The Judge in the case against Andris Pukke, Peter Baker, Luke Chadwick, Sanctuary Belize, and a host of others, seems to have reached a conclusion. At least the Judge wrote his opinion on the case presented by the Federal Trade Commission (FTC).
For more on the FTC case, read At FTC’s Request, Court Halts Massive “Sanctuary Belize” Real Estate Investment Scam.
The reason this winds up being of interest to my debt relief wonky mind is that Pukke was nailed by the FTC of his nonprofit debt relief company, Ameridebt.
I’m not sure I have it in me to run back through the entire case that has been going on since 2018. However, I am going to include the Opinion of Judge Peter Messitte at the bottom of this post. The full document is 178 pages long that I’m going to have to sit here and read so you don’t have to. Ugh.
Conclusion of Judge
Not to spoil the surprise, here is the finding of the Judge.
“The Court GRANTS the FTC’s Motion for Default Judgment as to all individual Defendants and as to all Corporate Defendants who were duly served but have never appeared in the case and as to whom the Clerk has entered a Default (except NLG).
The Court finds that the FTC has proven by a preponderance of the evidence that the nonsettling Corporate Defendants, as a common enterprise, linked to Pukke, Baker, Chadwick, and Usher, have violated the Federal Trade Commission Act and the Telemarketing Sales Rule and GRANTS in the main the FTC’s requested relief of Permanent Injunctions as may be finally entered against these Defendants and related relief. The Parties will be sent a draft of the Court’s proposed Permanent Injunction and Monetary Judgment and given a brief window to comment on the same.
The Court further finds Pukke, Baker, Usher and the non-settling Corporate Defendants (except NLG) jointly and severally liable for $120.2 million in restitution. Chadwick shall be jointly and severally liable for a portion of this amount, to be determined at a later date.
The Court further finds that the FTC has clearly and convincingly established its Motion to Hold Andris Pukke, Peter Baker, and John Usher in Contempt for Deceptive Telemarketing Practices in Violation of the Final Order in FTC v. AmeriDebt, 03-cv-317 PJM, ECF No. 266, and GRANTS the Motion.
The Court further finds that the FTC has not clearly and convincingly established its Motion to Hold Pukke, Baker, and Usher in Contempt for Failing to Turn the Sanctuary Parcel Over to the Receiver, ECF No. 267, and DENIES the Motion.
The Court further finds that the FTC has clearly and convincingly established its Motion to Hold Pukke in Contempt for Violating the Order Approving Stipulation for Conditional Release of Andris Pukke from Incarceration Subject to Compliance with Court Orders, ECF No. 268, and GRANTS the Motion.”
Everything here in the highlights section will be statements made in the written court document. I may break up some of the paragraphs just to make it easier to read.
“On October 31, 2018, the Federal Trade Commission (“FTC”) filed a Complaint in this Court, amended on January 15, 2019, alleging that certain named Defendants, in violation of Section 5(a) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 45(a) and the Telemarketing Sales Rule (“TSR”), 16 C.F.R. § 310.3, were perpetrating a large-scale land sales scam in the Central American country of Belize (formerly known as British Honduras).
The primary target of the scheme was and is American-based consumers. The principal Defendants were and are individuals Andris Pukke, Peter Baker, Luke Chadwick, and John Usher, and several corporate entities that the FTC alleges have at all relevant times operated as a common enterprise, which all together are known as Sanctuary Belize Enterprises (“SBE”).
The Complaint and Amended Complaint sought a Preliminary Injunction, and now seek a Permanent Injunction, restitution, and other appropriate relief. In tandem with its original Complaint, the FTC sought an ex parte Temporary Restraining Order freezing assets belonging to various Defendants so that funds might be available for restitution should the Court eventually order that relief. The FTC also sought the appointment of a Temporary Receiver to administer the assets subject to the freeze. The Court granted the asset freeze and appointed a Temporary Receiver.
In the course of the proceedings, several Defendants and Relief Defendants, i.e. individuals or entities who were not alleged to have committed wrongdoing, but who purportedly received proceeds of others’ wrongdoing as to which they have no legitimate claim, settled the FTC’s claims against them. At the start of the proceeding, the Court authorized the non-settling individual Defendants to draw a set amount of funds each month from their own frozen assets in order to cover their living expenses pending trial and directed the Receiver to expend receivership funds to cover certain costs on behalf of these individual Defendants, including the cost of ordering deposition and trial transcripts and the cost of attending the trial on the merits that was held in Greenbelt, Maryland.
The Court held both a Preliminary Injunction hearing and a trial on the merits, and received the Parties’ Proposed Findings of Fact and Conclusions of Law after both, except that Chadwick did not attend the Preliminary Injunction hearing nor did he submit Proposed Findings of Fact and Conclusions of Law afterwards.”
