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 by his side, as excited as I was to ski at the feet of the fresh snow. My boyfriend said he was 10 years old. I asked him why he liked coming to Jay Peak.
“Because of Jay Cloud,” he said matter-of-factly, as if it were obvious. “It has the best snow.” The world outside the aerial tram car suddenly turned from blue to white. Sixty of us on the ascending tram were in our own personal snow globe.
The secret of Jay Peak, Vermont’s northernmost ski area, is closely tied to the Jay Cloud, a mythical storm cloud that hovers above its rocky summit. The resort, five miles from Quebec City, 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 such as Park City, Utah and Steamboat Springs , in Colo. .
But another cloud, for years, hung over Jay Peak Resort: Its former owners perpetrated the largest financial fraud in the history of the ski industry — and the largest fraud in the state of Vermont.
In 2016, SEC officials seized the ski resort and accused its owners, longtime Jay Peak president Bill Stenger and Miami businessman Ariel Quiros, of defrauding foreign investors of $200 million in a similar scheme with Ponzi. Both men landed in jail. The ski resort remained open while under federal control, and emerged from that fall of 2022 when the area was purchased by Park City-based Pacific Group Resorts for $76 million.
Once the cloud of scandal finally lifted, a gleaming modern resort was – perhaps surprisingly – revealed. Three hotels, an ice rink, a 60,000-square-foot indoor water park, a climbing gym, a movie theater, several apartment complexes and several bars and restaurants have been built since 2009, largely with money from defrauded investors. The buildings and attractions are filled with visitors.
“If you haven’t been to Jay Peak in a decade, you literally won’t even recognize the place you’re climbing,” said Steve Wright, the resort’s general manager.
But the cloud was slow to clear from other parts of the North East Kingdom of the state. While the resort is buzzing with new accommodations and amenities, related promises to bring thousands of jobs and widespread development to the region, Vermont’s poorest, have fallen far short. In the nearby town of Newport, a 20-mile drive from Jay Peak, there’s still a hole in the heart of its downtown.
Dust, challenge and scandal
Jay Peak opened for skiing in 1957, with its signature steep summit becoming accessible to skiers in the mid-1960s with the opening of a chairlift and Vermont’s only tramway. In the 1970s, Hotel Jay opened with 48 rooms on the hillside.
In the early 2000s, Jay Peak Resort was famous among hardcore skiers for its powder and challenge. Half his skiers were Canadian, with Montreal just two hours away. But its lift and hotel infrastructure “was pretty well built,” said Mr. Wright, who was hired in 2004 by Mr. Stenger, who had headed the resort since the mid-1980s. and the Tyrolean-themed hotel was dated, and the ski area was described in a news account as seedy, unsuitable and unlovely.
Then came the prospect of seemingly easy money: Mr. Stenger turned to a federal initiative, called the EB-5 Immigrant Investor Program, which offers foreign investors a fast track to green cards in exchange for a $500,000 investment that creates jobs. The project is located in an economically deprived area such as the Northeast Kingdom.
In 2008, Mr. Stenger joined with Mr. Quiros to purchase Jay Peak Resort, and they acquired nearby Burke Mountain Resort several years later. A staggering $350 million was raised from EB-5 investors to upgrade and transform facilities at both resorts.
But the couple didn’t limit their vision to skiing. In their most ambitious – and outlandish – game, they also proposed to locate a biotech company in Newport, a working-class town of 4,400, and redevelop the town centre, including building a boutique hotel, a convention center and a new marina in Lake. Memphremagog. They said the project would directly or indirectly employ 10,000 people, turn ski areas into four-season resorts and help revitalize the struggling Northeast Kingdom, which has the highest poverty rate, lowest household income and highest median age in Vermont .
It turned out that Mr. Quiros had bought the resort with investor funds earmarked for building hotels, then proceeded to improperly divert funds from later projects in a Ponzi-like scheme to cover up this original sin. When the SEC and Vermont officials met with him, they revealed that Mr. Quiros, along with Mr. Stenger, had misappropriated $200 million of the funds they had raised, including $50 million that Mr. Quiros had spent on purchases luxury, such as an apartment in Trump Place New York. Mr. Stenger, who was not accused of personally profiting from the scandal, was nevertheless accused by the Securities and Exchange Commission of participating in a “massive eight-year fraud scheme” that “systematically preyed” on foreign investors.
“I am outraged by what he has done 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 false documents. He served nine months and was released in March 2023. “I’m ashamed I didn’t see it sooner,” Mr Stenger said.
Damaged
Michael Goldberg, a leading 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 a federal receiver of Jay Peak in 2016.
Jay Peek was “at one point the poster child for all the good things about the EB-5 program,” Mr. Goldberg said. “When it collapsed, it became the poster child for everything bad in 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 defrauded by Kingdom Con, as the scandal was later invented. While Mr. Goldberg’s job was to make sure the defrauded investors were made whole, Mr. Wright understood that Jay Peak “had to be successful, not just to make sure the staff kept their jobs, but because the investors who were getting their visas based on the business being successful.”
Much was on the line: Jay Peak’s staff had grown from 350 to 1,200, making it the largest employer in the area.
“We were nervous that no one was ever going to buy a Jay Peak pass or book a holiday here anymore,” Mr Wright said. To his surprise, as word got out about the improvements to the ski area, skier visits hit a record high.
After the scam
Then the pandemic closed everything. The border with Canada was closed to non-essential travel for 19 months. For the entire 2020-2021 winter, Jay Peak was unavailable to half of its clientele and subject to strict health restrictions by the state of Vermont. Annual skier visits fell to 75,000 from about 300,000.
In a curious twist, dealing with the EB-5 scandal prepared the resort to survive 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 resilience we built by surviving acceptance.”
Jay Peak has set records for revenue and ticket sales annually since 2006, said Mr. Wright, who did not disclose exact sales figures. One reason is the many non-ski options available to visitors, evident in the busy water park I saw when I visited on a brisk January day. Another is Jay Peak’s ski tree. Almost a third of the 385 skiable acres are glades, and the mountain has a throwback feel, offering skiers a mix of narrow natural snow trails and wide avenues. Skiing at Jay Peak is like a safari, where skiers roam the snowy landscape freely, unlike the tame feel of other resorts.
Jay Peak’s new owners aren’t planning any major changes. “We are very aware of the loyal clientele and the unique atmosphere it has,” said Mark Fischer of Pacific Group Resorts. “We don’t want to change that culture.”
Chris Young, the principal of nearby North Country High School, is a lifelong Jay Peak skier.
“I don’t think Jay’s vibe has changed at all. If anything, it has improved,” he said.
But the scars 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 control (Mr. Goldberg expects the ski area to be sold this year). In Newport, a weed-filled gaping hole sits in the middle 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 convention center. The hole is like a scarlet letter from a scammer. The package is pending sale by the federal consignee.
The result for foreign investors was 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 scam is that Jay Peak is a thriving modern resort?
“Having fraud and having a beautiful end product are not inconsistent,” Mr. Goldberg said.
