In a flurry of court documents, the Judge has trounced the participants in the foreign land sales scheme that has roots in the non-profit debt management group Ameridebt.
There is no need for me to engage in any hyperbole or opinion to write this post. I’m going to stick with the facts as the Judge and the Court have determined them to be after a trial of a .
Let’s run through each new document one at a time and I’ll pull out highlights and link to the document for you to review it if you want.
MEMORANDUM OPINION #2
“On August 28, 2020, the Court issued comprehensive findings of fact and conclusions of law, bringing this case of two years duration for the most part to a close. ECF No. 1020 (“Memorandum Opinion”). However, certain questions were left open for further briefing, which: the parties have now provided. The Court addresses the remaining issues in this Memorandum Opinion #2.”
“The Federal Trade Commission (“FTC”) requests that the Court impose a $120.20 million compensatory sanction against Defendants Andris Pukke, Peter Baker, and John Usher for their participation in the TSR Contempt. As explained in the Memorandum Opinion, the Court refrained from determining a precise damages figure for the TSR Contempt after finding that any amount would be “duplicative” of the restitution already ordered. ECF No. 1020 at 165. This was because, although the TSR Contempt pertained to “the AmeriDebt Stipulated Final Judgment, the injured parties are the lot purchasers in the present litigation who were deceived by Pukke, Baker and Usher’s contumacious conduct, such that any compensation would have to be made to them.”
“In opposition, Pukke and Baker read too much into the Court’s prior statement that a compensatory sanction would be duplicative of restitution. Defendants argue that the Court is now somehow precluded from issuing any contempt sanctions because it has already ordered restitution. That, of course, is not the case. The amounts are not cumulative, they are merely alternative measures of the same damages. The Court therefore imposes a $120.20 million compensatory sanction upon Pukke, Baker, and Usher, jointly and severally, for their participation in the TSR Contempt”
“In the Memorandum Opinion,the Court deliberately left open the amount of restitution due from Defendant Chadwick. Unlike other Defendants, Chadwick withdrew from the SBE operation around 2016. Accordingly^ the Court determined that the restitution due from him would not include lot sale payments from 2016 through 2018. The FTC was thus directed to provide a statement of restitution owed by Chadwick, which deducted lot sales generated during the period of January 1, 2016 through November 30, 2018 from the total restitution amount, $120.20 million. The FTC calculated Chadwick’s restitution to be $91,902,725.91.”
“In its Memorandum Opinion, the Court afforded David Heiman and other nonparty investors of NLG an opportunity to be heard as to why their investments in NLG should be excluded from the Receivership. ECF No. 1020 at 139-41. The Court has already found that NLG was part of the SBE “common enterprise” and, as such, is jointly and severally liable for violations of the FTC Act and the TSR. Id. at 139. The evidence amply demonstrated that SBE was significantly intertwined with NLG’s operations. Millions of dollars were transferred from SBE to NLG for no apparent legitimate business purpose and SBE individuals had interlocking relationships with NLG. See id. at 140. Accordingly, the Court concluded in June 2019 that NLG’s assets were part of the Receivership. ECF No. 507.”
MEMORANDUM OPINION #3
Pukke Is Liable for the $172 Million AmeriDebt Judgment
“The FTC requests that the Contempt Order explicitly find Pukke liable for the entire AmeriDebt judgment. The Court has already found that the “facts conclusively establish . . . Pukke’s non-cooperation with the FTC and trigger the $172 million [AmeriDebt] judgment.” ECF
1020 at 176. Including language to that effect in the Contempt Order is appropriate.
Pukke objects, arguing that he was denied a Due Process right to notice and an opportunity to be heard. He claims that because the Amended Complaint fails to specifically allege his liability for the entire AmeriDebt judgment, he cannot be liable for same. This argument is baseless and was firmly rejected when the Court found him liable for the entire AmeriDebt judgment in the Memorandum Opinion. The Contempt Order will be revised accordingly.”
Turnover of Monthly Income Over $5,000
“Pukke, Baker, and Chadwick each challenge the De Novo Order’s proposed requirement that they turn over monthly “employment income” exceeding $5,000. They argue that 15 U.S.C. § 1673 bars the FTC from seeking more than 25% of their aggregate disposable earnings, or the amount of income that exceeds 30x the minimum wage per week, whichever is less.”