“The development was the brainchild of Joan and Colin Medhurst, Peter Baker’s mother and stepfather, who envisioned a central American getaway site set in a pristine nature reserve that would protect the country’s jaguars and provide a wildlife corridor from the Cockscomb Basin in Belize to the sea. PI Hrg Tr., 3/13/19 Afternoon, 13:18-14:1. Lacking funds to bring the idea to fruition, the Medhursts asked Baker to help raise capital from his “rich friends,” including his high school friend and lacrosse teammate Andris Pukke.”
“The backstory of Pukke’s involvement in SBE is of utmost relevance. In 2003, Pukke, his company Debtworks, and a company he helped found, AmeriDebt, were accused by the FTC of masterminding a credit counseling scheme whereby, in essence, he represented to customers throughout the United States that AmeriDebt, as a nonprofit organization, could assist them with their credit problems, and would charge no initial fees. AmeriDebt, ECF No. 1.
But in fact AmeriDebt did charge initial fees. Id. Customers who signed up had to make an initial payment, and then were almost immediately enrolled in debt management plans and charged additional fees, which were collected by AmeriDebt’s from-all-appearances-independent-servicing company Debtworks, which in actuality was a profit-making entity owned by Pukke. Id.
The FTC brought suit against Pukke based upon this apparent deception and, a few months later, individual consumers of AmeriDebt and Debtworks filed a separate class action suit against Pukke, AmeriDebt, Debtworks, and related entities and individuals based on the purported misrepresentations. Polacsekv. DebticatedConsumer Counseling, Inc., 04-cv-631 PJM, ECF No.
Pukke, to be sure, denied liability in both cases. Even so, in one of those not infrequent scenarios in which a litigant denies liability but settles claims against him for an enormous sum and agrees to abide by the strict terms of a permanent injunction, Pukke ended up settling with the FTC on the eve of trial and agreed to make just such a huge restitution to the FTC to be distributed to AmeriDebt consumers.
Pukke also agreed to abide by several restrictions specified in a Stipulated Final Judgment and Permanent Injunction (“Stipulated Final Judgment”). AmeriDebt, ECF No. 473. Per the Stipulated Final Judgment, Pukke would pay $172 million in restitution, with all but $35 million suspended if (a) he fully paid the $35 million and (b) cooperated with the FTC. Id.
These payments were to be divided with the class members in the class action suit. AmeriDebt, ECF No. 472. The agreement appointed a permanent Receiver, Robb Evans and Associates LLC, to marshal Pukke’s assets for the purpose of satisfying his obligations under the Stipulated Final Judgment. AmeriDebt, ECF No. 473. The Court signed the Stipulated Final Judgment on May 16, 2006. Id.
As part of the Stipulated Final Judgment in AmeriDebt, Pukke was obliged to turn over to the Receivership essentially all his assets, the most relevant of which was control and custody of Dolphin based on his 60% interest in Dolphin. AmeriDebt, ECF No. 525. Dolphin, it will be recalled, was the development and sales arm of the Sanctuary Bay development, and possessed assets consisting of “ownership, development and related rights in real property located in Belize known as Sanctuary Bay Estates, including related rights and interests in developing and selling lots in the Sittee River Wildlife Reserve and related tangible assets such as equipment that are essential to the development.” Id.
But as it happened, as the Receiver said at the time, Pukke and Baker actually conspired to hide Pukke’s interest in Dolphin and Dolphin’s assets from the Receiver, as a result of which the Receiver was compelled to move this Court (this Judge) to hold both Pukke and Baker in contempt of court. Id.
After contempt hearings lasting ten days, the Court found both Pukke and Baker in civil contempt and, among other things, ordered them to turn over all “assets, rights, claims and interests of Dolphin…and all proceed thereof, as to which Andris Pukke holds indirectly a majority, 60% controlling ownership interest,” simultaneously entering an order vesting the same in the Receivership. AmeriDebt, ECF Nos. 571 and 572.
Pukke and Baker, however, did not immediately cooperate with the Receiver nor did they comply with the Court’s Orders, i.e., to purge their contempt.
As a result, on April 30, 2007, the Receiver moved to have both men incarcerated in order to coerce their compliance with the Court’s Orders. AmeriDebt, ECF Nos. 596 and 597.
On May 4, 2007, the Court again found Pukke and Baker in contempt and remanded them to the custody of the U.S. Marshal to be incarcerated. AmeriDebt, ECF No. 604.
After serving approximately two weeks and one month in custody respectively, Baker and Pukke were eventually released. AmeriDebt, ECF Nos. 614 and 622.
Their release, however, was conditioned on them cooperating in the turn-over of Pukke’s assets to the Receiver, including all rights, claims and interests in and to Dolphin. AmeriDebt, ECF Nos. 571, 614, 622.
