
ugh t
h o s e two
companies ,
Q u i r o s
c o n t r o l l e d
each of
h e D e f e n d a ~ i t
g e n e r a l and
l i m i t e d p a r t n e r s h i
p s .
He
s a
p r i n c i p a
l
of
t h e g e n e r a l p a r t n e r
of h e
Jay
Peak
B
iomedical i m i t e d
p a r t n e r s h i p
o f
f e r i n g
which
s
t
h e
s e v e a n t h
and
most
e c e n
t
p r o j e c t
o f f e r i n g .
Between Febr
uary
an d
Apri12
011, Quiros
e r v e d on t h e
b o a r d
of
i r e c t o r s
of
i o h e a r t
n c .
a p u b l i
c l y
- t r a d e d
company
.
1 4 . Sten
ger, 6, e s i d e s
i n
Newport
,
Vermo
nt. S t e n g e
r
i s
t
h e
D i r e c t o r P r e
s i d e n t
and
CE
O f Jay
Peak. He s
t h e
p r e s i d e n t and
d i r e c t o r of
h e
g e n e r a l
p a r t n e r
o
f h e
f i r s t
J a y Peak
p r o j e
c t o f f e r i n g and
i s t h e s o l e
o f f i
c e r
o r d i r e c t o r
of h e g e n
e r a l
p a r
t n e r
of
h e
second
t h r o u g h
s i
x t h
o f
f e r i n g s .
A l l . s i x o f f e r i n g s
were s e
t
u
p a s
l i m i
t e d
p a r t n e r s h i p s .
S t
e n g e r i s
a l o n
g w i t h
Q u i i a s ,
a
r
i n c i p a l i n t h e Jay
Pea
k
Bio
medical
e n
e r a l p a r t n e r .
1 5 .
Jay
Peak
Hotel
S u i
t e s
L.P.
S u i t e
s
Phase
I
)
s
a V
er mont i m i t e d
p a r t n e r
s h i p
w i t h
i t s
p r i n c i p
a l p l a
c e of
u s i n
e s s
i n J a y
Vermo
nt.
Between D ecem
ber 2006
and
May 008,
S u i t e s
Phase T
r a i s
e d
17 .5 m i
l l i o n
f
rom 35 i i l v
e s t o i s
t h r o u g h
an
E
-
5
o f f e r i n g
of
l i
m i t e d
p a r
t n e r s h i p
i n t e r e s t s
t o b
u i l d
a
o t e l . The
o t e l
i s
com
pleted
an
d o p e r a t i n g
.
E
8/18/2019 SEC Complaint 2
6/81
16.
.
T a y
Peak
H
otel
S
u i t e s
P l
x a s e
1 I L.
P.
H
otel
Pha
se
X
T )
s a
V
e i - ~ n o x
~ t l
i m i t e d
p a r t n e
r s h i p
w i t h i t s
p z ~ i
n c i ~ a l
p l a c e
o
f
b
u s i n e
s s i n
J a y ,
Ver
mont.
Betwe
en
Marc
h 200
$
and
Janu ary
201 1 ,
I n t e l
Phase
I l
r a i s e d
X75
m i l l i o n
f i o r n
1 50
i n v e s t o r s
through an
B
-5
o f f e r i n g
of
l i m i
t e d
p a r
t n e r s h
i p
i n t e
r e s t s
t o
b u
i l d a
h o t e
l , an
in
door w a f t e
r p
a r k ,
an
i c e
r i n
k , an
d a
g o
l f
c l u b
hou
se.
Cons
tructi
on
on
a l l
i s
comp
lete an
d
they
a r e
o
~ ~ e r a t
i n g .
17
. J a
y
Peak
Ma
nagem
ent,
Inc
.
i s
a
Verm
ont
c o r p o
r a t i o n
which
i s
t h e
g e n e r
a l
p a
r t n e r
of
S u
i t e s
Phas
e I
an
d
H
otel
Phas
e
T I .
I t i s
a l s o
awho
lly-own
ed
s
u b s i d i
a r y of Ja
y
Peak
.
St
en ger
i s
the co
mpany
's
p r e s i d
e n t .
1$.
J ay
1 e 1 1 ~
Penthouse
Suites
L.P. Penthouse Phase
1 1 1
)
s
a
Vermont
l i m i t e d
p
a r t n e
r s h i p
wi t
h
t s
p r i
n c i p a l .
p
l a c e of
bus
iness
i n
Jay
, Ver
mont.
Be
tween
J u l y
201
0 and
O c
t o b e r •
201 2
,
Pen
thous
e
Phas
e I I
I r a i s e d
$
32.5 m
i l l i o n
from
65 i n v
e s t o r s
throu
gh
an
-5
o f
f e r i n g
of
l i m i t e
d
p a r t n
e r s h i p
i n t e r e
s t s
t o
b u i
l d
a 5
5
- u
n i t ` ` p e
n t h o u s
e
s u i t e
s
h o t e l
and
an
a c t i v i
t i e s
c e n t e r
,
i n c
l u d i n g
a ba
r and
r e s t a
u r a n t .
C
onstr
uction
i s
co mpl
ete
and
t h e
f a c
i l i t i e s
a r e
o p e r a t
i n g .
19.
J ay
Pea
le
P er v
ices,
Inc.
i
s
a V
e i - ~ n o
n t
c o r
p o r a t i
o n
and
t h e g e n
e r a l p a r
t n e r o i
Pen
thous
e
Ph
ase
I I
. S
t e z l ~ e
r , l i s
t e d a s
the
d i r e
c t o r ,
i s
i t s
onl
y p r i n c i
p a l .
20.
J ay
Pe
ak
G
olf
a
nd
Mo
u ntai
n
Suite
s
L.
P.
Golf
and M
o u n t a i
~ i
f ' h a s c
I
V )
s
a
Verm
ont l i m
i t e d
p a r t
n e r s h
i p
wit
h
i t s
p r i n
c i p a l
p l
a c e o
f b u s i n
e s s i n J
a y ,
Ver
mont.
Betw
een
D
ecemb
er 20
1 0 and N
ovemb
er
2
01 1 ,
Gol
f and
Mou
ntain
Phas
e
I
V
r a
i s e d
$
45
m i l l i
o n
from
9
Q
i n v e s t
o r s
th
ro ugh
an
-5
o f f e r i
n g o
f l i m
i t e d p a
r t n e r s
h i p i n t e r
e s t s
t
o
b u
i l d
gol
f
c o
t t a g e
d
uplex
es, a
wedd
ing chap
el,
an
d
o t
h e r
f a c i l
i t i e s .
Const
ructio
n i s co
mp let
e, and
t h
e
f a c
i l i t i e s
a 1 • e
o p e r a
t i n g .
21. Jay
Pe
ar
~P
Ser
vices
G
olf,
Inc
.
i s
a
Ver
mont
c o r p
o r a t i o
n a
nd
t h e
g e n e ~ ' a
l
p a r t
n e r of
Golf
and Mou
ntain
Phase
IV
.
Steng
er,
i s t e
d a s t
h e d i r
e c t o r ,
i s
i t
s
onl y
p r i n c
i p a l .
6
8/18/2019 SEC Complaint 2
7/81
2 2 . Jay
Peak
Lodg
e
an
d
Townho
uses
L.
P.
