23 EB-5 investors who sued their immigration attorneys who had a conflict of interest — representing both the investors and the developers — have some closure. But of the $8 million settlement, each investor will only receive $12,500 or $25,000. 900 EB-5 investors gave the Jay Peak projects more than $450 million. Over 700 investors have not received their money back; and about half of all investors have not received Green Cards.
Almost three years later, 23 Jay Peak investors can say that the battle is over with their former immigration attorneys, Ed Carroll and Mark Scribner. The investors claimed their attorneys helped the Jay Peak developers commit fraud. And though there is an $8 million settlement, the investors must hardly feel like victors as they will only receive a very small portion of that money.
Investors in the earliest Jay Peak projects will receive half their legal costs, or $12,500, each; investors who financed later upgrades will receive their full legal costs, or $25,000 each. It’s worth noting that this money only represents compensation for investor legal fees and is not related to the $550,000 of capital investment and administration fees each investor provided.
Where is the rest of the more than $7.5 million going? The receivership will receive $5.2 million, with that money going towards the operating costs for the current Jay Peak and Burke Mountain ski resorts; roughly $2.5 million will go to the three law firms who represented the investors.
Carroll & Scribner was the law firm who acted both as immigration counsel for the investors as well as the corporate counsel for the Jay Peak developers from 2006 to 2013.In 2008 Scribner amended the limited partnership agreement with investors who funded the Jay Peak Tram Hause Lodge. This allowed Ariel Quiros, the Jay Peak developer and fraud mastermind, to take investor funds out of escrow, and use them for other investments. In 2013, Scribner wrote another amendment that removed the Tram Haus investors stake in the project, thus giving Quiros full ownership.Importantly, these Tram Haus investors were not given the opportunity to vote on these changes, as state securities law requires. They weren’t even informed of the amendments and ownership switch afterwards.
Jay Peak serves as the ultimate EB-5 cautionary tale as the government ran the Vermont Regional Center, and government officials failed to stop the biggest fraud in EB-5 history.
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