In re Sanctuary Belize Litig., Civil No. PJM 18-3309
| Court | United States District Courts. 4th Circuit. United States District Court (Maryland) |
| Writing for the Court | PETER J. MESSITTE, UNITED STATES DISTRICT JUDGE |
| Citation | 482 F.Supp.3d 373 |
| Parties | IN RE SANCTUARY BELIZE LITIGATION |
| Docket Number | Civil No. PJM 18-3309 |
| Decision Date | 28 August 2020 |
482 F.Supp.3d 373
IN RE SANCTUARY BELIZE LITIGATION
Civil No. PJM 18-3309
United States District Court, D. Maryland.
Signed August 28, 2020
MEMORANDUM OPINION
PETER J. MESSITTE, UNITED STATES DISTRICT JUDGE
TABLE OF CONTENTS
I. OVERVIEW ...385
II. PROCEDURAL BACKGROUND ...386
III. THE FACTUAL SETTING ...389
A. The Sanctuary Belize Development...389
B. The Backstory of Defendant Pukke (including his use of aliases)...393
IV. LEGAL STANDARDS FOR LIABILITY UNDER FTC ACT AND TSR...396
A. Liability for Violations of FTC Act and for Permanent Injunction...396
B. Liability for Monetary Relief Under FTC Act...398
C. Liability as a Common Enterprise...399
D. Liability for Violations of Telemarketing Sales Rule...400
V. THE SIX (SEVEN) ALLEGEDLY DECEPTIVE CORE CLAIMS ...401
A. Timeline of Claims...401
B. "No Debt" or "Debt-free" = No Risk or Less Risk...403
C. Every Dollar of Revenue Goes Back Into The Development...408
D. Development of Luxury Amenities...411
E. 2-5 Year Timeline for Completion...415
F. Appreciation of Lots in Value...421
G. Robust Resale Market...423
H. Degree of Pukke's Involvement in SBE...425
VI. LIABILITY FOR MISREPRESENTATION OF CORE CLAIMS ...429
A. SBE entities as a Common Enterprise...429
B. SBE's Liability for Violations of FTC Act and for Monetary Relief...433
C. Pukke's Involvement and Liability...435
D. Baker's Involvement and Liability...440
E. Chadwick's Involvement and Liability...448
VII. LIABILITY FOR TSR VIOLATIONS ...458
VIII. DEFAULTING DEFENDANTS ...459
A. John Usher...459
B. Global Property Alliance, Inc. ("GPA")...461
C. Sittee River Wildlife Reserve ("SRWR")...461
D. Buy Belize, LLC ("Buy Belize")...462
E. Buy International, Inc. ("Buy International")...462
F. Foundation Development Management, Inc. ("FDM")...462
G. Eco-Futures Development...462
H. Eco-Futures Belize, Limited ("Eco-Futures Belize")...463
I. Newport Land Group, LLC ("NLG")...463
J. Power Haus Marketing ("Power Haus")...464
K. Prodigy Management Group, LLC ("Prodigy")...464
L. Belize Real Estate Affiliates, LLC ("BREA")...465
M. Exotic Investor, LLC ("EI")...465
N. Southern Belize Realty, LLC ("SBR")...465
O. Sanctuary Belize Property Owners’ Association ("SBPOA")...465
P. Estate of John Pukke...466
IX. RELIEF ...466
A. Injunctive Relief...466
B. Monetary Relief...472
X. CONTEMPT MOTIONS ...475
A. Introduction...475
B. Legal Standard for Contempt Motions...475
C. TSR Contempt...467
D. Parcel Contempt...477
E. Vipulis Loan Contempt...481
XI. CONCLUSION ...484
I. OVERVIEW
This Memorandum Opinion constitutes the Court's Findings of Fact and Conclusions of Law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure.
On October 31, 2018, the Federal Trade Commission ("FTC") filed a Complaint in this Court, amended on January 15, 2019, alleging that certain named Defendants, in violation of Section 5(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 45(a) and the Telemarketing Sales Rule ("TSR"), 16 C.F.R. § 310.3, were perpetrating a large-scale land sales scam in the Central American country of Belize (formerly known as British Honduras). The primary target of the scheme was and is American-based consumers. The principal Defendants were and are individuals Andris Pukke, Peter Baker, Luke Chadwick, and John Usher, and several corporate entities that the FTC alleges have at all relevant times operated as a common enterprise, which all together are known as Sanctuary Belize Enterprises ("SBE").1 The Complaint and Amended Complaint sought a Preliminary Injunction, and now seek a Permanent Injunction, restitution, and other appropriate relief. In tandem with its original Complaint, the FTC sought an ex parte Temporary Restraining Order freezing assets belonging to various Defendants so that funds might be available for restitution should the Court eventually order that relief. The FTC also sought the appointment of a Temporary Receiver to administer the assets subject to the freeze. The Court granted the asset freeze and appointed a Temporary Receiver.
In the course of the proceedings, several Defendants and Relief Defendants, i.e. individuals or entities who were not alleged to have committed wrongdoing, but who purportedly received proceeds of others’ wrongdoing as to which they have no legitimate claim, settled the FTC's claims against them.2 At the start of the proceeding, the Court authorized the non-settling individual Defendants to draw a set amount of funds each month from their own frozen assets in order to cover their living expenses pending trial and directed the Receiver to expend receivership funds to cover certain costs on behalf of these individual Defendants, including the cost of ordering deposition and trial transcripts and the cost of attending the trial on the merits that was held in Greenbelt, Maryland. 3
The Court held both a Preliminary Injunction hearing and a trial on the merits4 , and received the Parties’ Proposed Findings of Fact and Conclusions of Law after both, except that Chadwick did not attend the Preliminary Injunction hearing nor did he submit Proposed Findings of Fact and Conclusions of Law afterwards.
