The Securities and Exchange Commission today announced fraud charges and an asset freeze against Bill Stenger, Ariel Quiros and their NEK businesses Wednesday and leveled allegations they misused millions of dollars raised through investments solicited under the EB-5 Immigrant Investor Program. 

According to a release put out by the SEC, a federal case was unsealed in in Miami that alleges Ariel Quiros of Miami, William Stenger of Newport, Vt., and their companies made false statements and omitted key information while raising more than $350 million from investors to construct ski resort facilities and a biomedical research facility in the Northeast Kingdom.

The SEC says investors were told they were investing in specific projects but instead, in Ponzi-like fashion, money from investors in later projects was misappropriated to fund deficits in earlier projects.

More than $200 million was allegedly used for other-than-stated purposes, including $50 million spent on Quiros’s personal expenses and in other ways never disclosed to investors.

According to the SEC’s complaint, Quiros improperly tapped investor funds for such things as the purchase of a luxury condominium, payment of his income taxes and other taxes unrelated to the investments, and acquisition of an unrelated ski resort.

“The alleged fraud ran the gamut from false statements to deceptive financial transactions to outright theft,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement.  “As alleged in our complaint, the defendants diverted millions of EB-5 investor dollars to their own pockets, leaving little money for construction of the research facility investors were told would be built and thereby putting the investors’ funds and their immigration petitions in jeopardy.”

The SEC’s complaint charges Quiros, Stenger, Jay Peak, and a company owned by Quiros called Q Resorts Inc. as well as seven limited partnerships and their general partner companies with violating the antifraud provisions.  Four other companies are named as relief defendants in the SEC’s complaint for the purpose of recovering investor funds transferred into their accounts.

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