“[W]hile the actions of Defendants in SBE are hardly praiseworthy, the Court does not wish to discourage any defendant from this point forward obtaining honest and lawful employment. The restriction on garnishment imposed by § 1673, in the Court’s view, reflects an acceptable balance between mandating the payment of the monetary judgment Defendants are faced with, while providing, to some extent at least, for their welfare. Accordingly, the Court will require that any turnover of “employment income” comply with the restrictions on garnishment under § 1673.” (15 U.S.C. § 1673)
FINAL ORDER FOR PERMANENT INJUNCTION AND MONETARY JUDGMENT AGAINST DEFENDANTS ANDRIS PUKKE, PETER BAKER, AND LUKE CHADWICK
“The Federal Trade Commission (“FTC”) has filed an Amended Complaint for Permanent Injunction and Other Equitable Relief (“Amended Complaint”), pursuant to Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b), and the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108, alleging that Defendants Andris Pukke, Peter Baker, and Luke Chadwick violated the FTC Act and the Telemarketing Sales Rule through the deceptive marketing of lots in a development known variously as Sanctuary Bay, Sanctuary Belize, and The Reserve (for ease, “Sanctuary Belize”). Following a trial on the merits, which commenced on January 22, 2020 and concluded on February 12, 2020, and as detailed in the accompanying Memorandum Opinion dated August 28, 2020, the Court has found Pukke, Baker, and Chadwick liable on all counts. To the extent necessary, the Court amends the allegations in the Amended Complaint to conform to the proof at trial.”
“Although the, relevant Findings o f Fact are more fully set out in the accompanying Memorandum Opinion, and are incorporated herein, the Court makes the following Findings in accordance with that Opinion:
a. Since 2005, Pukke, Baker, and their co-Defendants have sold lots in the development known by various names and identified herein as Sanctuary Belize.
b. For his part, Luke Chadwick controlled or participated in these acts or practices commencing in 2008.
c. Following the 2008 settlement between the Receiver and Sittee River Wildlife Reserve, Pukke, Baker, and Chadwick took steps to hide Andris Pukke’s involvement in Sanctuary Belize, including through Pukke’s use of aliases such as “Marc Romeo” and “Andy Storm.”
d. Under the control of Pukke, Baker and Chadwick, and frequently with their direct participation, all Corporate Defendants and Individual Defendants participated in the sale of Sanctuary Belize lots through telemarketers in the United States, while making the following claims, all of which were and are false and material:
i. That Defendants used a “no debt” business model to develop Sanctuary Belize which would make lots in Sanctuary Belize a less risky investment than one in which the developer would make payments to lenders;
ii. That every dollar Defendants collected from Sanctuary Belize lot sales would go back into the development;
iii. That Defendants would finish Sanctuary Belize quickly, including within two to three years, or within five years;
iv. That the finished Sanctuary Belize would have all of the amenities expected o f an American luxury resort community, such as: (i) a hospital staffed with American physicians and nurses near the development; (ii) an emergency medical center near the downtown “Marina Village;” (iii) a championship-caliber golf course; (iv) a local airport within the development; (v) a new international airport nearby with direct flights to and from the United States; (vi) a “Marina Village” containing high-end boutiques, restaurants, cafes, an American-style grocery store, an elegant casino, and a hotel; and (vii) a 250-slip world-class marina;
V. That consumers could realize the rapid appreciation of their lots within Sanctuary Belize because there is a robust resale market through which consumers could easily resell their lots should they choose to do so; and
vi. That Andris Pukke has had no meaningful involvement with Sanctuary Belize or with the Defaulting Corporate Defendants.
e. These representations were likely to mislead consumers acting reasonably under the circumstances, these representations were material, and consumers relied on these representations.
f. Except for Atlantic International Bank, the Corporate Defendants (including Defaulting Defendants) operated as a common enterprise (“SBE”) in making these claims.
g. SBE initiates or receives interstate telephone calls from consumers as part of a program to sell services to those consumers.
h. SBE offers to provide goods and services through telemarketing.
i. Pukke, Baker, Usher, and Chadwick knew or should have known that the claims identified were false at the time they were made, or were at the least recklessly indifferent to the truth of the claims.
j. As a result of these false claims, consumers paid the Defendants at least one hundred twenty million, two hundred thousand dollars ($120,200,000).
k. Usher and the Defaulting Corporate Defendants are jointly and severally liable with Pukke, Baker, Usher and to an extent, Chadwick.”
BAN ON REAL ESTATE GOODS AND SERVICES
“Pukke, individually, collectively, or in any combination, is permanently restrained and enjoined from advertising, marketing, promoting, or offering for sale, or assisting others in the advertising, marketing, promoting, or offering for sale of any Real Estate Good or Service, whether directly or through an intermediary, including by consulting, brokering, planning, investing, or advising. Further, Baker and Chadwick, individually, collectively, or in any combination, are permanently restrained and enjoined from any involvement with Sanctuary Belize or any future incarnation. Baker, individually, collectively, or in any combination, is also permanently restrained and enjoined from any involvement with the development known as “Kanantik.” The Court defers ruling on Chadwick’s involvement with the development known as “Kanantik.”
