The case involving Andris Pukke and Peter Baker that started with Ameridebt is still grinding on regarding Sanctuary Belize. The FTC summary of the case reads like a movie script.
It involves international intrigue, deception, Orange County companies, prison jumpsuits, and back-stabery.
Buckle up. This is going to be a long wild ride.
[PROPOSED] JOINT PRETRIAL ORDER OF THE FEDERAL TRADE COMMISSION, ANDRIS PUKKE, PETER BAKER, AND LUKE CHADWICK
Pursuant to the Preliminary Injunction, DE 615, and Local Rule 106, Plaintiff Federal Trade Commission and the Defendants submit the following Pretrial Order and its Attachments (collectively, “Order”).
General Reservation and Non-Waiver
All parties submitting this Order stipulate that whatever reservations of rights they may assert are preserved (including reserving whatever rights they may have to supplement this Statement) and no party submitting this Order waives any rights it otherwise has. Accordingly, the parties agree that they do not need to repeat various “boilerplate” reservations and objections throughout this Order.
I. BRIEF STATEMENT OF FACTS & LEGAL THEORIES (FTC)
L.R. 106(a): A brief statement of facts that each plaintiff proposes to prove in support of that plaintiffs legal claims, together with a listing of the separate legal theories relied upon in support of each claim.
The FTC will prove that Andris Pukke, Peter Baker, and Luke Chadwick orchestrated a massive land scam that spanned more than a decade and victimized consumers to the tune of $138.7 million. In the process, each have violated the Federal Trade Commission Act’s (“FTC Act”) prohibition on deceptive conduct, 15 U.S.C. § 45, and have violated similar provisions within the Telemarketing Sales Rule (“TSR”). Both Pukke’s and Baker’s actions operating the scam also violated this Court’s order in FTC v. AmeriDebt, Inc. (“ DE 473, which prohibited Pukke and any person acting in concert with him from making misrepresentations while selling any good service through telemarketing. Furthermore, Pukke and Baker were able to perpetrate this massive scam only because of their contempt of this Court’s order requiring them to turn over the land that comprises Sanctuary Belize to the original Receiver in AmeriDebt, Inc. See AmeriDebt DE 571 & 572. Additionally, in the course of operating the scam Pukke violated yet another order from AmeriDebt, this one prohibiting him from repaying a loan to his childhood friend, John Yipulis, unless and until he had made the FTC and the AmeriDebt victims whole. See AmeriDebt DE 625.
At trial, the FTC will prove that Pukke, Baker, and Chadwick operated a host of companies that, in concert, engaged in a long-running and effective deceptive marketing campaign for lots in Belizean development known variously as “Sanctuary Bay,” “Sanctuary Belize,” and “The Reserve,” and which the FTC will refer to as “Sanctuary Belize” for ease of reference. The host of companies Pukke, Baker, and Chadwick controlled will be referred to, for ease, as “SBE” or Sanctuary Belize Enterprise. The SBE included a host of United States-based companies that marketed and sold Sanctuary Belize lots from Orange County, California. These companies include the various corporate forms that the primary operation used over the course of the scheme (frequently interchangeably and at all times without reference to any corporate formalities), as well as shell companies that the individuals used to receive payment and at times hide their involvement. These companies also include the Belizean registered entities, which otherwise shared owners, finances, employees, and operations with the United States-based entities. Importantly, these entities also include the various companies comprising Coldwell Banker Southern Belize, which the SBE used to both deceptively market Sanctuary Belize lots and otherwise shore up hope amongst their victims that they might be able to sell their lots for the promised, but never realized, appreciation.
The following will describe: (1) the history behind the Sanctuary Belize parcel and previous proceedings before this Court; (2) how the scheme functioned, including the various misrepresentations made to consumers; (3) the individual defendants and their roles within the scheme; and (4) the companies comprising the SBE and how they formed a common enterprise.
After describing these facts, the FTC will lay out the legal basis for liability. Pukke, Baker, and Chadwick will be liable as principals of the SBE, which otherwise violated the FTC Act and the TSR. Pukke and Baker will also be liable for violating this Court’s prior orders.
In light of pending motions and settlements, the FTC reserves the right to modify this statement in advance of trial. In particular, there are stays and pending settlements for Brandi Greenfield, BG Marketing LLC, Rod Kazazi, Foundation Partners, Michael Santos, Angela Chittenden, and Beach Bunny Holdings LLC. The FTC expects that none of these people or entities will be parties to this case by the time of trial. As a result, each of these defendants are only discussed to the extent facts involving them are relevant to proving the liability of the remaining defendants. Additionally, John Usher and all of the other corporate defendants are currently in default.1 Although the FTC will prove the SBE’s liability, generally, in the course of proving that Pukke, Baker, and Chadwick are liable,2 the FTC may modify this pretrial statement if the Court does not grant the ministerial motion for clerk’s entry of default as to these defaulting entities.
The FTC is simultaneously submitting to the Court detailed Proposed Findings of Fact and Conclusions of Law that will elaborate on the facts and legal theories described below, complete with citations to exhibits, testimony, and case law.
A. Brief Statements of Facts Regarding Defendants’ Unlawful Conduct
1. Pukke’s and Baker’s Ownership and Control Over the Sanctuary Parcel Stretches Back to 2003 and Continued Notwithstanding Various Orders Requiring Them to Turn Over Their Interests to the Receiver.