The Receiver’s pursuit of the Sanctuary Parcel did not end there. Almost immediately, the Receiver found itself in a head-to-head contest in Belize with SRWR led by Usher, who contended that the Receiver had no legal, equitable or enforceable creditor or equity interest in the Parcel other than in a small portion of the land. Trial Tr., 1/23/20 Morning, 55:17-56:6, AmeriDebt, ECF No. 682.
Usher also claimed, in a letter dated April 23, 2007, that the Board of SRWR had met and terminated all development rights and contracts of Dolphin, Sanctuary Bay, Starfish, and Baker “past and future” at a recent board meeting. AmeriDebt, ECF No. 596.
So things stood until the Receiver, not relishing a court battle in Belize, found it to be the better part of wisdom to avoid litigating the dispute in Belizean Courts and chose to settle. Id.
On being paid $2.0 million cash by SRWR, the Receiver agreed to relinquish all rights, claims and interests in and to the Parcel, a sale that was submitted to and approved by this Court. Trial Tr., 1/23/20 Morning, 55:22-56:14; ECF No. 686.
Fast forward to the present case.
What the Receiver claims in the present case is that it did not know at the time it settled with SRWR that, in one way or another, Baker and Pukke, without missing a beat, would immediately jump back into the ownership and control of the Parcel, with all the attendant authority, responsibility and activity they had previously exercised. Trial Tr., 1/23/20 Morning, 57:8-59:13; PX 395 (emails between Baker and Greenfield discussing sales tours of Sanctuary Belize scheduled for February 2009, also forwarded to Pukke in 2011); Peter Baker Dep. Tr., 2/19/19, 123:17-124:1 (Baker testifying that Pukke’s ownership and involvement was reinstated “[a]s soon as we were ready to go to, call it, start marketing and sales” and describing Pukke as a “partner”). The FTC characterizes this as a sleight of hand by Baker and Pukke because, despite being found in contempt for hiding parts of the Parcel from the Receiver, they still ended up in control of the Parcel.
Pukke’s conduct in the AmeriDebt case and in the Chapter 11 bankruptcy case he filed during the AmeriDebt proceeding gave rise to other serious concerns.
Even as he was supposed to hand over certain assets to the Receiver, in a related criminal proceeding, Pukke pled guilty before this Court to obstruction of justice under 18 U.S.C. §1503, based on concealment and false statements concerning his interests in entities involved in (i) internet gambling, (ii) his accounts at A/S HansaBanka in Latvia and Valkyr Trust, (iii) his interest in real property located at 69 Emerald Bay in Laguna Beach, California, (iv) his interest in Dolphin, and (v) his interest in SeaSpray Holdings Ltd. United States v. Pukke, 10-cr-734 PJM U Pukke”), ECF No. 7.
For these misdeeds, the Court sentenced Pukke to 18 months incarceration, followed by a 3-year period of Supervised Release with Special Conditions. Pukke, ECF No. 15. Pukke was incarcerated from June 30, 2011 to September 20, 2012.
After Pukke served his jail time, but toward the end of his supervised release period, the Court’s Probation Office found cause to believe that Pukke might be violating a condition of his supervised release based on his involvement with the Sanctuary Belize development.
In particular, the Probation Officer reported to the Court that on corporate disclosure forms related to Sanctuary Belize, Pukke had been using an alias—Marc Romeo—and that he had failed to disclose to the Probation Office his involvement with, among other entities, SRWR and Eco-Futures Development in 2015. Pukke, ECF No. 38. On November 13, 2015, the Court commenced a hearing to determine if Pukke’s supervised release should be revoked, at which Pukke and his cohorts, testifying under oath in person and/or by affidavit, sought to convince the Court that Pukke’s role in the Sanctuary Belize development was only very minor and that, if he ever used the name Marc Romeo, he had only done so on a few occasions and then only before he began his supervised release. Hr. Tr. 3/2/16, 273:18-274:23.
Chadwick, in particular, filed a sworn affidavit with the Court at the time to the effect that he was “not aware of Andris Pukke using the name Marc Romeo at anytime between 2012 and the present,” i.e. 2015. Pukke, ECF No. 46.
While expressing skepticism as to Pukke’s claim that he never used the Marc Romeo alias during his term of supervised release, the Court chose to give him a pass and terminated his supervised release in satisfactory status. Pukke, ECF No. 51.
But, as the Court will elaborate in the following pages, the irrefutable facts were and are that (a) before he was incarcerated and very much while he was on supervised release and up to the very time of the filing of this suit by the FTC in October 2018, Pukke was not merely a minor player in SBE, he was effectively the Chief Executive Office in control of the entire Sanctuary Belize operation and (b) with the virtually certain knowledge and collaboration of many, Chadwick included—Pukke continued to hold himself out as “Marc Romeo” (and used at least one other alias, Andy Storm) on several occasions and frequently undertook either to deny or minimize to others his role in the development. These deceptions came in the face of express concerns by not a few prospective lot purchasers over whether Pukke, whose history as a felon engaging in consumer fraud had been bruited about in the press, was in any way involved in SBE. SBE employees—again, especially Baker and Chadwick— knew all about this.
