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UN1Tl+I) STATES DISTRICT COURT

SOITTHERN DISTRICT OF FLORIDA
FL

D y

CASE NO.

P
SECURITIES AND EXCHANGE COMMISSION,
Plli~itiff,

~
~~

2 2016

STEVEN M. LARIMORE
CLERK U.S. DIST. CT.
S. D. of FLA. MIAMI

V.

ARIEL QUIROS,
WILLIAM STENGER,
JAY PEAK,INC.,
Q RESORTS,INC.,
,TAY PEAK I~O'TEL SUITES L.P.,
JAY I'LAK HOTEL SUITES CHASE II L.P.,
JAY PEAK MANAGEMENT,INC.,
JAY PEAK PENTHOUSE SUITES I..P.,
JAY PEAK GP SERVICES,INC.,
JAY PEAK GOLF ANll MOUNTAIN SUITES L.P.,
JAY PEAK GP SERVICES GOLF,INC.,
JA'Y PEAK LODGE AND TOWNHOUSES L.P.,
JAY PEAK GP SERVICES LODGE,INC.,
JAY PEAK ~~4TEL SUITES STATESIDE L.P.,
JAY PEAK GP S.ERViCES STATESIDE,INC.,
JAY PEAK BIOMEDICAL RESEARCH PARK L.P.,
AnC BIO VERMONT GP SERVICES,LLC,
Defendants, and
JAY CONSTRUCTION MANAGEMENT,INC.,
GSI OF DADE COUNTY,INC.,
1~70RTH EAST CONTRACT SERVICES,INC.,
Q BURKE MOUNTAIN 12ESORT,LLC,
Relief Defenclantts.

COMPLAINT FOR INJUNCTIVE AND O'1"HL+'R RELIEF

I'laintifF Securities and Exchange Commission alleges as follows:
1. INTRODUCTION
1.

D.C.

This is an emergency action tlae Commission is bringixlg to stop an angaing,

massive eightyear fraudulent scheme iii wllict~ t}Ze Mia1~~i owner and the chief e;~ecutive o~ a
Vermont ski resort have systematically looted more than $S0 anillion of the more than. $350
million that has been ea sed fiom hundreds of foreign investors through the U.S.. Citizenship and
Imxni~ration Service's EB-S Immigrant Investor Program.
2.

The fraudulent scheme spans seven limited partnership securities offerings all

connected to Jay Peak, Inc., a Vermont ski resort that is wholly owned by Miain -based Q
Resorts, Inc., which in turn is awned by Miaini businessman Ariel Quiros. Quiros and William
Stengex, the president and CEO of Jay Peak, are primarily responsible for the fraudulent scheme.
3.

Among. other things, Quiros, Stenger, and the companies they run that have

overseen the development acid construction of the Jay Peak resort have misused more than $200
million more than half of all money raised from investors. Quiras orchestrated aisd Stenger
facilitated an intricate web of transfers between the various Defendants and Relief Defendants to
disguise the fact that the majority of the seven projects were either over budget or experiencing
shortfalls. These shortfalls were due in large part to Quiros pilfering. tens of millions of dollars
~f investor money for his own use.
4.

Si~zce 2008, Quiros has misappropri.ater3 snore than :DSO million in i~lvestor money

to, among other things:(1)finance his purchase ofthe Jay Peak resort;(2) back a personal line of
credit to pay his income taxes;(3) purchase a luxury condonniniuin;(4) pay taxes of a company
he owns; and (5} buy an unrelated resort. He improperly used additional investor funds to pay
down and pay off margin. loans (including paying nearly $2.S million in margin inteiest) he set
up in the name of the Defendant.companies at a brokerage firm.
5.

Tl~e EB-5 investment program gives foreign investors the chance to earn

permanent residence iii the Uxiited States through investing i1 U.S. projects that create a certain

number of jobs. Quiras, Steiager, aid the other Defendants made numerous misrepresentations
acid material omissions to these. foreign investors. Among them were telling investors the
Defenda~its would only use investor money to finance the specific project to which each investor
contributed. The Defendants further assured investors that Stenger, the defacto general partner
for the first six projects, had control of investor funds. In reality, Stenger extremely recklessly
ceded control of investor funds to Quiros. He did al~nost nothing to manage investor money,
even when confronted with red flags of Quiros' misuse.
6.

The first six projects for which the Defendants xaised money were all part of a ski

resort and accompanying facilities located clear Jay, Vcrmant. The most recent project, for
which the Defendants continue to raise money from unwitting investors, purports to be for a
nearby $110 million biomedical research center that the Defendants have operated as neaxly a
complete fraud. The offering documents the Defendants axe providing to investors in that project
are rife with material misstatements and omissions. These include bogus claims that the
Defendants are in the process of obtaining Food and Drug Administration approval for the
research center's products. In reality, the Defendants have not undertaken the necessary steps to
begin the lengthy and cuinbersoine process of getting rDA approval. Further exacerbating their
misstatements, the Defendants have baselessly projected hundreds of millions of dollars in
revenue from the xesearch.ceiiter projections based on FDA approval they have done virtually
nothing to obtain.
7.

As a result, although the Defendants have raised almost three-quarters of the

money for the research facility, they have done almost no work on it other than site preparation
az~d ground-breaking, acid are years behind their original construction and revenue schedule.
Quiros has secretly used most of the money raised for the research facility's construction to pay

off aa~d pay d~wsl a margin loan and to ~nisa~pro~~rilte a~~~aoxilnately $30 million for his ow~1
use.
8.

As a consequence of the Defendants' systematic misuse of investor funds from

the various Jay Peak projects, tk~ere is little money left in a~xy of the research facility's accounts
to pay for its construction. Similarly the sixth project, part of the ski resort, is nowhere hear
completion and out of money. Investors in those projects, who contributed $500,000 each, are in
grave danger of losing their investments and having their immigration petitions denied.
9.

The Defendants apparently are hoping to fund remaining construction of the sixth

and seventtz projects through ongoing efforts to raise money from new investors both in the
biomedical research facility and in additional EB-S projects Quiros is attempting to start. To
stop the Defendants' illegal course of conduct and prevent further fraud on investors, the
Comrnissiol~ is bringing this action and seeking emergency relief, among other remedies.
10.

Through their conduct, the Defendants have each violated Section 17(a) of the

Securities Act of 1933("Securities Act"), and Section 10(b) and Rule 10b-5 of the Securities
Exchange Act of 1934("Exchange .~1ct"). In addition, Quiros violated Section 20(a) of the
Exchange Act and he and Q Resorts aided and abetted violations of Section 10(b) and Rule 1 Ob5(b) of the Exchange Act. The Commission is seeking several forms of relief, including
simultaneous emergency relief of temporary restraining orders, asset freezes, appointment of a
Receiver, and sworn accauntings. The Commission also seeks preliminary and permanent
injunctions and civil money penalties against all the Defendants, and disgorgement of ill-fatten
gains against the Defendants and Relief Defendants.
II. llEFENDANTS AND RELIEF DEFENDANTS
A. nefendants

11.

Jay Peak is a Vermont carporatian with its principal place of business an. Jay,

Vermont. Jay Peak operates the Jay Peak Resort iii Jay, Vermont, which encompasses the first
six projects for which the Defendants raised money. Jay Peek, in conjunction with others, has
served as the manager or developer of the projects.
12.

Q Resorts is a Delaware corporation with its offices iu Mianii, Florida. Q

Resorts is the 100 percent owner of Jay Peak, and Quiros is the sole owner, officer and director
of Q Resorts. Q Resorts acquired Jay Peak from a Canadian Finn in 2008, and Quiros leas since
overseen the various Jay Peak projects through Q Resorts.
13.

Qniros, 5$, resides in Key Biscayne, Florida. In addition to being.the sole owner,

officer a~Id director of Q Resorts, he is chairman of Jay Peak. Through those two companies,
Quiros controlled each of the Defenda~it general and limited partnerships. He is a principal of
the general partner of the Jay Peak Biomedical limited partnership offering, which is the seveanth
and most recent project offering. Between February and Apri12011, Quiros served on the board
of directors of Bioheart, Inc., apublicly-traded company.
14.

Stenger, 66, resides in Newport, Vermont. Stenger is the Director, President, and

CEO of Jay Peak. He is the president and director of the general partner of the first Jay Peak
project offering, and is the sole officer or director of the general partner of the second through
sixth offerings. All. six offerings were set up as limited partnerships. Stenger is, along with
Quiias, a principal in the Jay Peak Biomedical general partner.
15.

Jay Peak Hotel Suites L.P.("Suites Phase I") is a Vermont limited partnership

with its principal place of business in Jay, Vermont. Between December 2006 and May 2008,
Suites Phase T raised $17.5 million from 35 iilvestois through an EB-5 offering of limited
partnership interests to build a hotel. The hotel is completed and operating.

16.

.Tay Peak Hotel Suites Plxase 1I L.P.("Hotel Phase XT") is a Vei-~nox~t limited

partnership with its pz~inci~al place of business in Jay, Vermont. Between March 200$ and
January 2011, ~-Intel Phase Il raised X75 million fiorn 150 investors through an F..,B-5 offering of
limited partnership interests to build a hotel, an indoor wafter park, an ice rink, and a golf club
house. Construction on all is complete and they are o~~erating.
17.

Jay Peak Management, Inc. is a Vermont corporation which is the general

partner of Suites Phase I and Hotel Phase TI. It is also awholly-owned subsidiary of Jay Peak.
Stenger is the company's president.
1$.

Jay 1'e11~ Penthouse Suites L.P.("Penthouse Phase 111") is a Vermont limited

partnership with its principal. place of business in Jay, Vermont. Between July 2010 and October
2012, Penthouse Phase III raised $32.5 million from 65 investors through an EB-5 offering of
limited partnership interests to build a 55-unit ``penthouse suites" hotel and an activities center,
including a bar and restaurant. Construction is complete and the facilities are operating.
19.

Jay Peale GP Services, Inc. is a Vei-~nont corporation and the general partner oi'

Penthouse Phase III. Stezl~er, listed as the director, is its only principal.
20.

Jay Peak Golf and Mountain Suites L.P.("Golf and Mountai~i f'hasc IV") is a

Vermont limited partnership with its principal place of business in Jay, Vermont. Between
December 2010 and November 2011, Golf and Mountain Phase IV raised $45 million from 9Q
investors through an EB-5 offering of limited partnership interests to build "golf cottage"
duplexes, a wedding chapel, and other facilities. Construction is complete, and the facilities a1e
operating.
21.

Jay Pear (~P Services Golf, Inc. is a Vermont corporation and the gene~'al

partner of Golf and Mountain Phase IV. Stenger, listed as the director, is its only principal.

22.

Jay Peak Lodge and Townhouses L.P.("Ledge a~ld Tor~nhouses Phase V") is a

Vermont limited partnership with its principal place of business in Jay Vermont. Between May
2011 ai d November 2012, Loclge and Townhouses Phase. V raised $45 million fro~~a 90 investors
through an EB-5 offeriizg of limited partnership interests to build 34 vacation rental townhouses,
90 vacation rental cottages, a cafe, and a parking garage. Construction is complete and the
facilities are operating.
23.

Jay Peak GP Services Lodge, Inc. is a Vei7nont corporation and the general

partner of Lodge and Townhouses Phase V. Stenger, listed as the director, is its only principal.
24.

Jay Peak Hotel Suites Stateside L.P.("Stateside Phase VI") is a Vermont

limited partnership with its principal place of business in Jay, Vermont. Between October 2011
and December 2012, Stateside Phase VI raised $67 million from 134 investors through an EB-5
offering of limited partnership interests to build an 84-unit hotel, 84 vacation rental cottages, a
guest recreation center, and a medical center. Although the Stateside Phase VI offering was fully
subscribed, the Defendants have only built the hotel. A small amount of work has been done on
building the cottages and work has not yet begun on the recreation and medical centers.
25.

Jay Peak GP Services Stateside, Inc. is a Vermont corporation v1d the general

partner of Stateside. Stenger, listed as the director, is its only principal.

26.

Jay Pealc Biomedical Research Park L.P.("Biomedical Phase VII") is a

Vermont lirrzited partnership with its principal place of business in Newport, Vermont. Since
November 2012, Biomedical Phase VII has raised approximately $83 million from 166 investors
through an EB-5 offering of limited partnership interests to construct a biomedical research
facility. Other than site preparation and groundbreaking, r~o woYk has been done on the facility.
The Defendants seek to raise approximately another $27 million from. 54 investors, which,

becaUSe of the misuse and misappropriation of funds, will not be enough to fanance conshliction
of the research facility.
27.

Aa~C Rio Vernlorii GP Services, LLC is a-Vermont limited liaUility company

and the general partner of Biomedical Phase VII. Its managing members axe Quiros and Stenger.
S. Relief Defendants
28.

Jay Construction Management, Inc.("JCM") is a Vermont corporation with its

offices in Miami, Florida, at the same address as Q Resorts. Its status is listed as terminated as of
March 16, 2016. Quiros is the sole officer and director of JGM. Quiros funneled more than
$160 million of investor funds from several projects through JCM and its bank accounts, and
entered into contracts with outside vendors for construction of some ofthe Jay Peak projects. He
also used misused tens of millions of dollars of the funds JCM received. Quiros controlled
JCM's bank accounts.

Without any legitimate basis, JCM received investors' proceeds

emanating from the Defendants' securities fraud.

29.

GSI of Dade County, Inc.("GSI") is a Florida corporation with its offices in

Miami at the same address as Q Resorts and JCM. Quiros is the owner and sole officer and
directox of GSI. GSI received more than $13 million of investor money emanating from
Biomedical Phase VII investor funds. Without any legitimate basis, GSI received investors'
proceeds emanating from the Defendants' securities fi~aud.
30.

North East Contract Services, LLC("Northeast") is a Florida limited liability

company formed in February 2013 and headquartered in Weston, Florida. Northeast acts as
project manager for Biomedical Phase VII. William Kelly, who is Jay Peak's COO and a
longtime business associate of Quiros, is the managing principal of Northeast. Northeast
received at least $7.9 million of Biomedical Phase VII investor funds (in turn, Northeast paid

approximately $5.5 million oP these fiends to GSI) for purported supervision fees. on
approximately $47 rzlillion of expenses that JCM ~utportedly was going to day on behalf of
Bioir~edical Plaase VII. Iii reality, the Defendants laid less than $10 million of Biomedical Phase
VII expenses with the approximately $47 million JCM received from Biomedical Phase VII.
Quiros misused and misappropriated the vast najoriYy ~f the remaining more than $37 million of
Biomedical Phase '~1II investor funds that JCM received.. Hence, Northeast received construction
supervision fees for work that was not perfoi-~ned. Without any legitimate basis, Northeast
received investors' proceeds emanating from the Defendants' securities fraud.
31,

Q Burke Mountain Resoxt, LLC("Q Burke") is a Florida limited liability

company formed in April 2012 and headquartered in Miami at the same address as Q Resorts.
Quiros is t11e managing principal ~f Q Burke. Q Burke is also the owner of the Burke Mountain
Resort located in East Burke, Vermont, which is the site of another EB-5 offering that Quiros is
As described below, Quiros improperly used

promoting called Q Burke Mountain Resort.

approximately $7 million froir~ a margin loan backed by investor rands to purchase Q Burke. He
subsequently used approximately $18.2 million of Biomedical Phase VII investor funds as part
of the $19 million pay off of this margin Loan. Without any legitimate basis, Q Burke received
investors' proceeds emanating fiorn the Defendalzts' securities fraud.
III. JURISDICTION AND VENUE
32.

The Court has jurisdiction over this action pursuant to Sections 20(b), 20(d), and

22(a) of the Securities Act, IS U.S.C. 77t(b), 77t(d), and 77v(a); and Sections 21(d), 21(e),
and 27 ofthe Exchange Act, 15 tI.S.C. 78u(d), 78u(e), and 78aa.
33.

This Court has personal jurisdiction over the Defendants and venue is proper in

the Southern District of Florida for several reasons. Q Resorts, which owns Jay Peak and as a

result oversees the Jay Peak projects, is located iti Miami. Quiros, who orchestrated the
fraudulent scheme and through Q Resorts controls the general partner and limited partnerships in
all Jay Peak offerings, resides and works in the 1Vliaini area. Stenger and tl~e other Jay Peak
employees all take direction from Quiros. Several of the companies tl~rougl~. which Quiros
orchestrated the fraud and through which he furuieled money, including JCM, GSI, Northeast,
and Q Burke, are located in South Florida.
34.

In addition, the Raymond James &Associates, Inc.("Raymolid James") account

executive and brokerage office through which Quiros opened the Raymond James accounts used
to perpetrate the fraud were located in Coral Gables, Florida. While investor money was first
deposited in an escrow account for each project at a Vermont bank, it was soon after transferred
to a corresponding Raymond James account through the brokerage office located in Coral
Gables. Quiros and Stenger had numerous communications with the Raymond James broker
located in Coral Gables, including emails, letters, wires, and telephone calls.
35.

Furthermore, Kelly, Jay Peak's COO,is located in South Florida. Other key Jay

Peak employees spent significant time ix~ South Florida during the time period alleged in this
Complaint. A number of investors who received green cards also have settled in the Southern
District, including at least 22 investors in Hotel Phase II, eight in Penthouse Phase III, 19 in Golf
and Mountain Phase IV, 11 in Lodge and Townhouses Phase V, 17 in Stateside Phase VI, and
seven in Biomedical Phase VII.
36.

The Defendants, directly and indirectly, made use of the means and

instrumentalities of interstate commerce, and the mails, in connection with the acts, practices,
and courses of business set forth in this Complaint.
IV. THE EB-5 PROGRAM

10

37.