Pukke formed two entities in 2003, with Baker’s and Baker’s family’s involvement: Dolphin Development LLC (“Dolphin”) and Sittee River Wildlife Reserve (“SRWR”). At that time, Pukke formally controlled both companies as the majority shareholder and “chairman” of the boards. Pukke then transferred at least $3 million to these entities for the purchase of three large parcels of land (“All Pines,” “Plenty,” and “Regalia”) that, together, form the “Sanctuary Parcel” in which Sanctuary Belize is situated. Over the next couple of years, both Pukke and Baker maintained their control over the Dolphin and SRWR entities. By 2005, John Usher had joined the enterprise, serving as a “General Manager” of Dolphin and a “Director” of SRWR.
On April 20, 2005, the Court entered a Preliminary Injunction, transferring all of Pukke’s assets to the Receiver appointed in FTC v. Ameridebt. Nonetheless, Pukke continued to fund and exercise control over the development. Even after that PI order, they conspired to market and sell lots within Sanctuary Belize, which was then known as Sanctuary Bay. Many of the key amenities and investment claims in this action date back to this early stage with Pukke and Baker promising consumers that the then “Sanctuary Bay” would have a hotel, marina, health spa, equestrian center, and 500% investment returns.
Pukke and Baker conspired to defy the Court’s order requiring them to turn over the Sanctuary Parcel. At first Pukke tried simply lying about his ownership and control, doing so in several different filings and when testifying under oath. When this failed, he and Baker engaged in a sham transaction to insulate the Sanctuary Parcel from the receivership. The sham transaction transferred Dolphin’s rights, for little or no consideration, to two entities held in Baker’s name: Starfish Development Ltd. (“Starfish”) and Sanctuary Bay Ltd. Records,
including emails and board meeting minutes, show that Pukke and Baker explicitly intended this transfer as a way of preventing the receivership from controlling Sanctuary Belize and the Sanctuary Parcel. As a result of this transaction, the Receiver moved to hold Pukke and Baker in contempt and the Court agreed, nullifying the sham transaction and ordering Pukke and Baker to turn over Pukke’s interests to the Receiver.
Undeterred, neither Pukke nor Baker turned over any interests in the Sanctuary Parcel. Baker’s noncompliance included refusing to direct various third parties, including Usher, to effectuate the transfer. As a result, the Court held Pukke and Baker in contempt and ordered them incarcerated. Still, neither turned over their interests. Nonetheless, Pukke and Baker were released, subject to orders noting their noncompliance, requiring them to take steps to comply, and specifying that further defiance would result in additional incarceration.
The Receiver then attempted to negotiate with what remained of SRWR, under the belief that this entity was no longer controlled by or otherwise involved Pukke or Baker. Rather, it appeared to the Receiver that Usher had ousted Pukke and Baker and was now independently in control of SRWR and the Sanctuary Parcel. Usher and SRWR refused to comply with the Court’s order, resulting in a settlement in which the Receiver took a discounted payment for Pukke’s rights to the Sanctuary Parcel to account for the litigation risk he faced in Belize. Notably, SRWR and Usher were represented by the law partner of the Belizean prime minister.
Unbeknownst to the Receiver, the FTC, and the Court, Baker and Pukke had in fact maintained control, using Usher as their front man for the purchase. Baker, who had been ordered to turn over Pukke’s shares, orchestrated the settlement negotiations, arranging for the $2 million transfer to buy off the Receiver. After the transfer, Pukke and Baker remained the majority owners of the entities operating Sanctuary Belize and immediately began marketing and selling lots in Sanctuary Belize.
Shortly after the settlement, they brought on Chadwick as a “Principal,” with significant control and authority over the marketing. Chadwick publicly filled both Pukke’s and Baker’s roles and even assisted in lying to consumers about Pukke’s continued control and involvement.
As a “Principal,” Chadwick blueprinted the sales and marketing operation, directly ran the sales tours in Belize, and conducted numerous webinars in which he deceived consumers.
To continue the operations, Pukke, Baker, and Chadwick created new entities in the United States, including Eco Futures Development (“Eco Futures US”), Global Property Alliance Inc. (“GPA”), Buy Belize LLC (“Buy Belize”), and Buy International Inc. (“Buy International”). Each of these entities were legally owned by Baker and managed by Pukke, Baker, and Chadwick. In Belize, they continued to operate SRWR and formed Eco Futures Belize Ltd. (“Eco Futures BZ”) to serve as the corporate shell in Belize. They controlled SRWR through Usher and Chadwick, both of whom served as directors. Eco Futures BZ was ostensibly owned by Usher but, in reality, was controlled by Pukke and Baker through nonpublic, shadow shares. Later, Pukke, Baker, and Chadwick created a Coldwell Banker franchise ostensibly owned by Chadwick to assist in the Sanctuary Belize sales operation.
Subsequently, Usher, still the Belizean front man, tried to assert greater control. Baker and Pukke stamped out this revolt, exercising a purchase option in the Belizean entities they held through a Panamanian shell company (the shadow shares). Pukke asserted his personal authority, including through an email to the whole SBE, including both the United States and Belize operations, declaring that they are “ALL ONE COMPANY!!!” under his control. Usher stepped back, but still maintained ownership interests and involvement in the development, despite his knowledge of wrongdoing.
