Ponzi scheme money helped build Desarrollos Aruba hotel - US Receiver

No worries: Tourism Minister Shawn Crockwell

Desarrollos, the developers chosen to build a new luxury hotel at the former Club Med site in St George’s, is being sued by a US receiver to recover proceeds of a Ponzi scheme which were used to fund a hotel in Aruba.

Carl Bazarian, who failed in his years long bid to develop the Club Med property, is also seeking his day in court with Desarrollos claiming he is owed money by the Venezuela company.

Bazarian’s lawyers have been unable to serve process on the Venezuelan-based developers, however.

Tourism Minister Shawn Crockwell is unfazed by the news.

“I have full confidence in the Desarrollos group and that they will be able to proceed with the St. George’s project.

“I am aware of the legal proceedings, a civil dispute that involves various entities and individuals, but to date no one has been formally served with process in this case.

“Desarrollos Hotel Group have maintained the legal position that they are innocent third party stakeholders in this civil dispute. I am not aware of Mr. Bazarian’s legal action that you refer to above, nor am I aware of the relationship he may have with the Desarrollos Group.”

Court appointed receiver John J Carney has filed suit against Walter Stipa and various Desarrollos entities he owns or controls, in a bid to recoup $15 million transferred to them from a Ponzi scheme managed by Francisco Illarramendi.

In 2011, investment fund manager Illarramendi pleaded guilty to various criminal charges after the fraudulent scheme collapsed and Carney was appointed to trace and recover hundreds of millions of dollars of investors’ money.

Venezuela-born Illarramendi managed hedge funds of Connecticut-based financial advisory firms, the Michael Kenwood Group and Highview Point Partners, LLC.

Carney has already succeeded in recovering about $300 million of investors’ money.

His complaint against the Stipa defendants, filed in June, states: “Illarramendi made payments from the Receivership Entities directly to entities controlled by Walter Stipa for the benefit of Romeo Mouawad, Miguel Mouawad, and Jespa Mouawad (collectively, the “Mouawad Family”).

“These fraudulent Transfers were used to build a luxury beachfront hotel in Aruba (the “Hotel”). These funds must be returned to the Receiver
for distribution to the defrauded victims of Connecticut’s largest Ponzi scheme.

“Defendants received or are the beneficiaries of at least $15 million for which they provided no reasonably equivalent value in return. The Stipa Defendants were the developers of the Hotel, and the Transfers were made to them in order for the Mouawad Family (together with the Stipa Defendants, “Defendants”) to obtain an ownership interest in the Hotel.”

Bazarian’s claim stems from his dealings with Desarrollos in connection with the same hotel project. According to court filings, Bazarian’s firm is seeking damages for breach of a 2007 agreement concerning financing for the hotel project.

Last month Bazarian’s lawyers filed a status report saying they could not be sure that Desarrollos has been served with the lawsuit.

“At the present time, Plaintiff and its attorneys have completed all steps within their control necessary to effect service of process upon the Defendant in Venezuela,” the report notes.

“The Venezuelan Foreign Ministry has been in possession of the service package for several months and has not yet advised either Plaintiff or the United States Department of State’s contracted process forwarder that service has been completed.”

Bazarian was named as developer of the former Club Med site in 2007, but his plans to build a Park Hyatt resort there did not come to fruition and the deal was terminated in 2012.

A process to select a new developer began in 2013.

In May, Crockwell announced that an exclusive negotiation period had been agreed with Desarrollos Hotelco Group to develop a “world class luxury resort” on the 124 acre site. That period expired in October but it was extended to December 13.

The fact that Bazarian had a business relationship with Desarrollos has raised eyebrows in some circles.

This article belongs to Politica ! The original article can be found here: Ponzi scheme money helped build Desarrollos Aruba hotel – US Receiver