Securities Fraud Cases: Businessman Accused in Jay Peak Resort-Related Investment Scheme Must Pay Back Over $81M in Investor Money, Former State Street VP Faces Another Criminal Charge, and Lawyer Pleads Guilty in $20M Stock Scam

Businessman Settles SEC Case Over Immigrant Visa-Related Investor Scam

Ariel Quiros, a businessman accused of defrauding foreign investors seeking to earn US residency through the EB-5 Immigrant Investor Program, has agreed to the settle the Securities and Exchange Commission’s case against him. As part of the settlement, which a court still has to approve, Quiros will be held liable for over $81M in disgorgement of ill-gotten gains and a $1M penalty. He also has to forfeit about $417K.

Over 700 investors from at least 75 nations invested with Quiros. Their funds were supposed to go toward “construction projects at the Jay Peak Resort and a proposed (nearby) biomedical research facility,” said the SEC. Instead, contends the regulator, Quiros misused over $50M to buy another ski resort and pay for his own spending, including the purchase of two luxury condos. He also failed to direct about $30M to the construction projects, which was necessary for these investors to become US residents.

Now, Quiros must give up the two condos and the resort that he bought using investors’ funds, as well as surrender his ownership stake in Jay Peak and many other properties.

Ex-State Street Executive is Accused of Defrauding Another Investor Through Hidden Fees

Federal prosecutors have filed a new criminal charge against ex-State Street Corp.(STT) Vice President Ross McLellan. The former bank executive had previously pleaded not guilty to an earlier indictment accusing him and others of defrauding six clients in the Middle East and Europe. Now, the government is claiming that McClellan charged another client, a US-based insurer, hidden fees on fixed-income trades that were made on behalf of funds that the client advised.

McLellan is scheduled to go on trial for the earlier criminal charges of wire fraud and securities fraud later this year.

In a settlement reached with the UK Financial Conduct Authority in 2014, State Street agreed to pay $38M for overcharging the six clients. Among those that were financially harmed were government pension funds in Britain and Ireland, as well as a Middle Eastern sovereign wealth fund. Last year, State Street agreed to pay $64M to settle related US civil and criminal probes.

Attorney Pleads Guilty in $20M Pump-and-Dump Scam

Diane D. Dalmy, a Colorado lawyer has pleaded guilty in the securities fraud case accusing her of conspiring with others to bilk thousands of investors in a $20M pump-and-dump fraud. She could end up serving up to five years behind bars, pay a $40M fine, and ordered to pay $10.7M in restitution.

Dalmy and others are accused of manipulating stock trades, announcing business developments that were bogus, and engaging in other fraudulent actions to inflate a stock’s price. The Hartford Courant reports that the stock scam affected about 12,000 victims, many of them retired investors who lost their savings as a result. Dalmy, who is accused of signing fake lawyer opinion letters falsely certifying that certain penny stock transactions were legitimate, admitted that she let a co-conspirator move funds through a law firm trust.

This is not the first time that Dalmy has been accused of fraud. The SEC barred her from involvement in letters similar to the ones she signed in this latest case after she was accused of profiting in earlier stock offering fraud.