JAY, Vt. – A ski resort whose owner and president were accused by the Securities and Exchange Commission of massive fraud months ago is set to open for the season on Saturday with what a federal receiver overseeing it says is a $6.5 million shortfall.
In a court filing last week, the receiver said the Jay Peak resort is expected to have lost that amount in the off-season. He said the resort typically loses money during the off-season but a prudent operator would have built up cash during the winter season to get through it. He said that didn’t happen because owner Ariel Quiros “wrongfully diverted millions of dollars.”
Quiros, a Miami businessman, and former Jay Peak president Bill Stenger were accused by Vermont and the SEC in April of misusing $200 million raised from foreign investors for developments through a special visa program. Quiros also is accused of improperly diverting $50 million for his personal use.
Quiros’ lawyer did not immediately return a phone call seeking comment Tuesday. Stenger has settled his case with the SEC.
Besides the cash shortfall, Jay Peak’s tram needed more than $5 million in repairs and maintenance, receiver Michael Goldberg wrote.
The Jay Peak resort, along with Burke Mountain Resort, also owned by Quiros, owed vendors $5.1 million in overdue bills. The receiver has said he paid the vendors for all goods and services provided after April and plans to start to pay past due amounts in season when cash flow improves.
A $13.3 million settlement with Citibank will be used to keep Jay Peak and the Burke hotel fully operational until they are sold and to pay some of the claims from vendors and contractors who worked on the hotel and various developments, Goldberg has said.
Jay Peak, which says it offers “the East’s best skiing and snowboarding,” features a year-round indoor waterpark, an ice arena and championship golf course.
The four-season resort, in northern Vermont near Canada, has come off a very successful summer with a record number of weddings from spring through fall, which has helped the sentiment among staff, said Steve Wright, who became general manager in April.
Season pass sales are down about 8 per cent, but that could be from the bad snow year last season, while vacation bookings for upcoming holiday periods are up from last year, which was a record at this time last year, he said.
Area businesses, which often cater to Jay Peak resort visitors, are a little apprehensive coming off a poor season last year but are trying to be optimistic, said Mike Murphy, owner of the Snow Job ski shop in Jay. He said when Jay Peak does well local businesses do well and he’s felt from the beginning the Jay Peak receivership seemed to be focusing on the correct things.
“But you do wonder if there’s ultimately going to be enough money to make it all happen,” he said.
Jay Peak said it planned to meet with local businesses to discuss its status.