Publicly, Baker asserted control over the development, moving to Belize to largely replace Usher. In 2016, Pukke and Baker worked on a “history” document to tell a story to the public that could account for Baker’s public reappearance and continued speculation about Pukke’s involvement. In this history, they admitted that Baker was directly involved in the 2008 SRWR settlement, notwithstanding the Court’s order that he turn over Pukke’s shares to the Receiver. In a document distributed to consumers, Baker and Pukke wrote: “Peter Baker surfaced another investor who agreed to invest $2 million into the project. With those funds, Rodwell [SRWR’s lawyer] was able to successfully negotiate a settlement with the Receivers [sic] on April 23, 2008. With the settlement payment made, Andris’ [Pukke’s] equity shares were conveyed to Peter Baker and the original core development investors (this should be noted to show he [Pukke] has no involvement)[.]” (emphasis added). But, this did not tell the whole truth. Pukke and Baker never fully relinquished their control. In fact, as communications amongst Pukke, Baker, and Usher establish, Pukke and Baker reaffirmed their control both in 2008 (through the straw purchaser) and in 2016 (by removing Usher as the front person and remaking the SRWR board to their liking).
Pukke’s and Baker’s control continued until the Receiver took control on November 7, 2018, pursuant to this Court’s temporary restraining order.
2. The Defendants Deceptively Marketed Sanctuary Belize.
Operating under the control of Pukke, Baker, and Chadwick, the SBE used national advertising to drive leads to its websites and calls to its telemarketers. At this point, SBE’s sales team made numerous misrepresentations to convince consumers to buy a lot in Sanctuary Belize, typically convincing each consumer to part with more than $100,000. Since 2005, SBE has made over 1,000 sales, and has sold certain lots multiple times. Taking into account refunds, the SBE has taken at least $138,700,000 from consumers. Despite having nearly 15 years to work on the development, few of the promised amenities exist and nearly all of the money consumers paid either fed the sales and marketing machine or funded Pukke’s lavish lifestyle and other business ventures. Indeed, the FTC will put forward evidence that Pukke and his close associates received more money than the entities’ accounting records show was ever spent on developing Sanctuary Belize.
The FTC will prove that the SBE scheme relied on six core false claims related to the value of lots in Sanctuary Belize: (1) the developer uses a “no debt” business model, which makes SBE a less risky investment than one in which the developer has to make payments to creditors; (2) in part because of the “no debt” model, every dollar the developer collects from lot sales goes back into the development; (3) this funding stream means the developer will finish the development quickly—within two to five years; (4) the finished development will boast remarkable amenities ranging from a hotel to an American-caliber hospital; (5) the impressive amenities mean the lots will appreciate from 200% to 300% within two to three years; and (6) consumers will realize the rapid appreciation without difficulty because there is already a robust resale market, making it easy to resell the lots (collectively, the “Core Claims”).
The FTC will also prove that throughout the marketing process, the SBE took steps to lie to consumers about Pukke’s involvement. Consumers were rightly concerned about Pukke’s past involvement and will testify that they would not have invested in the development had they known Pukke still had any role, let alone a principal.
a. The SBE Sold Lots Through Telemarketing.
The FTC will prove the SBE used commercials and other national advertising to encourage consumers to visit its website. The website urged consumers to submit their contact information to learn more. Consumers who responded received a call from California-based telemarketers. The telemarketers identified themselves as “property consultants” or “investment consultants.” In these initial calls, telemarketers established rapport with consumers, learned about their interests, and screened out anyone unable to make a substantial down payment, and made the Core Claims to consumers.
SBE’s telemarketers also encouraged consumers to participate in a longer webinar about the development during which a sales agent spoke while showing photos and graphics. The telemarketer would repeat the Core Claims, make additional claims, and answer questions. At this point, the telemarketers would require consumers to “reserve” a lot before they could go on a tour to see the development. The lot reservations were typically at least $2,000, and consumers paid them before any face-to-face interaction with the SBE. The lot reservation agreements are contracts consummated before the sales tours that gave consumers a benefit as consideration for their advance payment, namely, the right of first refusal on their chosen lot. In most cases, if the consumer purchased a lot, the lot reservation payment formed part of the consumer’s down payment. The agreements also served a sales function for the SBE because they helped invest consumers in the process, and therefore render them more likely to purchase.
Indeed, telemarketers that did not obtain a lot reservation would either not receive a commission or have a reduced commission in the event of any sale, presumably to encourage them to obtain lot reservation payments.
Following the lot reservation, the telemarketer then persuaded consumers to tour the development in Belize by offering an all-inclusive package (usually $999 per couple) that covered lodging at a resort near Sanctuary Belize, local transportation, and meals. Payments for the lot reservation and tour would be collected before there was a face-to-face meeting. Prospective lot purchasers also incurred other expenses, including the cost of their airfare to Belize City, before any face-to-face meeting.
Notably, some consumers purchased their lots prior to visiting the development. These consumers would enter into their contracts and begin making payments on lots without ever having a face-to-face interaction with an SBE representative.
Most consumers then toured Sanctuary Belize. The tours were typically from Thursday evening until Monday morning. Consumers would travel to Belize City on a Thursday (at their own expense). From there, the SBE would fly them to an airstrip in remote southern Belize, where SBE employees greeted them. Consumers generally stayed in resorts in the small villages in the vicinity of Sanctuary Belize, all of which were 30 minutes or more away from Sanctuary Belize. Eventually, the SBE purchased a neighboring resort called Kanantik, where they hosted consumers on the tours and then ultimately expanded the scam to include lots in the land surrounding Kanantik. After settling the consumers in remote, southern Belize, the SBE would take consumers on trips through Sanctuary Belize, cruises up the local rivers, and ultimately a trip to a private island located well off the coast of Belize where they would pressure consumers to purchase lots. Consumers would typically make down payments and agree to a long term payment plan, frequently agreeing to spread payments across 20 or 30 years.