Congress created the EB-5 Im~x~igrant Investor Program in 1990 in an effort to

boost the U.S. economy. The Program provides a prospective immigrant with the opportunity to
become a penx~anent resident by investing in the U.S.
38.

To qualify for aia. EB-5 visa, a foreign applicant must invest $500,000 0~~ $1

million (depending on the type of investment) in a com~n,ercial enterprise approved by the U.S.
Citizenship and Immi~ratioil Service("Immigration Service"). Once he or she has invested, the
foreign applicant may apply fox a cailditional green card, which is good for two years. If the
investment creates or preserves at least ten jobs during those two years, the foreign applicant
znay apply to have the conditions removed from his or her green card. The applicant can then.
live and work in the U.S. permanently.
39.

A certain number of EB-5 visas are set aside for prospective immigrants who

invest tluough what is known as a Regional Center. An applicant only has to invest $500,000 if
lie or sloe invests through a Regional Center.
40.

The State of Vermont EB-5 Regional Center has been afederally-designated

Regional Center since 1997. Prospective immigrants investing through the Vermont Regional
Center only have to invest $500,000. As the Regional Center, the state has approved all EB-S
projects within the state and has entered into a mennoxandum of understanding with the issuers of
EB-5 projects, including Jay Peak. The Vermont Agency of Commerce and Community
Development has, until recently, administered the state's EB-5 program. The Vermont Division
of Financial Regulation now shares that responsibility with the Agency.
V. TIDE JAY PEAK EB-5 OFFERINGS
41.

Jay Peak began offering and selling securities in the farm of limited partnership

interests in December 2006. Since that time it has raised more than $350 million from more than

11

700 investors from at least 74 countries in seven separate offerings. The individual offerings are
set forth in Paragraphs I5, 16, 18, 20, 22, 24, and 26 aUove. While Biomedical Phase VII
involves construction of the biomedical research facility, the first six limited partnership
offerings have centered around. a ski resort and related facilities, such as hotels, lodges,
condominiums, recreation and meeting facilities, and restaurants and cafes.
42.

Jay Peak has marketed its EI3-5 limited partnership interests anc~ solicited

investors in a variety of ways through its website, intermediaries who have promoted the
investments, immigration attorneys with iliterested clients, and ovetseas meetings and seminars
with prospective investors.
43.

For example, Jay Peak has routinely attended events overseas where company

representatives, including Stenger, have spoken and met with prospective investors. In addition,
Jay Peak has sponsored booths and spoken at immigratioiZ-related conferences and events, both
in the U.S. and abroad. Stenger has z~~.et in person with about 95 percent of the investors in the
Jay Peak projects, and Quiros in recent years also has attended Jay Peak meetings with investors
and answered their questions.
44.

While foreign residents are interested in investing to obtain their permanent green

cards, they also axe interested in achieving a return on their investment. Stenger has told
investors he anticipated the individual projects would each snake a two to six percent annual
retunl once they were each complete and operating. In addition, the offering materials the
Defendants provided to investors have touted their potential returns. For example, one Stateside
investor received information. from Jay Peak in the Stateside Phase VI offering materials stating
that once the project is complete, invesfiars will realize up to a six percent annual return. A
Biomedical Phase VIT investor received materials stating a five percent annual return is expected.

12

Other Biomedical Phase VTT investors also received offering documents touting a Pour to six
percent azu~ual return once the project is built.
45.

Interested investors in each of the partnerships generally put down a $10,000

deposit, which goes towards their $500,000 investment. The investors then normally receive
from Jay Peak, and often from Stenger, offering Ynatetals that consist of a private placement
mennorandum, a business plan, and a limited partnership agreement.
46.

Among the documents included in each business plan is one showing the cost of

each project and the use of investor funds. Given different titles, such as "Source and Use of
Investor Funds" (Suites Phase I), "Projected Sources and Uses of Ftuzds" (Biomedical Phase
VII), or "Investor Funds Source and Application" (Penthouse Phase III), this use of proceeds
document lists in great detail exactly how Jay Peek and/or the limited partnership intend to spend
all investor funds raised, including on land acquisition, site preparation, and constructioxx, The
use of proceeds document also lists the management contribution in each offering, and how Jay
Peak or the limited partnership will spend that money. 'The document also spells out exactly how
much in construction, management, land, or other fees Jay Peak and the general partner are
entitled to take from investor money in each ofFering.
47.

So, for example, in Suites Phase Y, the d~eurnent entitled "Source and Use of

Investor Funds" shows the project raising $17.5 million from investors to pay for the project.
The costs are then broken down as $10.4 million for construction, $1.6 million for operating
syste:~x~s and equipment, $800,000 for utilities and common areas, $1.8 million for purchase of
the land, approximately $600,000 for contingencies, and approximately $400,000 for working
capital. Upon completion of the project, Jay Peak is entitled to take $1.9 million in developer
fees, for a total of$17.5 million.

13

~8.

An additional part of the offering materials is the limited partnership agreement in

each project, which spells out the rights, obligations and responsibilities of the general pa~~tner
for each project as well as the limified partners (investors). In each project through Stateside
Phase VI, the general partner is an entity in which. Stenger is the sole principal. In Biomedical
Phase VII, Stenger and Quiios are bath principals in the general partner.
49.

Among other key provisions, each limited partnership agreement which all

investors either signed or adopted contains several provisions regarding how Jay Peak and the
general partner can use investor money. Generally, each limited partnership agreement preve~its
the general partner from, without consent of the limited partners: (1) borrowing from or
commingling investor funds;(2} acquiring any propet-ty with investor funds that does not belong
to the limited partnership; or (3) mortgaging, conveying or :encumbering partnership property
that was not real property.
50.

As described in detail throughout the rest of this Complaint, the Defendants

routinely violated these provisions when they misused, misappropriated, and commingled
investox funds from the diferent pxojects. Instead of using investor funds as described in the use
of proceeds documents, the Defendants frequently had investor funds filowing in a circular and
roundabout manner among various accounts and entities, which allowed them to misuse acid
misappropriate investor funds.
51,

Stenger reviewed, was responsible for, and had authority over, the contents of the

offeri~xg documents in 1'liases I-VI, including the limited partnership agreements and the use of
proceeds dacumellts.

Moreover, Quiros reviewed the contents of the Phase I-VI af~'ering

documents, was familiar with them, aald understood lie had to abide by them. He also approved
the use ofproceeds document in Phases ITI-VI.

14

52.

Both Stenger and Quiros, as principals of the ge~leral partner foz ~3iomzdical

Phase VII, reviewed aild approved the contents of that project's offering documents, including
the limited partnership agreement and the use of proceeds documenfi.
S3.

Interested investors made a $500,000 investment in a particular project, as well as

paid a~z additional $SO,U00 administrative fee that Jay Peak and the other Defendants used. for
expenses associated with the investment, including fees to intermediaries. Each project had an
escrow account at People's United Bank in Vernnant (for~neriy known as the Chittenden Trust
Company).

Stenger was a signatory on all of the People's Bank accounts and routinely

authorized the tia~lsfer offunds into and out ofthose accounts.

54.

The initial $500,000 investment norinally was deposited into the People's Bank

account for the specific project in which the invesfior was participating. Once the Immigration
Service approved the investor's initial, or provisional, green card, Stenger typically had the
$500,000 transferred to a Raymond James account that was set up in the name of the particular
project through Raymond Jaines' Coral Gables office.
55.

Stenger had no signatory or other authority over the Raymond James accounts.

Rather, Quiros opened all of the Raymond James accounts, and had sole authority over them.
Tlie Raymond James broker listed on the accounts was Quiros' former son-iii-law. Once the
Raymond James accounts received transfers from the People's Bank accounts, it was solely
Quiros who directed use ofthe funds.
56.

Quiros, Stenger, and other officers of Jay Peak and the Defendants oversaw acid

directed use of all investor fiands and the development and construction of all projects. Investors
played no role in the development, construction, or operation ofthe facilities.
V.I.. THE DEFENDANTS I+RAUDULENTLY USED INVESTOR FUNDS
TO FINANCE QUIROS'PURCHASE OF JAY PEAK
15

57.

Jay Peak was originally owned by a Canadian firm, Mont Saint-Sauveur

International, Inc.("MSSI"), that oversaw the Phase I securities offering. Stenger worked for
IvISSi at the time, and also oversaw the offering as the principal of Jay Peak Management, the
general partner of Defendants Suites Phase 7 and Hotel Phase II. Suites Phase I raised $17.5
million from 3S investors from Decembex 2006 through May 2008.
S8.

From January through June 200$, Quiros negotiated and finalized a stock transfer

agreement between MSSI and Q Resorts in which MSSI agreed to transfer the real estate and
other assets of Jay Peak to Q Resorts. The agreement was signed on June 13, 2008, and the
parties closed on the deal 10 days later, June 23,2008,for a final price of$25.7 million.
59.

Jay Peak owned Suites Phase I. During the time when Quiros and MSSI were

negotiating the stock transfer agreement, Suites Phase I was raising funds from investors.
Approxirr~ately eight people invested in the Suites Phase I limited partnership between January
and May 2008.
60.

Hotet Phase II began raising money in March 200$, and. that linnited partnership

received $500,000 investments from 15 investors between March and June 2008 (a total of $7.5
million). rrom July through September 2008, Hotel Phase II received $500,000 apiece from
another 15 investors(a total of $7.5 million).
61.

In the five months before closing on the purchase of Jay Peak, Quiros was heavily

involved in alI aspects of the Jay Peak project, including understanding how the project raised
money and managing the nascent Suites Phase I construction. He knew Suites Phase I was
raising money and investigated how that was being done before he bought Jay Peal.
62.

In preparation for the closing, Quiros asked MSSI representatives to open

brokerage accounts at Raymond James with his former son-in-law in the names of the Suites
16

Phase I and Hotel .Phase II limited przr~nerships. MSSI representatives agreed, and Stenger
opened a Suites Phase I account at Raymond James on May 20, 2008. A month later, on June
20, 2U0~, he opened a Hotel Phase II account at Raymond James.
63.

Both the Suites Phase I and. Hotel Phase II limited partnership agreements

provided that the general partners could only put investor money in FDIC-insured bank accounts.
As a brokerage firm, Raymond James was not a bank and not FDIC-insured. On May 12, 2008,
eight days before he opened the Suites Phase I Ra}nnond James account, Stenger signed an
amendment on behalf of the general partner removing the requirement of an FDIC-insured bank
account fiam the Suites Pliase I limited partnership agreement. This cleared the way for the
transfer of investor funds to Raymond James accounts. No such amendnnent was ever signed for
the Hotel Phase II limited partnership agreement. Thus, Stenger's subsequent transfer of the $75
million raised from 150 Hotel Phase II investors in 2008, 20Q9, and 2010 from People's Bank to
Raymond Jannes and Quiros' control violated the Hotel Phase II limited partnership agreement.
64.

On June 16 and 17,2008,in preparation for closing, MSST transferred $11 million

in Suites Phase I investor funds from People's Bank to Raymond James. Three days later, on
June 20, MSSI transferred $7 million in Hotel Phase II investor funds from People's Bank to
Raymond James. Stenger signed the wire transfer request for this $7 million. There was no
money in either the Suites Phase I or Hotel Phase II Raymond James account before the three
transfers described in this Para~~aph.
65.

In conjunction with those transfers, MSSI representatives on June 18 wxote a

letter to the Raymond James broker, with copies to Quros and .Stenger, aniong others, explaining
that the funds in the MSSI Raymond James Suites Phase I account were investor funds. The
letter further stated the investor money could only be used in the manner specified in the Suites

17

.Phase I limited partilership a~reernei t, and could not be used iii any way to pay for Q Resorts'
purchase of Jay Peak.
66.

The letter went on to state thafi any money transfeixed to the Raymond James

Hotel Phase II account similarly caizsisted of investor funds, and that no one could use that
money to finance Q Resorts' purchase of Jay Peak.
67.

Despite the fact that MSSI clearly explained to Quiros and Stenger they could nc~t

use investor money to purchase Jay Peak, Quiros aided by transfers that Stenger made did
exactly that. Over the next two months Quiros, through Q Resorts, used $21.9 million of
investor funds $12.4 million fronn Suites Phase I and $9.5 million from Hotcl Pliase IT to fund
the vast majority ~f his purchase of Jay Peak.
68.

Quros began his fraudulent use o#'investor funds on June 17, the day before the

MSSI letter, when he opened two accounts at Raymond James under his name and control, one
each fox Suites Phase I and Hotel Phase II. On the day of closing, June 23, MSSI transferred the
$11 million in its Suites Phase I account at Raymond Jannes to Quiros' new Suites Phase I
account. The same day, MSSI transferred the $7 million in its Hotel Phase II account at
Raymond James to Quiros' new Hotel Phase II account. MSSI closed the two Raymond James
accounts within days, leaving Quiros in total control of investor money. Stenger, as the sole
principal of the Suites Phase I and Hotel Phase II general partners, knew he was supposed to
control investor funds. Yet he willingly allowed Quiros to take control of the funds, abdicating
the responsibilities clearly laid out for him in the limited partnership agreements.
69.

Also on the day of closing, June 23, Quiros transferred $7,6 million of Suites

Phase I investor funds from his Suites Phase I Raymond James accou~~t and $6 million of Hotel
Phase II investor funds from his Hotel Phase 1'I Raymond James account to another account

18

(previously empty) that he had just opened At Raymond James in the name of Q Resorts. He
coinplcted his first fraudulent transfer the same day when he wired $13.544 million fiozn the Q
Resorts account to the law fii-~n representing MSSI as partial payment for the Jay Peak purchase.
70.

Over die next three months, Quiros made four additional payments totaling $5.5

million from the Q Resorts account to the same law firm as cotatinued paymexlt for the Jay Peak
pu~chase. The specific payments were $1.5 million on 3uly 1, 2008; $1 million on August 29,
2008; $504,000 on September 5, 2008; and $2.5 million on Septernbex 26, 2008.
71.

Quiros made three additional transfers from the Q Resorts account totaling $2.9

million $2 million on June 25, 2008; $628,684 on June 26, 2008; and $263,000 on September
3, 2008 all to the law firm that had represented Q Resorts in the purchase.
72.

Quiras and Q Resorts made all of these payments improperly using investor

funds. For example, to fiend the $2 million June 2S payment to Q Resorts' law firm, Quiros
transferred $2 million derived from Suites Phase I investor funds from his Suites Please Y
Raymond James account to the Q Resorts account, then immediately wired that $2 iziillion to the
Q Resorts law firm. The next day he arranged the transfer ofjust under $300,000 each from the
Suites Phase I and Hotel Phase II Raymond James accounts in his name to the Q Resorts
account, which he used to send $628,684 to the law firm.
73.

Stenger facilitated many of these payments by transferring additional money to

the Raymond James accounts. For example, on July 1, 2008, Stenger authorized the transfer of
$1 million of Suites Phase I investor funds from a Suites Phase I account at People's Bank to the
Q Resorts account at Raymond Jaines. The same day he authorized the transfer of $600,000 in
Hotel Phase II investor funds from the Hotel Phase II account at People's Bank to the Q Resorts
account. Quiros turned right around and wired $1.5 million of that ;money to the law firm

19

represetilg 1VISSL Subsequent transactions followEd a similar pattern Stenger transfeYring

Suites Phase I or Hotel Phase II money from People's Bank either to Quiros' Suites Phase I and
Hotel Phase II accounts or the Q Resorts account at Raymond James, and Quiros using that
money to pay either the Q Resorts or MSSI~Iaw firm. Tn addition, to facilitate some of these
paynnents, Quiros transferred Phase I and lI investor funds between the Suites Phase I and Hotel
Phase II accounts at Raymond James.
74.

The limited partnership agreements and the use of proceeds docwnents for Phases

I and II, all provided to investors before they invesfied, prohibited this use of investor funds. As
noted in Paragraph 47, in Suites Phase I, the document entitled "Source and Use of Investor
Funds" sowed the use of the investors' $17.5 million specifically for $l 0.4 million fox
construction, $1.6 million for operating systems and equipment, $800,000 for utilities and
coxaon areas, $1.8 million to Jay Peak for purchase of the land, approximately $600,000 to Jay
Peak if there were cost overruns, about $400,000 for working capital, and $1.9 million to Jay
Peak for developer fees. There was nothing in the use of proceeds document allowing Quiros or
Suites Phase I to use $12.4 million of Phase I investor money to purchase Jay Peak. At the tune
ofthe transfers of the $12.4 million, Jay Peak had barely begun construction and had not paid for
the project property. Therefore, it was only entitled to take about $60,000 of the $17.5 million of
investor money in developer, contingent, and land fees. Even at the conclusion of Suites Phase I
construction, years later, at most Jay Peak was only entitled to take $4.3 million of investor
money broken down this way: $1.8 million after the land sale was completed, 15% in
construction costs as construction was completed up to $1.9 million as a maximum, and
$600,000 in contingency fees if there were cost overruns. This is far short of the $12.4 million
of investor money Quiros improperly used on the Jay Peak purchase.

20

7'S.

Likewise, the Hotel Phase II use of proceeds dacum~;nt liven to investors, entitled.

Estimated and Projected Cost cif Development, showed a detailed breakdown of hnw Jay Peak
would spend the $75 million it raised from investors. This included $37 million for hotel
coi~stxuctioil, $23 milliozi for t11e other parts of Phase II, and additional rnon.ey for utilities, land,
cost overruns, and construction supervision fees. There was nothing in this docuulent that
allowed Quiros or Hotel Phase II to use $9.5 million of Phase II investor funds to buy Jay Pea1c
iii 2Q0$ particularly because at the tune of the transfers, construction on Hotel Phase II had not
started and the land sale had not occurred. Therefore, Jay Peak was not entitled to take any
investor money as fees for itself at that tune.
76.

