United States District Court, S.D. Florida, Miami Division
ALEXANDRE DACCACHE, on behalf of himself and all others similarly situated, Plaintiffs,
ARIEL QUIROS; PEOPLE'S UNITED FINANCIAL, INC.; and PEOPLE'S UNITED BANK, Defendants.
ORDER DISMISSING AMENDED COMPLAINT AGAINST QUIROS,
PEOPLE'S UNITED FINANCIAL. INC., AND PEOPLE'S UNITED
FEDERICO A. UNITED STATE DISTRICT JUDGE.
Court dismisses the Amended Complaint against the remaining
Defendants: Ariel Quiros, People's United Financial,
Inc., and People's United Bank and grants Defendants'
Motions to Dismiss (D.E. Ill. and 114). The Court finds that
Plaintiffs lack standing to sue Defendant Quiros, because
Plaintiffs' claims are derivative under Florida law, as
they have not sufficiently alleged an injury separate and
distinct from other investors. Additionally, the Court lacks
personal jurisdiction over the Peoples' Defendants
because Plaintiffs failed to meet their burden in rebutting
the Defendants' affidavits, but even if they had,
exercising personal jurisdiction over them would not comport
with the Due Process Clause. Accordingly, the Motions to
Dismiss are granted.
The Amended Complaint
August 9, 2016, Plaintiffs filed an Amended Complaint against
Defendants Raymond James & Associates, Inc.,
People's United Financial, Inc., People's United
Bank, Ariel Quiros, William Stenger,  and Joel
Burstein. The Defendants that remain are Ariel
Quiros, People's United Bank, N.A., and People's
United Financial, Inc. The Amended Complaint includes causes
of action for: common law fraud against Quiros (Count I);
aiding and abetting common law fraud against People's
Bank (Count III); aiding and abetting breach of fiduciary
duty against Quiros (Count IV); aiding and abetting breach of
fiduciary duty against People's Bank (Count VI); civil
conspiracy against Quiros and People's Bank (Count VII);
negligence against People's Bank (Count IX); breach of
fiduciary duty against People's Bank (Count X); breach of
contract against People's Bank (Count XI); Florida's
Racketeer Influenced and Corrupt Organizations Act against
Quiros (Count XII); conspiracy to violate Florida's Civil
Racketeer Influenced and Corrupt Organizations Act against
Quiros (Count XIII). The Peoples' Defendants and Quiros
move to dismiss the Amended Complaint. For the following
reasons, the Court dismisses the Amended Complaint.
are all natural persons, over the age of twenty-one, who
allegedly sustained damage as a result of their investments
in this Ponzi scheme. Defendant Raymond James &
Associates, Inc. is a corporation organized in Florida, with
its principal place of business in St. Petersburg, Florida.
Defendant People's United Financial, Inc., is a financial
services company. People's United Financial, Inc.
acquired the Chittenden Corporation, the bank holding company
for the Chittenden Trust Company, which at the time of the
acquisition, acted as the escrow agent for the investor funds
for the EB-5 projects.
People's United Bank is a federally chartered savings
bank headquartered in Bridgeport, Connecticut, and is a
subsidiary of People's United Financial, Inc. Plaintiffs
submit that in July 2008, the Board of Directors of
People's United Financial, Inc. and the Board of
Directors of People's United Bank approved a plan to
consolidate the acquired Chittenden entities into
People's United Bank. Defendant Quiros is a natural
person residing in Florida. Defendant Stenger is the
Director, President, and CEO of Jay Peak, Inc, and resides in
Vermont. Finally, Defendant Burstein resides in Florida and
is the Miami Branch Manager and Vice President of Investments
for the Raymond James South Florida Complex.
Peak, Inc. is a Vermont corporation that operates the Jay
Peak Resort in Jay, Vermont, the location of the first six
alleged EB-5 projects for which Quiros and Stenger raised
money. Q Resorts is a Delaware corporation that is a 100%
owner of Jay Peak, Inc., and Plaintiffs submit that Quiros is
the sole owner, officer, and director of Q Resorts. Q Resorts
acquired the stock of Jay Peak, Inc. from a Canadian company,
Mont Saint-Sauveur International, Inc.
Peak Hotel Suites L.P. ("Phase I") is a Vermont
limited partnership. Between December 2006 and May 2008,
Phase I raised $17.5 million from 35 investors through the
EB-5 program to build a hotel. Phase I then offered and sold
securities in the form of limited partnership interests
beginning in December 2006, when Jay Peak, Inc. was still
owned by Mont Saint-Sauveur. Jay Peak Hotel Suites Phase II
L.P. ("Phase II") is a Vermont limited partnership.
Between March 2008 and January 2011, Phase II raised $75
million from 150 investors through an EB-5 offering of
limited partnership interests to build a hotel, indoor water
park, ice rink, and golf club house.
