Re/Max Accused of Caribbean Condo Fraud

By LORRAINE BAILEY From Courthouse News Service

CHICAGO (CN) – Re/Max sold 30 people luxury condos in the Cayman Islands without telling them the developer had no financing, and refused to refund $5.6 million when the project collapsed, liquidators claim in court.

The Joint Official Liquidators of Caribbean Island Developments (CID) sued Re/Max Holdings and related entities and agents on Wednesday in Federal Court. The liquidators are successors-in-interest for a number of the condo buyers.

“The defendants bilked more than 30 people out of nearly $5.6 million by selling them luxury condominiums in CID’s ‘Island Resort Project,’ a proposed development on the island of Grand Cayman that was never built,” the complaint begins.

Defendant Simba Ltd. Does business as Re/Max Cayman Islands and was the exclusive listing agent for the condos.

Initially, Re/Max agreed not to collect commissions on condo sales until CID began construction, but Re/Max did not sell many condos under the arrangement, and the poor sales record prevented CID from obtaining financing.

“Re/Max Cayman then used its leverage as the ‘dominant’ resort condo seller on Grand Cayman to redo its deal with CID so that Re/Max Cayman would get paid commissions and bonuses as it made sales, rather than after CID obtained construction financing or after construction began. CID’s President [Oliver] De Hart agreed to this change because he was also a Re/Max sales agent, and thus benefited personally from quickly paid commissions and bonuses,” the liquidators claim in the 87-page lawsuit.

Re/Max ran an aggressive sales campaign from 2007 to 2011, deceiving customers into believing CID had financing and that condo sales were brisk, when in fact sales never topped 33 percent of available units, according to the complaint.

“By July 2011, CID still had not obtained financing, and without ever starting construction, it went belly up. Because the Cayman defendants had already taken (and laundered) their victims’ money, including sending a portion up to Re/Max, no money was returned to the victims of the fraud,” the liquidators claim.

They seek punitive damages for RICO violations, fraud, conspiracy, unjust enrichment, and breach of fiduciary duty.

They are represented by Elliot Schuler with Vanacour Schuler Zarin in Addison, Texas.

For more on this story go to: http://www.courthousenews.com/2015/03/26/re-max-accused-of-caribbean-condo-fraud.htm

See also:

From Chicago Federal Report March 25 2015

USDC Northern District of Illinois Chicago

The summary below describe allegations only and should not be taken as fact.

The Joint Official Liquidators Of Caribbean Island Developments Limited As Liquidator Of Caribbean Island Developments Limited And As Successor-In-Interest To Richard Allen, Ted V. Clark, Jill Bowers-Destro, Joseph Anthony Destro, Tony Jenkins, Thomas And Nancy Leidell, Joan And Gregory Link, Ken Liss, Martin And Patrizia Mccarthy, John Mikutowicz, Jack And Gitte Neilson, Jonathan And Cheryl Parker, Mary J. Shanahan, Douglas And Kathleen Spencer, Richo Strydom, G. David Thomas, Mike Thomas, And Christopher Curlew Tribelhorn
v.
Re/Max Holdings, Inc.; RMCO, LLC; Re/Max, LLC; Simba Ltd. (D/B/A Re/Max Cayman Islands); Kim Lund; James Bovell; Oliver De Hart; Michael Beggs
3/25/2015 1:15 cv 2542 Wood (Chicago)

RICO. Defendants bilked over 30 people out of nearly $5.6 million by selling them luxury condos in a proposed Grand Cayman development that was never built. “In an aggressive campaign of deception,” they misrepresented that the project had financing, that construction had begun, that defendants bought condos themselves when in fact they were given them for free, and that sales exceeded 40 percent of available units. They took and laundered buyers’ money and refused to return it when the project collapsed.

Adam Hirsch, Robinson Curley

UPDATE:

Kim Lund’s attorneys have said the claims had no merit whatsoever and that the men intend to “vigorously defend any such claims at the appropriate time”.

United States litigator Robert J. Palmersheim of the Chicago law firm Schopf & Weiss LLP has been retained to defend the parties in the United States Courts and “vindicate their good names and reputation”.