In addition, after misusing Hotel Phase II investor funds, the relevant Defendants

Stenger, Quiros, Jay Peak, Hotel Phase 7I, and Jay Peak Management did not change the use
of proceeds document they gave t~ future investors t~ show they had used $9.5 million of
investor funds to purchase Jay Peak.
77.

The use of investor foods to purchase Jay Peak also contravened prohibitions in

the Phase I and II limited partnership agreements. Each agreement contained a Section 5.02,
entitled "Limitations on the Authority of the General Partner." That section in each agreement
prevented the genaral partner from borrowing or commingling investor funds and from making
the type of purchase Quiros and Q Resorts made of Jay Peak without investor consent.
VTI. IMPROPER USE OF INVESTOR FUNDS FOR MARGIN LOANS
78.

Quiros, through Q Resorts, JCM, Jay Peak and the limited partnerships, also

misused investox fitnds froze all seven limited partnership offerings by pledging them as
collateral for margin loans in his Raymond James accounts, anc~ eventually using fitnds from the
limited partnerships to pay down and pay aff the nnaigin loans.

21

79.

Quixos' use of margin loans began in June 2008. When lie opened his Raymond

James Suites Phase I and Hotel Phase II accounts, Quiros signed a cxedit agreement with
Raynnond James to allow both accounts to hold rnargii~ balances meani~lg the accounts could
borxow rnoncy(which would have to be paid back with interest) and hold negative cash Valances.
Put another way, the accounts went into debt to Raymond James when they incurred inar~in
balances.
80.

The credit agreement Quiros signed pledged amounts in bath Suites Phase I and

Hotel Phase II accounts, as well as all of the assets of the Suites Phase I limited partnership, as
collateral for any xnargian loans the accounts incurred. As Jay Peak began new offerings, Quiros
opened new accounts at Raymond James in the name of each 11ew limited partnership, to which
Stenger transferred investor funds from the corresponding account at People's Bank where
investors deposited their money.
81.

So, for example, investors in Penthouse Phase III sent their investments to an

escrow account at People's Bank in the name of Penthouse Phase III. Stenger had signatory
authority and control over that account. When the offering began, Quiros opened. an account at
Raymond James in the name of Penthouse Phase III, over which only he had signatory authority
and control. Once Penthouse Phase III investors had their conditional green cards approved,
Stenger approved the transfer of those investors' $500,000 deposits to the Penthouse Phase III
Raymond James account, thereby giving up col~trol ovex that money to Quiros. Each time this
happened, Stenger violated. teens ofthe limited partnership agreements. Stenger, as the principal
of the general partner in Phases I-VI, always had ultimate responsibility for the overall
ma~ia~emei~t and control of the business assets and the affairs of the six limited partnerships, and
the obligation to place partnership funds in accounts in the names of the partnerships. Stenger

22

abdicated these responsibilities by giving; Quires complete contaol of the partnerships' funds and
by placing investor funds in accounts to which he did not leave access.
82.

The process in Phases TI and IV-VII worked the same way. Furthermore, each

time he opened a new Raymond James account, Quiros signed a new credit agreement pledging
the assets of that account in each case comprised of or derived from investor funds as
collateral for the margin loans he continued to hold at Ra}nnond James. Quiros signed a credit
agreement on Februaxy 6, 2009, pledging investor funds in the Suites Phase I and Hotel Phase II
Raymond James accounts as collateral fox the margin Joans. He signed one on October 1, 2010,
expanding the list of accounts to Penthouse Phase III and Q Resorts. Quiros sigied a credit
agzeement on Februaxy 10, 2011, addi~ig the account foe Golf and Mountain Phase IV. He
signed the next one on August 25, 2011, adding the account for Lodge and Townhouses Phase V.
On February 28, 2012, he signed a credit agreement adding the account for Stateside Phase VI as
collateral for the margin loans. And ou August 5, 2013, Quiros signed a credit agreement adding
the accounts for Biomedical Phase VII and JCM (which as described above and below held
investor funds).
83.

Thus, in every offering, Quiros put investor funds at risk by pledging them as

collateral for the margin loans. Raymond James could have insisted on payment of the margin
loans, and Quiros would have had na choice but to pay them off with investor funds slated for
use to construct the various projects unless he could come up with a replacement source of
funding. And, as described below in Paragraphs 92-95, Quiros eventually pazd off the margin
loans using investor funds.
84.

Quiros' establisl~inent of the margin loans violated the terms of each of the

limited partnership agreemants (which the Defendants provided to all investors).

23

Those

agieen~eilts speeificall.y prohibited the projects' general partners from encumbering or pledging
investor funds as collaterAl without the express approval of the investors. Furthermore, none of
the offering; documents the Defendants provided to investors said that any of the limited
partnerships, general partners, Quiros, Stenger, Q Resorts, ox Jay Peak could pledge investor
funds as collateral for loans. In fact, the use of proceeds document in every offering, which set
forth exactly how the Defendants would spend investors' money, did not provide for use of
investor funds as collateral for or to pay off margin loans. Neither Stenger nor Quiros ever told
any investors the companies in which they were investing could use or were using their money in
this fashion.
85.

Quiros began incurring margin loan debt in the Suites Please T and Hotel Phase I~

accounts almost innmediately after closing on the purchase of Jay Peak. On June 25,2008, in an
apparent attempt to give the appearance that investor funds remained in the Suites Phase I
account at Raymond James, Quiros directed the purchase of$11 million in Treasury Bills. That
$11 million purchase matched the $11 million of Suites Phase I investor fixnds MSSI had
transferred to Quiros' Suites Phase I account. But, as described in Paragraph 69, by this time
Quiros had transferred $7.6 million of the $11 million out of the account to pay for the purchase
of Jay beak. There was only $3.4 million in investor funds left in the Suites Phase I account.
Therefore, Quiros' Suites 'Phase I account had to incur a margin loan balance of $7.b million to
buy Treasury Bills (the difference between the $3.4 million. in the account and the full $11
million purchase). Under terms of the credit agreement Quiros had signed, that $7.6 million was
actually a debt to Raymond James. Thus, Suites Phase I investors did not have a claim to the
$11 million in Treasury Bills, and the $3.4 million in investor funds still in tl~e Suites Phase I
account was at risk of being forfeited to Raymond James if there was a margin call.

24

8G.

Quiros undertook the same acts in the Hotel Phase II account at Raymond James

on the wane day. On June 25, he ordered the purchase of $7 million in Treasury Bills in that
account. Again, this amount matched the $7 million of Hotel Phase II investor funds MSSI had
transferred to Quiros' Hotel Phase II account. But again, Quiros had already transferred $6
million of that amount out of the account to pay for Q Resorts' purchase of Jay Peak. See
Paragraph 69. There was only $1 million in investor funds left in the Hotel Phase TI account.
Therefore, Quiros' Hotel Phase II accotult had to incur a margin loan balance of $6 million to
buy Treasury Bills (the difference between the $1 million in the account and tl~e $7 million
purchase). Under terms ofthe credit agreement Quiros had signed, that $6 million was actually a
debt to Raymond James. Hotel Phase II investors did not have a claim to the full $7 million in
Treasury Bills, and the $1 nnillion in investor fixnds still in the Hotel Phase II account was at risk
of being for#'eited to Raymond James
87.

there was a margin call.

Quiros continued to make use of the margin loans in the Suites Phase I and Hotel

Phase II accounts at Raymond James to pay the remainder of the purchase price for Jay Peak
between June and September 2008. Whe~i he transferred funds out of the accounts to pay either
Q Resorts' or MSSI's law firm as described in Paragraphs 69-71, that often increased the margin
loan balance in the accounts, putting investor funds further at risk.
88.

Furthermore, on at least one other occasion during that time period, Quros

directed the purchase of an additional $1.5 million in Treasuxy Bills in the Suites Phase I account
at Raymond Janes to match a1z amount of Suites Phase I investor funds the account had received
from People's Bank. Stenger had authorized transfer of the funds from People's Bank. Again,
the purchase was a ruse, as Quiros had already transferred $1 million of the $1.5 million out of
the account to pay for tlae purchase of Jay Peak, leaving the Treasury Bills not as beloiibing to

25

investors, but as collateral for the margin loan balance to Raymond 3ames,
$9.

From October 2008 until February 2009, Quiras continued to maintain the margin

loan balances in his Suites Phase I and Hotel .Phase It accoui7ts at Raymond James, with investor
funds pledged as collateral in violation of the Phase I a~1d II use of proceeds documents acid the
limited partnership agreements (see Paragraphs 74-75 and 84). By February 2009, the combined
margin loan balances of the two accounts had reached $23.8 million. Stenger had continued to
authorize transfers of investor funds from the People's Bank Phase I and II accounts to the
Raymond James accounts, which then became collateral for the margin loans.
90.

That month, QuiYos consolidated the two margin loans into one(Margin Loan III),

and signed a new credit agreement that contiliued to pledge Phase T and II investor funds to back
the margin loan. balance. Over the next three years, Quiros signed the aforementioned credit
agreements pledging investor funds from Phases III-VI as collateral. He also used more than
$105 million ofinvestor funds from Phases I-V towards paying down Margin Loan III, breaking
down as follows: approximately $2.2 million from Suites Phase I, approximately $51.6 million
from Hotel Phase II, approximately $32.5 million from Pe~xthouse Phase III, approximately a net
amount of $15.8 million from Golf and Mountain Phase IV; a~1d approximately $5.6 million
fiom Lodge and Townhouses Phase V.
91.

Margin Loan III continued to be backed by Suites Phase I and Hotel Phase II

investor funds, putting them at risk, until February 2012. In addition, during this same ti~~~e, the
Defendants commingled Suites Phase I investor funds with other projects. For example, on
October 3, 2011, Stenger authorized a transfer of $49,000 from the Penthouse Phase III Account
at People's Bank to the People's Bar~lc Suites Phase I account. And on February 23, 2012,
Stenger authorized a transfer of almost $62,000 from the Suites Phase I account to the Hotel

z~

Phase II account, both at People's Bank.

92.

Because Quiros continued spending money from the margin loan account at

Raymond James, the Margin Loan III balance remained at approximately $23 million in
February 2012. On February 24, 2012, Quiros transferz~ed approximately $22.4 million of
investor funds from the Q Resorts account at Raymond James to pay off tl~e $23.4 million
balance. The $22.4 million of investor funds breaks down as follows: approximately $5.8
million of this amount came from Stateside Fhase VI, and approximately $16.G millio~~ of this
amowit carne from Lodge and Townhouses Phase V.
93.

However,just four days after paying off Margin Loan III, on February 28, 2012,

Quiros opened yet another margin loan account in the name of Jay Peak at Raymond James
(M~.rgin Loan IV). This time ]ie signed a credit agreement pledging investor funds in accounts
from Lodge .and Townhouses Phase V and Stateside Phase VI as collateral for the margin loan
balances. In August 2013, he added the accounts of JCM and Biomedical Phase VII, anti
reconfirnned the account ofQ Resorts, to a new credit agreement.
94.

Fioin February 2012 through March 2014, Quiros used more than $6.5 million of

investor funds from Phases V-VI towards paying down Maxgin Loan IV. However, because
Quiros spent approximately $25.5 million on the new margin loan account on various projectrelated and non-project expenses, the Margin Loan IV balance was approximately $19.4 million
in February 2014.
95.

Raymond James then demanded that Quiros pay oft Margin Loan IV. In

response, on March 5, 2014, Quiros transferred approximately $18.2 million of investor funds
derived from a Biomedical Phase VII account at T'eople's Bank, which he used as part of a $19
million pay off of this margin loan. The pay down a~1d pay off of this margin loan was a major

27

contributor to Biomedical Phase VII project s~iortfalls.

VIII. MISREPRESCNTATIONS AND OMISSIONS IN PHASES II-VI
A. Hotel Phase II
96.

Hotel Phase II, Jay Peak Management, Jay Peak, acid Stenger (and Quiros and Q

Resorts as tl~e owners of Jay Peak) misrepresented in the Hotel Phase II use of proceeds
document how they would spend investor money. As discussed in Paragraph 75, the Hotel Phase
ZI Lise of proceeds document set forth how these Defendants would spend investors' money,
down to the dollar. The Defendants used Hotel Phase II investor fiends in four ways that were
different than specifically set forth in the use of proceeds document:
First, as discussed in Paragraphs 68 to 73, they used $9.5 million of Hotel Phase II

investor money between June and September 2008 to help finance Quiros' and Q
Resorts' purchase ofJay Peak.
Second, as discussed in Paragraphs 79 to 92, Qu ros and Q Resorts used Hotel Phase II

investor funds as collateral for Margin Loan III until February 2012, and used more than
$50 million of investor funds to pay down this margin loan at Rayz~:~ond James between
Februaxy 2009 an~i January 2011.
Third, Quiros and Q Resort used a net amount of $4.7 million of Hotel Phase II investor

funds for Suites Phase I project costs.

I{'ourth, Quiros and Q Resorts used a net amount of$3 million of Hotel Phase II investor
ands on Penthouse Phase III project costs.
97.

The swine Defendants listed in Paragraph 96 also misrepresented in the Hotel

Phase TT limited partnership agreement certain restrictions on the general partner's use of
investor funds. As set forth in Paragraph 77, the limited partnership agreement prohibited the
Hotel Phase TI general parhier Jay Peak Management and Stenger from commingling investor

r:

finds, borrowing them, using theirs as collateral, or using them to buy property not part of the
limited partnership, without the consent of the investors. Hotel Phase II, Jay Peak Management,
Jay Peak, and Stenger (and Quixos and Q Resits as the owners of Jay Peak) violated those
provisions in these ways:
First, as discussed in Paragraphs 79 to 92, Quiros and Q Resorts used Hotel Phase II

investor funds as collateral for Margin Loan III until February 2012, and used more than
$50 million of investor funds to pay down. this margin loan at Raymond Jarnes between
February 2009 and January 2011.
Second, between October 2010 and January 2011, Quiros and Q Resorts transferred a net

amount of $4.7 million of Hotel Phase II investor funds from the Phase II account at
Raymond James to the Suites Phase I account at Raymond James for Phase I project
costs.
Third, Quiros and Q Resorts used a net amount of $3 anillion of Hotel Phase II investor

funds on Penthouse Phase III~project costs.

Fourth, these Defendants violated the commingling provision of the limited partnership

agreement by putting a net amount of $11.2 million of Phase II investor funds into Q
Resorts' Raymond James account between June 2008 and April 28, 2011, where they
were mixed with funds from Penthouse Phase ITI. This included an April 28, 2011
$SOO,000 transfer fiom a Phase II account into Q Resorts' Raymond James account.
98.

Stenger was on notice as early as 2010 that Quiros was irnpropexly using investor

funds. The former CFO of Jay Peak voiced concerlis to Stenger on several occasions that year
that he could not get statements from the Ra~nnond James accounts from Quiros to determine
how he was using investor funds. The CFO also told Stenger in conversations and in writing that

29

his analysis of Suites Phase I and HoEel Phase II records showed Jay Peak nad already used a.
minimum of $8.4 million of Hotel Phase II money to pay Suites Phase I construction costs.
Stenger fAlsely told the CFO there were sufficient funds either from Hotel Phase II investor
money ar future project management fees to cover Hotel Phase II construction costs.
B. Penthouse Plxase III
99.

Penthouse Phase III, Jay Peak GP Services, Jay Peak, and Stenger (and Quiros

and Q Resorts as the owners of Jay Peak) misrepresented in the Pentl~ause Phase III use of
proceeds document how they would spend investor money.
100.

Penthouse.Phase III raised $32.5 million from 65 i~ivestors. The Penthouse Phase

III use of proceeds document, found under the term "Investor Funds Source and Application" in
the business plan given to investors, stated Jay Peak would spend almost $28.1 million of that
$32.5 million on construction of the Penthouse Suites hotel (included in this amount was
approximately $900,000 for cost overruns and approxunately $2.8 million for construction
supervision fees, and the remaining X4.4 million on the accompanying recreation and learning
centers and a cafe and bar(Jay Peak was to contribute another $5 million). At most Jay Peak and
the other Defendants could receive approximately $3.7 million of that $32.5 million for their
own use, which is broken down, as follows: (a) as construction costs were paid, the project
developer could add 15 percent to construction-related costs as developer fee up to a maximum
of $2.8 million; and (b) if there were cost overruns, the developer could take up to $900,000 in
investor funds.
7 O1.

Yet the Defendants violated the use of proceeds document when Quiros and Q

Resorts misused almost all of the $32.5 nnillion raised from Penthouse Please III investors to pay
down Margin Laan III at Raymond James. There was nothing in the use of proceeds document

indicating the Defendants could spend investor fiu~lds oii paying down a maruin loan.
102.

The same Defendants listed in Paragraph 99 also misrepresented in the Pepthouse

Phase III limited partnership agreement certain restrictions on the general partner's use of
investor fiends. The limited partnership a~reelnent prohibited the Penthouse Phase III general
partner Jay Peak GP Services and Stenger fram commingling investor funds, borrowing or
pledging tl~ern., ar using them as collateral, without the consel~t of the investors. Tl1e Defeiidazxts
violated those pravis~ns in two ways:
First, as discussed above, Quiros and Q Resorts used Pentl~ouse Phase III investor funds
as collateral for Margin Loan TII and used almost all of the $32.5 million of investox
funds on paying daw~i that margin loan between December 2010 anal August 2011.
~t Second, Quixos and Q Resorts violafied the commingling provision of the limited
partnership agreement by putting a net amount of $4.5 xnill~n of Penthouse Phase III
investor funds into Q Resorts' Raymond James account, where They were mixed with
funds from Hotel Phase II.
C. Golf And 1V.~ountain Phase IV
103.

