Raymond James Sued Over $350M Development Fraud, Settles with Vermont for $5.95M

A receiver appointed by the U.S. Securities and Exchange Commission has filed a lawsuit against Raymond James Financial Inc. (RJF) over its alleged involvement in a $350M development fraud. The case stems from a complaint that the regulator filed earlier this year against William Stenger and Ariel Quiros. Along with their companies, the two of them are accused of making omissions and false statements when raising funds from foreign investors to supposedly build a biomedical research facility and ski resort facilities.

Raymond James and its employees are not defendants in that lawsuit. However, the firm is mentioned in the complaint to have received wire transfers starting in 2008 from a Vermont bank. The money went to brokerage accounts at Raymond James and they were in Quiros’s name. The funds were from investors and intended for the Peak resort in Vermont.

Quiros went on to borrow against the money in his Raymond James accounts that included high interest margin loans. He purportedly used investor money to pay almost $2.5M in margin interest loans to Raymond James.

Now, Jay Peak’s SEC-appointed receiver is suing Quiros, Raymond James, and Michael Goldberg, who is a branch manager for the firm and the ex-son-in-law of Quiros. The securities lawsuit is accusing the brokerage firm of misusing the investors’ money by helping Quiros and Stenger steal and misuse the funds of different receivership entities. The firm purportedly did this by actively allowing the two men to engage in their web transfers and margin loans, which allegedly caused many of the investors in the limited partnerships to be bilked.

The complaint goes on to content that because of the firm’s help, Stenger and Quiros were able to misuse more than $200M and steal $50M of the over $350M raised by hundreds of investors through the EB-5 Immigrant Investor Program. The program makes it possible for wealthy foreign nationals to gain a green card by investing a certain amount of money in a U.S. business that then establishes jobs for workers in this country.

Raymond James says the claims are false. Meantime, a possible class action claim that includes similar allegations has been brought against the broker-dealer.

Also, this week, Vermont’s Department of Financial Regulation announced that it had reached a $5.95M million settlement with Raymond James over compliance violations related to Jay Peak. $4.5M will be given back to investors.

The SSEK Partners Group is an institutional investor fraud law firm.

Raymond James involved in $350 million development fraud: SEC-appointed receiver, InvestmentNews, May 27, 2016

Raymond James Pays $5.95 Million For Part In Alleged Ski Resort Fraud, Financial Adviser, July 1, 2016