L
edge ~
l d T o r
~ n h o u s e
s
Ph
ase V )
s a
Ve
rmont
i m i t e
d p a r t n
e r s h i p w
i t h
i t s
p r i n c i p
a l
p l a c e
o
f
u s i
n e s s
i n Jay
Vermo
nt.
Betwee
n
y
2011
a i
d
November
2012,
o c l g e
and
Townhouses
h a s e .
V
a i s e d
$45
i l l i o n
f r o ~ ~
90
n v e s t o r s
t
h r o u g h an EB
- 5
o f f e
r i i z g o
f
i m i t e d
p a
r t n e r s h
i p
i n t e r
e s t s
t
o
b u i l d
34
a c a
t i o n
r e n t a
l
t o w n
h o u s e s
90
v a c a
t i o n r e n
t a l
c o t t
a g e s ,
a c a f e ,
an
d
a p a r k i n
g
g a r a
g e . C o n s
t r u c t i o
n
i s
c o m p l e t
e
a
nd
t
h e
f a c i
l i t i e s a r
e o p e r a t i
n g .
2
3. J
ay
Peak
GP
e r v i c
e s
Lodg
e, Inc.
s
a
V e i 7 n o
n t
c o
r p o r a t i
o n an
d
t h e
g e n e r
a l
p a
r t n e r
of
L
odge
and Townho
uses
Phase V.
S t e n g e
r , i s t e d
a
s t h e d i r e
c t o r ,
s
i t s
o n l
y
p
r i n c i p a l
.
24.
Jay
Peak
Hotel
S u i t e s S t a t e s i d e
L. P.
S t a t e s i d e
Phase
VI
)
s
a Vermont
l
i m i t e d p
a r t n e r s
h i p
w i t h
i t s p r i n c
i p a l
p l a
c e of
u s i n e s
s
i
n J a y ,
Ve
rmont.
Be
tween
O
c t o b e r
2011
and
Dec e
mber 20
12, t a t e
s i d e
Phase VI a
i s e d $
67
i l l
i o n
fr
om 134
n v e s t
o r s
t h r o u
g h an E
B- 5
o f f
e r i n g
of
i m
i t e d p a
r t n e r s h
i p i n
t e r e s t s t o
b u
i l d an 84
- u
n i t
h o t e
l ,
8
4 a c
a t i o n
r e n t a l
c
o t t a g e s
,
a
g u e s
t
r
e c r e a t i
o n c e n t
e r , a
nd
a
m
edical
e
n t e r .
Alth
ough h e
S t
a t e s i d e
Phase
VI
f f e
r i n g
was
u l l y
s u b s
c r i b e d ,
t
h e D
efenda
nts
h
ave
only
u i
l t t h
e
h o t e
l .
A
m a l
l amount
of wor k
has
b
een
do
ne
on
b u i
l d i n g
t h e
c o t t a g
e s
and
w
ork
h
as
not
y e t
b
egun
on
h e
r e c
r e a t i o n
an
d m e
d i c a l
c
e n t e r s .
25.
Ja
y P
eak G
P
e r v i
c e s
S t a
t e s i d e ,
I n c .
i s a V
ermon
t
o r p o r a t
i o n
v1d
t h e
g e n
e r a l
p a r t n e r
of t a
t e s i d e . S t e n g e
r ,
i s t e
d
a s
t h e
d i r
e c t o r ,
s
i t s
o n
l y
p r i n c
i p a l .
26.
Jay
P
e a l c
Bi
omedic
al R
esearc
h Park
L
.P.
Biomed
ical Phas
e
V
I I )
i s a
Vermon
t
i r r z i t e
d
p a r t n
e r s h i p
w i
t h i t s
p r i n c
i p a l
p l a c e
of
u s i n
e s s i n N
ewport
, Vermon
t.
S i
n c e
Nov
ember
201
2, Bio
medica
l
P
hase V
I I has
a i s e d
a p
p r o x i m a
t e l y
$83 i l l i o n
fro
m 166
n v e
s t o r s
t h r
o u g h an
E
B- 5 o f f e r
i n g o
f
l
i m i t e d
p a r t n e r
s h i p
i n t e r e
s t s t o
c o n s t r u
c t
a
b i o m e d
i c a l r e s
e a r c h
f a c i
l i t y
Other t
h a n s i t e
p r e p a r
a t i o n
a
nd
g r o u
n d b r e a k
i n g
~ o
w o Y • k h
as been
done
on
t h e f a c i
l i t y
Th
e
Defend
ants se
ek
t o
r a i s e
a
p p r o x i
m a t e l y
a n o t
h e r
$27
m i l l i
o n f
r o m .
54
i
n v e s t o r s
, whi
ch,
8/18/2019 SEC Complaint 2
8/81
b e c a
U S e
of h e
m
isuse
and
m i s a p p r o
p r i a t i o n of u n
d s ,
w i
l l n o t
be
enough
t o
f a n a n
c e c o n s h l i c t i o n
of
h
e
r e s
e a r c h f a c i l i t y
27.
Aa~C Rio
V e r n l o r i i
GP
e r v i c e s ,
LLC
s
a-Vermont
l i m i t e d
l i a U i l i t y company
and
t h e
g
e n e r a l
p a r t n e r
of iomedi
cal
Pha
se I I .
I t s
man
aging m e
m b e r s x • e Q u i r o s
and
S t
e n g e r .
S.
e l i e f
D
efendants
28.
Jay
Construction
Manag e m
ent,
nc
. JCM )
s
a
Vermont o r p o r a t i o n
w i t h i t s
o f f i c e s
i n
Miami ,
l o r
i d a , a t
t h e
s a m e d d r e s
s a s e s o r t s .
I t s
s t a t
u s
i s
l i s t e d
a s t e r m i n a t e d a s
of
March
1 6
,
2
016. Qu
iros
i
s
t h e s o l e
o f f i c
e r
and d i r e c t o r
of JGM
Q u i r o s
f u n n e l e d m o
re
t h a n
$1 6 0
m i l l i o n
of
n v e s t o r
funds
from
s e v e r a l
p r o j e c t s
t h r o u g h
JCM
nd
i t s
bank
a c c o u n t s ,
and
e n t e r e d i n t
o
c o n t r a c t s
w i t
h
o u
t s i d e
v e n
d o r s
f o r
c
o n s t r u c t i o n
of
o m e
of h e J a y
Peak
r o j e c t s .
He
a l s o used
misuse
d t e n s o
f
m i l l i o n s
of
o l l
a r s
of t h e funds
JC
M
e
c e i v e d . Q u i r o s
c o n t r o l
l e d
JCM's
bank
a c c o u n t s . Withou
t
any
l e g i t i m a t e
b a s i s , JC
M
r e c e
i v e d i n v e s t
o r s
p
r o c e e d s
em
anating f
rom t h e
D e f e n d a n t s '
e c u r i t i e s
f
r a u d .
29.
GSI of
Dade
County
,
n c
.
GS
I )
s
a F l o r i d a
c o r p o r a t i o n
w i t h
i t s
o f f i c e s i
n
Mi a m i a t
t h e
s a m e
a d d r e s
s
a s
Q
e s o r t s
a
nd
JCM
Q u i r o
s
i s t h e
owner
and s o l e
o f f i c e
r
and
d i r e c t
o x
of
GS
I.
GSI r e c e
i v e d more
t h a n
$13
m i
l l i o n
of
i n
v e s t o r m o n e y
emanating
from
Biome
dical
Phase
VII
i n v e s t o
r
f u n d s
.