Golf and Mountain Phase IV, Jay Peak GP Services Golf, Jay Peek, and Stenger

(and Quzros and Q Resorts as the owners of Jay Peak) misrepresented in the Golf and Mountain
Please IV use ofproceeds document hove they would spend investor money.
1.04,

Golf a7id Mountain Phase IV raised $45 million from 90 investors. The Golf and

Mountain Please IV use of proceeds document in the business plan given to investors stated Jay
Peak would spend the $~4S million raised from investors this way: $22.8 million on the
honeymoon cottages, $5.4 million on a retail center, almost $2.7 million on a wedding chapel,$4
million on a cafe, $3.8 million on parking, $1.8 million for land, appraxinnately $3,4 million for

31

supervision fees, and a~proxirnately $1,1 million far supervision expenses. Therefore, at most
Jay Peak and the other Defendants could receive approximately X6.3 million of the $45 z~lill an,
which is Uioken down as follows:(a) after the land sale was cornpletecl, Jay Peak (as the project
developer) could charge $1.8 million;(b) as construction casts were paid, the prajecfi developer
could add 15 percent to construction-related costs as supervision fees up to a maximum of $3,4
million; and (c)if the project developer incurred construction expenses, it coutd take a maximum
of $1.1 million in supervision expenses.
IOS.

The Defendants in Paragraph 103 violated the use of proceeds document when

Quiros and Q Resorts used a net amount of $15.8 million o f investor money to pay down Margin
Loan III at Ra}nnond James between May and Nove~l~er 2011. There was nothing in the use of
proceeds document stating the Defendants could use investor funds to pay down a margin loala.
106.

These same Defendants also misrepresented in the Golf and Mountain Please IV

limited partnership agreement the restrictions on the general partner's use ofinvestor funds. The
limited partnership agreement prohibited the Golf and Mountain Phase IV general partner Jay
Peak JP Services Golf and Stenger fram commingling investox funds, borrowing or pledgiiZg
them, or using thean as collateral, without the consent of the investors. Yet the Defendants
violated these provisions by Quiros and Q Resorts using the funds as collateral for, and to pay
down, Margin Loan III. They also coz~xinngled $34,3 ix~llo~a of Golf and Mountain Phase IV
funds by putting them into a JCM account at Raymond James where investor funds from Phases
IV through VII were .deposited.

D. L~c~~e and'1'o~vnl~ouses Phase V

107.

Lodge and Townhouses Phase V, Jay Peak GP Services Lodge, Jay Peak, and

32

Stenger (ana Quiros aiici Q Resorts as the owners of Jay Peak) ix~isrepresented ~in the Lodge aald
Townhouses Phase V use of proceeds document how they would spend investor money.
10$.

Lodge and Townho~ises Phase V raised $45 million from 90 investors. The

Lodge and Townhouses Phase V use of proceeds document in the business plan given to
investors stated Jay Peak would spend the $45 million raised from investors this way: $10.8
million on the vacation rental townhouses; $18.6 million on vacation rental cottages, $7.2 million
on ancillary facilities (a cafe, parking garage, tennis courts, and an auditorium), about $1 million
on parking, pathways, and woz~king capital, $2.4 million for the land sale, $3.5 million of
management a~ld supervision fees, and $1.5 million for supervision expenses. At most, Jay Peak
and the other Defendants as the project developer could take; approximately $7.4 million of the
$45 million, which is broken down as follows:(a) after the land sale was completed, the project
developer could charge approximately $2.4 million; (b) as construction costs were paid, the
project developer could add from 10 to 15 percent to construction-related costs as management
and supervision fees up to a maximum of $3.S million; and (c) if the project developer incurred
expenses, it could charge investors up to approximately $1.5 million for miscellaneous expenses.
109.

The Defendants in Paragraph 107 violated the use of proceeds document when

Quiros and Q Resorts used. at least $25.2 million of investor money to pay down Margin Laans
ITI aixd IV at Ra}nnond James and to pay off Margin Loan III. There was nothing in the use of
proceeds document stating the Defendants could use investor money to pay down and pay off
margin loans.
110.

These same Defendants also misrep~esented in the Lodge and Townhouses Phase

V limited partnership agreement the restrictions on the general partner's use of investor fiends.
The limited partnership agreement prohibited the Lodge and Townhouses Phase V general

33

partner Jay Peak JP Services Lodge and Stenger from comrninglirlg investor funds,
borrowing or pledging them, or using them as collateral, without the consent of the investors.
Yet these Defendants violated these provisions by Quiros aa~d Q Resorts pledging part~iersliip
assets as collateral and by paying down the two margin loans at Raymond James and paying off
Margin Loa11 III. They also eomming~ed $36 million of Phase V fiiz~ds ley putting them into a
JCM account at Raymond James where investor funds from Phases IV through VII were
deposited.
E. Stateside Phase VI
111.

Stateside Phase VI, Jay Peak GP Services Stateside, Jay Peak, and Stenger (and

Quiros az~d Q Resorts as the owners of Jay Peak) misrepresented in the Stateside Phase VI use of
proceeds document how they would spend investor money.
112.

Stateside Phase VI raised $67 million from 134 investors. The Stateside Phase VT

use of proceeds document in the business plan given to investors stated Jay Peak would spend
the $67 million raised from investors this way: approximately $22.5 million on the vacation
recital cottages; about $20.8 million on the Stateside hotel suites; $2.3 million on the medical
center; $7.3 million on tl~e ;recreation center; about $4.2 million on miscellaneous other expenses,
$2.5 million for land, approximately $S.4 million in supervision fees, and $2.2 million in
supervision expenses. In addition, the project sponsor had to contribute $20 million to the
project. Upon completing construction, at most Jay Peak and the other Defendants as the project
developer could take $10.1 million of the $G7 million, broken down as follows:(a) after the land
sale was completed, the project developer could charge approximately $2.5 million; (b) as
construction costs were paid, the project developer could add 10 to 15 percent to constructionrrelated costs as supervision fees up to a ~naxirnum of $5.4 million; and (c) if the project

34

developer incurred expenses, it could take $2,2 inilli~n in investor funds as supervision ex~eiises,
113.

The Defendants in Parab~raph 111 violated the use of proceeds document when

Quiros and Q Resorts used $5.8 ix~illion of investor money to pay off Margin Lnan III, and up to
$2.5 million to pay down Margin Loan IV. There was nothing in the use of proceeds document
indicating the Defendants could spea~d investor money on paying down or paying off margin
loans.
114.

These same Defendants also misrepresented in the Stateside Phase VI limited

partnership agreement the restrictions on the general partner's use ofinvestor funds. The limited
partizership agreement prohibited the Stateside Phase VI general partlier Jay Peak JP Services
Stateside and Stenger from commingling investor funds, borrowing or pledging then, or using
theirs as collateral, without the consent of the investors. Yet these Defendants violated these
provisions by Quiros and Q Resorts pledging partnership assets as collateral and by investor
funds to pay down and pay off margin loans. They also commingled $63 million of Phase VI
funds almost all o the money raised froir~ investors for this project by putting them into a
JCM account at Raymond James where investor fuzids fioin Phases IV through VII were
deposited.
115.

Quiros' and the other Defendants' misuse and looting of investor funds have

finally caught up with them. The Defendants have run out of investor money to compkete the
Stateside project due to their misappropriation and misuse of that money. The Defendants built
the Stateside hotel in 2013, but are not anywkere .close to completing the remainder ofthe project
the vacation cottages, the medical center, and the recreation center. Based on the amount the
Defendants have already spent on building the vacation cottages, the medical center, and the
recreation center and the Defendants' own suture cost estimates, they need at least another $26

35

million to finish Stateside. With all the commingling of funds a.nd use of money for improper
purposes, including paying off the margin loan, as of September 30, 2015, the Stateside accounts
had only approximately $58,000 left in them. If the project is not completed, investors cannot
realize their promised return, and likely will lose a portion of their principal and their opportunity
to obtain permanent green cards.
IX. MISREPRESENTATIONS AND OMISSIONS IN BIOMEDICAL PHASE VII
A. Misrepresentations And Omissions About The FDA Approval Process
116.

Quiros, Stengez, Jay Peak, Biomedical Phase VII, and AnC Bio Vei7nont GP

Services began offering the Biomedical Phase VII investment in November 2012. It purportedly
involves the construction of the biomedical research facility the Defendants will use for several
purposes. These include operating and leasing "clean rooms" facilities in pristine condition for
medical research conducting stern cell research, and developing, manufacturing, and
distributing certain artificial organs. Among the artificial organs are aheart-lung machine called
T-PLS, an artificial kidney called C-PAK, and a liver replacement device called E-LIVER.
117.

From the start, the Biomedical Phase VII offering has been rampant with fraud.

The original offering materials projected the facility would be complete and operating in 2014.
They forecasted the project would create 3,000 jobs and achieve more than $306 million iil
annual revenue by 2018. However, the revenue projections were baseless as discussed below,
and the Biomedical Phase VII offering documents made significant misrepresentations and
material omissions regarding FDA approval of the products the facility was to develop and
manufacture.

Moreover, practically from the. beginning, Quiros started siphoning tens of

millions of dollars from this project.

118.

The success of the bionnedical research facility was highly dependent on FDA

36

approval of the products, as the products requiring FDA appxoval accounted for 67% io 100% of
the facility's projected annual revenue from 2014 through 2018. Without FllA approval,
Biomedical Phase VII could not market and sell the vast majority of the products it proposed to
develop and manufacture in the United States. Thus, any delay or failure to obtain FDA.
approval would dramatically reduce the scope ofthe research center and the projected revenues.
119.

The Defendants listed in Paragraph 116 knew their products required FDA

approval, The offering materials indicated the project "plans on developing, producing, and
marketing the products ...once FDA approval is obtained." The FDA review and approval
process depends on the tyke of medical device, but generally the process can take years between
pre-submission steps such as development of the product, clinical studies and testing, and
discussions with the FDA. The Defendants were aware of this fact also. For example, the
business plan in the Biomedical Phase VII offering materials indicated its development, testing,
%x

and other pre-submission steps for the stem cell products alone would take 3 years.
120.

Despite the Defendants' knowledge of the lengthy FDA process, the Biomedical

Phase VII offering documents misrepresented the status of the process. In an information sheet
attached to the PPM, the Defendants stated that the T-PLS device was "currently under process
of US rDA approval." In the same document, the offering materials indicated the C-PAK
system was "currently under progress of US FDA approval (2'013)."
These statements were patently false, as when the Defendants ialade them, they

liad riot submitted the T-PLS device, the C-PAK system, ox

any

121.

Biomedical Phase VII product to

the FDA for approval. Stenger and Quiros were fully aware of this fact. At the time t11e

was heading up the company's FDA approval efforts. Stenger knew full well that the

37

only

Defendants distributed the Biomedical Phase VII offering materials in 2012 and 2013, Stenger

coiatact he had. had with the FDA prior to 2012 consisted of two zsolatcd email exchanges in June
2010 and February 2011, and a telephone call in 2010. All of these exchanges were about
Biomedical Phase VII fzrst contacting the FDA, not to submit any products for review, but only
to get mare infoi~ization on and discuss the review and approval process.
122.

Thus, there was no truth to the statements that the Biomedical Phase VII products

had been submitted to the FDA,

In fact, to datz, more than three years after that

inisrep~esentation, the company has still not submitted any products to the FDA for its review
and approval. Even Stenger has acknowledged the statements in the offering materials were
misleading.
123.

Iii addition to overseeing Biomedical Phase VIPs FDA efforks, Stenger, in his role

as principal ofthe Biomedical Phase VII general partner, had ultimate authority over the contents
of the Phase VII offering materials, and reviewed and. appraveci their. Quiros, as the other
principal of Biomedical Phase VIPs general partner, also reviewed and approved the Phase VTI
offering materials, and had ultimate authority over them.
B. Baseless Revenue Projections
124.

The Biomedical Phase VII offering materials also contained revenue projections

that were baseless because, among other tliin~s, they contemplated the company realizing
revenue from its products before its facilities were operational and before the company received
FDA approval.
125.

The offerzng documents, dated November 2012, included a business plan that

stated operations at the Vermont facilities wher-e the eoinpany said all. its research and product
development would take place v~ould begin by April 15, 2014. Ire other words, that was. the
date by which .Biomedical would began developing and testing its products. Despite that,

Biomedical Phase VTI's offerizl~ materials stated the compa~iy would begin reali~itlg ul~oduct
revenue tlxe very same year, and ~lznost $660 million in revenue from 2015-2018.
12b.

However, a separate schedule coiatained in the business plan shows those

projections to he without any basis. The September 2011 schedule, which not all investors
received, .showed a much longer timetable for revenue realization, Taking into account that
Biomedical Phase VII could not start developing and testing its products until April 2014 when
its facilities would be operational, and the years needed to get FDA approval, the September
2Q11 schedule showed Phase VII could only realistically reali.~e 20 to 33 percent of the revenue
the Defendants projected to investors in the offeri~~g ~nate~~zals. The schedule also showed
Biorr~edical Phase VII could not begin realizing revenues on its products until much later than its
offering documents showed in some cases as late as 201 B instead of 2014 or 2015. Thus,
Biomedical Phase VIPs own documents show its revenue projections were wildly overstated.
C. Further M srenresentatioiis Arad Misappropriation Of Phase VII Investor Money
127.

The Biomedical Phase VII use of proceeds document given to investors also

misrepresented liaw Jay Peak, the general partner ofPhase VII(AnC B o Vermont GP Services),
Stenger, Quiros, and Q Resorts would send investor money. Fut-thermore, as with the previous
Phases, the Phase VII limited partnership agreement misrepresented the restrictions on how the
same Defendants could use investor money.
128.

The use of proceeds document, contained in the Biomedical Phase VII business

flan, spelled out how the Defendants would use Phase VII investor funds: $63.2 million on
construction of the clean rooms, $10 million on distribution acid marketing rights for the medical
devices, $15.6 million on working capital, $400,000 on parking and access roads, $2.1 million on
design, architecture, and engineering, $6 million for land, approximately X9.5 million in

39

supervision fees, and approximately $3.2 million in supervision expenses. In addition, the
project sponsor must contriUute $8 million to the project. Upon the project being #ally fiincieci
a~~.d completed, at most Jay Peak and the other Defendants as project developer could take
approximately $18.7 million of the $110 million, broken down as follows:(a) after the land sale
was completed, the project developer could charge $6 million; (b) as construction costs were
paid, the project developer could add 15 percent to construction-xelafied costs as supervision fees
up to a maximum of $9.5 rnillioii; and (c) if the project developer incurred expenses, it could
take up to approximately $3.2 million fox supervision expenses. The Defendants cannot charge
construction supervision fees on any other category of costs besides construction of the clean
rooms, As of September 30, 2015, at best only approximately $2 million of these construction
supervision fees had been earned.
129.

The Phase VII limited partnership agreement contained nearly identical

restrictions on the general partner's use of funds as the limited partnership agreements in earlier
phases. Quiras and Stenger, and principals of AnC Bio Vermont GP Services, could not
commingle investor funds, and could not borrow, collateralize, or pledge investor funds to nonapproved uses without the consent ofthe investors.
130.

Biomedical Phase ~ VII, Jay Peak, Stenger, Quiros, Q Resorts, and AnC Bio

Vermont GP Services regularly violated the use of proceeds document and limited partnership
agreements when they pilfered tens of millions of dollars of investor funds for a variety of
improper expenses:
$18.2 million towards paying off Margin Loan IV at Raymozad raznes, which the

brokerage firm had called due;

~ $4.2 million for corporate taxes to the IRS and State of Vermont;

40

` $10.7 million to back Quiros' pe~~sonal line of credit, out of which he used $G million
more for personal income taxes, $1.4 million to pay purported. returils to investors in
earlier projects, and $3.5 million to pay Stateside construction vendors;
$2.2 million to purchase a Trump Place condominium for Quiros in New York;

! $7 million to purchase Q Burke resort;

A $7.9 million to Northeast for purported coz~stiuctio~ supervision fees when little
construction has taken place; and
$6 million for the sale of seven acres of land for the research facility from GSI to

I3iom.edical Phase VII in December 2012. 'This $6 million price represents a huge
markup on the land from the price at which Quiros (through GSI) purchased it just 18
months earlier; in fact Quiros bought a 25-acre tract (of which the seven acres were a
part) for $3.15 million in July 2011. The seven-acre parcel Quiros sold (through) GSI to
Biomedical Phase VII for $6 million was appraised as of December 2012 at only
$620,000. furthermore, the property deed showing transfer of ownership to Biomedical
Phase VII has not been recorded.
1. Paving O~f'Mar~;ir~. Loan IV
131.

As discussed above in Paragraph 95, Raymond James insisted that Quiros pay off

the $19 million balance of Margin Loan IV. In response, in March 2014, Quiros paid off Margin
Loan IV using more than $18 million of Biomedical Phase VII funds. At that time, Biomedical
Phase VII had an agreement with an affiliated Korean firm, AnC BioPharm, to provide
equipment and engineering services as part of $63.2 million category of costs called Biomedical
Research Clean Rooms. As the Clean Rooms were paid far and constructed, the Phase VII
project manager {Northeast) could charge a fee of 15 percent of the "construction supervision

41

costs" plus five percent for "supervision expenses."

132.

Accordingly, frown approximately February 2013 tluough approximately October

2014, JCM submitted a series of false invoices for Clean Room and other costs. JCM received
$47 million of Biomedical Phase VII investor funds in retur~i. Quiros did not use a vast majority
of the investor funds JCM received for their intended purpose (construction costs). Instead, ~e
used the money to pay $4.2 million in JCM taxes and. another $10.7 million as part of the
collateral for a personal line of credit at Citibank. Out of this line of credit, Quiros paid
approximately $6 million of his personal taxes (this payment went through GSI), approximately
$3.5 million for Stateside Phase VI co~isti-uction vendors, and approximately $1.4 million of
alleged returns to investors in Phases III-VT.
133.