One prospective purchaser of a lot testified at trial that he asked Chadwick to “look [him] in the eye and tell [him] that Andris Pukke was in no way, shape or form involved with Sanctuary Belize,” and Chadwick, now in full-blown denial, unhesitatingly full-on did just that. Trial Tr., 1/28/19 Morning, 78:1-78:5.”
“Even assuming that Pukke and Baker, if not Chadwick, were babes in the woods of real estate financing who did not appreciate that the no-debt model was and is in fact risky, they were at least recklessly indifferent to the unsoundness of the no debt/low risk representation and to the high probability that they were deceiving prospective lot purchasers. But this gives Pukke and Baker a charitable construction they do not merit. The fundamental glaring fact was and is that Pukke, Baker and Chadwick and their minions consistently put out this no debt/low risk representation as a marketing strategy after their initial efforts to secure debt financing were unsuccessful, and they continued to do so even as the development in fact took on, in marked contrast, not insignificant amounts of debt, secured and unsecured.”
“More important, there is, quite shockingly to be frank, incontrovertible evidence that Pukke diverted enormous sums of sales revenue away from the development, i.e., some $18 million or about 12.8% of the total sales revenue, for his own benefit and that of his friends and family. See ECF Nos. 219, 513 (Receiver’s Reports); Trial Tr., 1/23/20 Morning, 83:3-84:7.
One begins with a few simple, yet stunning examples: FTC Forensic Accountant Roshini Agarwal testified that $5,098 was transferred via check card by GPA, Buy Belize, and Eco-Futures to cosmetic dentists in Newport Beach, California (where Pukke lives). Trial Tr., 2/6/20 Afternoon, 15:16-16:6. During his deposition, which was attended by Pukke and Baker, GPA’s accountant Andy Dixon stated that expenses of GPA included children’s braces and a Harley-Davidson motorcycle. Dixon Dep. Tr., 49:20-50:11. Baker testified that he did not have children and that the Harley-Davidson was purchased for Pukke’s brother. Trial Tr., 2/10/20 Afternoon, 32:4-32:17. Agarwal also testified that from 2011 to 2015, GPA wrote checks totaling $54,000 to various individuals named “Pukke,” wiring $10,000 to a Kaelin Pukke in three installments from July 22, 2015 through October 20, 2015. Trial Tr., 2/6/20 Afternoon, 29:14-30:4.
The record further shows that, in a series of transactions between 2011 and 2015, Relief Defendant Chittenden (Pukke’s putative wife and the mother of two of his children), and one of the companies she controlled, “Beach Bunny Holdings,” wired $480,000 to and received $595,000 from bank accounts in the name of GPA. Trial Tr., 2/6/20 Afternoon, 19:3-9.
Bank records also show that between 2012 and 2015, Chittenden received $402,500 in her personal account from GPA. PX 816 at 11, Ex. 9. Additionally, Chittenden held nearly $2 million in investments in various companies funded by SBE entities currently under the control of the Receiver. Id. at 11.
The Estate of John Pukke, Andris Pukke’s late father, was another beneficiary of SBE “largesse,” courtesy of Pukke. The FTC presented evidence that the Estate of John Pukke improperly received, for no apparent reason, $830,000 from SBE from June 2011 to November 2018. PX 984 at 6, 15; Trial Tr., 1/23/20 Morning, 83:3-87:17. The Estate then transferred this money—revenue from SBE lot purchases—to various Pukke family members and associates. Trial Tr., 2/6/20 Afternoon, 25:18-25:15.
Were this not enough, the evidence also shows that GPA and Eco-Futures Development funded renovations to Andris Pukke’s personal residence in California, including payments to a local contractor whose invoices contained a memo line specifically referencing Pukke’s California home address. PX 816 at 6; Trial Tr., 2/6/20 Afternoon, 27:22- 28:11. This particular diversion of SBE lot revenue totaled over $200,000. Id. In fact, the Receiver’s representative testified that over $2.8 million total of sales revenue was diverted just to purchase and renovate one of Pukke’s houses, some of which was recorded in SBE’s books as “Media Spend.” PI Hrg. Tr., 3/21/19 Morning, 7:13-9:14.
Nor was Baker above diverting SBE funds himself though, to be sure, to a much lesser extent than Pukke. Agarwal testified that she identified 278 Amazon purchases by SBE entities totaling $19,336.60.
Those purchases include Drunk Elephant serums and gels, eyelash conditioner, and an anti-snoring jaw strap, all shipped to “Peter Baker” in Newport Beach, California and paid for by a debit card linked to a GPA bank account. Trial Tr., 2/6/20 Afternoon, 16:13-17:7.