W
ithout any l e g i t i m a t e
b a s i
s ,
G S I
r e
c e i v e d
i n v e s t o r s
p r o c e e d s emanati
ng from h e
D
e f e n d a n t s '
e c u r i t i e s
f i ~ a u d
30 .
North Eas
t
Contract
S e r v i c e s , LL
C N o r t h e a s t )
s
a F l o r i d a l i m i t e d
l i a b i l i t y
company forme
d i n
February
2 0 1 3
and
h e
a d q u a r t e r e d
i n
Weston,
l o r i d a .
N o r t h e a s t
a c t s
a s
p r o j e c t
manager
f o r
Biomedical
Phase
V
I I . William
K e l l y ,
who
i
s
J a y P e a k
' s
C
OO
nd
a
l o n g t i m e b u s i n e s s
a s s o c i a t e
of Q u i r
o s , i s t h
e
managing
p r i n c i p a
l
of
N o r t h e a s t .
N o r
t h e a s t
r e c e i v e d a t
l e a s t $7.9 m i l l i o n
o
f
Biome
dical
Phase
VII
i n v e s t o r
f u
n d s
( i n t u r n ,
N o r t h e a s
t
p a i d
8/18/2019 SEC Complaint 2
9/81
appr
oxima
tely
5.5
m i l l
i o n
o
P t h
e s e f i e
n d s
t
o
G
SI)
f o
r
p u r p o
r t e d
s
u p e r v
i s i o
n f e e s
. on
a
ppro
ximat
ely
47 z l i
l l i o n
of e x
pens
es t
h a t
JCM
u
t p o r
t e d l y
wa
s
go
ing t o
da
y
o
n
b
ehal
f
o f
B i o i r ~ e d i c a l P l a a s e
V I I .
i i
r e a l i t y
t h e
Defendants laid
l e s s
than
10
i l l i o n
o f
Biomedica l
Ph ase
V
II
exp
ense
s
w
ith
th
e
a
ppro
ximat
ely
4
7 m i l l
i o n J
CM
e c
e i v e d
fr o m
Bio
medi
cal P
h a s e
V I I .
Quiro
s
m i su
sed an
d
m i
s a p p
r o p r i
a t e d
t h e
v a s t
n
a j o r i
Y y
~f
h e
rem
ainin
g m o r
e
t
han
3
7
i l l
i o n
o f
B
i om ed
i cal
Phas
e
~ 1
I I
i n v
e s t o r
fund
s
t h a t
JCM
e c e
i v e d . .
H
en ce
,
orth
east
e c e i
v e d
c o n s t
r u c t i
o n
s u p e
r v i s i
o n
f e
e s
f o
r
w
o r k
t h a t wa s
not p e
r f o i -
~ n e d .
W
ith o
u t
a n y
l e g
i t i m a
t e
b a s i
s ,
North
east
r
e c e i v
e d i n
v e s t
o r s
proc
eeds
e
ma n a
t ing
f
r o m
t h
e
D
efend
ants
'
e c u r
i t i e s
f r a
u d .
31,
urke Mo u n t a i n
R e s o x • t ,
LL
Q
Bu r ke
)
s
a
F l o r i d a l i m i t e d
l i a b i l i t y
c
ompa
ny
fo
r m e d
i n
Ap
ril
201 2
and h
eadqu
arte
red i
n Miam
i a t
th
e same
a d d r
e s s a
s
e
s o r t
s .
Qu
iros
i s
t 1
1 e
m a n
a g i n
g p
r i n c i
p a l
~f
u
rke.
urke
i s
a l s o
t
h e
o w
n e r
o f
h
e Bu
r ke
Mo u
n t a in
Res
ort
l
o c a t
e d i n
East
B
u rke
, Ve r m
o n t,
wh i c
h
i s
the
s i t e o
f
n o t h
e r
EB-5
o f f e r
i n g
t h a t
Q
uiro
s i s
pro m
ot in
g c a l l e
d
u r
ke M
o u n t
a i n
R e s o r
t .
As d e s c r
i b e d
b el
ow,
Qu
iros
imp
rope
rl y
us
ed
ap
prox
imat
ely
$
7 i l l i
o n f r o i
r ~
a
ma r
gin
l
oan
b ack
ed
by n v e
s t o r
r and
s
t o
p
urcha
se Q
urk
e.
He
subse
quen
tly
us
ed appr
oxim
atel
y
18.
2
m
i l l i
o n
o
f
B
io me
di cal
P
h a s e
VII
i n v
e s t o r
f
unds
as
p a r t
o f
t
he
19 i l l
i o n
p
a y
off
o f
h i
s m
argi
n L o
a n .
With
out a
n y
l
e g i t i
m a t e b
a s i s ,
u
rk e
r e c e i
v e d
i
n v e s t
o r s
proc
eeds
em an
at in
g
i •
o r n
the D e f e
n d a l z
t s
e
c u r i t
i e s
f r a u d
.
I I I .
JU
RIS
DIC
TIO
N
A
ND
VE
NUE
32.
The
Cou
rt h a
s u r i
s d i c t
i o n
ov
er
t
h i s
a c t i o
n
purs
uant
t o
S
e c t i
o n s
2 0 b )
,
20(
d),
and
22(
a)
o f
t h e
S e c
u r i t i
e s A c
t, I
S U.
S.C.
§§
7
7 t ( b )
,
7 7 t
( d ) ,
a n
d
7 7 v a
) ;
a nd
S e c t
i o n s
21
(d),
2 1
( e ) ,
and
27
f
h e
E x c h
a n g e
A ct
,
15
t I . S .
C . §§
8u(d)
,
8 u e )
,
a nd
78
aa.
33.
T
h is
Co ur
t has p e
r s o n a
l j u
r i s d i
c t i o n
ove
r
t
h e
Defe
ndan
ts and
ve n
u e i s
pr
oper
i n
the
So
uther
n D i s
t r i c t
o
f
l o
r i d a
f o r
s e
v e r a l
r e
a s o n s
. Q
e s o r
t s , w
h i c h
owns
Ja
y
Pe
a k a
nd
a s
a
D
8/18/2019 SEC Complaint 2
10/81
r e s u l t
o v e r s
e e s t h e
J a y
Pea
k p r
o j e c t s
i s
l
o c a t e d
i t i
Miam
i.
Q u i
r o s
who
o r c
h e s t r a t e
d t h e
f r a u d
u l e n t s
cheme a
nd t
h r o u g h Q
e s o
r t s
c o n t
r o l s
t
h e
g
e n e r a l p a r t
n e r
and
i m i t e d p a r
t n e r s h i
p s i n
a l l
J a y
Peak
o f f e r i n g s
r e s i d e s
and works
i n t h e
1 V l i a i n i
a r e a .
S t e n g e r
and
t l ~ e
o t h e r
J a y
Peak
emplo
yees
a l l t a k e
d i r e c t
i o n
from
Q u i r o s
.
S e v e
r a l
of
t
h e
co
mpanie
s t l ~ r o
u g l ~ .
whi
ch Q u i r
o s
o r c h e s t
r a t e d
t h e f r a u
d and
t h r o u g h
whi
ch
he f u r u i e
l e d mon
ey ,
n c l u d i n
g
JCM,
SI,
N o r
t h e a s t
and Q
urke,
r e
l
o c a t e d
i n
So
uth
F l o
r i d a .
3 4 .
