How a Vermont Ski Area Roared Back From a Financial Scandal


Settling into the first tram of the morning at Vermont’s Jay Peak resort last month, I looked down to see a young boy wearing a neon helmet pressed against the window, his father next to him, as excited as I was to ski the foot of fresh snow. The boy told me that he was 10 years old. I asked him why he liked coming to Jay Peak.

“Because of the Jay Cloud,” he said matter-of-factly, as if it were obvious. “It has the best snow.” As if on cue, the world outside the aerial tram car suddenly went from blue to white. Sixty of us in the rising tram were in our own personal snow globe.

The mystique of Jay Peak, the northernmost ski area in Vermont, is intimately bound to the Jay Cloud, a mythical storm cloud that hovers over its rocky summit. The resort, five miles from Quebec, claims to receive more snow — an average of about 350 inches — than any resort east of the American Rockies, and even more than many Western ski areas, including Park City, Utah, and Steamboat Springs, Colo.

But another cloud, for years, hung over Jay Peak Resort: Its former owners perpetrated the biggest financial fraud in ski industry history — as well as the biggest fraud in the state of Vermont.

In 2016, officials from the Securities and Exchange Commission seized the ski resort and accused its owners, the longtime Jay Peak president, Bill Stenger, and a Miami businessman named Ariel Quiros, of defrauding foreign investors of $200 million in a Ponzi-like scheme. Both men landed in jail. The ski area remained open while under federal receivership, emerging from it in the fall 2022 when the area was purchased by the Park City-based Pacific Group Resorts for $76 million.

Once the cloud of scandal was finally lifted, a sparkling modern resort was — perhaps paradoxically — revealed. Three hotels, an ice rink, a 60,000-square-foot indoor water park, climbing gym, movie theater, multiple condo complexes, and numerous bars and restaurants have been built since 2009, largely with money from defrauded investors. The buildings and attractions teem with visitors.

“If you haven’t been to Jay Peak in a decade, you literally won’t even recognize the place you pull up to,” said Steve Wright, the resort’s general manager.

But the cloud has been slower to clear from other parts of the state’s Northeast Kingdom. While the resort bustles with new lodging and amenities, related promises to bring thousands of jobs and extensive development to the region, Vermont’s most impoverished, fell far short. In the nearby city of Newport, a 20-mile drive from Jay Peak, there is still a hole in the heart of its downtown.

Jay Peak opened for skiing in 1957, its signature, craggy summit becoming accessible to skiers in the mid-1960s with the opening of a chairlift and Vermont’s only tramway. In the 1970s, the Hotel Jay opened with 48 slope-side rooms.

By the early 2000s, Jay Peak Resort was renowned among hard-core skiers for its powder and challenge. Half of its skiers were Canadian, with Montreal just two hours away. But its infrastructure of lifts and hotels “was pretty well banged up,” said Mr. Wright, who was hired in 2004 by Mr. Stenger, who led the resort since the mid-1980s. The Tyrolean-themed base lodge and hotel was dated and the ski area described in one news account as shabby, unchic and seedy.

Then came the prospect of seemingly easy money: Mr. Stenger turned to a federal initiative, called the EB-5 Immigrant Investor Program, that offers foreign investors an expedited path to obtaining green cards in return for a job-creating investment of $500,000 if the project is in an economically depressed area like the Northeast Kingdom.

In 2008, Mr. Stenger joined with Mr. Quiros to purchase Jay Peak Resort and they acquired the nearby Burke Mountain Resort several years later. They raised a staggering $350 million from EB-5 investors to upgrade and transform the facilities at both resorts.

But the pair didn’t limit their vision to skiing. In their most ambitious — and outlandish — gambit, they also proposed to locate a biotechnology company in Newport, a working-class city of 4,400 people, and redevelop the city’s downtown, including building a boutique hotel, a conference center and new marina on Lake Memphremagog. They said that the project would employ directly or indirectly 10,000 people, transform the ski areas into four-season resorts and help revitalize the struggling Northeast Kingdom, which has the highest poverty rate, the lowest household income and the highest median age in Vermont.