Peak Penthouse Suites L.P. ("Phase III") is a
Vermont limited partnership. Between July 2010 and October
2012, Phase III raised $32.5 million from 65 investors
through an EB-5 offering of limited partnership interests to
build a 5 5-unit hotel and an activities center. Jay Peak
Golf and Mountain Suites L.P. ("Phase IV") is a
Vermont limited partnership. Between December 2010 and
November 2011, Phase IV raised $45 million from 90 investors
through an EB-5 offering of limited partnership interests to
build golf cottage duplexes, a wedding chapel, and other
Peak Lodge and Townhouses L.P. ("Phase V") is a
Vermont limited partnership. Between May 2011 and November
2012, Phase V raised $45 million from 90 investors through an
EB-5 offering of limited partnership interests to build 30
vacation rental townhouses, 90 vacation rental cottages, a
cafe, and a parking garage. Jay Peak Hotel Suites Stateside
L.P. ("Phase VI") is a Vermont limited partnership.
Between October 2011 and December 2012, Phase VI raised $67
million from 134 investors through an EB-5 offering of
limited partnership interests to build an 84-unit hotel, 84
vacation rental cottages, a guest recreation center, and a
medical center. Jay Peak Biomedical Research Park L.P.
("Phase VII") is a Vermont limited partnership.
Between November 2012 and April 2016, Phase VII raised
approximately $83 million from 166 investors through an EB-5
offering of limited partnership interests to construct a
biomedical research facility.
Mountain Resort, LLC owns Burke 2000, LLC, which in turn owns
Burke Mountain Operating Company. Plaintiffs' submit that
Quiros owns 100% of Q Burke Mountain Resort, LLC. Q Burke
Mountain Resort Hotel and Conference Center, L.P.
("Phase VIII") is a Vermont limited partnership.
Between June 2013 and April 2016, Phase VIII raised
approximately $53 million from 106 investors through an EB-5
offering of limited partnership interests to build a 112-room
hotel, a conference center, and outdoor pool.
is the director and only principal of various other entities
that act as the general partners of the limited partnerships
in Phases I-VI. Quiros and Stenger are managing members of
AnC Bio Vermont GP Services, LLC, a Vermont limited liability
company that acts as the general partner for Phase VII.
Alleged Ponzi Scheme
claims stem from their investments in a series of related
projects at the Jay Peak and Q Burke ski resorts in Vermont.
Plaintiffs allege that Jay Peak was owned and operated by
Mont Saint-Sauveur International, Inc. from 1978 until
mid-2008. Quiros and Stenger allegedly negotiated with Mont
Saint-Sauveur to acquire and further develop Jay Peak in
2007. Quiros and Stenger then raised funds to develop Jay
Peak through the EB-5 Immigrant Investor Program-a program
created by federal law that provides prospective immigrants
the opportunity to become permanent U.S. residents by
investing in U.S. enterprises. Plaintiffs allege that in
2008, Quiros, Burstein, and Amigo (Burstein's
supervisor), met to discuss a financial structure for the
limited partnerships they planned to implement to raise
capital for the EB-5 projects. As a result, Plaintiffs submit
that Raymond James agreed that investor funds would be
transferred from escrow accounts at People's Bank to
accounts at Raymond James, over which Quiros would have
allege that the Ponzi scheme occurred as follows: Burstein,
Quiros, and Amigo made plans to finance the purchase of Jay
Peak using a margin loan. Investor funds would be used to
purchase Treasury bills and Raymond James would then lend
money to Quiros using the investor money as collateral,
without notifying the investors that their money was serving
as collateral. The Treasury bills purchased with investor
funds became collateral for a margin loan, and the loan
permitted Quiros to borrow up to 90% of the value of the
Treasury bills in the limited partnership accounts at Raymond
preparation for the closing of Jay Peak Inc., Quiros asked
Saint-Sauveur to open brokerage accounts at Raymond James in
the names of Phases I and II. Saint-Sauveur agreed, and
Stenger opened Saint-Sauveur's accounts at Raymond James
for Phases I and II. People's Bank then made two
transfers of $11 million and $7 million in escrowed investor
funds to Saint-Sauveur's Phase I and II accounts at
Raymond James. Thereafter, Quiros opened two accounts at
Raymond James under his control for Phases I and II. Before
Quiros tendered the purchase price to Saint-Sauveur,
Saint-Sauveur transferred $11 million in its Phase I and $7
million in its Phase II accounts at Raymond James to
Quiros's Phase I and II accounts. By Plaintiffs'
account, Quiros was in control of investor money for Phases I
and II that was otherwise supposed to be in Stenger's
to transferring the funds for Phases I and II, Saint-Sauveur
wrote a letter to Burstein, copying Quiros, confirming that
the funds in the Raymond James Phase I account were investor
funds and cautioning about the permissible use of the funds.