I n
a
d d i t i o n
t h
e Ra y m
o n d
Jame
s &Ass
ociate
s, n c .
Ra y
molid Ja
mes
)
c c o u n t
e x
e c u t i v e
and
b r o
k e r a g e
o f f
i c e t
h r o u g h which
Q u i r
o s
op
ened
t h
e
Ray
m o n d
James
a c c o
u n t s
used
t o
p e r p e t r a t e
t h e f r a u d
were
l o c a t e d i n
C o r a l G a b l e s
F l o r i d a .
While
i n v e s t o r
m o n e y
was
i r s t
d e p o s i
t e d
i n
an
escr
ow
a c c o u
n t f o
r e a
c h
p r o j e
c t a t
a Ve
rmont
bank,
t
was
s
oon a f
t e r t r
a n s f e r r e
d
t o
a c o r r
e s p o n d i
n g Ra
y m o n d
Ja
mes
a c c
o u n t t h
r o u g h t h e
b r o k
e r a g e
o f f i c
e
l o c a
t e d
i n
C
o r a l
G a b l e s
. Q u i r o s
and
S t e n
g e r
h
ad
num
erous
commun
icatio
ns
w i
t h
t h e Ra y m o
n d James
b r o k e r
l o c a
t e d
i n C o r
a l G a b l
e s n c
l u d i n g
e m a i l s
e t t e
r s
w
i r e s and
t e l e p h
o n e c
a l l s .
35.
F u r t
h e r m o r
e K e l l y J
ay Peak
's CO
O s l
o c a t e d
i n Sou
th F l o r i
d a . Othe
r key
J
ay
P
eak
emplo
yees
s p
e n t
s i
g n i f i c a
n t tim
e i x ~
S
outh
F l o
r i d a
d u r i n g
t h e
t i
m e
p e r i o d
a l l e g
e d
i n
t
h i s
C o
m p l a i n
t .
A
u mb
er of
n v
e s t o r s
who
e c e i
v e d g r e e n
c
a r d s
a l s
o have
s e t t l e
d i n
t h e
S o u t h e
r n
D i s t r
i c t
i n c l u d i
n g a t
l e a s t
22 n v e s t
o r s
i n
H o
t e l
P
hase I
e i g h t
i
n
Pen
thouse Pha
se
I I
1
9 n
Golf
and Moun
tain Pha
se IV, 1 1
i
n
Lo dge
and
Townho
uses Ph
ase
V
1
7
i n
S t a t e s i
d e
Phase
VI,
and
s
e v e n
i n Bio m
edical
Phase
V I
I .
36.
T
he
D e f e n d a
n t s
d i r e c t l
y
and
i
n d i r e c t
l y
ma d
e
use
of t
h e
me
ans and
i n s t r u
m e n t a l i t
i e s
of n
t e r s t a t
e
com
merce,
and
t h e
m a i l s
i n
c o n n e
c t i o n
w i t h
t h e a c t s p r
a c t i c e s
and
c o u
r s e s of
u s i n e s
s
s
e t
f
o r t h
i n t h i s
C o m
p l a i n t
.
IV
.
THE EB-5
PRO
GR M
10
8/18/2019 SEC Complaint 2
11/81
37. C
ongress
c r e a
t e d
t h e
EB
- 5
I m ~ x ~ i g r
a n t
I n
v e s t o r Pr o g r
am
i n 1990 i n
a
n
e f f o
r t t o
b o o s t
t h e U.
S. econ o m
y. The Pr o g r a
m
p r o v i
d e s a
p r o s p e c t i v e immigran
t
w i
t h
t h e
o p p o
r t u n i t y t o
be c o m e
a
p e n x ~ a n e n t r e s i d e n t
by
n v e s t i n g i n t h e
U.S.
3 8 .
T
o
q u a l i f y f o r
a i a
EB-
5 v i s a , a
f o r e i g n
a p p l i c a n t mu
s t i n v e s t $500,0
00 ~ ~
$1
m i l l
i o n (depe
nding
o n t h e
t y p e
o f n v e s t m
e n t i n
a
c o m ~ n , e r c i a
l e n t e r p r i s e
approved
by
t h e
U.
S.
C
i t i z e n s h i p
and
I m m i ~ r a
t i o i l
S e r v i c e
Immig
ration
S e r v i c e ) .
O nc e
he or
s
he
h a s
i n v e s t e
d ,
t h e
f o r e
i g n
a
p p l i c a n t
may
p p l y f o x
a
c a i l d i t i o n a l
g r e e n
c a r d ,
which
i s go o d
f o r
t w o
y e a r s . I f
t h e
i n v e s t m e
n t
c r e a t e s
or
p r
e s e r v e s a t
l e a s t t e
n
jobs
d u r
i n g t h
o s e
t w
o
y e a r s
, t h e f o r e i g n
a p p l i c a n t
znay
a p p l y
t o
ha ve
t h e c o n d i t i o n s
r e m o v e d from
h i s
o r h e r g r e e n
c a r d .
The
a p p l i c a n t
ca n
t h e n .
l i v e
and
work n t h
e
U.
S. e r m a n e n t l
y .
3 9 . e r t a i n
n umbe
r
o f
E
B-5 v i s a s
a r e s e t
a s i d e
f o
r p r o s p e c t i v
e immigrant s
who
i n v e s t
t l u o u g h
wha
t
s know
n s a Regio
nal
C e n t e
r .
n p p l i
c a n t o n l y
has t o i n v e s t
$500,000
f
l
i e o
r
s l o
i n v e
s t s
t h r o u g h a Regional
C e n t e r .
40.
The S t a t e
o f
Ve
r m o n t EB
- 5
Regiona
l C e n t e r
has
be e
n a f e d e r a l l y -
d e
s i g n a t e d
Regi
onal C e n t e r
s i n c e 199 7.
P r o s p e c t i v
e
immigrants
i n v e s t i n g
t h r o u g
h
t
h e V e r m
o n t
R e g i o n a
l
C e n t e r
o n l y have t o
i n v e s t
$500,000.
s h e R e g
i o n a l C e n t e r
,
t h
e
s t a t e has
a p p
r o v e d a l l
EB
- S
p r o j
e c t s
w
i t h i n
t h e
s t a
t e
and
has
e n t e
r e d i n t o
a
m enn
oxandum
o f
n d e r s t
a n d i n g
w i t h t h e
i
s s u e r s
o f
EB
- 5 p r o j e c t s ,
i n c l u d i n g
Jay
Peak
.
The
Ve r
mo n t Ag e ncy
o
f
C o
m m e r c e
and
C o m m u
n i t y
De
v e l o p me n t
h a s ,
u n t i l r e c e n t l y , a d m i n i s t e r e d
t h e
s t a t e
s
EB
- 5 program.
The
V e r m o n t
D i v i s i o n
o f i n a n c i a
l
R e g u l a t i o n
n
ow
h a r e s
t h a t
r e s p o n s i
b i l i t y
w i
t h
t h e Ag e
ncy.
V
TI
DE
J YPE
KEB- 5
O
FFERINGS
41. Jay Peak began
o f f e r i n g and
s e l l i n g
s e c u r i t i e s
i n
t h e
farm
o f
i m i t e
d
p a r t n
e r s h i p
i n t e r e s t s
i n
D ecembe
r
2006.
