FBI probes huge “Ponzi-style” scheme; thousands in U.S., Canada “financially destroyed”

Sun Village developer Frederick Elliott

Sun Village developer Frederick Elliott

By Dan Christensen, BrowardBulldog.org

Federal prosecutors and FBI agents in South Florida are investigating allegations of yet another massive investment fraud in which thousands of investors across the U.S. and Canada are said to have lost $170 million, Broward Bulldog has learned.

The investigation began last month after a 50-page preliminary report about the “Ponzi-style” scam was sent to a Miami federal judge by a court-appointed special master. The report called for sweeping criminal probes by U.S. and Canadian law enforcement.

“The unassailable fact (is) that thousands of investors/owners, and by extension their families in the U.S. and Canada, as well as other countries, have been financially destroyed,” says the report by Miami lawyer Thomas Scott, a former federal judge and U.S. Attorney.

Investors allegedly sank those now missing millions into timeshare units and other property owned by the EMI Sun Village Resort and Spa in the Dominican Republic. But the money actually went to fund the lavish lifestyle, and gambling debts, of the resort’s developers, court papers say.

“That money has now been almost completely lost”, the report says. “The investors’ plight is tragic. The cause of that plight is criminal.”

Scott did not respond to telephone messages seeking comment. His report says there is evidence of racketeering, fraud, securities violations, money laundering and tax evasion.

James Catledge

James Catledge

The alleged Sun Village scam comes on the heels of a spate of news about the use of Ponzi schemes to bilk investors in South Florida and elsewhere.

Those recently convicted of running such schemes include New York’s Bernard Madoff, Fort Lauderdale lawyer Scott Rothstein and lesser criminal lights like Coral Springs investment advisor Michael Riolo and Weston securities trader Sean N. Healy.

Scott’s report, which reads like an indictment, says the Sun Village scheme was a “two-tier criminal enterprise.” It points the finger at Frederick and Derek Elliott, a father and son team of resort developers from Canada, and James B. Catledge, a Nevada-based investment guru whose company, Impact Inc., peddled Sun Village property.

“Catledge and his group, along with the Elliotts, created, developed, marketed, and sold a Ponzi-style scheme, bilking millions upon millions of dollars from investors,” the report says.

Catledge, a major Republican Party donor who dined with President George W. Bush in 2008, is described in the report as “the main architect of the Ponzi scheme.”

Still, the report says “the fatal blows to the investors” were the result of the Elliotts’ gross and fraudulent “mismanagement and/or essential theft of investor monies.”

Scott recommended to U.S. District Judge Alan S. Gold that he refer the Elliotts, Catledge, and a string of underlings, attorneys and corporations to law enforcement for possible prosecution.

Frederick Elliott, who once owned a home in the 700 block of Southwest 158th Terrace in Sunrise, his son, and 22 affiliated companies are defendants in a Miami federal civil racketeering lawsuit that gave rise to Scott’s report. The suit was filed last March.

James Moon, the Elliotts’ Miami lawyer, declined comment. But in a blistering reply filed last month, he asserted that Scott’s report is peppered with “factual inaccuracies, improper legal conclusions and misleading and grossly prejudicial statements.”

Moon asked Judge Gold to flush the report, remove it from the court’s website, and revoke Scott’s appointment as special master. A hearing is set for Feb. 1.

Catledge, who in 2008 contributed more than $100,000 to the Republican National Committee, John McCain’s presidential campaign and other Republican causes, is not a party to the suit. But he was briefly a plaintiff in a companion lawsuit last year, now withdrawn, that claimed he and his Impact Inc. sales team were also the Elliotts’ victims.

Catledge also owns a company called Net Worth Solutions, and can be seen in a pep talk video for employees here.

Catledge has retained criminal counsel, Las Vegas celebrity lawyer David Chesnoff. Chesnoff’s client list includes magician David Copperfield, Britney Spears and Martha Stewart.

“Mr. Catledge maintains that he is a victim, and as a result attempted to bring to the courts his concerns about the Elliotts. He categorically denies engaging in any criminal conduct,” Chesnoff said Thursday.

Derek Elliott

Derek Elliott

Still, Catledge and Derek Elliott each signed consent orders in 2007 with the Idaho Department of Finance in which they agreed not to sell unregistered securities or make false or misleading statements to investors regarding Sun Village.

Catledge admitted securities he had sold were not registered, and agreed to pay a $150,000 civil penalty. Elliott, on behalf of Sun Village, agreed to a civil penalty of $40,000. Both men also agreed to pay back investors, but the state has accused them of failing to pay and the litigation continues.

The South Florida civil action was brought by more than 200 disgruntled investors from around the country. An amended complaint filed last month alleges the Elliotts “conjured up a series of investment vehicles” through which investors could buy luxury vacation properties at two Sun Village projects, Cofresi and Juan Dolio with a promise of double-digit returns.

“Instead, the father and son pocketed the money and used it to finance a lavish lifestyle,” the suit says. The money allegedly financed “fanciful” movie projects, self-promotional videos, a yacht and Derek Elliott’s gambling debts in Las Vegas.