Throughout the tour, sales presentations reiterated the six key claims, provided detail, and frequently involved Chadwick, Frank Costanzo, and other SBE principals. Chadwick would frequently lead the tours. At other times, he directly managed the tour’s sales personnel.
Since 2017, Baker spent much of his time living on-site at Sanctuary Belize and took part in the tours, often being called in to negotiate with consumers who were reluctant to purchase or to reinforce the amenities and timeline claims. During many tours, consumers were told that “Marc Romeo” was a principal with authority over sales and marketing. As Baker has testified, those references were, in reality, to Pukke. More recently, when consumers asked about Pukke, SBE lied, providing assurances that Pukke was no longer involved with SBE.
b. SBE Continued Its Misrepresentations Following the Purchases to Convince Consumers to Make Their Monthly Payments.
After consumers returned to the United States, they made monthly payments to the SBE. Consumers also began receiving invoices for monthly payments, and the homeowners association sent invoices for $100 per month per lot. Notably, payments were purportedly subject to a 12.5% Belizean General Sales Tax (“GST”), which SBE collects on monthly payments and HOA payments. Consumers made payments to SBE in California (and to the HOA’s Texas address). The various invoices and communications highlight the lack of distinction between the various entities comprising the SBE. Many times consumers would receive invoices purportedly on behalf of one entity by a different entity and then be told to make their payments to yet another entity. Aside from a brief period in 2016, consumers were universally instructed to make payments for the purported benefit of the Belizean entities to the United States-based operations.
SBE also would continue to send marketing materials to the new “owners.” These communications pushed additional Sanctuary Belize lots or touted purported improvements at Sanctuary Belize. They referred to the consumers as “owners” and underscored the development’s claimed (but in reality limited) progress. The consumers often made tens of thousands of dollars in additional payments before becoming concerned about the development’s lack of substantial progress.
c. Over Time Many Consumers Would Become Disillusioned, Attempt to Unwind Their Transactions, or Would Face “Foreclosure” And Lose All of the Money They Had Paid.
Although sales began thirteen years before the FTC filed this case, the promised development is largely uncompleted. After purchasing lots, consumers frequently became disillusioned by the lack of development and the dissembling responses by the SBE when they complained. As a result, disillusioned consumers frequently tried to force SBE to buy back their lots or attempted to resell their lots to the public. The SBE usually refused to provide refunds or to buy back lots and most consumers could not sell their lots at any price. When they failed at either or both of these options and were left with seemingly worthless bits of land within a fraudulent development, many simply stopped making payments or pursued litigation.
The first step for many unhappy consumers was seeking a refund or lot buy back. SBE typically refused. Occasionally, SBE was willing to buy back the lot, but almost always at a loss for the consumers (and never at a profit). In the relatively rare instances of a buy-back, the consumer would typically receive the “principal” that they had paid, but not the interest or the GST they paid. SBE would also require consumers to accept payments over time, with payments spanning many months. This was likely a result of Pukke and the SBE’s practices of looting the payments from consumers as soon as they were received, resulting in little capitalization for either development or refunds. Following the buy-back, the SBE then remarketed the lot to new consumers (sometimes before the buyback agreement was even signed).
Many consumers seeking a buy back were told they should sell the lot themselves. Other consumers also tried selling the lots, to reap the promised appreciation. Typically, SBE would refer consumers to their Coldwell Banker franchise, which the SBE used to control the resale market (resales interfered with new lot sales). But, consumers who attempted to resell their lots on the open market discovered there were no buyers, that Coldwell Banker Southern Belize would not attempt to sell them sincerely (it was little more than a way to deflect consumer complaints), and that many local realtors would not touch Sanctuary Belize lots.
Unable to obtain a buyback or resell their lots, consumers who simply stopped making monthly payments often received “foreclosure” notices from SBE and its Belizean counsel.
After a couple letters, SBE would deem the lot forfeited and begin remarketing the lot to other victims. Notably, SBE did not refund the “equity” the consumer had accumulated through his or her payments, which frequently amounted to more than $100,000, or pay the consumer the equity after the lot was resold to another consumer. At times, SBE would offer a “store credit” to these consumers, which was an empty offer given that these unhappy consumers had no interest in purchasing any additional lots in the fraudulent development. With no refund or legitimate procedure, most consumers who experienced “foreclosure” still consider the lots to be theirs (and they almost certainly still have a cognizable ownership interest).
With no other options, many consumers threatened or initiated litigation. However, no U.S. case survived SBE’s motions to dismiss because the contracts make Belize the sole forum to resolve disputes. SBE has never lost a case in Belize where its counsel’s law partner was the country’s prime minister. Indeed, the illegitimacy of these Belizean court rulings is laid bare given that SBE’s counsel worked with the SBE, with Pukke making all relevant decisions, to “disprove” that Pukke had any involvement with the SBE.
d. Each of The Six Core Claims Were False, and. Contrary to the SBE’s Denials. Pukke Was At All Times a Principal.
