The move by the federal judge came shortly after Quiros’ former legal team filed an objection to the agreement. Those attorneys have been trying for months to collect $3 million from Quiros for work they say they did for him prior to getting fired in March.
The fired attorneys had asked the judge to delay acting on the proposed deal between Quiros and the U.S. Securities and Exchange Commission for 14 days to give them time to file an “explanation” of their position.
The approval of the partial settlement means Quiros is dropping challenges to the investor fraud allegations against him in the SEC lawsuit, leaving only the issue of monetary penalties to be decided.
The SEC and Quiros’ attorney will negotiate over penalties. If the two sides can’t agree, a court hearing may be needed. At a hearing in May 2016, the SEC had asserted Quiros could be liable for up to $191.8 million in “ill-gotten gains.”
Quiros is now also prohibited from selling securities and taking part in the federal EB-5 immigrant investor program again.
He is not admitting or denying the allegations.
Judge Darrin P. Gayles in his ruling Wednesday made no mention of the filing Quiros’ former attorneys submitted hours earlier.
Scott B. Cosgrove, the lawyer who wrote that filing on behalf of Quiros’ former attorneys, could not immediately be reached Wednesday for comment.
Cosgrove wrote that because Quiros’ former legal team has a pending motion in the case, the SEC should have “conferred” with them before filing the proposed agreement with Quiros.
Quiros’ former attorneys are asking the judge in that motion to “modify” that asset freeze as they try to collect the $3 million they say they are owed.
Quiros’ former legal team consists of attorneys from the firms Leon Cosgrove LLC and Mitchell, Silberberg & Knupp.
The March change in counsel for Quiros also represented a change in strategy, moving more to what his new attorney calls a collaborative approach to the case and the SEC.
The battle over legal fees has been raging for months.
Gayles, presiding in the SEC case against Quiros, has previously declined to step into the financial dispute between Quiros and his former legal team.
Melissa Visconti, Quiros’ current lawyer, said Wednesday that she was pleased the judge acted so quickly. She added that the dispute between Quiros and his former attorneys is separate from the SEC case and should be filed in a separate legal action.
“We, again, just don’t believe that they’re procedurally going about it properly,” she said of the former legal team.
Visconti added that the judge’s ruling approving the partial settlement “effectively denies” the request by her predecessors for time to weigh in.
Robert Levenson, the SEC attorney handling the case, could not immediately be reached Wednesday for comment.
Michael Goldberg, the court-appointed receiver now overseeing Quiros’ frozen assets, could not be reached Wednesday on phone. In an email he replied, “This is a big step forward in the ultimate resolution of the SEC’s case and we are optimistic that the SEC will eventually obtain the Vermont properties for the investors’ benefit.”
Quiros and Bill Stenger, Jay Peak’s former president, are accused of misusing more than $200 million raised through the federal EB-5 immigrant investor program to fund massive upgrades at the resort and other projects in the Northeast Kingdom. Those other projects include a proposed $110 million biomedical research center in Newport that the SEC called “nearly a complete fraud.”
Stenger has since settled his case with the SEC. Lawsuits by the state of Vermont remain pending against him and Quiros.
The U.S. attorney’s office is also investigating, though no criminal charges have been brought against Quiros and Stenger. Any criminal charges would be separate from the civil cases.
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