Since
t h a t
time
t
has
a
i s e d
m o r e
t h a n
$ 3 5 0
i
l l i o n from
m o r e
t h a n
1 1
8/18/2019 SEC Complaint 2
12/81
700
n v e s t o r s from a t
l e a s t 74 o
u n t r i e s i n
seven e p a r a t e
o f f e r i n g s .
T
he
n d i v i d
u a l o f f e r i n g s
a r e
s e t
f o r t h
i n P a r a g r a p h s
I5 1
6 1 8
20
22
24 and
26
a U o v e .
Wh
ile Bi
omedical
Phase
VII
i n v o l v e s c o n s t r u c t i o n
of
t h e
b i o m e d i c a l
r e s e a r c h
f a c i l i t y
t h e
f i
r s t s i x l
i m i t e d
p a r
t n e r s h i p
o f f e r i n g
s
ha ve
c e n t e r e d
a r o u n d . a
s k i
r e s o r t
and
r e l a t e d
f a c i l i t i e s
such a
s
h o t e l s
l
o d g e s
condom
iniums
e c r e a t i o n
a
nd me
eting
a c i l i t i e s
an
d e s t a u r a n t
s
and
c a f e s .
42
.
Jay
Peak has
marketed
i t
s E I 3
-5 l i m i t e d p a r t n
e r s h i p i
n t e r e s t s a n
c ~
s o l i c i t e d
i n v
e s t o r s
i n
a
v a r i e t y
of wa y s
— t h r o u g h
i t s
w e b s i t e
i
n t e r m e d i a r i e s w
o have
pr
omoted t h e
i n v e s t m
e n t s
i m m i g r a t
i o n a t t o r n e y s
w i t h i l i t e r e s
t e d
c l i e n t s and
o v e t • s e a
s m e e t i n g s and
s e m i n a r s
w i t h
p r o s p e c t i v e
i n v e s t o r s .
43.
F
or examp
le
J a y
P e
ak
has
r o u t i n e l y
a t t e n d e d
e
v e n t s
o v e r s e a s where
c omp
an y
r e p r e s e n t a t i v
e s i n
c l u d i n g S t e n g e r
ha
ve spoken and
m e t
w i t h
p r o s p e c t
i v e i n v e s t o r s .
I n
a d d
i t i o n
J a y
P eak
ha s
s p o n s o r e d b
o o t h s
and
spoken
a t
i m m i g
r a t i o i Z -r e
l a t e d
c o n f e r e n c e s
and
e v e n t s
b o t h
i n t h
e
U.S. and
a b r o a d . S t e n
g e r
has ~ ~ e t
i n
p e r s o
n
w i t h
ab
out
9
5
p e r c e n t of
h e
i n
v e s t o r s
i n t h e
Jay
P eak
r o j e c t s and
Quiros
n r e c e n t
y e a r s a l s o
has t t e
n d e d
Ja
y P e ak
m e e t i n g s
w i t h i n v e s
t o r s
and
answe
red
t h e i r
q u e s t i o n s .
44
. While
o r e i g n r e s i d e n t s
a r e
i n t e r e s t e d
i n
i n v e s t i n g t o
o b t a i n t h e
i r permanent
r e e n
c a r d
s t h e
y
a
l s o
a x e
i n t e r e s t e d
i n
a c h i e v i
n g
a
r e t
u r n
on
t h e i r
i n v e s t m e n t .
S t e n g e r
ha s
t o l d
i n v e s t o r s he
a n t i c i p a
t e d t h e i n d i v i d u a l
p r o j e c
t s would
each
s n a k e
a
t wo t o
s i
x
p e r
c e n t
a
n n u a l
r e t u n l
once t h e y
were
eac
h
c
omplete
and
o p e r a t i n g .
I n
a d d i t i o n
t
h e
o f f e r i n g
m a t e r i a
l s
t h e
De
fendant s
p r o v i d e d t o i n v e s
t o r s
ha
v e
o u t e d
t h
e i r
p o t e n t
i a l r e t u r n s . F
or
exampl
e
ne
t a
t e s i d e
i n v e s t o r
r e c e i v e d i n f o r
m a t i o n .
f
rom J
ay
P e ak i n
t h e
S t a t e s i d
e
Pha
se V I f f e r i n g
m a t e r i a l s
s t a
t i n g
t h a t
once
t h e
p r o j e
c t i s
c o m p l e t e i n v e s f i a r
s w i l l r e a l i z e
u p
t o a
s i x
p e r c e n
t
a n
n u a l
r e t u r n .
Bio
medical Phase
VIT n v e s t o r
r e c e i v e d m a t e r i a l s s t a t i n
g
a
i v e
p e r c e n t
a n
n u a l
r e t u r n
i s
e x p
e c t e d .
1 2
8/18/2019 SEC Complaint 2
13/81
Oth
er
B
iomed
ical
Phas
e
V T T
i n v e
s t o r s
a l
s o
r e
c e i v e
d
o f f e
r i n g
do c
ument
s
t
o u t i n
g a
P o u r
t o
s
i x
p e r
c e n t
a
z u ~ u a l
r
e t u r n
onc
e
h
e
p
r o j e c t
i
s
b u i l
t .
45.
I n t e r e s t e d
i n v e s t o r s i n
each
o f
t h e
p a r t n e r s h i p s g e n e r a l l y
p u t
d o wn
a
$10,000
d
e p o s i
t , which
goes
tow
ards t h
e i r
$
500,0
0 0
i n v e
s t m e n
t . Th e
i
n v e s t o
r s
t h e
n
n o
r m a l l
y r e c e i v
e
fr o
m
Jay Pe
ak, an
d
o f t e n
fr o
m
S t e n g
e r ,
o f f
e r i n g
Y n a
t e t a l s
t h a t c o
n s i s t
o
f
a p r i
v a t e
p l a c e
m e n t
m
e nno r
and u
m ,
a b u s i n
e s s
p l a n ,
and
a
i m
i t e d
p a r
t n e r s h
i p
a g r e
e m e n t
.
46.
m
ong
h e
do
cumen
t s
i n c l
u d e d
i n
ea
ch
b
u s i n e
s s
p
l a n
i s o ne show
ing
t h e c o s t
of
each
p r
o j e c t
and
t
h e
us
e
o f n v e s
t o r f u n
d s .
Give
n
d
i f f e r e
n t
t i
t l e s , such
a s
Sour
ce and
U
se
o f
I n v e s t o r
Fun d s
S u i t e s
Ph ase
I ,
P r o j e c t e d
S o u r c e s and
Use s of
F t u z d s
(Biomedical
Phase
V I I ) ,
o
r
I n v e s
t o r
F
un d s
Sou
r ce
and
A p
p l i c a
t i o n
(Pen
thous
e
P
h ase
I I
I ,
t
h i s
use of
p r o c e e
d s
d o
c u m en
t
i
s t s
i
n
g r e a
t
d e
t a i l
e x a c t l
y how
Jay
Pee
k
a
nd/
o r
t h e
l i
m i t e d
p a r t n e
r s h i p
i n t e n
d
t o
sp
end
a l l
i n v
e s t o r fu
nds r a i
s e d ,
i n c l u
d i n g
o n
l
a n d a c
q u i s i t
i o n ,
s i t e
p
r e p a r a
t i o n ,
and
c o n s t
r u c t i o
x x
Th e
use
o
f
r o c
e e d s
d o
c um e
n t
a l
s o
l i s t s
t h e
m a n
a g e m e
n t c o n t
r i b u t i
o n
i n
ea
ch o f f e r
i n g ,
and h
ow
Ja
y
Pea k
o r t
h e
l
i m i t e d
p a r t n
e r s h i p
w i l l
sp e
nd
t h a
t
m o
n e y . ' T
h e
d
o cum e
nt
a l s o
s p e l
l s o u
t e x a c
t l y
how
m u c h
i n
c
o n s t r
u c t i o n
, m a
n a gem
en t,
l a
n d ,
or
o
t h e r
f e e s
J
ay
P
e ak and
t h e g
e n e r a
l p a r t n
e r a r e
e n t
i t l e d t o
t a k
e fr o m
i n v
e s t o r m o
n e y
n e
ach o f F e
r i n g .