The FTC will prove that SBE’s six Core Claims were false. First, SBE promoted its “no debt” business model as a risk-reducing feature. In reality, the model substantially increases the risk that the project will fail. Harvard Professor Richard Peiser, arguably the country’s foremost expert on large-scale real estate developments, has already testified that a project theoretically can have no debt (0% debt) or be funded entirely with debt (100% debt), but anything approaching either extreme makes it highly unlikely the development will succeed. Among other things, where (as here) the developer lacks the cash to complete the development, the lack of debt increases risk in multiple ways. Without financing, a developer lacks regular or sufficient cash flow to advance the project notwithstanding fluctuating sales or other obstacles, which can cause significant delay. Additionally, creditors benefit consumers by performing an “underwriting” function. Specifically, although consumers cannot easily investigate a developer’s background or assess a project’s feasibility, sophisticated creditors can and will. There is essentially no chance a creditor would lend millions of dollars to a development operated by a felon and his associates, particularly when they have negligible development experience. A creditor also will avoid unfeasible projects (for instance, building a full-scale resort town center with no significant population for it serve or building hospital staffed with American physicians and sophisticated diagnostic and treatment capabilities in remote southern Belize). Finally, creditors provide a “monitoring function”—they have a strong interest in the project’s successful completion, as well as the resources, sophistication, and leverage that individual consumers lack. Thus, contrary to the proposed defendants’ assertions, moderate debt helps reduce risk to consumers. The Court has already heard, and will hear more, testimony confirming that the risks caused by the lack of debt are a reality. The development in Belize was always short of cash and as a result consistently failed to meet development goals.
Second, SBE falsely claimed that “every dollar” generated by lot sales goes to develop the Parcel. For a project that incurs no debt, this claim is particularly important because the “no debt” model creates liquidity problems. However, evidence reveals that very little of the lot payments went toward construction and that portions of these funds contributed to Pukke’s lavish lifestyle and luxury expenses. As the Receiver has already testified, millions of dollars were diverted to Pukke and his associates, including relief defendants Angela Chittenden, Beach Bunny Holdings LLC, and the Estate of John Pukke. Furthermore, in reality, less than $20 million of the $138.7 million SBE collected was used to develop Sanctuary Belize.
Third, SBE falsely claimed it would finish the development within two, three, or five years. The first Sanctuary Belize purchasers heard this timeline representation more than a decade ago. However, the development is nowhere near finished and never will be. The Court has already heard testimony regarding the costs to complete the promised development (conservatively estimated at $248 million), the gross amounts that SBE would likely reap in sales over the next five years (less than $100 million), and the percentage of money from sales that SBE historically contributed to development (less than 30%).
Fourth, there is no scenario in which Sanctuary Belize was ever going to be completed with the promised amenities, let alone within the next five years. Although the promised amenities vary somewhat over time, the marina village provides a good example. SBE claimed, in writing and during sales presentations, that there would be a marina village with a hotel, restaurants, shops, entertainment venues, and a full-scale American grocery store. Given the remote location of the development and the SBE’s desire to cater to Americans seeking amenities they would expect in a resort community, these claims were important to most consumers that purchased lots. But, SBE had done little or no work to complete the marina village, despite touting its coming development for more than decade. Furthermore, Professor Peiser testified that a town center such as the promised marina village would not only be prohibitively expensive to build, but that it would not make economic sense given the population in remote southern Belize.
Fifth, the SBE’s lot appreciation claims were false. The precise claims vary, but SBE always claimed that lots will increase 200% (or more) within three years (or less). For instance, FTC professionals posing as consumers went through the lot reservation process, and an SBE telemarketer claimed we could expect a “300 to 500 percent” return “in three years.” SBE posted additional marketing material online trumpeting “400% returns.” But, as described above, consumers attempting to resell their lots typically could not sell their lots at all, let alone for a profit of any type.
Sixth, SBE claimed consumers could realize the purported rapid appreciation easily because of a robust resale market. But buyback agreements and information from consumers establish that there was no such market. In fact, SBE pushed consumers looking to resell to SBE entity Coldwell Banker Southern Belize, which made only halfhearted efforts to resell lots and ultimately resold no more than a handful. Many Belizean realtors (other than Coldwell Banker Southern Belize) simply refused to remarket Sanctuary Belize lots. Additionally, the
SBE actively limited consumers’ abilities to resell lots because resale attempts interfered with the SBE’s own sales. For instance, the SBE removed “for sale” signs from owners’ lots to prevent other consumers on tour from knowing that lots were for sale. Additionally, the SBE prevented or severely limited prospective purchasers from entering the property to view lots owners want to resell independently. Finally, for at least five years, SBE falsely represented to prospective purchasers that Sanctuary Belize will sell out within a year or another short period (thereby suggesting consumers seeking to resell lots will not need to compete with the developer).
Additionally, the SBE systematically lied to consumers about Pukke’s involvement. Numerous consumers raised concerns regarding Sanctuary Belize’s history and Pukke’s role in the development. Universally, the SBE told these consumers that Pukke either had no role or that he had a limited role. Pukke, of course, made sure that his name did not appear on documents showing any formal or legal ownership and at times used aliases, such as Marc Romeo and Andy Storm, to hide his involvement. Pukke, as described in the history of the development above, and further detailed below, was in fact an SBE principal. The ludicrous and brazen nature of the lies to the contrary is most telling in one vivid series of events: A number of consumers were discussing Pukke’ alleged role in various Facebook posts. Pukke himself then logged into an SBE employee’s Facebook account and, while posting as Zamie Anderson (SBE’s then client concierge), claimed that he had no ongoing role with the SBE.
