Raymond James to Pay $150 Million to Settle Ski Resort Fraud Case
(Adds Raymond James general counsel’s comment in fourth paragraph, and firm’s protection from further related lawsuits in fifth paragraph.)
Raymond James & Associates agreed on Thursday to pay $150 million to settle a Securities and Exchange Commission-appointed trustee’s charges that it helped a Miami businessman steal $200 million from foreign investors.
The settlement ends five pending lawsuits against the Florida-based broker-dealer, according to lawyers involved. The investors, who were solicited by Ariel Quiros and William Stenger to invest in a Vermont ski development known as Jay Peak, will receive $125 million and lawyers will divide the other $25 million that Raymond James will pay.
Joel Burstein, Raymond James’ former Miami branch manager, helped his client Quiros move the investors’ money among various real estate partnerships through margin and cross-collateralization activities, according to Michael Goldberg, who the SEC appointed as a receiver to collect money for the abused investors. Goldberg initiated his civil case seeking recovery of funds against Raymond James, Burstein and Quiros.
“We believe this resolution is fair and representative of our commitment to redressing the victims’ losses in this case,” Raymond James General Counsel Jonathan Santelli said in a prepared statement.
The settlement, which includes $4.5 million that Raymond James previously paid in an agreement with the state of Vermont, bars investors from initiating or continuing any individual or class-action claims against the named parties but does not exclude actions from federal or state governmental bodies or agencies. Raymond James did not admit liability, fault or omission in the settlement, which is subject to final approval by the U.S. District Court for the Southern District of Florida.
Frank Amigo, a southern Florida complex manager who allegedly participated in some of the meetings, left Raymond James on April 6, according to employment records with state securities regulators.
“We’re very pleased with this outcome,” said Tucker Ronzetti, a lawyer who is representing a group of investors who, like others solicited by Quiros, believed their investments would help them secure green cards for contributing to EB-5 developments. “We’ve worked hard with the receiver to get benefits for the investor class.”
Burstein’s lawyer, James D. Sallah of Sallah Astarita & Cox in Miami, declined to comment.
Raymond James paid $17 million in May 2016 to the Financial Industry Regulatory Authority for “widespread failures related to its anti-money laundering programs.” Finra also suspended the brokerage firm’s anti-money laundering compliance head and fined her $25,000.
The settlement with Finra did not make specific reference to the Quiros case or to the Jay Peak ski resort project, but Raymond James said Thursday that it has “significantly” enhanced its supervision program, “including considerable investment in its anti-money laundering control infrastructure.”
Raymond James added $30 million to its Jay Peak legal reserves in its first fiscal quarter that ended on December 31, 2016, bringing the reserve to $50 million. The settlement allows the firm to share in 75% of all net proceeds that the SEC receiver may recover in the future, and orders him to “timely pursue litigation and other recoveries against third parties.”
A lawyer for some of the investors said cases will continue against People’s United Bank, the escrow agent that allegedly transferred the immigrant investors’ funds to accounts controlled by Quiros and his business partner. A spokesperson for the Bridgeport, Conn.-based bank did not immediately respond to a request for comment.