47.
S
o ,
f o r
exa
mple ,
i n
S u i t
e s Phase
Y
, t
h e
d ~ e u
r n e n t
e
n t i t l e d
Sour
ce and
U
s e of
I
n v e s t o
r Fun
d s sh
ows
t h
e
p r o j
e c t
r a i s
i n g
$
17.5
m i l l i o
n
fr o
m i n v e
s t o r s
t o
pa y
f o
r t h e
p
r o j e c t .
Th e
c o
s t s
a r e t h e n
brok
en d
own
a s $10.4
m i
l l i o n
f o r c o n s t
r u c t i o
n ,
$ 1 . 6
m i
l l i o n
f o r
o p
e r a t i n
g
s y s t e :
~ x ~ s
and
equip
ment,
$800
,0 0 0
f o r u
t i l i t i e
s
and
c
ommo
n r e a s
,
$1.8
m i l l i o
n
f o r
p
u r c h a s
e
o f
t h e
l a n d ,
a p p r o
x i m a t
e l y
$ 6
0 0 , 0 0
0 f
o r c
o n t i n g
e n c i e
s ,
a
nd
a p p r
o x i m a t
e l y $40
0,000
f o
r wo r
king
c a p i
t a l p
on
compl
etion
o f
h e p r o j e c
t ,
Jay
Pe
a k i s e n
t i t l e d
t o
t a k
e
$ 1 .
9 m i l l i
o n i n
d
e v e l o
p e r
f e
e s ,
o
r
a
o t a l of
1
7.5 m
i l l i o n
.
13
8/18/2019 SEC Complaint 2
14/81
~8.
n d d i t i o n a l p a r t
of h e
o f f e r i n g
m a t e r i a l s i s
t h e
l i m i t e d
p a r t n e r s h i p
agreement
n
each p r o j e c t , which s p e l l s
out
t h e
r i g h t s ,
o b l i g a t i o n s and
r e s p o n s i b i l i t i e s
of
h e
g e n e r a l
p a ~ ~ t n e r
f o r
each
p r o j e c t
a s
w e l l a s
t h e l i m i f i e d
p a r t n e r s ( i n v e s t o r s ) . I n
each
p r o j e c t
t h r o u g h
S t a t e s i d e
Phase
VI, h e g e n e r a l p a r t n e r i s an
e n t i t y i n w h i c h . S t e n g e r • i s
t h e
s o l e
p r i n c i p a l .
I n
Biomedical
Phase
V I I ,
S t e n g e r
and Quiios a r e
bath
p r i n c i p a l s i n t h e
g e n e r a l
p a r t n e r .
49.
mong
t h e r
key p r o v i s i o n s , each l i m i t e d
p a r t n e r s h i p
agreement
—w h i c h
l l
i n v e s t o r s
e i t h e r s i g n e d or adopted — c o n t a i n s
s e v e r a l
p r o v i s i o n s
r e g a r d i n g h o w
Jay
Peak
and
t h e
g e n e r a l p a r t n e r
can
use
i n v e s t o r m on e y.
G e n e r a l l y ,
each l i m i t e d
p a r t n e r s h i p
agreement
r e v e ~ i t s
t h e g e n e r a l
p a r t n e r
from,
w i t h o u t c o n s e n t
of
the
l i m i t e d
p a r t n e r s :
1)
borrowing
from
o r
commingling n v e s t o r funds;
2}
c q u i r i n g
any
p r o p e t - t y
w i t h
i n v e s t o r
funds
t h a t does
not
belong
t o
t h e
l i m i t e d p a r t n e r s h i p ; or
3)
mortgaging, conveying
or
:encumbering
p a r t n e r s h i p p r o p e r t y
t h a t was not
e a l
p r o p e r t y .
50. s
d e s c r i b e d
i n d e t a i l
t h r o u g h o u t
t h e
r e s t
of t h i s Complaint,
t h e
Defendants
r o u t i n e l y
v i o l a t e d
t h e s e
p r o v i s i o n s
w h e n they
misused, m i s a p p r o p r i a t e d , and
commingled
i n v e s t o x funds
from t h e d i f€ e r e n t
p x o j e c t s .
I n s t e a d of s i n g
i n v e s t o r funds
a s
d e s c r i b e d i n
t h e use
of
proceeds
documents, h e
Defendants f r e q u e n t l y h a d
i n v e s t o r
funds
f i l o w i n g i n a
c i r c u l a r and
roundabout
m a n n e r a m o n g
v a r i o u s a c c o u n t s and e n t i t i e s ,
which a l l o w e d t h e m t o
misuse
a c i d
m i s a p p r o p r i a t e
i n v e s t o r f u n d s .
51, S t e n g e r reviewed,
w a s e s p o n s i b l e
f o r ,
and h a d
a u t h o r i t y
o v e r , t h e
c o n t e n t s
of h e
o f f e r i ~ x g documents
i n 1 l i a s e s I
-VI,
n c l u d i n g
t h e
l i m i t e d
p a r t n e r s h i p
agreements
and t h e
use of
proceeds
d a c u m e l l t s .
Moreover,
Quiros
reviewed t h e
c o n t e n t s of t h e
Phase
I
-VI
a f ~ e r i n g
documents,
was
f a m i l i a r
w i t h
them, a l d u n d e r s t o o d
l i e
had
t o
a b i d e
b y
them. He l s o
approved
t h e use ofprocee ds d oc u m e n t n
Phases
I T I
- V I .
14
8/18/2019 SEC Complaint 2
15/81
5
2. Bo
th S
t e n g
e r
an
d
Q u
i r o s
,
a s
p r i n
c i p a l
s of
t h e g e
~ l e r a l
p a r t n
e r
f o z
~
3 i o m z
d i c a l
Phas
e V I I
, re
view
ed
a i l d
a
ppro
ved
t h e
c o
n t e n
t s o
f h a t
p
r o j e c
t s
o f f e
r i n g
doc
umen
ts,
n c l
u d i n g
t h e l i m i t e d p a r t n e r s h i p
agreement and
t h e u s e
of
proc eeds
d o c u m e n f i .
S3.
I
n t e r e
s t e d
i n v e
s t o r s
made
a
5 0
0,00
0 i
nves
tm ent
n
a
p a r t i
c u l a r
p r
o j e c t ,
a s w e
l l
a s
p a i
d
a ~ z a
d d i t i
o n a l
SO
,U00
a d m i
n i s t r
a t i v
e f e e
t h
a t Ja
y
Pe
ak and t
h e
o t h
e r Def
enda
nts
u s e d .
f
o r
exp
ense
s a s s o
c i a t e
d
with
t h e
i n v e
s t m e
n t , i n c
l u d i n
g
f
e e s t o
i n t e r
m e d i a
r i e s .
