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Elliott said to have admitted to defrauding investors

September 17, 2014   ·   0 Comments

A story in Wednesday’s Globe and Mail says an Orangeville-area man who once ran a well-known luxury resort in the Dominican Republic has pleaded guilty to a fraud charge in a U.S. federal court in San Francisco.

The story said Derek Elliott, of Hillsburgh,  had been facing U.S. criminal charges that he and an American business partner masterminded a fraud that raised $91.3-million from hundreds of investors to renovate and launch a second luxury hotel in the Dominican Republic.

A U.S. indictment issued in 2012 alleged that investors were promised “unsupportable” returns on what were marketed as timeshare-type interests in the project. But the hotel never opened. And only $13.4-million was ever spent working on the resort, with the rest spent on millions in undisclosed sales commissions, funding for other projects and payments to investors.

Documents filed with the San Francisco division of the U.S. District Court for the Northern District of California showed that Mr. Elliott appeared in court Aug. 27, after talks with prosecutors, and agreed to plead guilty to one count of conspiracy to commit mail fraud. Three other mail fraud charges were dropped.

The charge to which Mr. Elliott pleaded guilty carries a maximum jail sentence of 20 years, as well as fines. But a sentencing hearing is not scheduled until next year, when Mr. Elliott could see leniency applied for co-operating with prosecutors.

Mr. Elliott, who is in his early 40s, and his father Fred once ran the Sun Village Resort & Spa near Puerto Plata in the Dominican Republic.

After legal wrangling, Florida lawsuits against the Elliotts were eventually dropped. But while the litigation was hanging over the business and the pair’s assets were frozen by a court order, both hotel properties were lost in foreclosure

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