The letter stated, inter alia, that "[y]ou
confirmed that these funds will not be used in any manner,
including as collateral or a guarantee, to finance [Q
Resorts' purchase of] the Jay Peak Resort."
allege that despite knowing the investor money could not be
used to purchase Jay Peak, Inc., Quiros-with the assistance
of Stenger, Burstein, and Raymond James-through Q Resorts,
used $21.9 million of investor funds ($12.4 million from
Phase I and $9.5 million from Phase II) to fund the vast
majority of the purchase of Jay Peak, Inc. Quiros then
transferred $7.6 million of Phase I investor funds and $6
million of Phase II investor funds from the Raymond James
Accounts to a third account that he opened at Raymond James
in the name of Q Resorts. The same day, Quiros wired $13, 544
million from the Q Resorts account to the law firm
representing Saint-Sauveur as partial payment for the stock
purchase. Over the next several months, Quiros made
additional payments to the same law firm totaling $8.4
million. Plaintiffs allege that all of these payments were
made improperly using investor funds, and maintain that
Stenger facilitated many of these payments by transferring
additional money from People's Bank to Quiros's Q
Resorts account at Raymond James. When the transfers were
complete, Quiros wired the money to the law firm representing
submit that nothing in the limited partnership agreements
permitted Quiros to use the investor funds to buy Jay Peak,
Inc. In fact, a section in the Phase I and II agreements
prevented the general partner from borrowing or commingling
investor funds and from permitting Quiros and Q Resorts to
purchase Jay Peak, Inc., without investor consent. Plaintiffs
further allege that Quiros's misuse of investor funds
permeated through each of the EB-5 projects at issue.
Quiros opened the Phase I and II accounts, he signed a credit
agreement with Raymond James that allowed both accounts to
hold margin balances-the accounts could borrow money and hold
negative cash balances that would be paid back to Raymond
James with interest. Quiros pledged the funds in the Phase I
and II accounts as collateral for any margin loans the
accounts incurred, and opened new accounts in the name of
each limited partnership that he had sole control over.
Stenger transferred investor funds from accounts at
People's Bank-where investors had deposited their
money-to the accounts controlled by Quiros. Plaintiffs submit
that Stenger violated terms of the applicable limited
partnership agreements and breached his fiduciary duty as
general partner to the investors in the limited partnerships
each time he transferred the funds. Plaintiffs suggest this
occurred with every limited partnership. Plaintiffs also
maintain that Quiros's establishment of the margin loans
violated the terms of the limited partnership agreements
because the agreements prohibited general partners from
encumbering or pledging investor funds as collateral without
investor approval. Lastly, Plaintiffs allege that Quiros and
Stenger commingled Phase I investor monies with funds from
other limited partnerships.
the offering materials purportedly given to investors was an
escrow agreement with People's Bank. To purchase a
limited partnership interest in any phase, each investor was
required to (1) enter into the escrow agreement; and (2)
transfer funds to People's Bank, with $500, 000 as the
limited partnership investment and an additional sum, usually
$50, 000 for administrative fees. Id. Further, the
escrow agreements stated that People's Bank would release
the funds to the specific limited partnership account at
Raymond James that the investor purchased an interest in.
However, the Phase I-III offering materials provided that the
investors' funds could only be held in bank accounts, and
the Phases I and II documents required that the transferee
bank accounts be "insured by an agency of the federal
government." Plaintiffs allege that as a brokerage firm,
Raymond James is neither a bank, nor is ensured by the
Federal Deposit Insurance Corporation, and thus, the transfer
of investor funds for Phases I-III was prohibited by the
offering materials given to investors. For the following
reasons, the Court grants the Motions to Dismiss.
pleading that states a claim for relief must contain ... a
short and plain statement of the claim showing that the
pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2).
When ruling on a motion to dismiss, a court must view the
complaint in the light most favorable to the plaintiff and
accept the plaintiffs well-pleaded facts as true. See St.
Joseph's Hosp., Inc. v. Hosp. Corp. of Am., 795 F.2d
948, 954 (11th Cir. 1986). To survive a motion to dismiss, a
"complaint must contain sufficient factual matter,
accepted as true, to 'state a claim to relief that is
plausible on its face.'" Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544s 570 (2007)). Detailed
factual allegations are not required, but a pleading must
offer more than "labels and conclusions" or "a
formulaic recitation of the elements of the cause of
action." Twombly, 550 U.S. at 555; Jackson
v. BellSouth Telecomm., 372 F.3d 1250, 1263 (11th Cir.