The Elliotts allegedly created a maze of offshore companies and trusts to veil the fraud and make themselves “judgment proof,” the suit says.

Frederick Elliott is said to have began to acquire raw land in the Dominican Republic 25 years ago. But it wasn’t until 2001 that plans for Sun Village’s first property – a 300 room resort on Cofresi Beach in Puerto Plata on the country’s north coast – were finalized.

Court records indicate that sales began in 2004 and continued until last year.

Sun Village marketed its Cofresi and Juan Dolio properties out of an office in Doral. Money that poured in was funneled through an account at the Citibank branch in Tamarac, according to the lawsuit.

The Juan Dolio and Cofresi projects were eventually foreclosed. Investors were wiped out when both were sold at a public auction last fall. The Elliotts contend the properties were sold for tens of millions of dollars less than they were worth.

Under oath, the developers of Sun Village have said all their money is now gone.

“The Elliotts have been unable (or unwilling) to explain exactly what happened to the massive amounts of funds which were collected,” the report says.

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34 Comments Post a Comment
  1. rogerwalser says:

    get your facts straight we the 200 filed this action to bring light to elliotts wrong doing mr. catledge is a hero. he brought this selfishness and greed on the part of the elliotts to a final end. blogging on your newly created site will end unless you start doing real research and stop taking journalistic shortcuts. You are a Hack!

  2. GET REAL says:

    Roger

    Pretty harsh, although you dont offer any facts. It says in the story your buddy Catledge maintains his innocence, but also admitted to selling unregistered securities.

    Do you live in one of the developments in the DR ? Will probably have to start paying rent once court takes over properties

  3. Martin says:

    It is a shame that on top of all the wrong things that are happening in our countries, there is still people trying to get ahead at all costs…

    I´m a Dominican that have being involve in the tourism area over a decade, and have seeing the Sun Village Resort from it´s birth, now I finally understand!!!

    I hope the the authorities can work together on this matter to take out this kind of people.

    One, of the millions honest dominicans.

  4. Gerald Dunn says:

    I am investor and would like to submit my facts to the proper authorities. Is there an address, name and number available.

  5. RICK WRIGHT says:

    ROGER MADE A LOT OF MONEY PROMOTING THAT PONZI AND I BELIEVE HE IS WORRIED IF CATLIDGE GOES DOWN SO WILL HE BUT THE FUNNY PART IS…..EVEN IF CATLIDGE DOESN’T GO DOWN……..ROGER MIGHT.

  6. Jim Miller says:

    Gerald Dunn, check out scams.com under investment you will find help there. I have lost about $320,000 to these thieves

  7. screwed says:

    i have also invested with these scam bastards, o\any contact to tell my story.

    hope they all hang !!

  8. T Patterson says:

    My wife and I lost over half our life savings to Catledge and the Elliott’s. As Idaho investors we signed paperwork two years ago rescinding our investments in an attempt to get our money returned. The Idaho Dept. of Finance was way out in front on this one an forced these crooks to offer refunds to investors from Idaho, but both Catledge and the Elliott’s defaulted. The State of Idaho is going after Catledge and his associates, for more info copy and paste this link to your browser:
    http://idofvelliott-impact.blogspot.com/search/label/James%20Catledge

  9. Commentor says:

    My husband and I are investors and part of the lawsuit. If you are calling James Catledge a hero, you are going to get taken for more than just what you lost. As soon as this thing started going south, I never had a good feeling about Catledge..and the truth is coming out. If you think he is innocent in all of this, I feel sorry for you. If he was such a hero, he would be paying these attorneys to sue the Elliotts, not letting all of us do it, at the same cost as him. He’s a snake, just like the Elliotts, and to be honest I hold him even more accountable. I am embarassed that I was naive enough to think that if someone was LDS, they must be honest and that’s why we decided to invest our life savings. What a lesson learned. Don’t believe for a second that he is innocent, much less a hero. I personally don’t know how he sleeps at night and I wish I had the opportunity to tell him, or write to him and let him know what I think.

  10. Greg Clark says:

    Elliotts are going to Jail .They used the investment money as their own piggy banks.Why do we have to listen to losers like Roger he was part of the massive Rip Off with Catledge.Catledge paid him to shut up!Roger will end up in jail with the rest of the thieves!

  11. Amy says:

    Can I put the Elliotts in the jail cell & toss away the key? I can only guess what my parent’s lost through these bastards! My Dad cannot afford to retire and it’s because of these crooks!
    I see that some settlement was made when the property changed hands but my guess is that that money will go to pay the lawyers? Why not pay the investors “something”?

  12. Evan says:

    I bought a pair of Maxim Bungalow fractional units in early 2008 for $86,000. Ever since the foreclosure and sale of Sun Village Resort for pennies on the dollar I have basically given up hope that small investors will see anything. Does anyone know anyway that a small investor can hope to see any money recovered?