Baker claims that these purchases were made for business purposes, which may or may not be so at least as to some, but even assuming some of the purchases were for business purposes, others clearly were not, since Baker admitted the anti-snoring jaw strap, for example, was actually purchased for his wife. Trial Tr., 2/6/20 Afternoon, 43:20-43:24.
Baker also admitted that SBE diverted some funds to pay for his personal living expenses unrelated to the development. PI Hrg Tr., 3/15/19 Morning, 7:18-10:15.
Baker’s mother and step-father also benefitted from personal diversions. Agarwal testified that GPA sent wire transfers to the Medhursts in the approximate amount of $600,000 from February 23, 2012 to March 4, 2014. Trial Tr., 2/6/20 Afternoon, 30:5-10.
Other SBE funds found their way into purchases that obviously had nothing at all to do with completing Sanctuary Belize: $6,000 for Stanley Cup professional hockey tickets, $1,400 for tickets to an Eagles rock concert, and $1,200 for tickets to the “Triple Ho Show” music festival. Trial Tr., 2/6/20 Afternoon, 14:6-12.
Then there is the biggest ticket item of all. As the Court will discuss in detail infra. Section X.E, Pukke transferred $4 million of SBE funds to John Vipulis, a Relief Defendant. PX 816 at 6. This payment had no legitimate purpose whatsoever linked to SBE’s business. Rather, in direct violation of the Court’s Order in AmeriDebt, it was Pukke’s attempt to pay back Vipulis, who had loaned him money to obtain his release from prison in connection with that proceeding.
But, as the pitchman says on TV, there is more.
Evidence at trial indicated that funds from Sanctuary Belize lot sales were also used to fund advertising efforts for a real estate development project in Mexico totally unrelated to SBE. Trial Tr., 1/31/20 Morning, 67:23-68:3. Payments from SBE were also made on the loans from Barienbrock, despite SBE’s representations that no payments would be made on loans because the development had no loans. Barienbrock Dep Tr., 8/21/19, 259:18-260:7. The list goes on.
Chadwick, who did not personally participate in these diversions of funds, argues that, although he and others did represent in some form to consumers every dollar would go back into the development, he did not know the representation was false because he “didn’t see any diversion of actual cash” and “had no visibility” into Sanctuary Belize’s financials. Trial Tr., 1/31/20 Morning, 68:10-17; see also ECF No. 993.
But Chadwick ignores his own testimony that he did see a “diversion of resources” and knew that sales revenue from Sanctuary Belize was being used to fund an unrelated development project in Mexico. Trial Tr., 1/31/20 Morning, 67:23-68:3.
And while Chadwick claims he disagreed with this practice and that it was that particular diversion that led him to “transition” out of SBE, at no time did he ever try to stop SBE salespeople from representing to prospective lot purchasers that every dollar would go back into the development, or some variation of it.
At the very least, Chadwick acted with reckless disregard as to the making of this misrepresentation, while undertaking no effort to verify whether it was true. This Chadwick also knew: He knew full-well Pukke’s questionable background in dealing with consumers, particularly when Pukke chose him to assume charge of the SBE operation during the period after AmeriDebt that Pukke was incarcerated for obstruction of justice for hiding assets from the Receiver and the Government. See PX 635 (2011 email from Chadwick to Greenfield noting that Pukke asked him to “lead” while Pukke was in prison); PX 493.
Chadwick was one of the most senior employees at SBE, as will be discussed infra. Section VI.E, and at all times could have verified or at least questioned the information he and SBE salespeople were falsely disseminating across America. Pukke’s diversion of revenues, after all, were not minimis or one-off; they occurred throughout Chadwick’s tenure at Sanctuary Belize and totaled in the millions of dollars. As boxing champion Joe Louis once said of an opponent, “He can run, but he can’t hide.” Chadwick’s individual liability will be discussed infra. Section VI.E.”
That is because there was a fly in the ointment as big as a buzzard.
Common sense might suggest that a developer’s representation that a real estate project— particularly one as substantial as Sanctuary Belize—will be completed in 2-5 years, should not except in extraordinary circumstances, lead to liability under the FTC Act.
Lagging sales, a sluggish economy, supply delays, weather conditions, and litigation (private and public) might well intervene to stretch the completion times. But there is a critical feature of this case that compels a different outcome: SBE never had sufficient funds to finish the development, luxury amenities included, in the time promised, even to this day, and it still lacks sufficient funds to do so.
Sanctuary Belize could never be completed as promised even assuming revenue for the next five years would be at a historic high. Claiming otherwise is an actionable misrepresentation.”
“H. Degree of Pukke’s Involvement in SBE
Why was it important that Pukke’s involvement in SBE be denied altogether or represented as being minimal? Short answer: Because in the past, before SBE, Pukke had been found guilty of two felonies at the heart of which was the deception of trusting consumers and of this Court no less. That Pukke might try it again in a development he effectively controlled certainly loomed as a possibility, which would have, should have, and did give pause to prospective lot purchasers before they undertook to buy.
