|By Patrick Orr, The Idaho Statesman,
BoiseMcClatchy-Tribune Regional News
March 5, 2009 - The Idaho Department of Finance said the people were sold an investment to pay for the construction of two hotels, and were promised a quarterly payment with a fixed rate of return and their money back in five years.
But the investors actually bought time shares in the hotels lasting 45 years, according to a lawsuit filed last month in state District Court in Boise.
The suit also said the promoters have since ceased paying quarterly returns and refuse to repay investors who want their money.
The promoters have yet to complete the construction of the Juan Dolio Resort despite having told investors that it was completed in 2006, the lawsuit alleges.
The lawsuit names as "primary promoters" Derek Elliot, James Catledge, Sun Village Juan Dolio Associates LLC, and Impact Inc. Five other people with lesser roles also are listed.
Investigations Chief Jim Burns said department officials began investigating the promoters in 2006, after being contacted by a prospective investor.
That investigation revealed the fraud and led the department to issue a cease-and-desist order in July 2007 for Elliot, Catledge and their companies. The order required them to return the money to any investors who asked for it back. Both men refused, and the money has never been repaid, Burns said.
The lawsuit said Elliot and his companies functioned as the real estate developer and received most of the $3 million.
Burns said investors were solicited by members of Catledge's Impact Group, which handled marketing. Catledge and other defendants who worked for the Impact Group are not licensed to sell securities in Idaho, the lawsuit said.
Richard Riley, a Boise lawyer for the Impact Group, said his clients were one of nine selling groups for Elliot investment products and received only sales commissions, not sales proceeds. "The Impact defendants believe they have conducted themselves in good faith and intend to cooperate with the Idaho Department of Finance to hold the Elliott defendants accountable," Riley said in an e-mail Wednesday night.
Elliot and his attorney could not immediately be reached for comment Wednesday.
Burns said he hopes the Idaho investors might be able to get some of their money back but said it is impossible to know yet. There is evidence the developers do have property in the Dominican Republic, and it is possible they could also have other assets, he said.
Patrick Orr: 373-6619
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