FTC Intervenes in $100 Million Real Estate Investment Scam
Inside Subprime: Dec 18, 2018
By Grace Austin
The FTC is taking steps to shut down a $100 million real estate scheme, in what’s been called the “largest overseas investment scam” the agency has ever litigated.
A federal court in Maryland ordered the Sanctuary Belize Enterprise company to temporarily stop doing business in November 2018. In a release, the FTC said its goal is to halt the scam and return millions to duped investors.
The “Sanctuary Belize Enterprise,” or SBE, advertised land in the Central American country that was part of a large, luxury-oriented development. Investors then spent, the FTC estimates, between $150,000 and half a million dollars on parcels of land, or put down huge sums of money as a down payment. More than 1,000 victims over 13 years were deceived by the scam. AARP reported that many victims were retirees or near retirement.
SBE marketed through cable television channels and infomercials, according to the FTC. The FTC is accusing telemarketers, who billed themselves as property consultants, of reaching out to borrowers who expressed interest in the SBE development.
The FTC said that these telemarketers and, later, in-person representatives, made deceptive and false claims to borrowers, including false statements about the time it would take to complete the development; the amenities attached to the development, which included an international airport and golf course; and that the investments would increase in value exponentially and would be easy to resell. Those representatives also claimed that all the money invested from consumers would go into the development, and advertised SBE as using a “no-debt” business model that didn’t rely on banks and would get the project done quicker.
The FTC contends that less than 10 percent of SBE investors have had their homes finished, and investors won’t recoup profits by reselling.
A notorious scammer with a 15-year history with the FTC was behind the scheme: Andris Pukke. Pukke and his associates are accused of spending all of the investment money they received on themselves.
Pukke and two others are separately being charged with contempt by the FTC. Pukke previously was in trouble with authorities over selling phony debt management plans and pretending to be a nonprofit credit counseling service. He was required to hand over the Belize land and other assets to pay for those fines, but never did.
The FTC said Pukke continued to run the SBE scheme while he served time in prison for refusing to hand over assets.
Overall, there are more than 20 defendants, both individual and corporate, named in the FTC’s case. A Belize bank was also named, the first time a foreign bank has been sued by the agency.