As it turned out—and this, of course, is in hindsight—he did try it again. Not only did he help craft and disseminate the multiple misrepresentations to consumers that the Court has just found to be violations of the FTC Act; among other things he blithely helped himself, his family, and his friends to some $18 million of revenues that he diverted form lot sales.
The fact that many lot purchaser’s worst fears were eventually realized shows, at the very least, that their fears were reasonable to begin with.
The concealment of Pukke’s true relationship with SBE is a sorry tale within a sorry tale.
Obviously concerned about the effect of being publicly associated with the Sanctuary Belize development due to his checkered past, Pukke was at great pains to personally hide and to instruct SBE staff either to hide altogether or minimize his involvement with SBE.
Brazenly—it is hard to find a gentler term—at different times he masqueraded as “Marc Romeo” and “Andy Storm” when acting for SBE.
And at all relevant times, Pukke, Baker, Chadwick, and SBE operatives knowingly represented to consumers that Pukke had no involvement at all or at least no meaningful involvement with SBE, either by expressly denying his involvement, minimizing his involvement, participating in his charade of using aliases, or flatly omitting the fact of his involvement where one would expect the name of the individual who led the development to be front and center.
One SBE salesperson testified that salespeople in general were not permitted to say that Pukke was in charge of the operation and were instructed to “never use the name Audi Pukke in regards to Sanctuary Belize” because SBE did not want prospective lot purchasers “to make the connection between AmeriDebt and Sanctuary Belize.” Trial Tr., 1/31/20 Afternoon, 47:24-48:6, 143:21-144:12.
When prospective lot purchasers did inquire about Pukke during the sales process, SBE salespeople and Defendants told bald-faced lies. See, e.g., PI Hrg. Tr., 3/19/19 Afternoon, 65:15- 25 (lot purchaser testifying that in 2009, Brandi Greenfield “assured me that Mr. Pukke was not part of the community. In fact, she said that he’s not even welcome in Belize, and I believed her”); Trial Tr. 63:25-64:16, 1/28/20 (SBE salesperson “told me that Andris Pukke was no longer involved”); Trial Tr., 1/28/20, 72:3-73:15 (lot purchaser testifying that in 2012 during a presentation in front of other prospective lot purchasers and during private conversations, Chadwick represented that Pukke was not in any way involved).
In fact, this same purchaser testified that in 2012, Chadwick “looked me in the eye, shook my hand about the two issues I was concerned about and that was the timeline of the development and the fact that Andris Pukke wasn’t involved.” Trial Tr., 1/28/20, 142:16-20.
When an undercover FTC employee asked about Pukke’s involvement on a recorded phone call in late 2017, Costanzo claimed that Pukke’s only involvement was that “he runs a marketing company” associated with the development and that “Pukke has no relationship or ownership or control of this development or the property.” PX 338 at 8:8-12, 8:22-9:7. As will be discussed infra. Section VI.C, these representations were all patently false; Pukke was deeply involved and had plenary authority over essentially all aspects of SBE.
Pukke and others at SBE often used aliases to mask his identity. SBE salespeople were instructed to say “Marc Romeo” (i.e., Pukke) was the head of the development. Trial Tr., 1/31/20 Afternoon, 143:21-144:19.
While the real Marc Romeo apparently owned a small equity interest in an SBE entity, at some point before 2010 he converted his interest to lots, departed, and was possibly paid so that Pukke could use his name. Trial Tr., 2/5/20 Morning, 15:1-6.
As early as 2010, after an individual asked Chadwick for “Romeo’s” cell phone number and email address, Chadwick forwarded the email to Pukke and asked Pukke if he had a “Marc Romeo email.” PX 986. Chadwick sent emails to “Marc Romeo” at Pukke’s email address in 2012, PX 1193, and referred to Pukke as “Marc Romeo” in emails with others that same year, PX 1206. A webinar hosted by Chadwick and viewed by a lot purchaser in 2012 listed Marc Romeo as a “Principal,” as did other presentations given to consumers. PX 186.1; PX 186.3; also PX 296 at 38 (slide presentation given to consumers identifying “Marc Romeo” as “Director of Operations-USA” and “Sales and Marketing”).
In 2013, a presentation Chadwick sent to an SBE salesperson to give to prospective lot purchasers that listed Marc Romeo as a “Principal” alongside Chadwick and Usher (referencing the July 2013 tour and listing awards Sanctuary Belize won in 2012). PX 1609.
In 2013, an SBE salesperson witnessed Pukke sign a contract under the name Marc Romeo. Trial Tr., 1/31/20 Afternoon, 147:18-21; PX 1602. Pukke was also included on sales emails as “Marc Romeo,” emails that copied Chadwick as late as 2013. PX 910.2.
