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From Antitrust Law Daily, November 8, 2018

FTC gets TRO against ‘Sanctuary Belize luxury real estate scheme’

By Edward L. Puzzo, J.D.

At the FTC’s request, a federal district court in Maryland has issued an order temporarily shutting down a fraudulent scheme, targeted to potential retirees, deceptively marketing interests in a luxury real estate development in Belize, the FTC has announced today. According to James A. Kohm, Director of the Enforcement Division in the Bureau of Consumer Protection, this sophisticated scheme is the largest overseas real estate investment scam the agency has ever targeted (FTC v. Ecological Fox, LLC, FTC File No. X040009).

The alleged scheme took in more than $100 million, marketing at least 1,000 lots in what supposedly would become the Sanctuary Belize luxury development in Central America. According to the FTC, the defendants duped consumers, usually business owners at or near retirement age, into buying Sanctuary Belize lots by falsely promising that the development would include luxury amenities and be completed soon, and that the value of the lots would rapidly appreciate.

The 23 named corporate and individual defendants include Andris Pukke, a recidivist previously sentenced to prison in connection with the AmeriDebt case (Federal Trade Commission v. AmeriDebt, Inc., FTC File No. 0223171, Civil Action No. PJM 03-3317). The complaint also names Angela Chittenden, Beach Bunny Holdings, LLC, The Estate of John Pukke (Andris Pukke’s late father), John Vipulis, and Deborah Connelly as relief defendants who received funds from deceptive and illegal conduct.

The development was advertised and promoted on television, including Fox News, Bloomberg News, infomercials and featured on HGTV's House Hunters program. When consumers responded, telemarketers based in California or individuals on-site in Belize, identifying themselves as "property consultants" or "investment consultants," would deceptively claim that (1) the developers used a "no-debt" business model, which supposedly made buying a lot in Sanctuary Belize less risky than a real estate investment in which the developer must make payments to creditors like banks; (2) that every dollar collected from lot sales went back into development, which (3) would allow completion of the development in 2-5 years; (4) that the development would include impressive amenities including an American doctor-staffed hospital, a championship-caliber golf course, and a new international airport with direct flights to the United States; (5) that the amenities would insure a doubling or tripling of property values in 2-3 years; (6) making it easy for buyers to resell their lots. All of these claims, according to the FTC, were false.

The FTC contends that relying on the defendants’ deceptive claims, consumers purchased lots that typically cost between $150,000 and $500,000 outright, or made large down payments followed by sizeable monthly payments, in addition to paying monthly homeowners association (HOA) fees. However, because the defendants’ claims are not true, consumers either have lost, or will lose, some or all of their investments.

In its complaint filed in the federal district court in Maryland, the FTC is seeking to permanently stop the scheme and obtain a court order requiring them to turn over hundreds of millions of dollars to compensate deceived U.S. investors.

Companies: AmeriDebt, Inc.; Ecological Fox, LLC

MainStory: TopStory ConsumerProtection FederalTradeCommissionNews

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