Fatime Abdel-Fakhara, et. al. v. The State of Vermont, et. al., was filed in the United States District Court for the District of Vermont on August 24, 2021 by investors claiming that the State of Vermont and several individual Defendants wrongfully solicited and used investor funds to complete the last two phases of a Vermont ski resort after they had knowledge that the first six phases were funded through a Ponzi scheme. The complaint alleges claims for: (1) civil conspiracy under 42 U.S.C. § 1983; (2) constitutional taking without just compensation against the State of Vermont; (3) constitutional taking with no Due Process against the State of Vermont; and (4) gross negligence against the individual defendants.
Plaintiffs are seven foreign investors who, as purported class representatives, seek to represent a broader class of foreign investors who invested money as part of the “EB-5 Program,” a federal program that allows immigrant-investors to both invest $500,000 in a U.S. based project and pursue permanent residence in the United States. While a previous state-court lawsuit dealt with claims asserted against the alleged operator of the Ponzi scheme, Abdel-Fakhara involves claims against the State of Vermont and several individuals who allegedly failed to disclose to investors that the first six phases of the resort construction were funded by a Ponzi scheme. Individual defendants are several Vermont government officials or administrators of the state actor Vermont Regional Center (“VRC”).
The action is predicated on the scheme perpetrated by Ariel Qurios who purportedly stole millions from immigrant investors in 2007 for the illegitimate purchase of Jay Peak Rest in Vermont. Plaintiffs allege that Defendants, including the state actor VRC, were prepared to file a complaint against the operator of the Ponzi scheme in summer of 2015 but elected to hold off on filing the complaint and, instead, elected to raise an additional $43 million for the project through a private placement memorandum (“PPM”) that failed to disclose the Ponzi scheme activity. According to Plaintiffs, Defendants elected to proceed with completing the project to benefit the State of Vermont and pay Vermont contracts, only to plunge the resort into liquidation and receivership once the resort was largely completed. Plaintiffs contend that Defendants oversaw and approved the expenditure of investor funds, knowing that the investment was subject to liquidation and the PPM was materially misleading, violated securities laws, and omitted key information.
The complaint seeks “just compensation” pursuant to the Fifth Amendment, return of investor funds, compensatory damages, punitive damages, and an award of reasonable attorneys’ fees.