SEC bars ex-Raymond James branch manager after alleged ski resort fraud
A former Raymond James branch manager Joel N. Burstein has lost his career over what appears to be a misguided decision to put family first.
Burstein agreed to be barred from the industry for 10 years and to pay the SEC a $80,000 fine for allegedly helping his father-in-law Ariel Quiros misappropriate $21 million in investor funds in order to buy a ski resort in Vermont, according to the SEC.
Quiros, the accused mastermind of a broader fraud, raised a total of about $364 million from 728 investors in at least 74 countries, all of whom were hoping to fast-track their immigration applications through the federal EB-5 visa program, according to a complaint filed by the commission in federal district court in Miami.
"Instead, in Ponzi-like fashion, money from investors in later projects was misappropriated to fund deficits in earlier projects," the commission claims. "More than $200 million was allegedly used for other-than-stated purposes, including $50 million spent on Quiros' personal expenses."
Last year, Raymond James agreed to pay $150 million to settle charges that it enabled the fraud against the immigrant investors. It also agreed to pay nearly $6 million to settle allegations from Vermont state regulators related to the case.
At the time, the SEC-appointed receiver on the case, attorney Michael Goldberg, said that most investors have been "put in the position they would have been had there not been a fraud, and that was our goal."
Goldberg credited Raymond James for helping facilitate a rapid recovery of losses to investors.
The firm settled charges by Vermont securities regulators connected to a ski resort at the center of an alleged $200 million fraud. A related lawsuit filed by an SEC-appointed receiver is pending.July 1
The settlement is the third major regulatory payment the BD has incurred in the past year. A branch manager associated with the Jay Peak case has also left the firm.April 17
"I've been involved in a lot of cases, and typically companies will dig in and fight it out for years," Goldberg said. "I could not be completely honest if I did not give them credit."
For the duration of the fraud, Burstein was the registered representative on Quiros' accounts at Raymond James and on accounts owned by the ski resort, Jay Peak.
Burstein created a smokescreen to hide from his broker-dealer his misappropriation of client funds, according to the complaint.
"To give the appearance that the investor funds remained in the accounts, with Burstein's assistance, Quiros also purchased U.S. Treasury bills on margin," the SEC says.
Burstein, who neither admitted nor denied guilt in his settlement with the SEC, could not be reached for comment. It is unclear if he is represented by counsel.