Minutes from a 2016 Annual General meeting of SRWR list “Mark Romeo” as a “full member” and state that “Mark Romeo” was appointed a director of SRWR at this meeting. PX 1071. In November 2016, Pukke sent an email to Costanzo (himself going by the name Frank Connelly on the email) discussing the progress of the development and the importance of being “more careful” that “only my email shows up, not my name” on external communications. PX 833. Costanzo replied that he would be sure to “take exhaustive measures to create distance [because] careless error [in disclosing Pukke’s involvement] could be [a] major setback.” Id. In 2017, Baker sent Pukke an email regarding a list of directors, stating that perhaps they should take Mar[c] Romeo off the list. PX 831.
There is more.
In an effort to keep his involvement under wraps, Pukke posted Sanctuary Belize-related posts on Facebook using SBE Salesperson Morgan’s Facebook account. Anderson Dep. Tr., 262:8- 274:21; Trial Tr., 1/30/20 Morning, 22:21-24 (Chadwick admitting Pukke posted information about Sanctuary Belize under Morgan’s name on Facebook); PX 1386.
Pukke’s posts on Morgan’s account included a post with Pukke, pretending to be Morgan, denying Pukke’s involvement in Sanctuary Belize, because Pukke had “moved on to other projects in other parts of the world,” was no longer involved in Sanctuary Belize, and “ha[d] absolutely no control” of Sanctuary Belize. Anderson Dep. Tr., 262:8-274:21. Anderson stated that she “knew [Pukke] wrote the response.” Id.
Pukke also hid behind the name Andy Storm as an alias. e.g.. Trial Tr., 1/23/20 Morning, 73:3-25 (Receiver’s representative testifying that Pukke used the alias “Andy Storm,” and that he was unaware of any other employee going by the name Andy Storm); Trial Tr., 2/5/20 Afternoon, 84:23-85:7 (Baker testifying that Pukke used the alias “Andy Storm.”); PX 1381 at 1 (identifying “Andy Storm” as a sales representative who made a lot reservation); PX 1365 at 2 (identifying “Andy Storm” as the prospector and representative for a consumer who went on tour).
Notably, during face-to-face negotiations with a marina management company to discuss possible management of the marina being developed at Sanctuary Belize, Pukke was introduced as “Andy Storm.” Sometime afterward, the marina management company’s representatives who participated in that encounter came to understand that “Andy Storm” was the CEO of SBE. See PI Hrg Tr., 3/22/19 Afternoon, 72-73. Then, not without a small dash of drama, the representative of the marina management company, testifying at the Preliminary Injunction hearing, was asked if he could identify the individual who was sitting in the back of the courtroom, and the witness said that that individual was indeed the man he had been introduced to during the negotiations as “Andy Storm.” See PI Hrg Tr., 3/22/19 Afternoon, 72:6-10. The Court took judicial notice of the fact that the individual was, in fact, Andris Pukke.
Chadwick in particular submits that, at most, the testimony of a single lot purchaser at trial was that on a single occasion, in answer to a direct question, Chadwick supposedly told the individual that Pukke was not involved in SBE (Chadwick however, appears to deny the witness’s testimony). Chadwick also argues that an SBE salesperson acknowledged that the Marc Romeo alias was used infrequently. His suggestion is that any representation as to Pukke’s lack of or minimal involvement in the project was not sufficiently widespread to cause SBE to be held liable for monetary liability under the FTC Act. This is a gross distortion of the evidence, which the Court has just recounted in detail. Over an extended period, Pukke’s involvement and role in SBE was actively and continuously misrepresented and/or concealed by multiple SBE personnel. Chadwick had a large speaking role in this deceptive play-acting.
In addition to express misrepresentations regarding Pukke’s non- or minimal involvement with SBE, there were also deliberate deletions or omissions of his name from corporate documents and marketing materials, as well as on the tours. This included omitting Pukke’s name from SBE documents in several instances in order to not raise suspicions. See, e.g., PX 627, PX 628, PX 629 (not listing Pukke).
At all times throughout SBE’s history, it must be remembered, Pukke carried with him a hard-core reputation for commercial flim-flam. The basic and entirely reasonable concern was always that lot purchasers might be loath to invest in a development led by an individual burdened with two felonies, one for mail fraud stemming from a scheme in which he defrauded consumers and one for obstruction of justice, as well as someone who only a few years before had settled with the FTC and consumers in related cases and agreed to pay them millions of dollars. See, e.g., PI Hrg. Tr., 3/19/19 Afternoon, 65:15-25 (lot purchaser testifying that she was “concerned” about Pukke’s potential involvement but was assured that Pukke “was not part of the community” and was “not even welcome in Belize”); Trial Tr., 1/28/20, 106:9-108:19 (lot purchaser testifying that, had he known the truth about Pukke’s involvement, he would not have purchased the lot).
Pukke a/k/a/ Marc Romeo a/k/a Andy Storm at long last stands exposed.”
