In 1986, when a friend urged him to invest in the Dominican Republic, he says he couldn’t have found the Caribbean country on a map. He started speculating on undeveloped land near Puerto Plata with 17 Canadians, each of whom invested more than $100,000 (Canadian). A few homes were built on spec, but nothing much happened.
Then, in the mid-1990s, an Austrian tourism outfit turned the beachfront land next door into a bustling resort. Fred and Derek went into business with the newcomers, agreeing to build hotel rooms on their land and then lease them back to the Austrians to operate. The Elliotts began raising money from mostly Ontario investors, many of them in rural areas or small towns. Over several years, they took in around $38 million by selling shares in various companies registered in the Dominican Republic and the Turks and Caicos. In Ontario, these were private placements—sales of stock that don’t require the filing of a complete prospectus to regulators.
One of the companies in which Fred sold shares was Amber Coast Resort Corp.—a land deal that would later be rolled into Sun Village. The Ontario Securities Commission alleged that financial advisers had sold the shares in the late 1990s without the necessary licences, though enforcement action against Fred and several others was later dropped.
The Elliotts’ relationship with the Austrians fell apart in 2000, leaving them with no revenue stream but with the makings of their own resort—soon to be known as Sun Village.
As Derek tells it, things were rocky from day one. They sent their first run of Sun Village pamphlets to travel agents around Sept. 11, 2001. The ensuing crash of the tourism industry, they say, forced them to close until February, 2002. A little over a year later, an earthquake rocked the Dominican Republic, damaging the resort and shutting it down once again. In October, 2003, a fire wrecked four of the resort’s restaurants; to make matters worse, the Elliotts say their insurer went bankrupt, leaving them with no coverage for a $1-million loss.
Yet, they were keen to expand. The 300-room resort’s pools and restaurants were overbuilt, meaning they needed between 150 and 200 more rooms in order to turn a profit. But slow bookings and a banking collapse in the Dominican Republic made getting new financing difficult, according to Derek.
By that time, Derek—a high school grad who worked as a restaurant manager before joining Fred in 1995—was in charge of day-to-day operations at Sun Village. He and his dad first met James Catledge, a Nevada-based network marketer and motivational speaker, in 2004, through a U.S. investor in Sun Village. According to Derek, it was Catledge who presented a solution to the Elliotts’ cash-flow problem: selling time-shares. After meeting with Catledge at his office just outside Las Vegas, and again at Sun Village, Derek handed the self-styled guru an exclusive contract to sell time-shares in the resort. It was the beginning of what the Elliotts call, in a $120-million (U.S.) countersuit now working its way through the Florida court, a “disastrous relationship.”
n his many websites, James Catledge claims to be a man on a mission to provide “financial education for families.” In various YouTube videos, he can be seen pacing the stage, trying to energize a crowd of sales agents or prospective clients. “Brainwash yourself until the new way kicks in,” he tells one audience. “You’ve already been brainwashed. You’ve been brainwashed by the world to think that you are all you can do right now.”
According to his own bio, Catledge is a Mormon who was raised by a single mother in North Carolina and Tennessee. He “has helped in the design of several golf courses around the world” and says he flew around in a private plane he called Impact One. He also claims to have supported various Republican Party campaigns and dined at former Massachusetts governor Mitt Romney’s Utah home with Senator John McCain and then-president George W. Bush.