3. Pukke, Baker, and Chadwick Each Controlled and Participated in The Scheme.
a. Andris Pukke
Although he attempted to hide his role and does not legally own any SBE entity, the FTC will prove that Pukke controlled the SBE. The Court has heard, and will hear more, testimony showing that Pukke was the ultimate control person, directing all aspects of the SBE, including its sales and marketing operations. Testimony from former employees, including Pukke’s friend James Catsos, will confirm Pukke’s central role. Additionally, numerous documents, including many written by Pukke himself, will show Pukke exercising this control over all aspects of the operation—ranging from providing edits and approval on sales scripts to determining what construction, if any, should be completed within Sanctuary Belize. The Court has also already heard from third parties, such as IGY executive Eric Simonton, who confirmed that Pukke (using the alias Andy Storm) was the SBE control person. The Court will hear additional such testimony from other witnesses during trial. Pukke’s codefendants, Baker and Chadwick, have already testified, and will do so again before the Court during trial, that Pukke had a central role in the scheme and exercised broad authority.
If this were not enough, the finances plainly show his control. The FTC will prove that Pukke diverted SBE funds for his own personal use. The Receiver has documented approximately $18 million of funds diverted to Pukke or his close associates. For example, SBE funded renovations to Pukke’s lavish personal residence, including payments to a local contractor with a memo line referencing Pukke’s address. Pukke funneled more than a $1.5 million to his romantic partner, Angela Chittenden, who had no role within the SBE. Pukke also funneled hundreds of thousands of dollars to the estate of his deceased father, from where he distributed money to himself and his family members. In addition, Pukke used a Sanctuary Belize debit card for personal expenses including groceries, gas, restaurants, personal travel, and cash withdrawals. SBE money funded tickets to sporting events, a Tesla for Pukke, and his monthly CrossFit membership. Importantly, Pukke also used SBE funds to pay back a personal loan to his childhood friend John Vipulis. Vipulis loaned Pukke $3.25 million in 2007 to, in part, obtain Pukke’s release from coercive incarceration. Pukke, however, was prohibited from repaying this loan until the AmeriDebt victims had been made whole. DE 625.
While Pukke is likely to emphasize his lack of formal, legal ownership, this in no way exonerates him. The FTC does not need to show formal legal ownership to establish Pukke’s liability as a control person. Furthermore, the lengths that Pukke went to hide his role shows the obvious materiality of his agents’ lies to consumers about his involvement.
Furthermore, the evidence will show that Pukke has knowledge of SBE’s deception. Pukke’s deep immersion in the scheme is itself evidence of his knowledge. He controlled SBE for thirteen years, and thus knew that SBE failed to meet any of its timeline claims, build most of the promised amenities (yet SBE continued to make roughly the same claims for more than a decade), and that consumers were unable to resell their lots despite the appreciation claims. He also contributed directly to the lack of development and failure of the business by diverting funds from construction for his own personal benefit.
b. Peter Baker
Baker is Pukke’s childhood friend, with whom Pukke partnered to operate the SBE, including relying on Baker to manage the operations of SBE in Belize. The FTC will prove that Baker is an owner or officer of the various indistinguishable companies comprising the United States-based operations, including GPA, Eco Futures US, Buy International, Buy Belize, and Foundation Development Management Inc. Additionally, Baker owned or controlled the Belizean operations through Eco Futures BZ and SRWR. Testimony will confirm Baker’s ownership, and Baker himself has previously signed various documents and declarations claiming his ownership and independently written emails stating that the “Companies were in his name.” Baker admits he actively participated in the sales operation until 2008 or 2009, at which point he delegated this authority to Pukke as part of their partnership. The FTC will show that he continued to be involved after that date and that as of 2017 he began taking part in the sales tours in Belize.
Baker has knowledge of SBE’s deception because he was heavily involved with the consumer tours of the development and has been involved with SBE since its inception—even helping Pukke maintain control of the parcel of land being deceptively marketed. Baker’s knowledge of the wrongdoing includes his complicity in hiding the development’s connection to Pukke and role in misleading the courts in Belize.
c. Luke Chadwick
Chadwick joined the SBE in 2009 to help market and sell Sanctuary Belize lots. Chadwick served as Pukke’s partner in sales and marketing and was Pukke’s hand-picked successor to run the SBE during Pukke’s incarceration. Despite his obvious knowledge of Pukke’s involvement, Chadwick was a key part of the campaign to hide and mislead consumers about Pukke’s role. For years, Chadwick was SBE’s public face in many marketing materials, including infomercials. On numerous occasions, Chadwick represented himself to be a “principal” or “owner” of the development. Chadwick negotiated contract terms on SBE’s behalf and signed sales contracts on behalf of Eco-Futures Belize Ltd. (“Eco Futures BZ”). Chadwick served as an SRWR Director for years, starting in 2010. Chadwick also legally owned the Defendants doing business as Coldwell Banker Southern Belize (Nevis entities Exotic Investor LLC (“El NY”) and Belize Real Estate Affiliates LLC (“BREA NY”), and Belizean entity Southern Belize Realty LLC (“SBR BZ”). SBE compensated Chadwick through Prodigy Management Group, LLC, which Chadwick owns or manages. Chadwick sent and received SBE-related communications from his cellphone, along with at least one personal email and several SBE accounts including @SanctuaryBelize.com and @ColdwellBankerBelize.com.
