Raymond James to Pay $150 Million Settlement Involving Alleged EB-5 Investment Fraud

Raymond James Financial Inc. (RJF) has agreed to pay $150 million to resolve all investor claims involving the Jay Peak Resort’s immigrant visa fraud. The EB-5 scam was created in 2007 by third parties and offered to foreign investors.

Although settling, the firm noted in a statement that it was never the placement agent for the fraudulent program nor did it play any other role in the scam. Raymond James also stated that it was never involved in selling the investments. The broker-dealer said that the Raymond James Financial advisor that worked with the brokerage accounts of the investment partnerships involved in the scam is no longer working the firm.

Already, investors have brought several lawsuits over this fraudulent EB-5 Immigrant Investor program. They had invested in a number of related projects at the Jay Peak ski resort. They did so to help themselves gain permanent US residency.

Under the US government’s legitimate EB-5 Immigrant investor program, a foreign investor has to invest a certain amount of money in a commercial venture that will establish at least 10 full-time jobs for employees. Upon approval by the U.S. Citizenship and Immigration Services, these foreign nationals that have contributed the funds are granted conditional permanent residency for two years. At that time, they can apply for a green card.

However, that is not what happened with Jay Peak’s immigrant program. Investors contend that they lost over $200M as a result of the scam. They accused the Jay Peak projects of fronting a Ponzi scam that they claim Raymond James facilitated as the firm that he used.

In one complaint, investors argued that they sent their funds to an escrow account at Raymond James for the Jay Peak Project. The bank sent the cash to accounts that Quiros controlled. The plaintiffs said that this violated offering material terms. Quiros allegedly commingled investors’ funds, divergent them to his own personal accounts, as well as to different projects.

The complaint said that Quiros’ son-in-law at the time, Joel Burstein, was the broker at Raymond James who oversaw the Jay Peak accounts there. Burstein is the one who is longer at the firm.

Last year, the US Securities and Exchange Commission filed a civil case against Quiros, the Jay Peak companies and partnerships, and Jay Peak CEO William Stenger over what the regulator said was a “massive” scam that went on for years.

Raymond James said that it has been working with the SEC-appointed receiver to make sure that investors in the fraudulent program are compensated fairly. The SEC appointed receiver said that Raymond James played a role in the misuse of investors’ funds.

Also last year, the brokerage firm agreed to pay $5.9 M to resolve a case brought by the Vermont Department of Financial Regulation related to compliance violations involving the Jay Peak Resort project. A federal receiver will make sure money is returned to the foreigners who invested in the project.

The SSEK Partners Group is a securities fraud law firm.

Raymond James to pay $150 million to settle alleged fraudulent visa program, MarketWatch, April 14, 2017

EB-5 Immigrant Investor Program, USCIS

SEC Complaint in the Jay Peak Case (PDF)

SEC’s Investor Alert Regarding Fraud and the Immigrant Investor Program

Raymond James settles administrative enforcement matter with DFR Firm pays penalty, disgorges investor money for EB-5 involvement, Vermont Dept. of Financial Regulation, June 30, 2016