Federal prosecutors and FBI agents in South Florida are investigating allegations of yet another massive investment fraud in which thousands of investors across the United States and Canada are said to have lost $170 million.
The investigation began last month after a 50-page preliminary report about the “Ponzi-style” scheme was sent to a Miami federal judge by a court-appointed special master. The report called for sweeping criminal investigations 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 time share 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 could not be reached for comment. His report says there is evidence of racketeering, fraud, securities violations, money laundering and tax evasion.
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 has retained criminal counsel, Las Vegas celebrity lawyer David Chessnof. Chessnof’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,” Chessnof said Thursday.
By Dan Christensen, BrowardBulldog.org
January 29, 2010