Chadwick’s knowledge of wrongdoing is established through his long involvement, including actual knowledge that its timeline and amenity claims (that he often made himself) are false. Furthermore, he had knowledge that consumers were dissatisfied—including about their efforts to force SBE to buy back lots—and he knew that SBE’s investment and resale market claims were false because he both owned and controlled SBE’s Coldwell Banker arm.
Chadwick’s knowledge, and need to be under a permanent injunction, is apparent given his follow-on scam, Kanantik. After running Sanctuary Belize with Pukke and Baker,
Chadwick partnered with Pukke to start a neighboring development known as Kanantik (mentioned above regarding SBE’s use of it for Sanctuary Belize tours). Chadwick continued to operate this scam even after the FTC filed its complaint in this case, continuing to make claims identical to those at issue here (such as “no debt” and the various amenities claims), despite an utter lack of development at Kanantik over several years and the existence of significant bank and other debt rendering its “no debt” claims patently false.
4. Pukke, Baker, and Chadwick Deceived Consumers Through The Various Companies Comprising the SBE.
The Defendants used a variety of largely indistinguishable corporate forms to perpetrate their fraud. These entities did not maintain corporate formalities or practical distinctions. Among other things, they shared:
- Location. All seventeen SBE entities were operated or managed to at least a significant extent from 3333 Michelson. Seven SBE entities were legally registered at 3333 Michelson.
- Common Management. Almost all SBE entities shared at least one owner, officer or director with at least one other SBE entity. The only exception is Power Haus, which was held in Angela Chittenden’s name despite being controlled by Pukke. GPA shared at least one owner, officer or director with seven other SBE entity Defendants. SRWR had at least one overlapping owner, officer, or director with nine other SBE entity defendants.
- Commingling. The FTC will show that at least nine SBE entities exchanged funds with each other. Four SBE entities collected money from consumers on behalf of another SBE entity.
- Joint Communications and Marketing. The FTC will show that SBE entities communicated with other SBE entities as if they were one (for instance, an email from @GPADevelopers forwarding an SRWR invoice), and marketed jointly to consumers (for instance, advertising by one entity directing consumers to contact another). Multiple entities used “@SanctuaryBelize” email addresses, and at least four sent emails with signature blocks referring to Sanctuary Belize.
- Common Employees. The FTC will show that all SBE entities with employees shared those employees with at least one other SBE entity. Prior SBE employees often did not understand the formal distinctions between various SBE entities were not sure which entity they worked for.
The SBE entity Defendants can be roughly separated into four interrelated subgroups: (1) the corporate forms associated with the United States-based operations; (2) domestic pass-through entities used only to process payments for SBE principals; (3) the two Belizean entities directly associated with the development; and (4) the entities associated with Coldwell Banker Southern Belize. The FTC will show that each entity within these subgroups worked to further the SBE land-sale scam.
a. Pukke. Baker, and Chadwick Used Several Interchangeable Companies in Orange County, California, to Deceptively Market and Sell Sanctuary Belize Lots.
Over the past decade, Pukke, Baker, and Chadwick have marketed and sold Sanctuary Belize lots under the guise of a variety of frequently overlapping and indistinguishable companies in Orange County, CA. As of November 7, 2018, when the FTC served the TRO and the Receiver took control of these various companies, all operated from 3333 Michelson Drive, Suite 500, Irvine, CA. Employees at 3333 Michelson Drive, and at the predecessor addresses, could not distinguish between any of these companies and frequently did not know for which company they actually worked. In all cases, these companies were controlled by Pukke, Baker, and Chadwick, regardless of the largely meaningless corporate particularities. Indeed, these companies did not have board meetings and the income was generally reported on GPA’s tax returns, with GPA serving as a pass through entity on Baker’s personal taxes.
Eco Futures US was founded by Baker and at times formally listed defendant Rod Kazazi as its CEO, and defendant Costanzo as its Secretary. Eco Futures US was the first marketing entity that Baker and Pukke created following the 2008 settlement with the Receiver. It persisted in various forms over the years, most recently being used to collect Sanctuary Belize lot payments.
Around the time that Pukke reported for prison for his obstruction of justice conviction and after Chadwick was brought on board, the defendants created GPA. As noted above, GPA was a pass through entity on Baker’s taxes and at times defendants Brandi Greenfield and Rod Kazazi were listed as officers. At various times Baker created and signed documents explaining that GPA was responsible for the sales and marketing of Sanctuary Belize lots. GPA registered various trade names: “Eco-Futures Development,” “Eco-Futures Belize,” and “Sittee River Wildlife Reserve HOA.” Many SBE employees, including defendant Kazazi, used email addresses with the @gpadevelopers.com domain. Frequently, consumers received invoices for lot payments from employees using such email addresses.
Buy Belize is yet another entity listing Baker as its managing member and CEO, and identifying defendant Greenfield as its registered agent. Numerous sales employees used buybelize.com email addresses to interact with consumers and Pukke has in the past indicated he was the “Director of Marketing” at Buy Belize.
Buy International is a more recent corporate shell. SBE seemed to create it as it expanded the sales operation to include Sanctuary Belize as well as developments in Costa Rica and Mexico. But, it still shared owners and official officers, with Baker holding two board positions and Costanzo holding the third. Kazazi helped create the incorporation papers. As of November 7, 2018, the 3333 Michelson Drive office suite included a “Buy International” sign at the reception desk.
SBE defendants controlled Foundation Development Management Inc. (“FDM”). Baker was the CEO, CFO, and sole director, Costanzo was the Secretary, and Kazazi was a bank signatory. At times, FDM collected consumer lot payments and transferred money to the Belizean operations at Baker’s request. Additionally, FDM was at times used to pay telemarketing staff.