The Court granted the Preliminary Injunction. ECF Nos. 539 and 615.
The Court now GRANTS , with minor modifications, the FTC's requested relief of a Permanent Injunction against Pukke, Baker, Chadwick, Usher and the Corporate Defendants who have not yet settled. The Court also GRANTS the FTC's requested relief of restitution against all these Defendants and will make their liability joint and several, subject to the qualifications set forth infra, Section VI.E. Restitution will be made to the FTC on behalf of consumers in an amount to be discussed infra, Section IX.B.
The Court further GRANTS the FTC's Motion to Hold Andris Pukke, Peter Baker, and John Usher in Contempt for Deceptive Telemarketing Practices in Violation of the Final Order in FTC v. AmeriDebt , 03-cv-317 PJM, ECF No. 266.
The Court DENIES the FTC's Motion to Hold Pukke, Baker, and Usher in Contempt for Failing to Turn the Sanctuary Parcel Over to the Receiver, ECF No. 267.
The Court GRANTS the FTC's Motion to Hold Pukke in Contempt for Violating the Order Approving Stipulation for Conditional Release of Andris Pukke from Incarceration Subject to Compliance with Court Orders, ECF No. 268.
II. PROCEDURAL BACKGROUND
Defendants comprise a web of individuals and corporate entities that, according to the FTC, has directed and controlled what the FTC collectively terms Sanctuary Belize Enterprise ("SBE"), a real estate enterprise which develops and sells lots in the Central American country of Belize.
The primary individual SBE Defendants are Andris Pukke, Peter Baker, Luke Chadwick, and John Usher. Other individual Defendants are Brandi Greenfield, Rod Kazazi, Frank Costanzo, and Michael Santos.5 The Complaint also named as Relief Defendants6 Angela Chittenden, Deborah
Connelly, John Vipulis, the Estate of John Pukke, and Beach Bunny Holdings, LLC ("Beach Bunny Holdings").7 Of these individual and Relief Defendants, only Pukke, Baker, Chadwick, Usher and the Estate of John Pukke remain in the case. As far as Usher and the Estate of John Pukke are concerned, they have never appeared in the case despite having been duly served, such that on January 10, 2020 and on January 16, 2020, respectively, the Clerk of the Court entered defaults against them. ECF Nos. 799 and 826. As part of its decision today, the Court now enters default judgments against them as well.
The organizational SBE Defendants include Global Property Alliance, Inc. ("GPA"), Eco-Futures Development, Eco-Futures Belize, Ltd. ("Eco-Futures Belize"), Sittee River Wildlife Reserve ("SRWR"), Buy International, Inc. ("Buy International"), Buy Belize, LLC ("Buy Belize"), Foundation Development Management, Inc. ("FDM"), Power Haus Marketing ("Power Haus"), Ecological Fox, LLC ("Ecological Fox"), Belize Real Estate Affiliates, LLC ("BREA"), Southern Belize Realty, LLC ("SBR"), Exotic Investor, LLC ("EI"), Foundation Partners ("FP"), BG Marketing, LLC ("BG Marketing"), Prodigy Management Group, LLC ("Prodigy"), Newport Land Group, LLC, and the Sanctuary Belize Property Owners’ Association ("SBPOA," aka "The Reserve Property Owners’ Association") (termed the "Corporate Defendants"8 ). Atlantic International Bank, Ltd. ("AIBL"), located in Belize, was also sued for allegedly assisting in the deceptive...
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Fed. Trade Comm'n v. Pukke, 20-2215
...2003, Andris Pukke and Peter Baker began developing land in the Central American country of Belize. In re Sanctuary Belize Litig. , 482 F. Supp. 3d 373, 389 (D. Md. 2020). With the help of John Usher, a Belize native, they began selling lots in 2005 with the intent to convert this tropical ......
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Paradise Concepts, Inc. v. Wolf, CIVIL ACTION NO. 20-2161
...are skeptical of claims seeking to challenge emergency government action taken to combat a once-in-a-century global health crisis. See 482 F.Supp.3d 373 South Bay United Pentecostal Church v. Newsom , ––– U.S. ––––, 140 S. Ct. 1613, 1613-14, 207 L.Ed.2d 154 (2020) (Mem.) (Roberts, C.J., con......
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Fed. Trade Comm'n v. Pukke, 20-2215
...In 2003, Andris Pukke and Peter Baker began developing land in the Central American country of Belize. In re Sanctuary Belize Litig., 482 F.Supp.3d 373, 389 (D. Md. 2020). With the help of John Usher, a Belize native, they began selling lots in 2005 with the intent to convert this tropical ......
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Fed. Trade Comm'n v. Noland, CV-20-00047-PHX-DWL
...on this basis, the Court does not reach the Individual Defendants' other arguments. [3] Similarly, in In re Sanctuary Belize Litig., 482 F.Supp.3d 373 (D. Md. 2020), which is another case the FTC cites in support of its burden-flipping request (Doc. 365 at 15; Doc. 398 at 8), the claim givi......