Eac
h
p r o
j e c t
had
a
n
esc
row
accou
nt a t
P e o p l
e s
Uni
te d
Ba
n k i n V
ernn
ant
f o
r ~ n e r
i y know
n a
s
t
h e
C
h i t t e
n d e n
T r u
s t
Com
p any
).
S
t e n g
e r
w a
s
a s i g
n a t o r
y
on
a
l l
o
f
t
h e P
e o p l e
s
Ba n
k a c c o u
n t s
and
r o
u t i n e
l y
a u t h o r i z e d t h e
t i a ~ l s f e r
of
unds
n t o
and
ou t
of
h o s e a c c o u n t s .
54
.
The i
n i t i a
l 5
00,0
00
inve
stm e
nt
n o
r i n a l
l y
w a s
d e p o
s i t e
d
i n
t o
t h
e P
e o p l e
s
Ba n k
acco
unt
f o r
t h
e
s p e c i
f i c p r o j e
c t i
n
whic
h
t h
e i
n v e s f i
o r
w a
s
p a r
t i c i p a
t i n g .
Onc e
t
h e Im
migr
ati o
n
S e r
v i c e
a
ppro
ved t h
e
i n v e
s t o r
s
i n i
t i a l o r
p r o v i
s i o n
a l ,
gr
een
c a
r d ,
S t
e n g e r
t y p
i c a l l
y ha
d
t h
e
5
00,0
00
t r a n
s f e r r
e d
t o
a
a
ymon
d J am
es
acc
ou nt
t h
a t w a s
s e t
u p i n t h e
nam
e
of
h e
p a r t i
c u l a r
p r o
j e c t
thr o
ugh
a
ymon
d a i n
e s
Co
ral
Gab
les o
f f i c e
.
55.
S t e
n g e r
had
n
o s i g n
a t o r
y
or
o
t h e r
a u t
h o r i t
y
ov e
r t h e
ay
mond
J a me
s
a c
c o u n t
s .
R a
t h e r ,
Qu
iros
ope
ned a
l l
o
f t
h e ay
mon
d
J a m
es a c
c o u n t
s , and
ha
d
s o l
e
a
u t h o r
i t y ov
er
the
m.
T l i
e
aymo
nd
J
a m es
br
oke r
l i s t e
d
on
t h e
a c c o
u n t s
w
a s
Quir
os ' fo r
mer
s
on-
i i
i
- l
a w .
O
n c e
t
h e
ay
mond
J
ames
a
ccou
nts
r
e c e i v
e d
t
r a n s f
e r s fr
om
t
h e P e
o p l e
s
Ba n k
a c c
o u n t s
, i t
w
a s
s
o l e l y
Quir
os
w
o
i r e c t
e d use of
h e
f u
n d s .
56.
Q u
i r o s
,
S
t e n g e
r ,
and o t h e
r
o f
f i c e r
s of
Jay
Pe
ak
a
nd
t h e
Def
enda
nts
ove
rsaw
a c
i d
d i r e c
t e d us
e
of
l l
i n
v e s t o
r f
i a n d s
an
d t
h e
dev
elop
ment
and
c o n s t
r u c t i
o n of
l
l p r o
j e c t s
.
I n
v e s t
o r s
p l a y
e d
n o o l e
i n t h
e
dev
elopm
ent,
o n s
t r u c
t i o n ,
or
o p e
r a t i
o n
of
h e
f a c i l i
t i e s .
V I
THE
DEF
END
ANT
S
+RA
UDU
LEN
TLY
U
SED
IN
VES
TOR
FU
NDS
T
O FI
NAN
CE
QUI
ROS
URC
HAS
EO AY
PEA
K
15
8/18/2019 SEC Complaint 2
16/81
57. J a y
Pe
ak was
o r i
g i n a l l y
ow
ned
by
a Cana
di an
f i r m
,
Mon
t
S a i n t -
S
auveur
I n t e r n a
t i o n a l , I n c
.
MSSI
) , t h a t
ov e
rsaw
t h e
Phas
e
I
s e c
u r i t i e s
o f f e r
i n g .
S t e
n g e r
wor
ked
f o r
I v I S S i
a t
t h e
t i m e ,
and
a l s o
ov e
rsaw t
h e
o f
f e r i n g
a s
t
h e
p
r i n c i p a l
o
f
J
ay
Pea
k
M
anagem
ent,
h e
g e n
e r a l
p a r t n e
r
of Defe
ndants
S u i
t e s
Ph
ase 7 and
H
otel
Ph
ase
I I
S u
i t e s
Ph
ase I r
a i s e d
1
7.5
m i l
l i o n
fr o
m
3S
i n v e
s t o r s
fr om
De
cembex
•
2006
t h r o u
g h
May
008 .
S 8 .
Fr o
m
J a
n u a r y
t
h r o u g h
Ju
ne
200
,
Qui
ros n e g o t i a
t e d
and
f i
n a l i z e d
a
t o c k
t
r a n s f e r
agreem
ent
betwee
n
MS
SI nd e s o r t s
i n
which
MSSI
g r e e d
t o
t r a n
s f e r t
h e
r e a l
e
s t a t e
a
nd
o t h e r a s s
e t s
of
J
ay Pea
k
t
o Q e s o
r t s .
Th
e
agree
ment
wa
s s i g n
e d on
June
1 3 ,
2008,
an
d
t
h e
p a r t i e s
c l o s e d on
t h e
d e a l
1
0
d
ays a t e
r
Ju
ne 23,
2008,
o r a
i n a l
p
r i c e
of
25.7
m i l l i
o n .
59
.
Jay Pe
ak
owned
S u i t e
s
Ph
ase I
Durin
g
t h e ti
me
w
hen
Q u i r o s
an
d MSS
I we re
n
e g o t i a t
i n g
t
h e s t o
c k
t r a n
s f e r a g
r e e m e n
t , S u i t
e s Phase
I
was
r
a i s i n g
fu
nds
fr
om
i n v e s
t o r s .
A p p r o
x i r r ~ a t
e l y
e
i g h t
p e o p l e
i n v e s t e
d
i n
t h e
S
u i t e s
Phas
e
I l i m i t e d
p
a r t n e r s
h i p
bet
we en
J a n u
a r y
and
Ma
y
0
08.
60.
H o t e t Phas
e be
gan
r a i s i
n g
mo
ney
n
Mar c h
200 ,
n d
.
t
h a t l
i n n i t e d
p
a r t n e r s h
i p
r e c e
i v e d
5
00, 000
i n v
e s t m e n t
s
fro
m 1 5
i n v e s
t o r s
be
tween
Ma
r c h
and J
une
2
008
(a o t a
l o
f 7 . 5
m i l
l i o n ) .
r r om
J u l y
t
h r o u g h
Septem
ber 2008,
Ho
tel Phase
r e c e i v e
d
500,0
00
a p
i e c e fro
m
a n o
t h e r
1 5
n v e s t o
r s
(a o t a l
o
f
7.5
m i l l i o n
) .
61 .
