Unregistered Sale of Stock, Fraud and Misrepresentation Litigation and FINRA Arbitration Attorney, Russell L. Forkey, Esq.
SEC Charges Two Individuals in Fraudulent Offering of Investments in Dominican Republic Resorts
The Securities and Exchange Commission charged James B. Catledge and Derek F.C. Elliott, and certain of their related entities, with making material misrepresentations to investors in connection with the unregistered sale of interests in two resorts in the Dominican Republic.
The SEC alleges that Catledge, a Nevada resident, and Elliott, a Canadian citizen and resident of the Toronto area, raised more than $163 million from approximately 1,200 investors between the fall of 2004 and 2009. The securities offered, called “Residence” and “Passport” investments, represented timeshare and ownership interests, respectively, in the Cofresi and Juan Dolio resorts in the Dominican Republic
The complaint alleges that Catledge and Elliott promised investors a secure return of 8% to 12% annually on the Residence investment and 5% on the Passport investment. Investors were assured that their principal was safe, and that they would share in the projected appreciation in the value of the resorts. According to the SEC’s complaint, investor funds were not used to construct the properties, as had been represented, but instead were largely used for other purposes, including the payment of exorbitant undisclosed commissions and promised returns to earlier investors. The SEC alleges that, of the nearly $164 million raised from investors, approximately $59 million (36%) was used to pay commissions to Catledge, Elliott and several of their related entities, among others.
The SEC’s complaint seeks disgorgement of ill-gotten gains, financial penalties, and permanent injunctive relief against Catledge, Elliott, Sun Village Juan Dolio, Inc., EMI Sun Village, Inc. and EMI Resorts (S.V.G.), Inc. to enjoin them from future violations of the federal securities laws. As to Catledge and Elliott only, it also seeks an injunction against acting as an unregistered broker-dealer. The complaint also names D.R.C.I. Trust, which was beneficially owned by Catledge, as a relief defendant in this matter.