2004) ("To survive a motion to dismiss, plaintiffs must
do more than merely state legal conclusions; they are
required to allege some specific factual bases for those
conclusions or face dismissal of their claims."). In
short, the complaint must not merely allege misconduct, but
must demonstrate that the pleader is "entitled to
relief." Iqbal, 556 U.S. at 677-78.
motion to dismiss for lack of personal jurisdiction, the
court accepts as true all allegations in the complaint and
decides whether the plaintiff has met its burden of
establishing a prima facie case of personal
jurisdiction. Stubbs v. Wyndham Nassau Resort &
Crystal Palace Casino, 447 F.3d 1357, 1360 (11th Cir.
2006). "[W]here the defendant challenges the court's
exercise of jurisdiction over its person, the plaintiff bears
the ultimate burden of establishing personal jurisdiction is
present." Oldfield v. Pueblo De Bahia Lora,
S.A., 558 F.3d 1210, 1217 (11th Cir. 2009).
determining whether personal jurisdiction exists over a
defendant, courts generally partake in a two-step analysis.
Verizon Trademark Servs., LLC v. Producers, Inc.,
810 F.Supp.2d 1321, 1324-25 (M.D. Fla. 2011). A court may
exercise personal jurisdiction over a nonresident if: (1) the
forum state's long-arm statute confers jurisdiction and
(2) jurisdiction would not "offend traditional notions
of fair play and substantial justice." PVC Windoors,
Inc. v. Babbitbay Beach Constr., N.V., 598 F.3d 802, 807
(11th Cir. 2010) (citation and internal quotations omitted).
Courts proceed to the second step only if the long-arm
statute provides for jurisdiction. Id. A court must
strictly construe the long-arm statute in assessing whether a
plaintiff has satisfied its burden of producing affidavits,
documents, or testimony that overcome a defendant's
evidence challenging personal jurisdiction. Sculptchair,
Inc. v. Century Arts, Ltd., 94 F.3d 623, 627 (11th Cir.
1996) (citations omitted).
Quiros, People's United Financial, Inc., and People's
United Bank, N.A. move to dismiss the Amended Complaint.
Quiros makes ten arguments in his Motion to Dismiss Counts I,
IV, VII, XII, and XIII of the Amended Complaint: (1)
Plaintiffs do not allege a Ponzi scheme; (2) Plaintiffs lack
standing to bring derivative claims; (3) Plaintiffs have not
alleged investment injury for Phases I-V of the alleged Ponzi
scheme; (4) Plaintiffs cannot bring claims on behalf of
limited partnerships in which they did not invest; (5)
Plaintiffs' claims against Quiros fail because they are
breach of contract claims disguised as tort claims; (6)
Plaintiffs have not pled falsity of offering documents with
requisite particularity as required by Federal Rule of Civil
Procedure 9(b); (7) Aiding and Abetting Breach of Fiduciary
Duty (Count IV) fails because Plaintiffs do not allege that
Quiros owed a fiduciary duty to investors or that he had
knowledge of the purported fiduciary duties at issue; (8)
Civil Conspiracy (Count VII) fails because Plaintiffs have
not alleged an actual agreement by the alleged
co-conspirators; (9) Racketeer Influenced and Corrupt
Organizations Act claims (Counts XII and XIII) fail because
Plaintiffs have not adequately pleaded criminal wrongdoing
and Plaintiffs have not sufficiently alleged Quiros's
participation in a pattern of racketeering activity; and (10)
the statutes of limitation bar claims for aiding and abetting
breach of fiduciary duty and civil conspiracy (Counts IV and
motion relies on procedural and substantive arguments. The
Court will address his procedural arguments first, because
standing and statutes of limitation are dispositive threshold
matters. See Varga v. Palm Beach Capital Mgmt., LLC,
No. 09-82398-CIV, 2010 WL 8510622, at *1 (S.D. Fla. Sept. 3,
2010) ("[V]enue and standing issues are threshold legal
issues that are case-dispositive."); Bethke v.
Stetson, 521 F.Supp. 488, 489 (N.D.Ga. 1979),
aff'd, 619 F.2d 81 (5th Cir. 1980) ("A
determination as to whether the claim is barred by the
statute of limitations is dispositive of the issues in the
case."). Quiros's procedural arguments include: (1)
Plaintiffs lack standing to bring derivative claims; (2)
Plaintiffs lack standing because they have not alleged
investment injury for phases I-V; (3) Plaintiffs lack
standing to bring claims on behalf of limited partnerships in
which they did not invest; and (4) the statutes of limitation
bar claims for aiding and abetting breach of fiduciary duty
(Count IV) and civil conspiracy (VII).
Peoples' Defendants also seek dismissal of the Amended
Complaint with three principal arguments: (1) the Court lacks
personal jurisdiction over them; (2) Plaintiffs' claims
fail because they are based upon the Peoples' Defendants
transfers of funds consistent with the terms of the escrow
agreements; and (3) Plaintiffs' fail to plausibly plead
claims against the Peoples' Defendants. Like ...