To mask this misuse of investor funds as well as his use of $7 million from

Margin Loan IV to purchase Q Burke, Quiros had JCM pay off the margin loan in March 2014
using $18.2 million of the Biomedical Phase VII investor funds JCM had received through the
fraudulent invoices.
2. Taxes To The IRS And The State O Vermont
134.

Quiros used $4.2 million in Biomedical. Phase VII investor funds to pay a portion

of JCM's income taxes to the IRS and the State of Vermont in 2013.
3. 7'he Citibank Line OfCredit
135.

In 2015, Quiros secured a more than $15 million personal line of credit with

Citibank, which he then backed with more than $10..7 million of Biomedical Phase VIT investor
funds he had sent from Phase VII to JCM. For each dollar of the line of credit Quiros used,
Citibank held a corresponding amount of t ie investor funds. Therefore the investor funds were
not available to JCM or any entity to use on Biomedical Phase VII construction costs until

~2

Quirks paid down the loan. Quiros had falsely claimed to Citibank that none of the funds
backing the account belonged to JCM's customers, such as Biomedical Phase VII.
136.

Around April 2015, Quiros transferred approximately $10.7 million of

Biomedical Phase VII investor Funds as collateral for the personal line of credit,

He

subsequently used the line to pay approximately $6 million of his personal taxes(he fumleled the
payment through GSi), approximately $3.S million to Stateside Phase VI construction vendors,
and approximately $1.4 million of purported returns to investors iii Phases III-VI. As a result,
Quiros used nearly all of the $10.7 million in Biomedical Phase VII investor funds he transferred
to back the line of credit. These funds axe therefore not available for use on the Biomedical
Phase VII project unless Quiros comes up with $10.7 million to pay down the line of credit.
4. The Trump Place Luxury Condominium
137.

On April 12, 2013, Quiros transferred $3 million in Biomedical Phase VII

investor funds to GSI. Six weeks later, on May 30, 2013, he used $2.2 million of that money to
buy a luxury condominium at Trump Place in New York City.
S. O Burke Mountain Resort
138.

Q Burke is the owner of the Burke Mountain Resort, a ski resort in East Burke,

Vermont, which is the site of another EB-5 offering that Quiros is promoting called Q Burke
Mountain Resort. Quiros and Stenger are trying to raise $98 million from the Q Burke EB-5
offering, and to date have raised approximately $53 million. As described above, Quiros
improperly used approximately $7 million from the last margin loan (collateralized by investor
funds) to purchase Q Burke. He subsequently used approximately $18.2 million of Biomedical
Phase VII investor funds as part of the $19 million day off of this margin loan (to replace in part
the fiends he had spent to buy Q Burke).

43

6. Misrepresentations Io lhe State O Vcrrnont

139.

To attempt to cover up their extensive r~iisappropriatioii and 171isuse ofinvestor

funds, the Biomedical Please VII Defendants leave misrepresented to State of Vermaiit regulators
low tl~ey have been spei~diia~ investor funds. In documents they provided to state officials in
March 2015, the Defendants claim they have sent $24.5 million to an affiliated Korean fir-ii~ for
equipment, distribution, and marketing rights.

Those ,same documeizts further state that

Bioinec~ical Phase VII has $21 zx~illon of investor funds in operating accounts,
140.

However, financial records far JCM, Biomedical Phase VII, AnC Bio Vermont

GP Services, and the project sponsor show the Defendants have at most sent $8 million to the
Korean fine and have nowhere near $21 million in Phase VII accounts.
D. The Status Of Biomedical Phase VII
141..

As of Sept. 30, 2015, Quiros, Stenger, Biomedical ~'hase VII, Jay Peak, aiid Q

Resorts have raised at least $$3 million from Biomedical Phase VTI investors. Of this amount,
the Defendants have taken $69 million, while the remaining $14 million remains in escrow.
However, they have done very little work on the project just site preparation and minimal
groundbreaking. In total, they have spent only approximately $10 million of the $69 million on
Biomedical Phase VII vendors and related project costs.
142,

Biomedical Pkase VII documents show the company needs an additional $84

million to complete the project. However, there is only about $5.2 million remaining in nanescrow accounts associated with the Biomedical Phase VII project, and tl~e aforementioned $14
million in escrow. Furthe~rzaore, the. Defenda~lts can only raise aiz additional $27 million from
new Biomedical Phase VII investors before the offer n~ is fully subscribed. Hence, with only
$41 million in available funds but at least $84 million in expenses ~emai~~ng, fhe Aefendants are

at least $43 million short of the fuk~ds needed to complete the rESearch facility. As with tl~e
Stateside Phase VT project, if Biomedical Phase VIT is not completed and the project appears in
rave dander of not Ueing built t11e 1.66 investors who have already made their investment will
not realize their promised return, will likely Iose their iYive;stments, and will likely lose their
opportunity to obtain permanent green cards.
X. TI3E DEFENDANTS'CONTINUED I'UNDRA.ISING
143.

The Defendants continue to raise money through additional EB-5 projects, as well

as in Biomedical Phase VII. As discussed above, Quiros, with the assistance of Stenger,
continues to solicit investors for the $98 million Q Burke project.
144.

The Defendants also continue to solicit new investors for the remaining

subscriptions available in Biomedical Phase VII. To that end, Stenger and the other members of
the Jay Peak organization regularly travel around the world in search of new investors. In the
last few months, Stenger and others (including Quros on occasion), have traveled to Vietnam,
Dubai, Istanbul, Hong Kong, Singapore, and South America.
145.

The Defendants also make presentations in this country, including; at recent.

immigration conferences anel events in Las Vegas and Dallas.

146.

At these events and in other solicitations, the Defendants continue to make

misrepresentations and onnissions to investors. The State of Vermont directed Biomedical Phase
VII to stop raising money in June 2014 due to questions over its offering materials. Ultimately,
the Biomedical Phase VII defendants began soliciting new investors with, revised offering
materials in 2015, but were not allowed to have iiew invested funds released ftom escrow until
they completed a financial review, which they have not completed. However, the revzsed
offering materials still contain misrepresentations and oinissians.

45

14?.

The most glaring ~.xaa ~ple i~ the fact thafi the revised offering materiels do not

il~ent on the si~aaficant shortfall: in funds needed to complete the biomedical research faeility, as
well pis the misuse a~ld misappropriation of investor funds detailed iz1 thzs Complaint. In
addition, the revised offering documents continue to project that Biorrzedical Phase VII will start
realizing revenue as soon as this year for same of its products, and will realize snore than $Ci00
million in revenues by 2Q20 even though Biomedical Phase VII is years away both from
obtain.ii~g FDA approval for its products and completing the research facility (and ira fact does
not currently have the money to build the facility). Thus, Quiros, Stcuger, and the other Phase
VIT Defendants continue to put new investor money as well as existing investor funds- at risk.
148.

Moreover, Qu ros wants to raise at least another $400 million from investors

through future EB-5 offerings and is plaruiii~g on using funds from these new offerings to help
complete Phases VI and VII.
XI. CLAIMS FOR RELIEF
SUITES PHASE I
COUNT 1
Section 17{a)(1) of the Securities Act
(A~ai~st ;suites 1, ,Tay Peak Managennent,,Tay Peak, Q Resorts, Quiros, and Sten~e~)

149.

The Commission repeats and realleges Paragraphs 1-148 of this Complaint as it

iially set forth herein.

150.

Defendants Suites Phase I, Jay Peak Ma7agernent, Jay Peak, Q Resorts, Quiros,

and Stenger, in the offer or sale of securities by use of any meaals or instruments of transportation
or communication in interstate commerce or by use of the mails, directly or indirectly employed
devices, schemes, or artifices to defraud.
151.

By reason of the foregoing, Suites Phase I, Jay Peale Management, Jay Peak, Q
46

Resorts, Quiros, anc~ Stenger violated, and unless enjoined, are reasonably likely to cantiz~ue to
violate, Section 17(x)(1) of the Securities Act, 15 U.S.C. ~ 77q(a)(1).
COUNT 2
Section 17(a)(3) of the Securities Act
(Against Suites Phase I, Jay Peak Management, Jay Pealc, Q Resorts, Quiros, and Stenger)
]52.

The Commission repeats aid realleges Paragraphs 1-148 of this Complaint as if

fully set forth herein.

153.

Defendants Suites Phase I, Jay Peak Management, Jay Peak, Q Resorts, Qu ros,

and Stenger, in the offer ar sale of securities by use of any means or instz-uYnents of transportation
or communication in interstate commerce or by use of the mails, directly or indirectly engaged in
transactions, practices, or courses of business which operated or would have operated as a fraud
or deceit upon the purchasers.
154.

By reason of the foregoing, Suites Phase I, Jay Peak Management, Jay Peak, Q

Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably likely to continue to
violate, Section 17(a)(3) ofthe Securities Act, 1S U.S.C. ~ 77q(a)(3).
COUNT 3
Section 10(b)send Rule lOb-5(a~ of the Exchange Act
(Against Suites Phase I, Jay Peak Nlana~;ement, Jay Pealc, Q Resorts, Quiros, and Stenger)
155.

The Commission repeats and realleges Paragraphs 1-148 of this Complaint as if

fully set forth herein.

156.

Defendants Suites Phase I, Jay Peak Management, Jay Peak, Q Resorts, Quiros,

and Stenger, directly or indirectly, by the use of any means or instrumentality of interstate
commerce, or of the mails, employed devices, schemes or artifices to defraud in connection with
the purchase or sale of securities.

47

157.

By reason of the foregoing, Suites Phase I, Jay Peak Management, Jay Peak, Q

Resorts, Quiros, and Stenger violated, and unless enjoined, are reasoziably likely to continue to
violate, Section lU(b) of tl~e Exchange Act, 15 U.S.C. 78j(U), and Exchange Act Rule lOb-5(a),
17 C.F.R. 240.1 Ob-S(a).
COUNT 4
Section 10(b) and Rale 10b-5(c) of the Exchange Act
(Against Suites Phase I, Jay Peak Management,Jay Peak, Q Resorts, Qairos, and Stenger)
158.

The Commission repeats and realleges Paragraphs 1-148 of this Complaint as if

fully set forth herein.

159.

Defendants Suites Phase I, Jay Peak Management, Jay Peak, Q Resorts, Quiros,

and Steger, directly or indirectly, by the use of any means or instrumentality of interstate
commerce, or of the mails, engaged in acts, practices, and courses of business which have
operated, are now operating and will operate as a fiaud upon the purchasers of such securities.
160.

By reason of the foregoing, Suites Phase I, Jay Peak Ma~iagement, Jay Peak, Q

Resorts, Quiras, and Stenger violated, and unless enjoined, aie reasonably likely to continue to
violate, Section 10(b) ofthe Exchange Act, Z 5 U.S.C. 78j(b), and Exchange Act Rule lOb-5(c),
17 C.F.R, 240.1Ob-5(c).
COUNT 5
Section 20(a) Control Person Liability
For Suites Phase I and Jay Peak Management's Violations Of The Exchange Act
(Against Quros)
161.

The Cornnaission repeats and realleges Paragraphs 1-148 of this Complaint as if

:illy set forth herein.

162.

Beginning no later than June 23, 200$, Quiros has been, directly or indirectly, a

control person of Suites Phase I and Jay Peak Management for purposes of Section 20(a) of the
~,

~xchax~ge Act, 1 S U.S.C. ~ 78t(a).

163.

Begilii~i~lg no later than June 23, 200$, Suites Phase I and Jay Peak Management

violated Section 10(b) and Rule 10U-S of the Exchange Act.

164.

As a control person of Suites Phase I and Jay Peak Management, Quiros is jointly

ar~d severally liable with and to the same extent as Suites Phase I a~1d Jay Peak Management for
each of their violations ofthe Section 10(b) and Rule l Ob-5 ofthe Exchange Act.
I65.

By reason of the foregoing, Quiros directly and indirectly violated, and unless

enjoined, is reasonably likely to continue to violate, Sections 10(b) and 20(a) and Rule lOb-5 of
the Exchange Act, 15 U.S.C. 78j(b) and 78t(a)~ and 17 C.F.R. 240,IOb-5.
HOTEL PHASE II
COUNT G
Section 17(a}~1) of the Securities Act
(Against Hotel Pliasc iI, Jay Peak Management,Jay Peak,Q Resocts, Quiros, and Stenger}
166.

The Commission repeats acid realleges Paragraphs 1-148 of this Complaint as if

fully set forth herein.

167.

Defendants Hotel Phase II, Jay Peak Management, Jay Peak, Q Resorts, Quiros,

aiid Stenger, in the offer or sale of securities by use of any means or instruments of transportation
or comliiunication in interstate commerce or by use of the mails, directly ox indirectly ~m~loyed
devices, schemes, ar artifices to defraud.
1 C8.

By reason of the foregoing, Hotel Phase II, Jay Peak Management, Jay Peak, Q

Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably likely to continue to
violate, Section. 17(a)(1) ofthe Securities Act, 15 U.S.C. 77q(a)(1).
CIJUNT 7
Section 17(x)(2) of the Securities Act
4~

(Against Motel Phase II,Say Peak Management,Jay Peak, Q Resorts, Quiros, and Stenger)
169.

The Commission repeats and realleges Paragraphs 1-17, 28-98, 115, and 142-148

of this Complaint as if fully set forth herein.

170.

Defendants Hotel Phase II, Jay Peak Management, Jay Peak, Q Resorts, Quiros,

and Stenger, in the offer or sale of securities by use of any means or instruments oftransportation
or communication in interstate commerce ox by use of the mails, directly or indirectly obtained
money or property by means of untrue statements of material facts and omissions to state
material facts necessary in order to snake the statements made, in the light of the circumstances
under which they were made, not misleading.
171.

By reason of the foregoing, Hotel Phase II, Jay Pcak Management, Jay Peak, Q

Resorts, Quros, and Stenger violated, and unless enjoined, are reasonably likely to continue to
violate, Section 17(a)(2) ofthe Seciuities Act, 15 U.S.C. 77q(a)(2).
COUNT 8
Section 17ta)(3) of the Securities Act
(Against Hotel Phase II, Jay Peak Management,Jay Peak, Q Resorts, Quiros, and Stenger)
172.

The Commission repeats and realle~es Paragraphs 1-148 of this Complaint as if

fully set forth herein.

173.

Defendants Hotel Phase II, Jay Peak Management, Jay Peak, Q Resorts, Quiros,

and Stenger,.in the offer or sale of securities by use of any means or instruments oftransportation
oz communication in interstate commerce or by use of the mails, directly or indirectly engaged in
transactions, practices, or courses of business which operated or would lave operated as a fraud
ax deceit upon the purchasers.
174.

By reason of the foregoing, Hotel Phase II, Jay Peak Management, Jay Peak, Q

Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably likely to continue to
50

violate, Section 17(a)(3) of the Securities Act,]5 LJ.S,C. ~ `77c~(a)(3).

COUNT 9
Sectio IOSb~ and Rule lOb-5(a) of the Exchange Act
(Against Hotel Phase II, Js~y Peak Management, Jay Peak,Q Resorts, Quiros, and Stenger)
175.

The Commission repeats and realleges Paragraphs 1-148 of this Cainplaint as if

fully set forth herein.

176.

Defendants Hotel Phase II, Jay Peak Management, Jay Peak, Q Resorts, Quiros,

and Stenger, directly or indirectly, by the use of any means or instrumentality of interstate
commerce, or of the mails, employed devices, schemes or artifices to defraud in connection with
the puxchase or sale of securities.
177.

By reason of the foregoing, Hntel Phase Tl, Jay Peak Management, Jay Peak, Q

Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably likely to continue to
violate Section 10(b) o#` the Exchange Act, 15 U.S.C. 78j(b), and Exchange Act Rule ]Ob-5(a),
17 C.F.R. 240.1Ob-5(a).
COUNT 10
Section 10(b)and Rule lOb-5(b) of the Exchange Act
(Against Hotel Phase Ii, Jay Peak Management,Jay Peak,and Stenger)
178.

The Commission repeats a~~zd realleges Para~aphs 1-17, 28-98, l 15, and 142-148

of this Complaint as if fully set faith herein.

179,

Defendants Hotel Phase II, Jay Peak Management, Jay Peak, and Stenger, directly

or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails,
made untrue statements of material facts or omitted to state nnaterial facts necessary in order to
make the statements made, in the light of the circumsta~lces under which they were made, not
misleading.

51

l 80.

By reason of the foregoing, Motel Phase II, Jay Peak Management, Jay Pea1c, aria

Stenger violated, and unless enjoined, are reasonably likely to continue to violate Section 10(b)
of the Exchange Act, 15 U.S.C. 7$j(b), and Exeha~~~e Act Rule l Ob-5(b), 17 C.F'.R. ~ 240.1Ob-

5(b).
COUNT 11
Section 10(b) and Rule lib-5(c) off' tl~e ~xch.in~e Act
(Against Hotel Phase II, Jay Pealc Management, Jay Peak, Q Resorts, Quiros, and Stenger)
181,

The Commission repeats and realleges Paragraphs 1-148 of this Complaint as if

fiilly set forth herein.

182.

Defendants Hotel Phase II, Jay Peak Manageanent, Jay Peak, Q Resorts, Quiros,

and Stenger, directly or indirectly, by the use of a~iy means or instrumentality of interstate
commerce, or of the mails, engaged in acts, practices, and courses of business which have
operated, are now operating and- will operate as a fraud upon the purchasers of such securities.
183.

By reason of the foregoing, Hotel Phase II, Jay Peak Management, Jay Peak, Q

Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably lzkely to continue to
violate Section 10(b) of the Exchange Act, 15 U.S.C. 78j(b}, and exchange Act Rule lOb-5(c),
17 C.F.R. ~40.1Ob-5(c).
(:OUN'1' l 2
Section 20(a) Conhol Person Liability
Jay Peak Management's Violations Of The Exchange Act
and
II
Hotel
Phase
For
(Against Quiros)
184.

