Ever since the Securities and Exchange Commission brought the hammer down on the Jay Peak/Northeast Kingdom EB-5 developers, there have been plenty of Vermonters hoping that local hero Bill Stenger will turn out to be nothing more than a dupe in a massive fraud scheme by Ariel Quiros. That’s certainly the tale that Stenger’s been anxious to tell.
Well, now it’s Quiros’ turn to throw his partner under the bus. VTDigger’s Anne Galloway reports that Quiros has deployed an interesting defense — one that tacitly acknowledges wrongdoing on a significant scale.
The Miami businessman was not responsible for offering documents and did not communicate with investors, defense attorneys said. They allege that Stenger was the one who made misrepresentations to investors.
Oh, ho, ho, ho, ho. Cute.
It’s kind of a Hail Mary pass, which indicates exactly how deep in the doo-doo Quiros finds himself. First, as I said, he’s tacitly admitting that there were “misrepresentations to investors and… violat[ions of] securities laws.” That’s kind of the heart of the SEC’s case.
Second, while it may be technically true that Stenger made the misrepresentations, it stretches credulity beyond the breaking point to think Quiros could have been unaware or noncomplicit. Just as Stenger had to know something was fishy with the finances, Quiros had to know what investors were being told.
Quiros has a point, just barely. Stenger was the front man for the whole operation. He was the manager and the PR guy. Quiros was the silent presence, always within camera range but rarely stepping to the microphone.
Still, Quiros had to know what was going on. He had to know that tens of millions of dollars were flowing into his accounts. Unless he’s the most incurious man in the world, he must have known where the money was coming from.
Until now, Quiros had been insisting that nothing was wrong at Jay Peak, that the SEC complaint was groundless. This new tactic is a big departure, and a giant blinking neon sign that his defense is already crumbling and his lawyers are attempting an orderly retreat.
That’s a real trick to pull off. It rarely ends well.