Reprinted without any permission or warning from this article, BY JEFF HARRINGTON
– TIMES STAFF WRITER
Raymond James — which previously agreed to pay a $5.95 million settlement to Vermont regulators in connection with the case — last week sued 21 people who had filed arbitration suits against the company with the Financial Industry Regulatory Authority (FINRA).
The investors had accused Raymond James of negligent supervision, common law fraud, fraudulent transfers, unjust enrichment and breach of fiduciary duty, among other claims.
In its suit, Raymond James counters that the 21 — all of whom were believed to be living in Florida at the time of their arbitration filing — do not have standing for a claim because they were not Raymond James’ clients. The suit also maintains that the allegations are already being address in a separate class action complaint.
The scandal bubbled up in April when the Securities and Exchange Commission filed a complaint against developers Ariel Quiros and William Stenger, alleging that they and their companies made false statements and omitted key information while soliciting money to build a biomedical research facility and ski resort in Vermont. The SEC also froze the assets of the resort and related businesses.
Quiros and Stenger had raised more than $350 million for the Jay Peak resort project from wealthy investors through the federal government’s EB-5 program. The program is a way for foreign nationals who invest $500,000 in a depressed region of the United States to receive green cards if a required number of jobs are created by their investment.
The SEC said Quiros and Stenger were aided in their deception by Quiros’ former son-in-law, Joel Burstein, a vice president of investments for Raymond James who managed the firm’s South Florida office.
Investors were told their money would only be used to finance new projects related to Jay Peak, according to the SEC. Instead, in what devolved into a Ponzi scheme, their investments were misappropriated to fund deficits in earlier projects, the SEC said.
In May, investors filed a class action suit alleging that Quiros and Stenger, with Burstein’s help, misused more than $200 million and “systematically looted” more than $50 million of the $350 million-plus that had been raised by using an intricate web of transfers among various accounts at Raymond James.