MONTPELIER — The state has reached a $5.95 million settlement with Raymond James and Associates in connection with a massive EB-5 fraud case in the Northeast Kingdom.
Department of Financial Regulation Commissioner Susan Donegan announced the settlement with the financial firm Thursday, noting the department found “multiple instances of non-compliance with supervisory requirements and Vermont law.”
“DFR’s responsibility is to ensure that Vermont’s securities laws are followed, and that investors are protected,” Donegan said in a release. “Since the SEC’s seizure of the Jay Peak-related EB-5 projects, investors have been rightly concerned about possible recovery of funds. This settlement contributes to their restitution.”
The settlement follows an investigation and the filing of fraud charges in April against Bill Stenger and Ariel Quiros, the principals of several development projects, including Jay Peak, using the federal foreign investor program.
Quiros and Stenger are accused by both the federal Securities and Exchange Commission and the state of misusing about $200 million of the $350 million they raised from foreign investors in $500,000 increments. Quiros is also accused of using $50 million of investor money for his own personal gain.
Donegan said DFR has jurisdiction over Raymond James and its registered representatives because the firm holds licenses to conduct the business of securities in Vermont. She said the firm’s activities originated from a Miami branch office. None of the company’s Vermont offices nor any Vermont salesperson or advisor participated in improper activity, she said.
The settlement agreement will provide $4.5 million to an appointed federal receiver overseeing Jay Peak for the purpose of reimbursing possible claims by investors. Another $200,000 will be paid to DFR for the cost of its investigation and $1.25 million will be paid to Vermont’s general fund as an administrative penalty.