  13. Simon says:

    If you are an investor at Sun Village like myself. You may be interested to know that a meeting for all shareholders of EMI Sun Village Inc. and EMI Cofresi Developments Inc. May 14, 2010 at 6:00 pm and 8:00 pm, at The Mohawk Inn, 9230 Guelph Line, Campbellville, Ontario, Canada. You may also be interested in their blog :http://sunvillageresorts.blogspot.com

  14. Ralph says:

    We all need to show up at the shareholder’s meeting and demand answers. Also, let’s take control of what’s left through voting for directors from the ordinary people, ones not linked to the other guys.

  15. Stuart says:

    I think there are many more shareholders in the UK like myself,a Juan Dolio investor, that have been forgotten. If the Elliott’s loose, in the end the shareholders get the leftover’s after everybody else has been paid out. There must be many more around the world not just the U.S. and Canada, who do we go to seek recompense?

  16. Chris Chua says:

    Does anyone know where I can seek legal advice? I also invested my money for a timeshare a so called Maxim Bungalows! I have been unable to seek an attorney so if anyone please I would like to be sent in the right direction. And if anyone who is feeling my anger reply back via email

  17. josiah says:

    The elliotts have deployed JR pullman as a blogger hack to use a scorched earth diversion campaign to allow the elliotts to hide their loot, the websites and propoganda perpetuated by her and her band of idiots has proven comical, so absurd it was compelling to those of us outside looking in, after professional investigators have returned real facts, its clear Elliotts are criminals and have been for many years, who ever impact is has been propped up as a scape goat for the elliotts. it may work!

  18. Rick Wright says:

    By the way, I was a salesman too and knew the same as everybody else.

  19. Securities law says:

    James Catledge and Impact agents sold securities in the form of investment timeshare contracts to hundreds of investors in unregistered, non-exempt transactions raising at least $170 million. For those of you who may be Dominican you may not understand or appreciate that Catledge broke federal and state laws in the United States in his sale of investment timeshare contracts which were unregistered, non-exempt transactions. Had James Catledge complied with federal and state laws then there would have been no sales here in the United States, and there would have been significantly fewer Elliott victims. JR Pullman or Jacci as we know her understands just who the bad guys are. I encourage you to read the complaint filed in the Michael Kelly Ponzi-scheme where James Catledge then sold securities in the form of investment timeshare contracts in unregistered, non-exempt transactions.

  20. Truth about Elliotts and James Catledge says:

    Hey Roger…

    This Greg Clark is telling the truth.
    I will listen to this Greg Clark.

    from previous post:

    Greg Clark says:
    March 15, 2010 at 1:25 am

    Elliotts are going to Jail .They used the investment money as their own piggy banks.Why do we have to listen to losers like Roger he was part of the massive Rip Off with Catledge. Catledge paid him to shut up! Roger will end up in jail with the rest of the thieves!

  21. shawn baldridge says:

    hey can anyone tell me what is true. I am hearing nothing but negative stuff on the Sun Village resort. I invested ten thousand dollars 7 or 8 yrs. ago. Is my money gone. Was it stolen. Please someone talk to me. Please.

  22. shawn baldridge says:

    my email is bassman33@centurytel.net

  23. Never Believe a Celebrity says:

    I have one simple rule. Although it won’t help everyone out of a white collar crime, it would’ve kept me out of trouble in the past, and now keeps me out of trouble in the present:
    Never leave your money with someone who doesn’t have a University Education. It is unfortunate; but every Impact Net Worth rep that happened to approach me who were doing the dirty work for this scheme, never had a University Ed, so I didn’t believe what they said.
    Likewise I know never to give out money to all the other scams out there that people accept such as Aroma Therapy or any “therapy” run by some hack with no real qualifications, Advice, Expensive Restaurants (including “cheap” cardboard food at Fast Food joints,) Hair Salons, “Non-Profits” run by people and “artists” who never had a real 9-6 job, Recycling “Programs,” Hippie Governments, the list goes on.

  24. aztec6 says:

    Catledge owns a $6.0M home, free and clear, at 18437 Calle Tramonto
    Rancho Santa Fe, CA under the name North Shore 1, LLC. It used to be owned by Impact Real Estate, LLC. He is a member at the Bridges Country Club.

  25. I understand that the Elliots are in a court battle but have not been able to get any reports that. I haven’t been able to reach anyone that might have more info. I’m looking for Mr. Dresler in TO. Does anyone able to have more info??

  26. Faye says:

    Johnny Miller has taken the picture of himself and James Catledge off of Catledge’s Linked In website. We are now asking President Bush to do the same. Please check out http://www.sunvillageblogspot.com and also http://www.scam.com under Elliott, Impact and Maxim.

  27. FL +NV +UT=SCAM says:

    When will the people ever get their money back?! Is there a reason these investor “product” specialists would invest money all in one place?

  28. JAson says:

    I am one of the investors of the Maxim Bungalows in Corfesi…i wish i could get my money back

  29. Zeta says:

    This is absolutely heartbreaking to those that lost their life savings. :(

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