The Commission repeats and realleges Paragraphs 1-148 of this Complaint as if

fully set forth herein.

185.

Beginning no later than June 23, 2008, Quiros has been, directly or indirectly, a

control person of Hotel Phase II and Jay Peak Management for purposes of Section 20(a) of the.
52

Exchange Act, 15 U.S.C. 78t(a).

186.

Beginning no later than June 23, 2008, Hotel Phase II and Jay Peak Management

violated Section 10(b) and Rule l Ob-5 of the Exchange Act.

187.

As a control person of Hotel Phase II and Jay Peak Management, Quiros is jointly

and severally liable with and to the same extent as Hotel Phase II and Jay Peak Management for
each of their violations of Section 10(b) and Rule l Ob-5 of the Exchange Act.
188.

By reason of the foregoing, Quiros, directly and indirectly violated, and unless

enjoined, is reasonably likely to continue to violate, Sections 10(b) and 20(a) and Rule lOb-5 of
the Exchange Act, 15 U.S.C. 78j(b) and. 78t(a), and 17 C.F.R. 240.10b-S.
COUNT 13
Aiding and Abetting Hotel Phase II, Jay Peak Management,Jay Peak, and Stenger's
Violations Of Section 1U(b) and Rule lOb-5(b) of the Exchange Act
(Against Quiros and Q Resorts)
189.

The Commission repeats and realleges Paragraphs 1-17, 28-98, 115, and 142-148

of this Complaint as if fully set forth herein.

190.

From no later than June 2008, Hotel Please II, Jay Peak Management, Jay Peak,

and Stenger each, directly or indirectly, by use of the means and instrumentalities of interstate
commerce, and of the mails in connection with the purchase or sale of securities, knowingly,
willfully or recklessly made untrue statements of material facts and omitted to state material facts
necessary in order to make the statements made, in light of the circumstances under which they
were made, not misleading, in violation of Section 10(b) of the Exchange Act and Rule l Ob-5(b),
15 U.S.C. 78j(b) and 17 C.F.R. 240.1 Ob-5(b).
191.

Quiros and Q Resorts knowingly or recklessly substantially assisted those four

Defendants' violations of Section 10(b) acid Rule l Ob-5(b) ofthe Exchange Act.

53

192.

By reason of the foregoing, Quiros and Q Resorts, directly or indirectly, violated,

and unless enjoined, are reasorxably likely to continue to violate, Section 10(b) and Rule lOb-5(b)
ofthe Exchange, 15 U,S.C. 78j(b) and 17 C.F.R. 240.1Ob-S(b).
PENTHOUSE PHASE lIl
COUNT 14
Section 17(a)(1) of the Securities Act
(Against Penthouse Phase III, Jay Peak GP Services, Jay Peak, Q Resorts,
Quiros, and Stenger)
193.

The Comzi~ission repeats and realleges Paragt~aphs 1-14.8 of this Complailzt as if

fully set forth herein.

194.

Defendants Penthouse Phase III, Jay Peak GP Services, Jay Peak, Q Resorts,

Quiros, and Stenger, in the offer or sale of securities by use of any means or instruments of
transportation or c;omXnunication in interstate commerce or by use of the avails, directly or
indirectly employed devices, schemes, or artifices to defiaud.
195.

By reason of the foregoing, Penthouse Phase III, Jay Peak GP Services, Jay Peak,

Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably likely to continue to
violate, Section 17(a)(1) ofthe Securities Act, IS U.S.C. 77q(a)(1).
COUNT 1S
Section 17(al(2) of the Securities Act
(A~ainst Penthouse Phase III, Juy Peak GP Services, Jay Peak, Q Resorts,
Quiros, and.Stenger)
196.

The Commission repeats and realleges Paragraphs 1-14, 1819, 28-56, 78-95, 99-

102, 115, and 142-148 of this Complaint as if fu11y set fot-th herein.
197.

Defendants Penthouse Phase III, Jay Peak GP Services, Jay Peak, Q Resorts,

Quiros, a~~d Stenger, in the offer or sale of securities by use of any means or instz~urnents of
54

transportatiozl or communication in interstate commerce or by use of the mails, directly or

indirectly obtained honey or property by means of untrue statements of material facts and
omissions to state material facts necessary in order to snake the statements made, in the light of
the circun~sta~ices under which they were made, not misleading.
198.

By reason of the foregoing, Penthouse Phase III, Jay Peak GP Services, Jay Peak,

Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably likely to continue to
violate, Section 17(a)(2) ofthe Securities Act, 15 U.S.C. 77q(a)(2).
COUNT 16
Section 17~a)(3) of the Securities Act
(Against Penthouse Phase III, Jay Pealc GP Services, Say Peak, Q Resorts,
Quiros, and Stenger)
19~.

The Commission repeats and realleges Para~;ra~~hs 1-148 cif this Ccn}~laint as if

fully set forth herein.

200.

Defendants Penthouse Phase III, Jay Peak GP Services, Jay Peak, Q Resorts,

Quiros, and Stenger, in the offer or sale of securities by use of any means or instruments of
transportafion or coirunun cat on in interstate commerce or by use of the mails, directly or
indirectly engaged in transactions, practices, or courses of business which operated or would
have operated as a fraud or deceit upon the purchasers.
201.

By reason of the foregoing, Penthouse Phase IrI, Jay Peak GP Services, Jay Peak,

Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably likely to continue to
violate, Section 17(a)(3) ofthe Securities Act, 15 U.S.C. 77q(a)(3).
COUNT 17
Section lU(b) and Rule lOb-S(a) of the Lxchan~e Act
(Against Penthouse Phase III, Jay Peak GP Services, Jay Peak, Q Resorts,
Quiros, and Stenger)

55

202.

Tlie Comil~ ssion repeats and realleges Paragrapl'is 1-148 of this Com~~laint as if

fully sst forth herein.

203.

Defendants Penthouse Phase III, Jay Peak GP Services, Jay Peak,. Q Resorts,

Quiros, said Stenger, directly or indirectly, by the use of any means or instrumentality of
interstate commerce, or of the snails, employed devices, schemes or artifices to defraud in.
connection with the purchase or sale of securities.
204.

By reason of the faregoing,l'~nthouse Phase III, Jay Peak. GP Services, Jay Peak,

Q Resorts, Quiros, and Stenger violated arid, unless enjoined, are reasonably likely to continue to
violate Section 10(b) of the Exchange Act, 15 U.S.C. 78j(b), and Exchange Act Rule l Ob-5(a),
17 C.F.R, 240.1Ob-5(a).
COUNT 18
Section 10(b) and Rule lOb-5(b) of the Exchange Act
(Against Penthouse Phase III, Jay Peak GP Services, Jay Peak, and Stenger)
205.

The Commission repeats and realleges Paragraphs 1-14, 18-19, 28-56, 78-95, 99-

102, 115, and 142-148 of this Complaint as if fully set forth herein.
206.

Defendants Penthouse Phase III, Jay Peak GP Services, Jay Peak, Q Resorts,

Quiros, and Stenger, directly or indirectly, by the use of any means or instrunnentality of
interstate commerce, or of the mails, made untrue statements of material facts or omitted to state
material facts necessazy in order to make the statements made, in the light of the circumstances
under which they were made, not misleading.
207.

By reason of the foregoing, Penthouse Phase III, lay Peak GP Services, Jay Peak,

Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably likely to continue to
violate, Section 10(b) of the Exchange Act, I S U.S.C. 78j(b), acid Exchange Act Rule I Ob-5(b),
17 C.F.R. ~ 240.1 Ob-5(b).
S6

COUNT 19
Section 10(b) and Rule 10b-5(c) of the Exchange Act
(Against Penthouse Phase IIi, Jay Peak GP Services, Jay Peak, Q Resorts,
Quiros, and Stenger)
208.

The Commission repeats and realleges Paragraphs 1-148 ai'tllis Complaint as it~

fully set forth herein.

209.

Defendants Penthouse Phase III, Jay Peak GP Services, Jay Peak, Q Resorts,

Quiros, and Steii~er, directly or indirectly, by the use of any means or instrumentality of
interstate commerce, br of the mails, engaged in acts, practices, and courses of business which
have opet~ateci, are i~ow operating and will operate as a fraud upon the purchasers of such
securities.
210.

By reason ofthe foregoing, Penthouse Phase III, Jay Peale GP Services, Jay Peak,

Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably likely to continue to
violate, Section. 10(b) of tlae Exchange Act, 15 U.S.C. 78j(b), and Exchange Act Rule l Ob-5(c),
17 C.F.R. 240.1Ob-5(c).
COUNT 2U
Sectio~i 20(a)-Control Person Liability
Fox Penthouse Phase III and Jay Peak GP Services' Violations Of The Exchange Act
(Against Quiros)
21 ~.

1'lle Commission xepeats and realleges Paragraphs 1-148 of this Complaint as if

fully set fortl1 herein.

212.

Beginning no later than July 2010, Quiros has been, directly or indirectly, a

control person of Penthouse PlZase III and Jay Peak GP Services for purposes of Section 20(a) of
the Exchange Act, 15 U.S.C. 78t(a).
2]3.

Beginning no later than July 2010, Penthouse Phase III and Jay Peak GP Services
S7

violated Section 10(b) and Rule l Ob-5 of the Exchange Act.

214.

As a control person of Penthouse Please III and Jay Peak GP Services, Quiros is

jointly and severally liable with and to the sa~x~e extent as Penthouse Phase III and Jay Peak GP
Services for each of their violations of Section 10(b) a~Id Rule l Ob-5 of the Exchange Act.
215.

By reason of the fore~oiiig, Quiros, d ~ectly and indirectly violated,. and unless

enjoined, is reasonaUly likely to continue to violate, Sections 10(b) and 20(a} and Rule l Ob-5 of
the Exchange Act, 15 U.S.C. 7$j(b) and 78t(a), and 17 C.F.R. 240.1Ob-5.
COUNT 21
Aid~ig and Abetting Penthouse Phase TII, Jay Peak GP Services, Jay Peak, and Stengerr's
Violations Of Section 10(b) of the Exchange Act and Rule 10b-5(b)

(Against Quiros and Q Resorts)

216.

The Commission repeats and realleges Paragraphs 1-14, 18-1y, 28-56, 7~-95, 99-

102, 115, and 142-148 above of this Complaint as if fully set forth herein.
217.

From no later thAn July 2010, Penthouse Phase III, Jay Peak GP Services, Jay

Peak, and Stenger each, directly or indirectly, by use of the means acid instrumentalities of
interstate commerce, and of the mails in connection with the purchase or sale of securities,
knowingly, willfully or recklessly made untrue statements of mAterial facts and omitted to state
material facts necessary in order to make the statenn.ents made, in light of the circumstances
under which they were made, not misleading, iz~ violation of Section 10(b) of the Exchange Act
and Rule lOb-5(b), 15 U.S.C. 78j(b) and 17 C.F.R. 240.1Ob-5(b).
21 S.

Quiros and Q Resorts knowingly or recklessly substantially assisted those four

Defendants' violations of Section 10(b) and Rule l Ob-5(b) ofthe Exchange Act.
219.

By reason of'the foregoing, Quiros and Q Resorts, directly or indirectly, violated,

and unless enjoined, are reasonably likely to continue to violate, Section 10(b) and Rule l Ob-5(b)

58

of the Exchange, 15 U.S,C. ~ 78j(b) aild 17 C.F.R.~~' 240.1~b-5{b).

GOLF AND MOUNTAIN PHASE IV
COUNT 22
Section 17(x)(1) of the Securities Act
(Against Golf and Moanta.in Phase IV,Jay Pealc GP Services Golf, J.iy Pealc, Q IZeso~ts,
Quiros, and Stenger)
220.

The Commission repeats and real;leges Paragraphs 1-14$ of this Complaint as if

fully set forth herein.

221.

Defendants Golf and Mountain Phase IV, Jay Peak GP Services Golf, Jay Peak, Q

Resorts, Quiros, and Stenger, in the offer or sale of securities by use of any means or instruments
of transportation or communication in interstate commerce or by use of the mails, directly or
indirectly employed devices, schemes, or artifices to defraud.
222.

By reason of the foregoing, G~f and Moui~taill Phase IV, Jay Feak GP Services

Golf, Jay Peak, Q Resorts, Quiros, and Stei~~er violated, and unless enjoined, are reasonably
likely to continue to violate, Section 17(a)(1) ofthe Securities Act, 15 U.S.C. 77q(a)(1).
COUNT 23
Section 17(a)(2) of the Securities Act
(Against Golf end Mountain Phase IV,Jay Peak GP Services Golf, Jay Pealc, Q Resorts,
Quiros, and Stenger)
223.

The Commission repeats and realleges Paragraphs 1-14, 20-21, 28-~6, 78-95,

103-106, 115, and 142-148 of this Complaint as iffully set forth herein.
224.

Defendants Golf and Mountain Phase IV, Jay Peak GP Services Golf, Jay Peak, Q

Resorts, Quiros, anal Stenger, in the offer or sale of securities by use of any means or instruments
of transportation or communication in interstate commerce or by use of the mails, directly ar
indirectly obtained money or property by means of untrue statements of material facts and
59

omissions to state material facts necessary in order to make the statetnen~s inacie, in the light of
the circumstances under which they were made, not misleading.
225.

By reason of the foregoing, Golf and Mountain Phase IV, Jay Peak GP Services

Golf, Jay Peak, Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably
likely to eor~tinue to violate, Section 17(a)(2) ofthe Securities Act, I S U.S.C. 77q(a)(2).
COUNT 24
Section 17(a)(3) of the Securities Act
Phase IV,Jay Peak GP Services Golf, Jay Peak, Q Resorts,
Mountain
and
Gott'
(Against
Quiros, and Stenger)
226.

The Commission repeats and realleges Paragraphs 1-14$ of this Complaint as if

fully set forth herein.

227.

Defendants Golf and 1Vlountain Phase IV, Jay Peak GP Services Golf, Jay Peak, Q

Resorts, Quiros, and Stenger, in the offer or sale of securities by use of any means or instruments
of transportation or communication in interstate commerce or by use of the mails, directly or
indirectly engaged in transactions, practices, or courses of business which operated oz would
have operated as a fraud or deceit upon the purchasers.
228.

By reason of the foregoing, Golf and Mountain Phase IV, Jay Peak GP Services

Golf, Jay Peak, Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably
likely to continue to violate, Section 17(a)(3) ofthe Securities Act, 15 U.S.C. 77q(a)(3).
COUNT 25
Section 10(b) and Rule lOb-5(a of the Exchange Act
and
Mountain Phase IV,Jay Peak GP Services Galf, Jay Peak,(1 Resorts,
Golf
(Against
Quiros, and Stenger)
229.

The Commission repeats and realleges Paragaphs 1-148 of this Carnplaint as if

fully set forth herein.

60

230,

Defendants Golf and Mountain Phase IV, Jay Peak GP Services Golf,.Tay Peak, Q

Resorts, Quiros, and Stenger, directly or indirectly, by the use ofany means or instrume~ztality of
interstate commerce, or of the mails, employed devices, schei~les or artifices to defraud in
conciection with the purchase ar sale of securities.
231.

By reason of the foregoing, Golf and Mountain Phase IV, Jay Peak GP Services

Golf, Jay Peak, Q Resorts, Quiros, and Stenger violated, and tuiless enjoined, are reasonably
likely to continue to violate, Section 10(b) of the Exchange Act, 15 U.S.C. '18j(b), and
Exchange Act Rule l Ob-5(a), 17 C.F.R. 240.1Ob-5(a).
COUNT 26
Section 1~(bLand Rule lOb-5(b) of the Exchange Act
(Against Golf and Mountain Phase IV,Jay Pealc GP Services Golf, Jay Peak, and Stenger)
232. The Commission repeats and realleges Paragraphs 1-14, 20-21, 28-56, 78-95, 103106, 1.15, and 142-148 of this Complaint as if fully set forth herein,
233.

Defendants Golf and Mountain Phase IV, Jay Peak GP Services Golf, Jay Peak,

and Stenger, directly or indirectly, by the use of any means or instrumentality of interstate
comnnez-ce, or of the mails, made untrue statements of material facts or omitted to state material
facts necessary in order to make the statements made, in the light of the circumstances under
which they were made, not misleading.
234.

By reason of the foregoing, Golf and Mountain Phase IV, Jay Peak GP Services

Golt, Jay Peak, and Stenger violated, and unless enjoined, are reasonably likely to continue to
violate, Section 10(b)of the Exchange Act, 15 U.S.C. 78j(b), and Exchange Act Rule lOb-5(b),
17 C.F.R. 240,1Ob-5(b),

61

covNT 2~
Section 10(b) and Rule 10b-5(c) of the Exchange Act
(Against Golf and Mountain Phase IV,Jay Peak GP Services Golf, Jay Peak, Q Resozts,
Quiros, and Stenger)
235.

The Commission repeats and realleges Paacagraphs 1-148 of this Complaint as if

frilly set forth herein.

236.

Defendants Golf and Mountain Phase IV, Jay Peak GP Services Golf, Jay Peak, Q

Resorts, Quiros, and Stenger, directly ox indirectly, by the use of any meaa~s or instrumentality of
interstate commerce, or of the mails, engaged in acts, practices, and courses of business which
have operated, are now operating and will operate as a fiaud upon the purchasers of such
securities.
237.

