April 17–PROVIDENCIALES, Turks and Caicos Islands — Almost two weeks after questions were first directed to its press office, the Turks and Caicos Islands (TCI) government finally issued a statement on Thursday saying that it is aware of a civil lawsuit against the developer of a planned $224 million Ritz Carlton resort in the TCI seeking to recover funds fraudulently transferred by the convicted operator of a Ponzi scheme.
“We are aware of the civil lawsuit against members of the Desarrollos Hotelco group. We are in receipt of representations from their attorneys, and note that those involved have filed defences in the US courts,” the statement read.
However, the TCI government did not state when it became aware of the civil lawsuit, whether it was before or after the matter was first raised by Caribbean News Now.
In January, Venezuelan financier, Francisco Illarramendi, was sentenced to 13 years in prison for running what US federal prosecutors described as Connecticut’s largest ever Ponzi scheme, which resulted in $382.2 million of losses to investors, including Venezuela’s state-owned oil company.
Illarramendi allegedly made fraudulent payments of at least $15 million directly to entities controlled by Walter Stipa, for the benefit of the Mouawad family as a previously agreed loan from another Venezuelan Romeo Mouawad, which was used to build a luxury beachfront hotel in Aruba. The receiver has sued Stipa and entities controlled by him for the recovery of the funds.
Stipa is described in court documents as a Venezuelan citizen who owns and develops hotel properties. Through his Desarrollos group of companies, Stipa is said to be the majority shareholder of at least four luxury hotels in South America and the Caribbean.
According to Stipa’s attorneys, he had no knowledge regarding the origin of the funds “and is now stuck in the middle between the receiver, who claims that the proceeds should be returned to the receivership estate, and the lender, who claims that Mr Stipa’s company is obligated to repay the funds that were loaned to it.”
The TCI government said it carried out appropriate due diligence with regard to Stipa’s Desarrollos Hotelco group and their development proposals in the TCI, but it said it continues to request information from Desarrollos and other sources.
Again, the government did not make it clear when this due diligence process started or when it will end.
The Desarrollos Hotelco group has also provided corporate documentation to substantiate shareholders and directors, the TCI government said.
The Desarrollos Group plans to build a $224 million hotel, resort, casino and spa project in the TCI with works beginning in the fall of 2015. The project is located in the Grace Bay area of the island of Providenciales. The project includes 124 hotel rooms, penthouses, resort residences and associated facilities.
“In addition, the Desarrollos Ritz Carlton development in the TCI is being substantially financed by Marriott, a world leading luxury hotel chain. Marriott too met with the TCI government to demonstrate their commitment to the success of this five star development. Desarrollos and Marriott have a proven track record of having already developed four successful resorts together in the Caribbean region,” the statement added.
The government also attempted to address previously unanswered questions arising from a tender notice issued in relation to a valuable strip of prime beachfront Crown land in front of the proposed Ritz Carlton resort development at Grace Bay — widely acknowledged to be one of the world’s best beaches.
According to the TCI government, an application has been made for the leasing of a parcel of land of 0.46 acres in size.
“The land was publicly tendered and the tender having now closed, is being processed in accordance with the requirements of our Crown Land Ordinance,” the statement said.
However, the TCI attorney general has thus far still failed to respond to a request earlier this week for confirmation that the land in question was sold or leased to the Desarrollos group pursuant to the tender process and to provide details of the price and/or terms of the transaction.
The TCI government has also failed to address concerns that the development agreement with the Desarrollos Group was signed by the acting governor without Cabinet approval.
The April 1 post-Cabinet meeting statement reported that the Cabinet, “Discussed the draft development agreement between the Desarrollos Group and the TCI Government relating to a proposed luxury branded hotel development project at Grace Bay”, with no indication that development agreement in question was actually approved by Cabinet and/or that the acting governor was advised to sign it on behalf of the TCI government.
The apparent absence of such Cabinet approval or direction contrasts with a Cabinet discussion on the same day regarding a separate memorandum of understanding with Cooper Jack Development Limited to build another $220 million dollar hotel, spa and residences in Providenciales, when the Cabinet specifically advised the acting governor to finalise the execution of the memorandum of understanding, which was signed with equal fanfare the following day, April 2 — the same day as the development agreement with the Desarrollos group was signed by the acting governor, apparently without such Cabinet “advice”.
