Jay Peak owners accused of running $200M Ponzi scheme
Ariel Quiros and Bill Stenger are accused of redirecting funds aimed at boosting the region’s economy
The owners of the Jay Peak ski resort in Vermont are facing fraud charges in connection with a Ponzi scheme that U.S. security regulators allege defrauded investors of US $200 million.
Ariel Quiros and Bill Stenger are accused of siphoning the money from funds aimed at boosting the region's economy.
The two businessmen bought Jay Peak and another ski hill in 2008.
The pair raised $350 million from investors to build ski resort facilities and a biomedical research facility in Vermont.
The Security Exchanges Commission alleges they used a portion of the $200 million to pay off previous debts connected to other projects.
Court documents say Quiros used another $50 million on personal expenses.
Vermont Governor Peter Shumlin called it a "dark day" for the state, saying people feel "betrayed."
Operations at the ski resort will be turned over to another company while legal proceedings against the owners take place.
A call to the Jay Peak media office was not returned.
The ski hill is located in northern Vermont, not far from the Canadian border, about 140 kilometres from Montreal.
What is a Ponzi scheme?
A Ponzi scheme is a pyramid sales-type scam, where the original investors are paid off by the new investors.
It is named after Charles Ponzi, who immigrated to the United States in 1903, moving to Montreal in 1907. He worked for a bank in Montreal, it failed, and then he forged cheques to make a living. He served a jail term in Quebec before moving back to Boston.
The scam that made Ponzi immortal started in early 1920. He offered depositors a 50 per cent return in 45 days.
Within weeks money was pouring in. He paid off some early investors with money from the later investors. By July of 1920, Ponzi was making $250,000 a day.
By November he was in jail, serving a five-year sentence.
with files from Associated Press