“Certainly, as far as Pukke is concerned, a permanent injunction that includes a blanket prohibition against engaging in any kind of real estate activity is warranted, given the “cognizable danger of recurring violation” and the need for “fencing-in” to prevent repeat violations and to monitor his compliance with the law. Pukke has been nothing less than the mastermind of SBE’s operations and of the many of the deceptive practices attributable to it.
His machinations throughout the life of Sanctuary Belize were preceded by a conviction for Mail Fraud under 18 U.S.C. § 1341 & 2 in the United States District Court for the Western District of Pennsylvania in 1996 and his involvement in the massive credit counseling scheme of AmeriDebt, which resulted in a FTC suit and a class action suit brought in this Court, in which he agreed to pay the FTC and class members millions of dollars. The FTC proceeding also caused him to be held in contempt of Court, and led to a criminal conviction and more than a year in prison for obstruction of justice for concealing assets in connection with the AmeriDebt proceeding and with a related bankruptcy proceeding. Taken together, these actions give every indication that, if not brought to book here and now, Pukke may soon enough be up to his old practices again.
In the present case, Pukke was consistently untruthful about the fact of his involvement in, much less his controlling position, in SBE; more than once he used the alias Marc Romeo and the alias Andy Storm with prospective lot purchasers and third parties (e.g. the marina management company); he helped formulate and circulate multiple misrepresentations to prospective lot purchasers relative to the offering of the lots; he diverted millions of dollars in revenue from the sale of SBE lots to benefit himself, his family, and his friends; and he used significant revenue from Sanctuary Belize lot sales to fund real estate projects totally unrelated to SBE. Even in his post-trial filings, Pukke offers up self-serving assertions totally untethered to evidence presented during the proceeding that make fencing-in appropriate. For example, to this day he claims that “[t]he only witnesses that testified to hearing an alleged false representation were a small group of highly conflicted members of the IOSB, who clearly had ulterior motives or individuals who were improperly influenced by the IOSB.” Pukke’s Proposed Findings of Fact and Conclusions of Law, ECF No. 1011. Pukke insists this to be the case, despite the fact that he himself cross-examined FTC witnesses at length about the IOSB, several of whom denied any involvement with the IOSB.
Pukke’s deceptive conduct, then, has been recurrent, starting as early as 2005 (in fact, Pukke and Baker were selling lots while AmeriDebtwas still in progress). The degree of consumer harm is immense—all the ill-gotten revenue from the sale of lots at SBE from 2011-forward. And Pukke is very much positioned to commit similar violations in the future.
All of this is to say, of course, that Pukke has given no assurances against committing future violations. In fact, he vigorously denies that any were committed and denies that the representations were in any way misleading, which implies that he believes everything he and SBE have said in their marketing and sales efforts was legitimate.
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As far as can be told, Pukke appears quite ready to mobilize identical or similar misrepresentations in his real estate ventures hereafter, as well as in other activities in the future. Unless he is enjoined from making the same or similar representations, there is little to keep him from telling prospective purchasers, for example, in another real estate project that it is “debt-free” and therefore less risky than a project with traditional financing. The same may be said as to a possible assertion that “every dollar goes back into the development.” Without an injunction, there is nothing to prevent Pukke from making these representations again, or even diverting millions of dollars of revenue from that project’s lot sales to his own benefit and that of family and friends.
Considering the clear transferability of Pukke’s unlawful behavior, Section III.B, a permanent injunction prohibiting him from participating in any real estate-related activity of any kind is very much in order.
The question is whether he should be prohibited altogether from engaging in any other specific activity. His history of scheming in connection with credit-counseling businesses of the type addressed in the Pennsylvania mail fraud and AmeriDebt cases unquestionably suggests that a flat prohibition against engaging in credit-counseling services or the like should be included in the injunctive relief.
However, the Court notes that the AmeriDebt Stipulated Final Judgment already bans Pukke from “engaging in, participating in, or assisting others to engage or participate in[,] credit counseling, credit education, or debt management.” AmeriDebt, ECF No. 473. The Stipulated Final Judgment form AmeriDebt remains fully in effect and is in no way superseded by the Court’s Permanent Injunction here. As such, the Court firmly reminds Pukke that he is already enjoined from these activities.
But the Court does not intend to prohibit Pukke from engaging in any other specific commercial activity. What it does seek to do is to ensure that, whatever activity Pukke may engage in (other than real estate and credit-counseling-related activities), that he do so without making any material misrepresentations as to any good or service.
Should he continue to do so, he may be called to account by the FTC, in this Court or otherwise, and duly sanctioned.
The Court, however, takes a different view as to Pukke’s involvement in telemarketing. As to that, the Court will ban Pukke from any and all telemarketing activity whatsoever, because he has most definitely violated both the TSR, as alleged in the present case, and the AmeriDebt Stipulated Final Judgment which prohibits violations of the TSR.
In all other respects, with minor modifications, the Court finds the terms of the FTC’s proposed Permanent Injunction appropriate.”