BAN ON TELEMARKETING
“Pukke, Baker, and Chadwick individually, collectively, or in any combination, are permanently restrained and enjoined from Telemarketing or assisting others in Telemarketing in any commercial enterprise whatsoever, whether directly or through an intermediary, including by consulting, brokering, planning, investing, or advising.”
EQUITABLE MONETARY JUDGMENT
“Judgment in the amount of one hundred twenty million, two hundred thousand dollars ($120,200,000) is entered in favor of the FTC against Pukke and Baker, jointly and severally, as equitable monetary relief (“Equitable Monetary Judgment”). Judgment in the amount of ninety-one million, nine hundred and two thousand, seven hundred and twenty-five dollars and ninety-one cents ($91,902,725.91) is entered in favor of the FTC against Chadwick, jointly and severally with Pukke, Baker, Usher and the Defaulting Corporate Defendants.”
ORDER FOR PERMANENT INJUNCTION AND MONETARY JUDGMENT AGAINST DEFAULTING DEFENDANTS JOHN USHER, GLOBAL PROPERTY ALLIANCE INC., SITTEE RIVER WILDLIFE RESERVE, BUY BELIZE LLC, BUY INTERNATIONAL INC., FOUNDATION DEVELOPMENT MANAGEMENT INC., ECO FUTURES DEVELOPMENT, ECO-FUTURES BELIZE LIMITED, NEWPORT LAND GROUP LLC, POWER HAUS MARKETING, PRODIGY MANAGEMENT GROUP LLC, BELIZE REAL ESTATE AFFILIATES LLC, EXOTIC INVESTOR LLC, SOUTHERN BELIZE REALTY LLC, SANCTUARY BELIZE PROPERTY OWNERS’ ASSOCIATION, AND THE ESTATE OF JOHN PUKKE
“The Federal Trade Commission (“FTC”) ha\ filed an Amended Complaint for Permanent\Injunction and Other Equitable Relief (“Amended Complaint”), pursuant to Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b), and the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108, alleging that Defendants John Usher, Global Property Alliance Inc., Sittee River Wildlife Reserve, Buy Belize LLC, Buy International Inc., Foundation Development Management Inc.,Eco Futures Development, Eco-Futures Belize Limited, Newport Land Group LLC, Power Haus Marketing, Prodigy Management Group LLC, Belize Real Estate Affiliates LLC, Exotic Investor LLC, Southern Belize Realty LLC, and Sanctuary Belize Property Owners’ Association, violated the FTC Act and the Telemarketing Sales Rule through the deceptive marketing of lots in a development known variously as Sanctuary Bay, Sanctuary Belize, and The Reserve (for ease, “Sanctuary Belize”), and that The Estate of John Pukke received funds to which it had no legal entitlement. None of these defendants have responded to the Amended Complaint (hereinafter “Defaulting Defendants”). The Clerk entered default against each of the Defaulting Defendants except The Estate of John Pukke on January 10, 2020. ECF No. 799. The Estate of John Pukke was placed in default on January 16, 2020. ECF No. 826.”
“A. Judgment in the amount of one hundred twenty million, two hundred thousand dollars ($120,200,000) is entered in favor of the FTC against Usher and the Defaulting Corporate Defendants, jointly and severally, as equitable monetary relief.
B. Judgment in the amount of eight hundred thirty thousand dollars ($830,000) is entered in favor of the FTC against The Estate of John Pukke as equitable monetary relief.”
ORDER REQUIRING ROD KAZAZI TO TURNOVER $268,873.37 WITHIN SEVEN (7) DAYS
“The Federal Trade Commission (“FTC”) has moved the Court to order Rod Kazazi to make certain payments to the FTC pursuant to the Stipulated Order for Permanent Injunction and Monetary Judgment Against Defendants Rod Kazazi and Foundation Partners. ECF No. 789. For good cause shown,
IT IS HEREBY ORDERED:
A. Kazazi must within seven (7) days of this Order transfer two hundred sixty-eight thousand, eight hundred seventy-three dollars, and thirty-seven cents ($268,873.37) to the FTC in accordance with wire instructions that the FTC has previously provided.
B. At this time, the Court declines to impose the full suspended judgment of one hundred fourty-four million dollars ($144,000,000) against Kazazi. However, should Kazazi, or others acting on his behalf, fail to provide timely payment of the entire transfer required in paragraph A, the Court will reconsider the imposition of the full suspended judgment.”