What happened to the rest of the money? Some went into expanding Sun Village. But tracing the remainder is difficult, Scott writes, because the Elliotts constantly moved money between their many offshore companies and “because of the extremely poor state of the Elliotts’ and their companies’ accounting records (so much so, it appears to be more by design than by incompetence).”
Yet, the Elliotts managed to make deals with even sophisticated financiers. Scott’s report makes reference to Russian-Canadian billionaire Alex Shnaider, who agreed to partner with the Elliotts to buy a piece of land on the east coast of the Dominican Republic. (The Elliotts’ plan was to build a luxury hotel and golf course, to be designed by golfing legend Johnny Miller.) Shnaider’s investment company put about $17 million into the deal. As for the Elliotts, according to the Florida lawsuit, they used $7.5 million in funds from Juan Dolio sales to finance their share of the deal. (Derek insists it was $4.5 million—$2.5 million from their management fees, the rest from an “intercompany advance.”)
Shnaider—the man behind the Trump Tower now under construction in Toronto—lent the Elliotts a further $1 million through his investment company when they told him they were in financial trouble; the loan was never repaid. He says he cut his ties with the pair when he heard about the allegations in Miami, and put the land, still undeveloped, up for sale. “It’s not pleasant when your partners are being sued—especially with something like that, when it’s insinuating Ponzi schemes,” says Shnaider, who met Derek through a mutual acquaintance. “I don’t know if it’s true or not.”
Derek and his father call Scott’s report “defamatory.” Derek says they were paid “more or less” $7 million or $8 million in commissions and management fees for running Sun Village and Juan Dolio, though Scott says it was at least $12.8 million between 2004 and 2009. Derek says the discrepancy is due to the fact that some of that money was paid in shares in their companies, not cash. Almost all of the Elliotts’ commission money, plus the rest of the cash brought in from investors and time-share sales, has been spent on the projects or on “soft costs” like marketing and legal fees, says Derek.
The Elliotts scoff at Scott’s claims that they are hiding money in their web of offshore companies. They also deny claims in the Florida suit that they are living a “lavish lifestyle.” They have declared in affidavits that they have very few assets left. Derek sold his $900,000 (Canadian) Yorkville condo in 2009 to help pay corporate legal bills. The farm has been mortgaged for $800,000 (Canadian) to pay the Elliotts’ former lawyer, Lambert. Fred’s plane, a single-engine Mooney Bravo GX, has been repossessed (and besides, Derek says, it was merely the latest in a long line of small aircraft that his father has owned since the 1970s). The yacht—a $425,000, 54-foot boat called the Independence—belonged to the resort, Derek says, not him. It was subject to an ownership dispute and taken by a disgruntled employee. But the Dominican Navy seized it after it ran into engine trouble near Luperon Bay, where it remains, Derek says, “rotting.”
Derek did lose some money gambling in Nevada, according to court documents, but not the $1 million his accusers claim. He filed an affidavit saying he lost $119,865 from 2005 to 2007 gambling at two Nevada hotels, while on trips to Catledge’s head office with other employees. But Derek says he was playing with his own money.
In the fall of 2009, the Elliotts’ banks in the Dominican Republic foreclosed on the Sun Village and Juan Dolio properties. Sun Village—which was worth an estimated $58 million, according to a court-submitted appraisal—was sold at auction for about $4.3 million, or “the price of a dead cow,” as Derek read in one Dominican newspaper.
He blames Scott for the foreclosures, saying he overstepped his bounds under Florida and Dominican law. With Scott and his agents looking over his shoulder and attending meetings with creditors, Derek says, the banks got nervous. But Scott says that with $41 million in unpaid bills, Sun Village was beyond saving.
In July, 2010, in what Derek portrayed as a kind of victory that came “18 months too late,” Florida Judge Alan Gold ruled that the “mega-lawsuit” filed by hundreds of plaintiffs against the Elliotts and their companies should be chopped up, with each case proceeding individually. But the decision was put on hold, pending an appeal by the plaintiffs. The Elliotts also won a legal victory in the Turks and Caicos, where the Florida plaintiffs’ case was thrown out.