By reason of the foregoing, Golf and Mountain Phase IV, Jay Peak GP Services

Golf, Jay Peak, Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably
likely to continue to violate, Section 1U(b) of the Exchange Act, 15 U.S.C. 78j(b), and
Exchange Act Rule lOb~S(c), 17 C.F.R. 240.10b-5(c).
COUNT 28
Section. 20(a) Control Person I.iability
For Golf and Mountain Phasc IV And Jay Pcuk GP Services Golfs Violations Of
The Exchange Act(Against Quiros)
238.

The Commission repeats and realleges Paragraphs 1-148 of this Complaint as if

fully set forth herein.

239.

Beginning no later than December 2010, Quiros has been, directly or indirectly, a.

cotltrol person of Golf and Mountain Phase IV and Jay Peak GP Services Golf for purposes of
Section 20(a) ofthe Exchange Act, 15 U.S.C. 78t(a).
240.

Beginning no later tiha.n December 2010, Golf and Mountain Phase IV and Jay

62

Peak GI' Services Golf violated Section 10(b) and-Rule 10b-5 of the Exchange Act.
241.

As a control person of Golf and Mountain Phase IV and Jay Peak GP Services

Golf, Quiros is join#ly and severally liable with aild to the same extent as Golf and Mountain
Please IV and Jay Peak GP Services Golf for eacl~ of their violations of Section 10(b) and Rule
l Ob-5 ofthe Exchange Act.
242,

By reason of the foregoing, Quiros, directly and indirectly violated, a~1d unless

enjoined, is reasonably likely to continue to violate, Sections 10(b) and 20(a) and Rule l Ob-5 of
the Exchange Act, 15 LJ.S.C. 78j(b) and 78t{a), and 17 C.F.R. 240.10b-5.
COUNT 29
Aiding and Abetting Golf and Mountain Phase IV,Jay Peak GP Services Golf, Jay Peak,
and Stenger's Violations Of Section 10(b) of the Exchange Act and Rule lOb-5(b)

(Against Quiros and Q Resorts)

243.

The Commission repeats and realleges Paragraphs 1-14, 20-21, 28-56, 78-95,

103-106, 115, and 142-148 of this Complaint as iffully set forth herein.
244.

From no later than December 2010, Galf and Mountain Phase IV, Jay Peak GP

Services Golf, Jay Peale, and Stenger each, directly or indirectly, by use of the means and
instrumentalities ofinterstate commerce, and of the mails in connection with the purchase or sale
of secure# es, knowingly, willfitlly ar recklessly made untrue statements of material facts and.
omitted to state rnate~ial facts necessary in order to make the statements made, in light of the
circumstances under which they weze made, not misleading, in violation of Section 10(b) of the
Exchange Act and Rule lOb-5(b), 15 U.S.C. 78j(b) and 17 C.F.R. 240.1 Ob-5{b).
245.

Quiros and Q Resorts knowingly or recklessly substantially assisted those four

Defendants' violations of Section 10(b) and Rule 10b-5(b) ofthe Exchange Act.
246.

By reason of the foregoing, Quiros and Q Resorts, directly or indirectly, violated,

63

and unless enjo~ii~ec], are reasonably likely t~ continue to violate, Seciion 10(b) ~tt1d Rulc lOb-5(b)
of the Exchange, 15 U.S.C. 78j(b) and 17 CT.R. 240.1 Ob-5(b).
LODGE AND TOWNHOUSES PI-CASL V
COUNT 30
Section 17(a){1) of the Securities Act
(Ahainst Lodge and Townhouses Phase V, Jay Peak GY Services Lodge, Jay Pealc,
Q Resorts, Quiros, and Stenger)
247.

The Commissiozl Yepeats and realleges Paragraphs 1-148 of this Complaint as if

fully set forth herei~~.

248.

Defendants Lodge and Townhouses Phase V, Jay Peak GP Services Lodge, Jay

Peak, Q Resorts, Quiros, and Stei~~er, in the offer or sale of securities by use of any means ar
instruments of transportation or communication in interstate commerce or by use of the mails,
directly or indirectly employed devices, schemes, or artifices to defraud.
249.

By reason of the foregoing, Lodge and Townhouses Phase V, Jay Peak GP

Services Lodge, Jay Peak, Q Resorts, Quiros, and Stenger violated, and unless enjoined, are
reasonably likely to continue to violate, Section 17(a)(l.) of the Securities Act, 15 U.S.C,
77~1(~)~~)~
COUNT 31
Section 17(x)(2) of the Securities Act
(Against Lode and Townhouses Phase V, Jay Pealc GP Services Lodge, Jay Peak,
Q Resorts, Quiros, and Stenger)
250.

The Commission repeats and realleges Paragraphs 1-14, 22-23, 2$-56, 7&95,

107-1 l 0, 11 S, and 142-148 of this Complaint as if fully set forth herein.

251.

Defendants Lodge and Townhouses Phase V, Jay Peak GP Services Lodge, Jay

Peak, Q Resorts, Quiros, and Stenger, in the offer or sale of securities by use of any means or

64

instruments of transpox-tatian or comrnunacation in interstate commerce or by use of the mails,

directly or indirectly obtained money ox property by means of untrue statements of material facts
and omissions to state material facts necessary in order to make the statements made,in the liglrt
ofthe circumstances under which they were made, not misleading.
252.

By reason of the foregoing, Lodge and Townhouses Phase V, Jay Peak GP

Services Lodge, Jay Peak, Q Resorts, Quiros, and Stenger violated, and unless enjoined, are
reasonably likely to continue to violate, Section 17(a)(2) of the Securities Act, 15 U.S.C.
77q~a)~2)
COUNT 32
Section 17(a)(3) of the Securities Act
(Against Lodge and Townhouses Phase V,Jay Peak GP Services Lodge,Jay Peak,
Q Resorts, Quiros, and Stenger)
253.

The Commission repeats an:d realleges Paragraphs 1-1.48 of this Complaint as if

fully set forth herein.

254.

Defendants Lodge and Townhouses Phase V, Jay Peak GP Services Lodge, Jay

Peak, Q Resorts, Qui~os, and Stenger, in the offer or sale of securities by use of any means or
instruments of transportation or communication in interstate commerce oz by use of the mails,
directly or indirectly engaged in transactions, practices, ox courses of business which operated or
would have operated as a fraud ox deceit upon the purchasers.
255.

By reason of the foregoing, Lodge and Townhouses Phase V, Jay Peak GP

Services Lodge, Jay Peak, Q Resorts, Quiros, and Stenger violated, and, unless. enjoined, are
reasonably likely to continue to violate, Section 17(a){3} of the Securities Act, 15 U.S.C.
77q~a)~3)

COUNT 33
Section 10(b) and Rule lOb-S(a) of the Exchange Act
(Against Locige and Townhouses Please V,Jay Pealc GP Se1viees Lodgc, Jay Peak,
Q Resorts, Qui~os, and Stenger)
256.

The Commission repeats ~tnd realleges Paragraphs 1-148 of this Complaint as if

frilly set forth herein.

257.

Detendant:s Lodge and Townhouses Phase V, Jay Peak GP Services Lodge, Jay

Peak, Q Resorts, Quiros, and Stenger, directly or indirectly, by the use of any means or
iaistrun~entality of interstate commerce, or of the mails, employed devices, schemes or artifices to
defraud in connection with the purchase or sale of securities.
258.

By reason of the foregoing, Lodge and Townhouses Phase V, Jay Peak GP

Services I.,odge, Jay Peak, Q Resot-ts, Quiras, and Stenger violated, and unless enjoined, are
z~easonably likely to continue to violate, Section 10(b) of the Exchange Act, 1S U.S.C. 78j(b),
and Exchange Act Rule lOb-S(a), 17 C.F.R. 240,IOb-5(a).
COUNT 34
Section 10(b) and Rule lOb-5(b) of the Exchange Act
(Against Lade and Townhouses Phase V,Jay Peak CP Services Lodge,
Jay Peak, and Stenger)
259.

'~'he Coininission repeats and realleges Paragraphs 1-14, 22-23, 28-56, 7895,

107-i 10, 115, and 142-148 of this Complaint as if frilly set forth herein.
2G0.

Defendants Lodge and Townhouses Phase V, Jay Peak GF Services Lodge, Jay

Peak, axed Stenger, directly or indirectly, by the use of any menus or i~~strumentality of interstate
commerce, or of the mails, inadc untrue statements of material facts or omitted to state material
facts necessary in order to make the statements made, in the light of the circumstances under
which they were made, not misleading.

66

261.

I3y .reasotl of the fo1egoing, Lodge a11d 'Townhouses Phase V, Jay Peak. C7f.'

Services Lodge, Jay Peak, ar1d. Stenger violated, and uYiless enjaine~l, are reasonably likely to
continue to violate, Section 10(b) of the Exchange Act, 1S tJ.S.C. ~ 78j(b), and Excliatige Act
Rule 10b-5(b), 17 C.F.R. 240.1Ob-S{U).
COUNT 35
Section 10(b} and Rule 10b-5(c~ of the Excha~~e Act
(A~ainsl Lodge and Townhouses Phase V, Jay Peak GP Services Lodge, Jay Peak,
Q Resorts, Quios, and Stenger)
262.

The Commission repeats a11d realleges Paragraphs 1-148 of this Complaint as if

:fully set fot~h h.ez~eizi.

263.

Defendants Lodge and Townhouses Phase V, Jay Peak GP Services Lodge, Jay

Peak, Q Resorts, Quiros, and Stenger, directly or indirectly, by the use of any means or
instx~iinentality of interstate commerce, or of the mails, engaged in acts, practices, and courses of
business which have operated, are now operating and will operate as a fraud upon the purchases
of such securities.
264.

By teason of the foregoing, Lodge and Townhouses Phase V, Jay Peak GP

Sc;z-vices Lodge, Jay Peak, Q Resorts, Quiros, and Stenger violated, and unless enjoined, are
reasonably likely to continue to violate, Section 10(b) of the Exchange Act, 1S U.S.C. 78j(b),
and Exchange Act Rule 10b-5(c), 17 C.F.R. ~ 240.1Ob-5(c).
COUNT 36
Section 20(a) Control Person Liability
For' Lodge and Townhouses Phase V and Jay Peak GP Services Lodge's Violations Of
The Exchange Act(Against Quiros)
265.

The Corninission repeats and realleges Para~~aphs 1-148 of this Complaint as i.('

fillly set forth herein.

67

266.

F3eg nniiig no later thane May 2011, Qt~iros has been, directly or indirectly, a

cont~ol person of Lodge and Townhouses Phase V and Jay Peak GP Services Lodge for purposes
of Section 20(a)ofthe Exchange Act, 15 U.S.C. 78t(a).
267.

Begiruiing no later than May 2011, Lodge and Townhouses Phase V and Jay Peak

UP Services Lodge violated Section 10(b) and Rule l Ob-5 of the Exchange Act.
2b8.

As a control person of Lodge and Townhouses Phase V and Jay Peak GP Services

Lodge, Quiros is jointly and severally liable with and to the same extent as Lode and
Townhouses Phase V and Jay Peak GP Services Lodge for each of their violations of Section
10(b) and Rule l Ob-5 of the Exchange Act.
269.

By reason of the foregoing, Quizos, directly and indirectly violated, and unless

enjoined, is reasonably likely to continue to violate, Sections 10(b) and 20(a) and Rule 10b-5 of
the Exchange Act, 15 U.S.C. 78j{b) and 78t(a), and 17 C.F.R. 240.1Ob-5.
COUNT 37
Aiding and Abetting Lodge and Townhouses Phase V,Jay Peak GP Services Lodge,Jay
Peak, and Stenger's Violations Of Section 10(b) of the Exchange Act and Rule 10b-5(b)
(Against Qniros and Q Resorts)
270. The Commission xepeats and realleges Paragraphs 1-14, 22-23, 28-56, 78-95, 10711 U, 11S, arzd 142-148 of this Complaint as if fully set forth herein.
271.

From no later than May 2011, Lodge and Townhouses Phase V, Jay Peak GP

Services Lodge, Jay Peak, and Stenger each, directly or indirectly, by use of the means and
i~istrumeutalities ofinterstate commerce, and ofthe mails in connection with the purchase or sale
of securities, knowingly, willfully or recklessly made untrue statements of material facts and
omitted to state material facts necessary in order to snake the statements made, iii light of the
circumstances under which they were made, not misleading, in violation of Section 10(b) of the

Exchange Act and Rule l Ob-5(b), 15 U.S.C. 78j(b) and 17 C.F.R. ~ 24'0.10b-5(b).
272.

Quiros and Q Resorts knowingly or recklessly substantially assisted those four

Defendants' violations of Section 10(b) a~7d Rule l Ob-S(b) ofthe Exchange Act.
273.

By reason of the foregoing, Quiros and Q Resorts, dixectly or indirectly, violated,

and unless enjoined, are reasonably likely to continue to violate, Section 10(b) axed Rule lOb-5(b)
ofthe Exchange, 15 U.S.C. 78j(b) and 17 C.F.R. 240.1 Ob-5(b).
STATESIDE PHASE VI
COUNT 38
Section 17(a)(1) of the Securities Act
(Against Stateside Phase VI, Jay Peak GP Services Stateside, Jay Peal, Q Resorts,
Quiros, and Stenger)
274.

The Commission repeats and realleges Paragraphs 1-148 of this Complaint as if

fully set forth herein.

275.

Defendants Stateside Phase VI, Jay Peak GP Services Stateside, Jay Peak, Q

Resot-ts, Quiros, and Stenger, in the offer o~` sale of securities by use of any means or instruments
of transportation or communication in interstate commerce or by use of the mails, directly or
indirectly employed devices, schemes, or artifices to defraud.
276.

By reasa~a of the foregoing, Stateside Phase VI, Jay Peak Services Stateside, Jay

Peak, Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably likely to
continue to violate, Section 17(a)(1) of the Securities Act, 15 U.S.C. 77q(a)(1).
COUNT 39
Section 17(a)(2) of the Securities Act
(Against Stateside Phase VT,Jay Peak GP Services Stateside, Jay Peak, Q Resorts,
Quiros, and Stenger)
277.

The Commission repeats and realleges Paragraphs 1-14, 24-25, 28-56, 78-95,

111-115, and 142-148 of t2i s Complaint as if fully set forth herein.

278.

Defendants Stateside Phase VI, Jay Peak GP Services Stateside, Jay Peak, Q

Resorts, Quires, and Stenger, in the offer ar sale of securities by use of any means or instruments
of transportation or cornrnunication in interstate commerce o~ by use of the mails, directly or
indirectly obtained money or property by means of untrue statements of material facts and
oinssoils to state material facts necessary in order to make the- statements made, in the light of
the circumstances under which they were made, riot misleading.
279.

By xeason of the foregoing, Stateside Phase VI, Jay Peak GP Se2wices Stateside,

Jay Peak, Q Resorts, Quiras, and Stenger violated, and unless enjoined, are reasonat~ly likely to
continue to violate, Section 17(a)(2) ofthe Securities Act, 15 U.S.C. 77q(a)(2).
COUNT 40
Section 17fa)(3) of the Securitiies Act
(Against Stateside Phase VI, Jay Peak GP Services Stateside, Jay Peak, Q Resorts,
Quu~os, and Stenger)
280.

The Commission repeats and realleges Paragraphs 1-148 of this Complaint as if

fully set forth herein.

281.

Defendants Stateside Phase VI, Jay Peak GP Services Stateside, Jay Peak, Q

Resorts, Quires, and Stenger, in the offer or sale of securities by use of any means or insnurnents
of transportation or communication in interstate commerce or by use of the mails, directly or
indirectly engaged in transactions, practices, ox courses of business which operated or would
have operated as a fraud or deceit upon the purchasers.
282.

By reason of the faregoin~, Stateside Phase VI, Jay Peak GP Services Stateside,

Jay Peak, Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably likely to
continue to violate, Section 17(a)(3) ofthe Securities Act, 15 U.S.C. 77q(a)(3).

70

COUNT 41
Section 10(b) aand Rule lOb-5(a) of the Exchange Act
(Against Stateside Phase VI, Ja}' Peak GP Services Stateside,.Jay Peak, Q Resorts,
Qiiiros, and Stenger)
283.

The Coinm.ission adopts by reference Paragraphs 1-148 of this Complaint as if

fiilly set forth herein.

2~4.

Defendants Stateside Phase 'Vl, Jay Peak GI' Services Stateside, Jay Peak, Q

Resorts, Quiros, and Stenger, dizectly or indirectly, by the use of axly means or instrulnen#ality of
interstate commerce, ox of the iilails, employed devices, schemes or artifices to defraud in
connection with the purchase oi sale of secuz{ities.
285.

By reason of the foregoing, Stateside Phase VI, Jay Peak GY Services Stateside,

Jay Peak, Q Resorts, Quizos, and Stenger violated, and unless enjoined, are reasonably likely to
continue to violate, Sectiol~ 10(b) of the Exchange Act, 15 U.S.C. 78j(b), and Exchange Act
Rule lOb-5(a), 17 C.F.R. 240.1Ob-5(a).
COUNT 42
Section 10(u) and Rule lOb-S(b)_of_the Exchange Act
(Against Stateside Please VI, Jay Pealc GP Services Stateside, Jay Peak, and Stenger)
286.

The Commission repeats and xealleges Paragraphs 1-14, 24-25, 28-56, 78-95,

111-115, and 142-148 of this Complaint as if fully set foi~th herein..

287.

Defendants Stateside Phase VI, Jay Peak GP Services Stateside, Jay Peak, and

Stenger, directly or indirectly, by the use of any means or instrumentality ofinterstate commerce,
or of the mails, made untrue statements of material facts or omitted to state material facts
necessary in order to make the statements made, iii the light ofi` the circumstances under which
they were made, not misleading.
288.

