Canadian national found guilty in Caribbean hotel Ponzi scheme
SAN FRANCISCO, Jan. 18, CMC – A Canadian man has pleaded guilty for his role in a Ponzi scheme involving vacation resorts in the Caribbean.
Derek Elliott, 44, pleaded guilty to conspiracy to commit mail fraud after reaching a plea agreement with prosecutors.
Elliott is scheduled to be sentenced on February 25, in a San Francisco court for his role in the scheme involving vacation resorts in the Dominican Republic.
He could face the maximum penalty of 20 years in prison and a fine up to twice the value of the fraud.
As part of the plea agreement, it’s believed Elliott will provide evidence against James Catledge, a Nevada businessman who was charged along with Elliott in the same scheme.
Catledge is facing one count of conspiracy to commit mail fraud and three counts of mail fraud in the scheme, which allegedly involved the illegal diversion of nearly US$70 million from more than 1,000 investors across North America.
Catledge is described as an “investment guru” who was a significant donor to the US Republican party and the failed presidential campaigns of Mitt Romney and John McCain.
Elliott grew up in Carlisle, Canada and worked in the restaurant business and real estate before joining forces with his father, Frederick, who had begun developing properties in the Dominican Republic in the late 1980s, the paper said.
It said their first resort, the Sun Village Resort & Spa, was located in Cofresi, just north of Puerto Plata's city center.
In late 2004, the Elliotts purchased an abandoned Sheraton hotel on the beachfront in Juan Dolio, about 40 kilometers east of Santo Domingo.
The plan was to turn the former 268-room Sheraton into a high-end resort.
According to court documents, investors in the Dominican vacation resort purchased a product, which was essentially a time-share arrangement for the resort property.
The investors were told the product should provide them a guaranteed annual rate of return of 7 to 10 per cent, paid quarterly, over a minimum period of five years.
But according to the prosecution, nearly US$70 million of investors' money was illegally diverted to commissions and other projects.
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