A federal judge has approved the latest request totaling $834,380 for the court-appointed receiver and other professionals overseeing Jay Peak and Burke Mountain, the resorts at the center of a massive EB-5 investor fraud case.
The request covers the fees and expenses for Michael Goldberg, the receiver, and professionals assisting him for the period from May 1 to Aug. 30.
Judge Darrin P. Gayles, in federal court in Florida, signed off Thursday on the request. Gayles is presiding over the case pending against the developers of the Northeast Kingdom projects now overseen by Goldberg.
It’s the third fee and expense request from Goldberg since Gayles named him receiver in April 2016. Goldberg was appointed in the wake of investor fraud lawsuits the U.S. Securities and Exchange Commission and state regulators brought against developers Ariel Quiros, a Miami businessman and Jay Peak’s owner, and Bill Stenger, Jay Peak’s former president.
In December the judge awarded $1.95 million for fees and expenses spanning the time from Goldberg’s appointment to Oct. 31, 2016. Then in July the judge awarded the receiver $1.35 million for fees and expenses from Nov. 1, 2016, to April 30.
With the latest approval, the total amount awarded to the receiver and the professionals assisting him is $4.14 million.
He and the others continue to work with managers to improve the value and operations of the properties; with the SEC “to secure and preserve the real and personal properties for the benefit of the investors; and continue to analyze claims against third parties,” Goldberg wrote in support of the latest fee request.
Goldberg could not be reached Friday for comment.
His filing breaks down the request to include $791,246 for fees for him and other professionals and $43,143 for expenses. A further breakdown shows that from May 1 to Aug. 30 the attorneys and accountants spent a total of 3,005.5 hours working for the receivership.
Goldberg says in his filing that he and his firm, Akerman LLP, of Fort Lauderdale, Florida, as well as the other professionals working with him, have reduced their standard fees and reimbursement rates.
For example at Akerman, instead of the standard rates ranging from $440 to $725 an hour, all partners are billed at $395 an hour; associate rates are capped at $260; and paralegals and paraprofessionals are capped at $175 — resulting in a “blended rate” of $278, according to the filing.
In addition, all time billed to nonworking long distance travel is reduced a further 50 percent, according to the filing. “These discounts equate to a $235,000.00 reduction from Akerman’s standard billing,” it says.
For the time covered by the latest request, Goldberg and his firm are seeking $461,301 in fees and $21,573 in expenses, for a total of $482,874.
A breakdown of the fees and expenses for the other professionals from May 1 to Aug. 30 shows:
- Soneet Kapila, a certified public accountant, and the accounting firm Kapila Mukamal, based in Florida, are seeking fees of $207,897 and expenses of $3,208, for a total of $211,105.
- Klasko Immigration Law Partners LLP, of Pennsylvania, which has worked for the receivership in assisting with EB-5 immigration matters, is seeking payment of $15,738.
- The law firm Levine Kellogg Lehman Schneider + Grossman LLP, of Miami, is seeking fees of $106,674 and expenses of $17,747, for a total of $124,421. Jeffrey Schneider, a partner at the firm, provides “special litigation and conflicts litigation services” for the receiver, according to the filing.
The SEC accuses Quiros and Stenger of raising money from foreign investors through the federal EB-5 visa program to fund specific developments, then using $200 million in a “Ponzi-like” scheme to cover shortfalls in other projects.
In addition, the SEC claims Quiros “looted” $50 million for personal expenses, including a luxury condo in New York City.
The EB-5 program provides U.S. residency to foreign investors who put at least $500,000 into a qualified project that creates a required number of U.S. jobs.
Goldberg’s latest filing highlights steps the receivership has taken since his appointment when the two ski resorts, Jay Peak and Burke Mountain, were on the brink of bankruptcy. The document outlines work to stabilize the operations of both resorts as well as reaching a nearly $150 million settlement approved in late June with the financial firm Raymond James & Associates.
That settlement resolves claims Goldberg brought over the firm’s alleged role in the “Ponzi-like” scheme. Money from the settlement is going to several entities, including unpaid contractors, and to provide refunds to certain investors. Money also is being used to finish some of the projects, including the Stateside condo project at Jay Peak.
“As a result of these obligations, the amount of unencumbered funds presently in the receivership bank accounts is $3,449,156,” the latest filing states. “The Receiver seeks to use the unencumbered funds to satisfy the accrued administrative expenses of … $834,380 which is comprised of what is owed to the professionals.”
Goldberg also reports in the filing that he is exploring possible legal actions against other entities, though none is named.
“While the Receiver cannot yet predict the likelihood, amount or cost-effectiveness of particular claims or the claims as a whole, the Receiver continues to diligently evaluate claims against third parties,” he wrote.
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