By reason of the foregoing, Stateside Phase VI, Jay Peak GP Services Stateside,
71

Jay Peak, and Stezzger violatied, and uialess e~~joirled, are xeaso~aably likely to continue to violate,
Section 10(b) of the Exchange Act, 15 L.S.C. 78j(b), and Exchange Act Rule lOb-5(b),
17 C.F.R. 240.10b-5(b).
COUNT 43
Section 10(b) and Rule lOb-5(c) of the Exchange Act
(Against Stateside Phase VI, Jay Peak GP Services Stateside,.Iay Peak, Q Resorts,
Quiros, end Stenger)
289.

The C~oinmission Yepe~ts alid realleges Paragraphs 1-148 of this Complaint as if

fully set forth herein.

290.

Defei~da~~ts Stateside Phase VI, Jay Peak GP Services Stateside, Jay Peak, Q

Resorts, Quiros, and Stenger, directly o~~ indzrectly, by the use of any means or instrumentality of
interstate coz~amezce, or of the mails, engaged in acts, practices, and courses of business which
have operated, are now operating and will operate as a fraud upon the purchasers of such
securities.
291. By reason of the foregoing, Stateside Phase VI, Jay Peak GP Services Stateside,
Jay Peak, Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably likely to
continue to violate, Section 10(b) of the Exchange Act, 15 U.S.C. 78j(b), and Exchange Act

xule lo-s~~~, i7 c".F.R. 240.1Ob-S(c).

COUNT 44
Section 20(a) Control Person .L.iability
Foy Stateside Phase VI and Jay Peak GP Services Stateside's Violations Uf
The Exchange Act(Against Quizos)
292.

The Commission repeats and realleges Paragraphs 1-148 of this Coi~ll~laint as if'

full y set Earth I~erein.

293.

~egiz~nizlg iw later than October 2011, Quiros has been, directly or indirectly, a

72

control person of Stateside Please VI aild Jay Peak GP Services Stateside far purposes of Section
20(a) ofthe Exchange Act, 15 U.S.C. 78t(a).
294.

Begiiuiin~ no later than October 2011, Stateside Phase VI and Tay Peak GP

Services Stateside violated Section 10{b) and Rule 1 Ob-5 ofthe Exchange Act.
As a control person of Stateside Phase VI and Jay Peak GP Services Stateside,

295.

Quiros is jointly and severally liable with and to the wine extent as Stateside Phase VI and Jay
Peak GP Services Stateside for each of their violations of Section 10(b) and Rule l Ob-5 of the
Exchange Act.
296.

By reason of the foregoing, Quiros, directly and indirectly violated, and unless

enjoined, is reasonably likely to contiixue to violate, Sections 10(b) and 20(a) and Rule l Ob-S of
the Exchange Act, 15 U.S.C. 78j(b) and 78t(a), and 17 C.F.R. 240.10b-5.
CQUNT 45
Aiding and Abetting Stateside and Jay Peak GI'Services Stateside's Violations Of Section
10(b} of the Exchange Act and Rule lOb-5(b)(Against Quros and Q Resorts)
297.

The Commission repeats and realleges Paragraphs 1-14, 24-25, 28-56, 78-95,

111-115, and 142-148 oftliis Complaint as if fully set forth herein.

298.

From no later than October 2011, Stateside Phase. VI, Jay Peak GP Services

Stateside, Jay Peak, and Stenger each, directly or indirectly, by use of the means and.
instrumentalities ofinterstate commerce, and of tl~e mails in c;onnectio7i with the purchase or sale
of securities, knowingly, willfully or recklessly made untrue statements of material facts and
omitted to state material facts. necessary in order to make the statements made, in light o'f the
circumstances undex which they wexe made, not misleading, in violation of Section 10(b) of the
Exchange Act and Rule 10b-S(b), 1 S U.S.C. 78j(b) and l7 C.F.R. 240.1 Ob-5(b).
299.

Quros and Q Resorts knowingly or recklessly substantially assisted those four

73

Defendants' vio~a.tions of Section 10(b) and Rule l Oh-5(~} of the Exchange Act.
300.

By reason of the foregoing, Quiros and Q Resorts, directly oz indirectly, violated,

and unless enjoined, are reasonably likely to continue to violate, Section 10(b) and Rule l Ob-5(b)
of the Exchange, 15 U.S.C. 78j(b) and 17 C.F.R. 240.1 Ob-5(b).
BIOMEDICAL PHASE VII
COUNT 46
Section 17(x)(1) of the Securities Act
(~i,ganst Biomedical Phase VII, AnC Sio Vermont GP Services, Jay Peak, Q Resorts,
Quiros, and Stenger)
301.

The Commission repeats and xealleges Paragraphs 1-148 of this Complaint as if

fully set forth herein.

302.

Defendants Biomedical Phase VII, AnC Bio Vermont GP Services, Jay Peak, Q

Resorts, Quiros, and Stenger, in the offer or sale of securities by use of any means or instnunents
of transportation or cominunicatan in interstate coinrnerce or by use of the mails, directly or
indirectly employed devices, schemes, or artifices to defraud.
303.

By reason of the foregoing, Biomedical, AnC B a Vermont GP Services, Jay

Peak, Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably likely to
continue to violate, Section 17(a)(1) ofthe Securities Act, 15 U.S.C. 77q(a)(1).
CQUNT 47
Section 17(a}(2) of the Secuxhies Act
(Against Biomedical Please ViI, AnC Sio Vermont GP Seevices, Jay Peak, Q Res~its,
Quiros, and Stenger)
304.

The Commission xepeats and rea.11eges :Paragraphs 1-14, 2(i-56, 78-95, and 115-

148 of this Complaint as if fully set forth herein.

305.

Defendants Biomedical Phase VII, AnC Bra Verznoilt GP Services, Jay Peak, Q

74

Resorts, Qu ros, and Steiger, in the offer or sale of securities by use of any means or instruments
of transportation or conlnnunication in interstate corrunerce or by use of the snails, directly or
indirectly obtained money or property by means of untrue statements of xnatcrial facts and
oz~riissions t~ state nnatexial facts necessary in order to make the statements made, in the light of
the circuxnsta~nces under which they were made, riot rnisleadin~.
306.

By reason of the foregain~, Biomedical Phase VII, AnC Bio Vermont GP

Services, Jay Peak, Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably
likely to continue to violate, Section 17(a}(2) ofthe Securities Act, 15 U.S.C. 77q(a)(2).
COUNT 48
Section 17(a)(3) of the Securities Act (Against Biomedical Phase VII, AnC Bio Vermont GP Services, Jay Peak,. Q Res~rts,
Quros, and Stenger)
307,

The Commission repeats and realleges Paragraphs 1-148 of this Complaint. as if

fully set forth herein.

308.

Defendants Biomedical Phase VII, AnC Bio Vermont GP Services, Jay Peek, Q

Resorts, Quit~c~s, and Stenger, in the offer or sale of securi# es by use of any means or instxulnents
of trai~spor~tatioii or communication in interstate commerce or by use of the mails, directly or
indirectly engaged iii txan:sactao~as, practices, or courses of business which operated or would
have operated as a fraud or deceit upon the purchasers.
309.

By reason of the foregoing, ]3iomedical Phase VII, AnC Bio Vermont GP

Services, Jay Peak, Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably
likely to continue, to violate Section 17(a)(3) of the Securities Act, 15 U.S.C. 77q(a)(3).
COUNT 49
Section 10(b)and Rule 1Db-5(a) of the Exchange Act
(A~ainst Bionedical Phase VII, AnC Bo Vermont GP Services, Jay Peak, Q Resorts,
75

Quiros, and Stenger)

310.

The Commission repeats and realleges Parag7aphs 1-148 of this C~oinplaint as iP

fully sit Portli herein,

311.

Defendants Biarnedical Phase VII, AnC Bio Vei-~no~1t GP Services, Jay Peak, Q

Resorts, Quiros, and Stenger, directly or indirecfily, by the use of any means ox instru~a~entality of
interstate commerce, or of the mails, employed devices, schezraes oz az-tifices to defraud in
connection with the purchase or sale of securities.
312.

By reason of the foregoing, Biomedical Phase VI.[, AnC 13io Verinont GP

Services, Jay Peak, Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably
likely to contimie to violate, Section 10(b) of the Exchange Act, 15 U.S.C. 78j(b), and
exchange Act Rule 1 ~b-5(a), 17 C.F.R. 24Q,10b-5(a).
COUNT SO
Section l0(b) and Rule lOb-5(b) of the Exchange Act
(A~ainst Biomedical Phase VII, AnC Bio Vermont GP Services, Jay Peak, Quires, and
Stenger)
313.

Tl~e Commission repeats and realle~es Paragraphs l -l4, 26-5(i, 78-95, zuci 115-

148 of this Complaint as if fully -set forth herein.

314.

Defendants Biomedical Phase VII, AnC Bio Vermont GP Services, Jay Peak,

Quiros, and Stenger, directly oi indirectly, by the use of any means or instrumentality of
interstate commerce, or of the mails, made untrue stateinex~ts of material facts or omitted to state
material facts necessary in order to make the statements made, iii the right o~ tlae circumstances
uzicier which they were made, not misleading.
315.

By reason of the foregoing, Biomedical Phase VII, AnC I3io Vermont GP

Services, Jay Peak, Quiros, and Stenger violated arid, unless enjoined, are reasonably likely to

'76

coiatiz~ue io violate Section ]0(b) of tl~e 1~?xcha~~ge Act, I S tJ.S.C. ~~' 78j(b), and ~xeh~nge Act
Rule l Ob-5(b), 17 C.I.R. 240.10~b-5{b).
COUNT 51
Section 10(b) azad Rule lOb-S(c) of the Exchange Act
(Against Biomedical Phase VIr, AnC Bio Vermont GP Services, Jny Peak, Q Resorts,
Q~iiros, and Stenger)
316.

The Commission repeats and realleges Paragraphs 1-X48 of'this Complaint as if

fully set forth herein.

317.

Defendants Biomedical Phase VII, AnC". Bio Vermont GP Services, Jay Peak, Q

Resorts, Quiros, and Stenger, directly or indirectly, by the use of any means or instrui~lentality of
interstate commerce, or ofi' the mails, engaged in acts, practices, and courses of business which
have operated, are now operating aild will operate as a fraud upon the purchasers of such
securities.
31 ~. By reason of the foregoing, Biomedical Phase VII, AnC Bio Vermont GP
Services, Jay Peak, Q Resorts, Quiros, and Stenger violated, and unless enjoined, are reasonably
likely to continue to violate, Section 10(b) of the exchange Act, 15 U.S.C. 78j(b), and
Exchange Act Rule lOb-5(c), 17 C.F.R. 240.1 Ob-5(c).
COUNT 52
Aiding and Abetting Biomedical Phase VII, AnC Bia Vermont GP Services, and Quiros'
Violations of Section 10(b) of the Exchange Act and Rule lOb-5(b)
(Against Q Resorts)
319.

Tl~e Commission repeats and realleges Paragraphs 1-14, 26-56, 78-95, and 115-

148 of this Complaint as if fully set forth herein.

320.

From 110 later than. NovembeX~ 2012, Biomedical P11ase VII, AnC Bin Vermont GP

Services, and Quiros each, directly or indirectly, by use of the means and instrumentalities of

77

interstate commerce, and of the snails in connection with the purcllase or sale of securities,
laiowingly, willfully or recklessly made untrue statenleilts of material facts and arnitted to state
material facts necessary in order to make the statements made, in light of the circum~.sta~ices
under which they were made, not misleading, in violation of Section 10(b) of the Exchange Act
and Rule IOb-5{b), IS U.S.C. 78j(l~) and 17 C.F.R. 240.1Ob-5(b).
321.

Q Resorts knowingly or recklessly substantially assisted those three Defendants'

violations of Section 10{b) and Rule 1 Qb-S(b) of the Excllange Act.

322,

By reason of the foregoing, Q Resorts, directly or indirectly, violated, and unless

enjoined, is reasonably likely to continue to violate, Section 10(b) and Rule 10b-5(b) of the
Exchange, 15 U.S.C. 78j(b) and 17 C.F.R. 240.1Ob-S(b).

XII. RELIEF REQUESTED

WHEREFORE, the Commission respectfully requests the Court find the Defendants
committed the violations alleged, and:
A. Temporary Restraining Order and Pr@lirninary Injunctive Relief
Issue a Ternpoxary Restraining Order and a Preliminary Injunction restraining and
enjoining: (1) Quiros, Stenger, Jay Peak, Q Resorts, Stateside Phase VI, Jay Peak GP Services
Stateside, Biomedical Phase VII, and AnC Bio Vermont GP Services from violating Section
17(a) of the Securities Act, and Section 10(b) and Rule lOb-5 of the Exchange Act;(2) Quiros
fi-oin violating Section 20(a} of the Exchange Act; and (3) Quiros and Q Resorts from aiding and
abetting violations of Section 10{b) and Rule l Ob-5(b) ofthe Exchange Act.
B. P~eimanent Injunctive Relief
Issue a Permanent Injunction restraining and enjoiizing:(1) all Defendants from violating

Sections 17(a)(1) and (3) of the Securities Act, and Section 10(b) and Rules lOb-5(a) and (c) of

the Exchange Act; (2) Quiros, Stenger, Jay Peak, Q kesorts, Hotel Phase II, Jay Pealc
Marlabem~~it, Pailthouse Phase III, Jay beak GP Services, Golf azid Mountaiz7 Phase IV, Jay Feak
GP Services Golf, Lodge and Townhouses Please V, Jay Peak GP Services Lodge, Stateside
Phase VI, Jay Peak GP Services Stateside, Biomedical Phase VII, and AnC Bio Vermont GP
Services from directly or il~dix~ectly vialatiz~g Sections 17(x)(2) of the Securities Act and Section
10(b) and Rule l.Ob-5(b) of the Exchange Act;(3) Quiros from violating Section 20(a) of the
Exchange Act; and (4) Quiros and Q Resorts from aiding and abetting violations of Section 10(b)
ofthe Exchange Act and Rule 10b-5(b).
C. Conduct-Based Injunctive Relief
Issue a Temporary Restraining Order, a Preliminary Injunction and Permanent Injunction
restrailiing and enjoining Qu ros and Stenger, at a minimum from directly or indirectly, including
through any entity they owil or control: (a) participating in the issuance, offer or sale of any
securities issued through the EB-5 Immigrant Iiavestor Pxograrn (provided, however, that such
injunction would nat prevent them from purchasing or selling securities for their own accounts);
and (b) participating in the management, administration, or supervision of, or otherwise
exercising az~y control over, any corrunercial enterprise or p7oject that has issued or is issuing any
securities through the EB-5 Imrni~rant Investor program.
D. Ds~or~ement
Issue an Order directing; all Defendants (except Steng~:r) and all Relief Defendants to
dis~or~e all ill-gotten gains, including prejudgment interest, resulting from the acts or courses of
conduct alleged in this Complaint.
E. Civil Penalty
Issue an Order directing all Defendants to pay civil money penalties pursuant to Sectio~~

79

2(~(d) of the Secizritzes Act, IS U.S.C. 77t(ci), anal Sectio~l 2](d) of the Exchange Act, 15 U.S.C.

F. Sword Accounti~i~
Issue an Order directing all Defenda~lts except Stenger and all Relief Defendants to
provide a sworn accounting of all proceeds received resulting fioin the acts/or courses of conduct
alleged in this Complaint.
G. Asset Freeze
Issue an Order freezing the assets of Defendants Quiros, Q Resorts, Stateside Phase WI,
Jay Peak GP Services Stateside, Biomedical Phase VII, and AnC Bio Vermont GP Services a~~d
all Relief Defendants until further Ozde~ of the Court.
~I. Appointme~xt of a Receiver
Appoint a receiver over Defendants Jay Peak, Q Resorts, Suites Phase I, Hotel Phase II,
Jay Peak Mana~ernent, Penthouse Phase III, Jay Peak GP Services, Uolf and Mountain Phase IV,
Jay Peak GP Services Golf, Lode and Townhouses Phase V, Jay Peak GP Services Lodge,
Stateside Phase VI, Jay Peak GP Services Stateside, Biomedical Phase VII, and AnC Bio
Vermont GP Sexvices, ai d all Relief Defcnclants.
1. Records Pt~eservation
Issue an Ordex restraining anc~ enjoining all Defendants and Relief Defendants frorra,
diiectly or ii~clirectly, destroying, i~lutilating, conccali~ag, altezing, disposing of, or otherwise
rendering illegible in any manner, any of the books, records, documents, correspondence,
bradlures, manuals, papers, ledgers, accounts, st3tezraents, obligations, files and other property of
or pertaining to al] Defendants and Relief Defendants, wherever located and in whatever form,
electronic or otherwise, that refer, reflect or relate to the acts or courses ofconduct alleged in this

X17

Complait, until furtlaer Order of this C~o~~rt.

J. Officer and Director 13ar

Issue an Order barring Defendant Quiros from and serving as an officer or director of any
public company pursuant to Section 20(e) of the Securities Act, Sections 21(d)(2) and 21(d)(5)
of the Exchange Act, and Section 305(b)(5) ofthe Sa~banes-Oxley Act,
K, Further Relief
Ciant such other and furtheY relief as inay be necessary airci appro~riAte.

Respectfully submitted,
April 12, 2016

By: s/Robert K. Levenson

Robert K. Levenson, Esq.

Sei7ior Trial Counsel

Florida Bax No. 0089771
Direct Dial: (305} 982-6341
Email: levensanr ~r,sec.gov

By.

Christopher E. Ma in, Esq.

Senior Trial Counsel
SD Fla. Bar No. A5500747
Direct Dial:(305)982-6386
Email: martinc ,sec.~ov
Attorneys for Plaintiff
SECURITIES AND EXCHANCrE COMMISSION
801 Brickell Avenue, Suite 1$00
Miami, Florida 33131
Telephone:(305)982-6300
Facsimile:(305)536-4154

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