FTC challenges massive overseas real estate investment operation harming American consumers

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Based on the promoters’ promises, it sounded like a tropical paradise: a luxury enclave called Sanctuary Belize featuring a championship golf course, a new airport with direct flights to the U.S., and a hospital staffed with American doctors. No wonder consumers – many of whom were contemplating retirement – sunk more than $100 million of their savings into lots in what appeared to be a swanky resort development already under construction. But according to an FTC lawsuit, it’s the largest overseas real estate investment scam the agency has ever challenged. And for FTC watchers, one of the names behind the operation may sound familiar.

Ads for Sanctuary Belize frequently ran on cable news networks. Consumers who expressed an interest received calls from California-based telemarketers who styled themselves as “property consultants” or “investment consultants.” According to the lawsuit, the Sanctuary Belize telemarketers made a host of deceptive claims, including that every dollar from lot sales went directly into development, that the location would be ready for occupancy quickly, and that their “no-debt” business model made it a less risky investment. What’s more, the FTC says prospective buyers were told that the luxury amenities meant the value of their lots would double or even triple in just a few years, making for easy resale.

The complaint charges that when consumers visited the area before investing, Sanctuary Belize representatives doubled down on the deception, making the same false promises and again assuring prospective buyers that construction would be quickly completed. The FTC alleges that consumers also were falsely reassured by prestigious-sounding “awards” Sanctuary Belize supposedly won and by the development’s affiliation with some well-known brand names in the real estate and resort world. Relying on the defendants’ representations, consumers paid between $150,000 and $500,000 to buy lots outright. Others put down hefty down payments. Then there were monthly HOA fees. But according to the lawsuit, the defendants used consumers’ cash to fund their own lavish lifestyles and many of the tales they spun about the development were pure fiction. As a result, consumers invested their savings, but didn’t get what they were promised.

Alleging violations of the FTC Act and the Telemarketing Sales Rule, the complaint names Andris Pukke and related corporate and individual defendants. In addition, the lawsuit charges Belize’s Atlantic International Bank, an offshore financial institution, with assisting and facilitating the Sanctuary Belize scam. (You’ll want to read the complaint for more about Atlantic International’s alleged involvement.)

If the name Andris Pukke rings a bell, perhaps it’s because he’s a recidivist law violator, whom the FTC says carried out the Sanctuary Belize scheme even while serving a prison sentence for obstruction of justice. The FTC first sued Pukke in 2003, alleging that his AmeriDebt operation sold debt management plans to struggling consumers while falsely claiming to be a non-profit credit counseling organization. A 2006 order barred Pukke from violating the Telemarketing Sales Rule, imposed a multi-million judgment, and required him to turn over certain assets, including the Sanctuary Belize parcel. In 2007, the court held Pukke and co-defendant Peter Baker in contempt for refusing to turn over assets, including the land in Belize. Fast forward to 2010 when Pukke was sentenced to 18 months in prison for obstructing the AmeriDebt receivership and refusing to turn over assets.

So in addition to the lawsuit challenging the allegedly deceptive marketing of Sanctuary Belize, the FTC has filed three contempt actions: the first against Pukke, Baker, and defendant John Usher related to Sanctuary Belize, a second against Pukke and relief defendant John Vipulis seeking money Pukke owes the FTC, and a third against Pukke, Baker, and Usher seeking to unwind an earlier real estate transfer so the FTC can secure the unsold portions of the Belize land. At the FTC’s request, a federal district court in Maryland has issued an order temporarily shutting down the operation.

What’s the message others can take from the filing of the case? As baby boomers approach retirement, many are looking to relocate or to invest their nest egg in a resort dream house. As attractive as “get in on the ground floor” offers may appear on paper – and even in person – they can pose undisclosed risks if those artists’ renderings never materialize or if construction is never completed. That’s why anyone contemplating an investment of that kind – including experienced business executives – should discuss their plans with an independent accountant, attorney, or other advisor they know and trust. When those developments are located outside the United States, it calls for additional caution before consumers sign on the dotted line. Talk to experts in that locale, of course, but also consult a U.S.-based attorney with experience in foreign property investment. He or she can advise you about the additional legal risks those transactions can present.

Did you buy property in Sanctuary Belize or have dealings with related businesses that used the names Global Property Alliance, Buy Belize, Buy International, Eco Futures, Sittee River Wildlife Reserve, Sanctuary Bay, The Reserve, and The Marina at the Reserve? The FTC would like to hear from you.
 
 

Comments

Any Investor who is investing in any scheme outside or in his own home country has to fo due diligence before parting with his money. If it is overseas investment, then he can ask someone to visit site, verify and report to him through his own friends and relatives in or near the site, or appoint someone on contractual basis to do the due diligence as per his requirements and report.
Alternatively the Home Country's Govt may make relevant disclosures with copies of documents, to the investor.

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