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Ponzi scheme allegations dropped

Ponzi scheme allegations against the proposed developer of the St George's hotel project have been dropped after it was accepted there was nothing linking them to the operation.

The Desarrollos Hotelco Group, who have signed on to develop the former Club Med site, were listed last year in a Connecticut District Court lawsuit.

Court-ordered receiver John Carney filed the claim against Walter Stipa Sprecase, a lead principle in the Desarrollos group, and several Desarrollos entities, alleging that $15 million raised in a Ponzi scheme by Francisco Illarramendi had been used to build a hotel in Aruba.

Illarramendi, a former investment fund manager, was sentenced to 13 years behind bars this year after pleading guilty to five criminal counts, including securities fraud, wire fraud and conspiracy to obstruct justice. In total, an estimated $382.2 million was lost in the scheme.

In the originating complaint, dated last June, counsel for Mr Carney wrote: “The Stipa defendants [Mr Stipa and the Desarrollos entities] were the developers of the hotel, and the transfers were made to them in order for the Mouawad family (together with the Stipa defendants) to obtain an ownership interest in the hotel.

“Romeo Mouawad and certain of the Stipa defendants entered into a share sale agreement pursuant to which Romeo Mouawad agreed to provide a loan in the amount of $30 million to the Stipa defendants to assist in the development of the hotel. In consideration for the loan, Romeo Mouawad was to receive, among other things, an ownership interest in the hotel once it was completed.

“Illarramendi transferred $15 million of the funds that Romeo Mouawad agreed to contribute from receivership entities to bank accounts in New York held by certain of the Stipa defendants without receipt of any consideration therefor.”

However according to Connecticut court documents dated November 30, lawyer Ona Wang voluntarily dismissed the defendants.

In a separate letter, the lawyer explained: “The receiver's actions against Mr Stipa and the entities were voluntarily dismissed with prejudice with no party being deemed a prevailing party under any contract or statute for any purpose. Consequently, the receiver has no claims against Mr Stipa or any of the entities.

“Although the first amended complaint alleges in great detail the fraudulent Ponzi scheme operated and managed by Francisco Illarramendi through his control of the receivership entities, it did not include any allegations suggesting that Mr Stipa or any of the entities had any involvement in Illarramendi's scheme.”

The legal action had sparked concerns about the St George's hotel project, with Opposition members raising the matters in the House of Assembly.

• It is The Royal Gazette's policy not to allow comments on stories regarding court cases. As we are legally liable for any slanderous or defamatory comments made on our website, this move is for our protection as well as that of our readers.

Hotel project: the former Club Med site is due to be developed by the Desarrollos Hotelco Group (File photograph)

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Published December 03, 2015 at 8:00 am (Updated December 03, 2015 at 1:08 am)

Ponzi scheme allegations dropped

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