I n
t h e
f i v e
mon
ths
b e f
o r e c l o s i n
g on
t h e p u r c h a s
e
of ay Peak,
u i r o s
wa
s
e a v i l
y
i n v o l v
e d i n a l I
a s p e c t s
of
h e
Jay
Pea
k
p r o j
e c t ,
i n c l u d
i n g u n d e r
s t a n d i n
g
h
ow
t h
e
p r o
j e c t
r a i s
e d
money
and
managing
t h e
n a s c e n t
S u i t e s
Phase
I c o n s t r u c t i o n .
e
new
S u i t e s
Phase
I
was
r a
i s i n g
money
and n v e s t i
g a t e d
how
h
a t was
b e i
n g
done
b e f
o r e
he
bo
ught
Jay
Peal.
62.
I
n
p
r e p a r a t
i o n f o r
t h e
c l o s
i n g ,
Qui
ros as
ked
MS
SI r e p r
e s e n t a t
i v e s t o ope
n
b r o k
e r a g e
a c c o
u n t s
a t
ay
mond J
ames
w
i t h
h i s
for
mer
s
on
- i n- l a w
i n
t h e
nam
es
of h e
S u i t e
s
1 6
8/18/2019 SEC Complaint 2
17/81
Phase
I
and
H o t
e l
. P h a s
e I I l i m i t e d
p r z r ~ n e r s
h i p s . MS
SI
e p r e s
e n t a t i v e s a g r e
e d ,
and
S t e n g e
r
open
ed a
S u i t e s Phase
I
a c c o u n t a t
Raymo
n d
James o n
May
0,
2008.
month l a t e
r on June
20,
U0~, h e
opened
a
Hotel
Phase
I
a c c o u n t
a t
Raymon d
James.
63.
Both
t
h e
S u i t e
s Phase I
a n d .
Hotel Ph
ase I I l i m i t e d p a r t n e r s
h i p
a g r e e m e n t s
p r o v i d e d
t
h a t
t h e
g e
n e r a l
p a r t n
e r s c o u
l d
only p u t
i
n v e s t o r
m
o ney n
FDIC-i n s
u r e d
bank
a c c o u n t s .
As a
b r o k e
r a g e
f i r m ,
Ra ym ond
James
wa s
n o t
a
b
ank and
n o t
FDIC-
i n s u r e d . O
n
May
2 , 2008,
e i g h t
days
b e f o r
e
h e
opened
t h e
S u i t e s
Phase
I
Ra}nnond
James
a
c c o u n t ,
S t e n g e r
s i g
n e d
an
ame
ndment on b e h a
l f o f h e g e n e
r a l
p a r t
n e r
removing
t h e
r e q u i r e m e
n t
of
an
FDIC
-
i n s u
r e d
bank
a c c o u n t
fiam
t h e S u i t e s
P l i a s e
I l i m i t e d p a r t n e r s h i p
a g r e e m e n t .
This
c l e a r e d t h e
way
o r t h e
t r a n s f e r
o f
n v
e s t o r
funds t o Raym ond
J
ames
a c c o u n t s . No uc
h
amendnnent
was
e v e r
s i g n e d
f o r
t h e Hotel
Phas
e I l i m i t e d
p a r t n e
r s h i p
a
g r e e m e n t .
Thus,
t e n g e r s
s u b s e q u e n t
t r
a n s f e r
of
h e
75
m i l l i o n r
a i s e d
from 15
0
Hotel
Phase
I i n v e s t o r s
i n
2
008, 20Q9,
and
2
010
from
P e o p
l e s B a n k
o
Raym
o n d J a n n e s and
Q u i r o s
c o n t
r o l v i o l
a t e d t h e
Hotel Phase I
l i m i t e d p a r t n e
r s h i p
a g r e e m e n t .
64. O
n une
16
and
17,
0
08,
n
p r e p a r a t i o
n
f
o r
c l o s i n g ,
MSST r a n s f
e r r e d
11 m i l l i o n
i n
S u
i t e s Phase
I
i n v e s t o r funds
from P
e o p l e s Ba n k t
o
Raym
o n d James.
Three days
l a t e r
o n
June
20
,
M
SSI
r a n s f e r r e
d
7
i l l i o n
i n H o t e
l
Phase
I I
i n v e s t o r
funds
f
rom
P e o p
l e s
Ba n
k
t o
Raymon
d Jame
s. S t e n g e r
s i g n
e d
t h e wire t r a n s
f e r r e q
u e s t
f o r t h i s
7 i l l i o n . T here
w
a s
no
m oney
i n
e i t h e r t h e
S u i t
e s
Phase
I or
H o t e l
Phas
e
I I
Raymo n d
James
a c c o u
n t b e f o r e t
h e t h
r e e
t r a n s f e r s
d e s c r i b
e d
i n
t h i s
P a r a ~
~ a p h .
65.
I n c o n
j u n c t i o n w i t h t h o s e
t r a n s f e r s
,
MSS
I
e p r e s
e n t a t i v e s
on
Jun
e
18
w x o t e a
l e t t e r
t o
t h e
Ra
ym ond
Jame
s
b
r o k e r , w i t h
c
o p i e s
t o
Q u r o s
and S
t e n g e r , a
n i o n g
o t h e r s ,
e x p l a i n i n g
t h a t
t h e
f
u n d s i n
t h e MSSI
Ra
ymond
Ja
mes
S
u i t e s
Ph
ase I a c
c o u n t
were
i n v e
s t o r
f u n
d s .
T he
l e t t e r f u r t
h e r
s
t a t e d
t h e i n v e s t o r
money
c o u l d
o n l y b
e
used
i n
t h
e
ma nner
s p e c i f i e d
i n t h e
S u i t e s
17
8/18/2019 SEC Complaint 2
18/81
8/18/2019 SEC Complaint 2
19/81
( p r e v i
o u s l y
e
mpty)
h a t he h
ad j u s
t
open
ed
A t
R
aymo
nd
Ja
me s i n t
h e n
ame of
e s o r
t s .
e
c o i n p
l c t e d
h i s
f i r s t
f
r a u d u l
e n t t
r a n s f e
r t h e
same
da
y
wh
en
he
w i r
e d
13
.544
m i l l
i o n
f i o z n
t
h e
R e s o r t s
account
o
t h e
law
i i ~ n
r e p r e s e n t i n g
MSSI
s
p a r t i a l
payment
o r
t h e
Jay
Peak
p u r c h a s e .
70.
Over
d
i e
nex t t h r e e
mont
hs,
Q
uiros ma
de
o u r
a d d i t i
o n a l
p
aymen
ts
t
o t a l i n
g
5
. 5
m i l l i o
n f
rom
t h e
e s o r
t s acco
unt
o
t
h e
sa
me
law
f i
r m
a s
c o t
a t i n u e
d p a
y m e x l t
f o r
t h
e J
ay
Pea
k
p
u ~ • c h a
s e .
The
p e c i
f i c pa
yment
s
were
1.5 m i l l i o
n
on 3 u
l y 1 , 200
8; 1
m i
l l i o n
o
n
A
ugust
29,
2008;
5 04,0
00
o n
Septe
mber 5, 00
8; and
2.
5
m
i l l i o n
o n e p t e
r n b e x
26,
008.
71.
Q
uiros
m
ade h r e e
a d d i t i
o n a l
t r a
n s f e r s
from
t h e
e s o r
t s
acco
unt
t o t
a l i n g
2.9
m i l l i o n
—
2
i l l i o n
o n
June
25, 200 8; 628,684
o n
June 26, 2008; and 263,000
on
Sept ember
3,
0
0 8
—all o
t h
e
law
i r m
t h a t
h
ad r e p r
e s e n t e
d
e s
o r t s i n