The Securities and Exchange Commission filed and settled charges against a former Raymond James & Associates branch manager in Coral Gables for helping facilitate an EB-5 fraud that generated $364 million for a Vermont ski resort.
The SEC’s complaint alleged Joel Burstein, who according to BrokerCheck was at Raymond James from 2001 to 2016, aided and abetted ski resort owner Ariel Quiros of Miami in misappropriation and misuse of investor money that flowed through about 15 Raymond James brokerage accounts.
All told, seven offerings attracted money from 728 investors in 74 countries for stakes in limited partnerships from 2006 to 2016. The SEC charged Jay Peak “systematically looted” more than $50 million from foreign investors seeking U.S. visas in exchange for job-creating funding.
Burstein, Quiros’ ex-son-in-law, “substantially assisted in the fraud from its inception,” the SEC complaint said. Investors were told the money was heading into ski, golf and tennis facilities, hotels, condominiums and ultimately a biomedical research center.
The $110 million research park was seen as the big prize by everyone from U.S. senators to Vermont governors who anticipated injecting long-lasting, high-income jobs into the rural northeast corner of the state.
Burstein managed the Raymond James accounts where investor funds were parked. The SEC complaint charged Burstein facilitated Quiros’ misappropriation of more than $21 million of investor funds for the purchase of Jay Peak in 2008.
Burstein then assisted Quiros in trying to mask significant shortfalls created in the Raymond James accounts due to misappropriation. The complaint also alleged Burstein facilitated Quiros’ fraudulent use of more than $18 million to pay off Jay Peak’s margin debt at Raymond James.
In April 2016, the SEC filed an emergency civil action against Quiros, Jay Peak and others for allegedly engaging in an offering fraud where Quiros systematically misappropriated and misused investor funds.
The EB-5 program solicits at least $500,000 from foreigners to invest in job-generating projects in exchange for legal U.S. residency.
In April 2018, Raymond James agreed to pay $150 million to settle all claims tied to the scheme.
With no admission of wrongdoing, Burstein consented to the entry of a final judgment ordering him to pay a civil penalty of $80,000.
Burstein also agreed to an SEC order barring him from association with any broker, dealer, investment advisor, municipal securities dealer, transfer agent or nationally recognized statistical rating organization and from participating in an offering of penny stock, with the right to apply for reentry after 10 years.
Burstein was with Raymond James for 15 years until he was fired in December 2016. He later moved from Miami to Pittsburgh.
The SEC case was filed Thursday by senior trial counsel Robert Levenson and Christopher Martin and senior counsel Trisha Sindler and Brian James, all in Miami.
Boca Raton attorney James Sallah of Sallah Astarita & Cox represented Burstein. Sallah said, “Mr. Burstein is happy to have resolved the SEC matter amicably and without protracted litigation, and to have put this behind him.”
Emily Zulz reports for Think Advisor. Contact her at email@example.com. Catherine Wilson is managing editor of the Daily Business Review. Contact her at firstname.lastname@example.org.