The Defendants created Newport Land Group LLC (“NLG”) to further the Sanctuary Belize scam and serve as a corporate shell for Sanctuary Belize sub-developments Bamboo Springs and Laguna Palms, and extend operations to other developments in Costa Rica and Mexico. It operated from 3333 Michelson Drive, listed Costanzo as its CEO, and hand bank accounts on which defendant Greenfield was a signer.
The defendants also created and operated the Sanctuary Belize Property Owners Association (“SBPOA”). Defendant Usher was SBPOA’s director. When SBE changed the development’s name from “Sanctuary Belize” to “the Reserve,” SBPOA registered the trade name “The Reserve Property Owners Association” (“RPOA”), and began doing business under that name. SBE used SBPOA to collect monthly homeowners’ association dues. The evidence will show that although SBPOA was nominally a nonprofit, SBE operated it as part of the overall for-profit SBE organization; in fact, SBE deposited homeowners’ association dues into a GPA account. SBPOA invoices initially directed consumers to make checks payable to SRWR, and instructed consumers to mail checks to “SRWR c/o Eco-Futures” at 3333 Michelson. Evidence before the Court already shows that Pukke, Baker, and Chadwick created this entity to help pacify consumers while collecting additional funds.
b. The Individual Defendants Used A Variety of Shell Companies to Receive Payment from The SBE.
To hide the involvement of various individuals, and otherwise to improperly avoid taxes, the defendants created a number of shell companies that did little more than collect payment from the SBE. Pukke created Power Haus Marketing, ostensibly to pay for marketing but which served no real purpose other than to transfer money out of the SBE’s primary books and records before distributing large sums to Angela Chittenden, his long-time romantic partner. Similarly, Chadwick created Prodigy Management Group LLC (“Prodigy”), which did nothing more than collect Chadwick’s payments. Kazazi, Greenfield, and Costanzo had similar shells: Foundation Partners (Kazazi); BG Marketing LLC (Greenfield); and Ecological Fox LLC (“Costanzo”). To the extent any of these entities “operated” at all, they did so from 3333 Michelson Drive, where all of the defendants worked while receiving these payments.
c. Pukke. Baker, and Chadwick Used Two Belizean Entities to Further The Scheme.
The SBE operates in Belize under the guise of two legal entities: (1) SRWR and (2) Eco Futures BZ. As described in detail above, Pukke and Baker created SRWR in 2003 and have controlled it ever since. Although both claim it can only act through a board of directors, Pukke and Baker have controlled who sat on that board of directors. For several years, Chadwick himself sat on the board of directors. More recently, Baker has controlled the entity as the Chairman, with other SBE principals (like Costanzo) also serving on its board.
Pukke, Baker, and Usher created Eco Futures BZ to replace Dolphin Development following the settlement with the Receiver. This particular shell allowed them to state that there was a domestic Belizean entity to operate Sanctuary Belize. At all times, Pukke and Baker have had full control over this entity, although Usher served as its public face for years. This entity serves as the “vendor” for the various lot sales, with the sales staff that reports to the Orange County offices signing on its behalf.
As with the rest of the SBE, both of these companies operated from 3333 Michelson Drive. The budgets for both were created and determined by Pukke, Baker, Chadwick, and their cronies at 3333 Michelson Drive. Additionally, both invoiced consumers from and received payments directed to 3333 Michelson Drive (or the predecessor Orange County locations).
d. Pukke. Baker, and Chadwick Used Various Other Corporate Forms to Create “Coldwell Banker Southern Belize.” Which They Used to Further The Scheme.
To both placate consumers struggling to resell lots and to add legitimacy to the sales process, the defendants created the Coldwell Banker Southern Belize franchise. Consumers having difficulty selling lots would be directed to Coldwell Bank Southern Belize, where SBE employees would work to keep potentially disgruntled consumers in line while hiding the growing number of consumers that were trying to sell or otherwise dispose of their Sanctuary Belize lots. Separately, SBE employees wearing Coldwell Banker shirts would attend Sanctuary Belize sales tours and assist in the sales tours. These activities were not limited to, and frequently were unrelated to, making resales. SBE valued the “presence” of a reputable real estate agency during the sales tours.
Chadwick legally owned the various entities associated with Coldwell Banker Southern Belize. First among these companies is Exotic Investor LLC (“El NV”). This is an offshore shell company, registered in Nevis, that may have had another purpose at one time (early in the scheme Chadwick used a faux reality show called “Exotic Investor” to help market Sanctuary Belize), but now does little more than own Chadwick’s shares in the rest of the companies that controlled Coldwell Banker Southern Belize and Sanctuary Belize’s sister development, Kanantik.
El NV’s holdings include Southern Belize Realty LLC (“SBR NY”) and Belize Real Estate Affiliates LLC (“BREA NV”). Through SBR NV and BREA NV, the defendants acquired the various licenses and franchise rights to operate Coldwell Bank Southern Belize.
Chadwick is the legal owner of both, either in his own right or through El NV. Both of these entities, as Coldwell Bank Southern Belize, operated from 3333 Michelson Drive. It was here that Chadwick and many of the other employees, such as Charmaine Voss and Sandi Kuhns, were located. Furthermore, these employees were shared with the rest of the SBE, and the other portions of the SBE paid Coldwell Banker Southern Belize’s expenses, including the salaries for its employees. – Source