It turned out that Mr. Quiros had bought the resort with investor funds intended to build hotels, then continued to improperly redirect funds from subsequent projects in a Ponzi-like scheme to cover this original sin. When the S.E.C. and Vermont officials caught up with him, they revealed that Mr. Quiros, along with Mr. Stenger, had misused $200 million of the funds they had raised, including $50 million that Mr. Quiros had spent on luxury purchases, such as a condo in Trump Place New York. Mr. Stenger, who was not accused of personally profiting from the scandal, was nevertheless charged by the S.E.C. with being part of a “massive eight-year fraudulent scheme” that “systematically looted” foreign investors.

“I’m outraged at what he did and I feel abused,” Mr. Stenger said recently.

Mr. Quiros was sentenced to five years in prison for wire fraud and money laundering, and Mr. Stenger was sentenced to 18 months for submitting falsified documents. He served nine months and was released from prison in March 2023. “I’m embarrassed that I didn’t see it earlier,” Mr. Stenger said.

Michael Goldberg, a top receivership attorney who has handled hundreds of Ponzi cases and represented many clients of Bernie Madoff, the financier and architect of the largest Ponzi scheme in history, was appointed federal receiver of Jay Peak in 2016.

Jay Peak was “at one point the poster child of everything good about the EB-5 program,” Mr. Goldberg said. “When it collapsed, it became the poster child for everything bad about the EB-5 world.”

Mr. Wright, Jay Peak’s general manager, teamed up with Mr. Goldberg to steer Jay Peak through a different kind of storm.

Some 836 investors from 74 countries had been duped by the Kingdom Con, as the scandal was later coined. While Mr. Goldberg’s job was to ensure that defrauded investors were made whole, Mr. Wright understood that Jay Peak “has to be successful, not only for making sure that the staff kept their jobs, but because the investors getting their visas was predicated on the business being successful.”

A lot was on the line: Jay Peak’s staff had grown from 350 to 1,200, making it the biggest employer in the region.

“We were nervous that no one was ever going to buy a season pass for Jay Peak or book a vacation here anymore,” Mr. Wright said. To his surprise, as word spread about the ski area’s improvements, skier visits set records.

Then the pandemic shut everything down. The Canadian border closed for nonessential travel for 19 months. For the entire winter of 2020-2021, Jay Peak was inaccessible to half of its clientele and subject to strict health restrictions by the state of Vermont. Annual skier visits plunged to 75,000 from some 300,000.

In a curious twist, weathering the EB-5 scandal prepared the resort for surviving the pandemic. “We can probably get through this,” Mr. Wright recalled thinking during the height of the pandemic. “A lot of it was with the resiliency that we built up through surviving the receivership.”

Jay Peak has set records in revenue and lift ticket sales annually since 2006, said Mr. Wright, who would not reveal exact sales figures. One reason is the many non-skiing options available to visitors, evident in the bustling water park I saw when I visited on a brisk January day. Another is Jay Peak’s tree skiing. Nearly a third of its 385 skiable acres are glades and the mountain has a throwback feel, offering skiers a mix of narrow natural snow trails and broad boulevards. Skiing Jay Peak feels like a safari, where skiers freely roam the snowy landscape, in contrast to the domesticated feel of other resorts.

Jay Peak’s new owners are not planning major changes. “We are very cognizant of the loyal clientele and the unique vibe that it has,” said Mark Fischer of Pacific Group Resorts. “We don’t want to change that culture.”

Chris Young, the principal of the nearby North Country High School, is a lifelong Jay Peak skier.

“I don’t think the Jay vibe has changed at all. If anything, it’s gotten better,” he said.

But wounds from the scandal are still visible in the surrounding area. Burke Mountain Resort, where Mr. Quiros and Mr. Stenger built a hotel, is still under federal receivership (Mr. Goldberg expects the ski area to be sold this year). In Newport, a gaping weed-filled hole sits in the center of downtown. An entire block was razed in 2015 to make way for what Mr. Stenger and Mr. Quiros promised would be a multimillion dollar hotel and conference center. The hole is like a scarlet letter from a cheating paramour. The parcel is awaiting sale by the federal receiver.

The outcome for the foreign investors has been decidedly mixed. Eighty percent of Jay Peak’s EB-5 investors have received green cards, Mr. Goldberg said, but none of the 121 investors in Burke have received one. Getting green cards for investors is one of his remaining priorities, he said. Many investors have lost money.

Is it ironic that one fruit of the fraud is that Jay Peak is a thriving modern resort?

“Having a fraud and having a beautiful end product are not inconsistent,” Mr. Goldberg quipped.

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