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Raymond James fights back in $350 million Vermont fraud case

Raymond James — which previously agreed to pay a $5.95 million settlement to Vermont regulators in connection with the case — last week sued 21 people who had filed arbitration suits against the company with the Financial Industry Regulatory Authority ...

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Tuesday, August 2, 2016 2:24pm Print 0 My Edition I want to see more articles tagged I'm already following articles tagged   
[Times file photo] "> Previous Next Previous Next Raymond James Financial is striking back in a large fraud case over a failed $350 million ski resort and real estate project in northern Vermont tied to the Miami branch of the StPetersburg-based brokerage firm. Related News/Archive Sharp stock market declines depress Raymond James Financial's quarterly earnings 6 Months Ago Trigaux: StPetersburg's Raymond James Financial cracks Fortune 500 rankings 2 Months Ago New study ranks Raymond James among top ten firms for financial adviser misconduct 5 Months Ago createAd("widesky1", "news_business_banking_story", "widesky1", "160x600", "", "", "7297", "", "", "", "", "", ""); Raymond James — which previously agreed to pay a $5.95 million settlement to Vermont regulators in connection with the case — last week sued 21 people who had filed arbitration suits against the company with the Financial Industry Regulatory Authority. The investors had accused Raymond James of negligent supervision, common law fraud, fraudulent transfers, unjust enrichment and breach of fiduciary duty, among other claims In its suit, Raymond James counters that the 21 — all of whom were believed to be living in Florida at the time of their arbitration filing — do not have standing for a claim because they were not Raymond James' clientsThe suit also maintains that the allegations are already being addressed in a separate class action complaint. The scandal bubbled up in April when the Securities and Exchange Commission filed a complaint against developers Ariel Quiros and William Stenger, alleging that they and their companies had made false statements and omitted key information while soliciting money to build a biomedical research facility and ski resort in VermontThe SEC also froze the assets of the resort and related businesses. Quiros and Stenger had raised more than $350 million for the Jay Peak resort project from wealthy investors through the federal government's EB-5 programThe program is a way for foreign nationals who invest $500,000 in a depressed region of the United States to receive green cards if a required number of jobs are created by their investment. The SEC said Quiros and Stenger were aided in their deception by Quiros' former son-in-law, Joel Burstein, a vice president of investments for Raymond James who managed the firm's South Florida office. Investors were told their money would only be used to finance new projects related to Jay Peak, according to the SECInstead, in what devolved into a Ponzi scheme, their investments were misappropriated to fund deficits in earlier projects, the SEC said. In May, investors filed a class action suit alleging that Quiros and Stenger, with Bur­stein's help, misused more than $200 million and "systematically looted" more than $50 million of the $350 million-plus that had been raised by using an intricate web of transfers among various accounts at Raymond James. In late June, Raymond James reached a settlement with the Vermont Department of Regulation, agreeing to pay the state $5.95 million to settle allegations of violations of securities laws. Among those who filed for arbitration with the Financial Industry Regulatory Authority in June was Tampa resident Maurice Price, who described himself as a 60-year-old who came to the United States from the United Kingdom "with the hope of living the American dream" but "lost his hard-earned retirement funds and has been damaged as a result of Raymond James' conduct." In his arbitration filing, Price accuses Raymond James of routinely violating its own internal rules and industry standards and facilitating the fraudulent scheme involving transfers of investors' funds in a "roundabout manner" to defraud them. He sought damages in excess of $500,000 plus interest and punitive damages. Contact Jeff Harrington at jharrington@tampabay.comFollow @JeffMHarrington. 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