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SEC Secures Settlements in Vermont EB-5 Fraud; South Dakota Tricksters Remain Unpinched

The Securities and Exchange Commission has secured a whopping $84-million settlement from Ariel Quiros, who defrauded EB-5 visa investors in Vermont to pay his own taxes and buy a Manhattan flat from Donald Trump:

Ariel Quiros, a Miami businessman, allegedly misused more than $50 million in EB-5 investor funds for personal expenses and to purchase a ski resort. He has been ordered to pay back another $30 million for two projects that were never completed. In addition, the Securities and Exchange Commission levied a $1 million penalty against Quiros.

Quiros was also ordered to pay prejudgment interest of $2,515,798, resulting in a total judgment of $83,859,964. The SEC is also asking the judge to approve a “Fair Fund” to allow the money from the judgment to be distributed to defrauded Jay Peak investors. The interest and penalty assessments are to be repaid in cash; the rest of the money will be recouped from assets Quiros obtained with investor money.

The SEC said Quiros used investor money to pay his personal taxes and to buy two luxury condominiums in Manhattan, one of which was at Trump Place, instead of building projects promised to investors. Federal prosecutors have also alleged that the Miami businessman used EB-5 money to purchase the Jay Peak Resort and Burke Mountain Resort. He relinquishes both of those properties as part of the negotiated deal [Anne Galloway, Alan J. Keays, and Mark Johnson, “Quiros to Pay $84M for EB-5 Fraud at Jay Peak Resort,” VTDigger, 2018.02.02].

With this settlement, Quiros and EB-5 partner Bill Stenger neither admit nor deny wrongdoing.

Recall that Vermont already secured $150 million from Raymond James and $13.3 million from Citibank last April to compensate for money lost in the Vermont EB-5 scheme. David North notes that money will pay a lot of contractors and lawyers and finish EB-5 projects in Vermont. North finds this outcome remarkably different from the aftermath of EB-5 in South Dakota:

Contrast, for a moment, this outcome with the situation in South Dakota, where at least as much EB-5 money went missing. No major receiver of missing funds has been located and penalized; none of the banks that played a role in the case have been identified; and with the exception of some piddling fines, all the missing money remains missing — or in the coffers of the middleman participants in such places as Cyprus, Hong Kong, and various other former British Empire tax havens, such as the British Virgin Islands.

There are several reasons for these differential outcomes. In South Dakota, for example, the U.S. attorney, appointed by Obama and continued in office by Trump for a year, squashed an FBI report whose contents are unknown. Nothing like that happened in Vermont.

While both state governments allowed the EB-5 scandals to occur, state officials in Vermont belatedly have tried to do something substantive about it, which cannot be said about South Dakota.

But perhaps the biggest difference between the two states is that Vermont’s scandals were 1) reported in telling detail by Anne Galloway, editor of VTDigger; 2) the Securities and Exchange Commission entered the Vermont scene, but not the one further west; and 3) the SEC suit caused the appointment of Michael Goldberg as the gung-ho receiver [David North, “EB-5 Gets 2 More Years, and Defrauded Millions Are Recovered in Vt.,” Center for Immigration Studies, 2018.02.08].

While we’re at it, let’s remind Neal Tapio that Muslim refugees and doctors didn’t buy any of the green cards sold in South Dakota’s EB-5 scandal.

10 Comments

  1. leslie 2018-02-09

    wow- Rounds, Daugaard, Jackley and his deputies, GOAC, Regents will be paying attention finally. Look at this Vermont language as it applies to SD:
    “the U.S. Citizenship and Immigration Service said it planned terminate the center because of the state’s inadequate supervision of the projects.

    Petitions filed by a number of investors…. sued the state for breach of contract and negligence. the state auditor, is investigating the state’s role in allowing the fraud to continue from 2008 to 2016, despite red flags early on in the Ponzi scheme.

    Gaawd it sucks living in a totally dominated red state. This is one of the only ways to get their attention.

  2. John 2018-02-10

    He’s not part of the solution; therefore he’s part of the problem – AG Jackley has to go.
    Sutton for Gov.

  3. Cory Allen Heidelberger Post author | 2018-02-10

    Nope. I should follow up, see if the Sessions DOJ is more responsive to such citizen requests than the Obama DOJ was.

  4. mike from iowa 2018-02-11

    From Tom Fitton, Judicial Watch head Obama hater- Judicial Watch filed 3000 FOIA requests with the Obama administration alone.

    There has been a serious backlog because of the suits brought by JW. Might be why the administration is slowed down.

    Sessions, otoh, will probably be delighted to hand you stuff they claim will send Obama to jail. Just guessing.

  5. Shad Olson 2018-05-12

    Cory,

    Do you honestly believe that Neal Tapio would defend or overlook the egregious EB-5 scandal and the resulting carnage and fallout from such brazenly disgusting corruption and graft? Or could it be that he and his ‘staff’ have researched comprehensively, know more and are prepared to reveal more than any candidacy for major political office in this state’s history? I’d bet on the latter.

    Cory, despite massive political divide, whenever topical opportunity arises, I’ve never failed to give you generous and specific personal credit, both publicly and privately, for your sterling and meticulously detailed investigative reportage of EB-5 and Gear UP. Both, hideous examples of how pay-for-play administrative nepotism in South Dakota routinely turns into a high-stakes game of stolen loot and privatized profit sharing for those lucky enough to bask near the solar center of political power in this state.

    Unlike some of us, you resided at both moments of historic scandal in the luxury of the uncontrolled, non-corporatist media. Editorial conflict over not being allowed to tell the story of EB-5 eight months before it broke waves in any media outlet in this state is part of what contributed to my decision to leave the mainstream media once again and likely for good. Making sloppy assumptions that all Republicans are willing to drop trou, defend and carry cloak and train for the Rounds/Daugaard cabal is beneath your level of astute observation.

    Choosing to believe that Lutheran Social Services shunting of monopolized high-needs refugee populations into our communities while holding lucrative VOLAG social assistance contracts (and writing large donations to administration officials campaigns) is not precisely of the same jibber and jive is similarly beneath your already evidenced powers of curiosity and factual outlay. Be real.

    So, it’s either deliberately obtuse or intellectually dishonest. Or, oatmeal lumps for political effect.

    Stay tuned.

    Shad

  6. Porter Lansing 2018-05-12

    And I thought I was full of bull….

  7. Roger Cornelius 2018-05-12

    Porter
    Neal Tapio should never serve in any elective office, he is as dangerous as Trump.

  8. jerry 2018-05-13

    It is true then, shad is a red herring regarding Neal Tapioca.

  9. jerry 2018-05-13

    I always wondered what they had on Tim Johnson’s kid that he abruptly tossed in the towel on the investigation and then removed himself from politics altogether. Tim Johnson had and probably still has, a sizable war chest of campaign monies left over from when he retired.

    Maybe a trip down memory land with the Freedom of Information request would be a good idea to revisit. Jackley and Rounds have some splaining to do on what happened to our money that Joop got away with. I want to know how they split the take.

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