Michael E. Kelly and $500 Million Fraud
Michael E. Kelly, et al charged by SEC in massive fraud against seniors
Continuing its crackdown on fraud against senior citizens, the Securities and Exchange Commission today filed charges stemming from a $428 million securities fraud that victimized thousands of seniors and other investors throughout the United States. The SEC's action, filed in federal district court in Chicago, Illinois, charges 26 defendants and alleges that they participated in a massive fraud on U.S. investors that involved the sale of securities in the form of "Universal Leases." The Universal Lease investments were structured as timeshares in several hotels in Cancun, Mexico, coupled with a pre-arranged rental agreement that promised investors a high, fixed rate of return. The Universal Lease scheme has now collapsed and investor losses exceed $300 million.
The SEC alleges that Michael E. Kelly ("Kelly") and those working with him defrauded thousands of U.S. investors into using their retirement savings to buy Universal Leases on the false promise of safe and guaranteed returns. The SEC alleges that from 1999 until 2005, Kelly and others raised at least $428 million through the Universal Lease scheme from investors throughout the United States, with more than $136 million of the funds invested coming from IRA accounts. The SEC further alleges that a nationwide network of unregistered salespeople who sold the Universal Leases collected undisclosed commissions totaling more than $72 million. The SEC also alleges that Kelly and others ran the scheme from Cancun, Mexico, through a number of foreign entities in Mexico and Panama. According to the SEC's complaint, Kelly and others told investors that Universal Leases would generate guaranteed income through the leasing of investor timeshares by a large, independent leasing agent. In fact, the complaint alleges, the leasing agent was a small Panamanian travel agency controlled by Kelly, and for most of the scheme its payments to investors came from accounts funded by money raised from new investors. Further, the complaint alleges that Kelly and the other defendants failed to disclose key facts about the Universal Lease investment, including the risks of the investment and that more than $72 million in investor funds were used to pay commissions as high as 27% to the selling brokers.
The SEC's complaint names the following individuals and entities as defendants: Kelly, Michael P. Kelly, Donald L. Kelly, John Corwin, Corporativo Nola, S.A. de C.V., Resort Holding International (RHI) S.A., Panorama Communities, S.A., World Phantasy Tours, Inc. (Viajes Fantasia Por El Mundo, S.A.), also d/b/a Majesty Travel, Galaxy Properties Management, S.A., Yucatan Resorts, S.A. de C.V., Resort Holdings International, S.A. de C.V. The complaint also names as defendants a number of the unregistered brokers who sold the Universal Leases to the investing public. They are: Mark Ruttenberg, Ruttenberg and Associates Financial Marketing, Inc., Mark G. Meyer, Mark Meyer and Associates, Inc., Richard E. Riner, Southwest Income Marketing, Inc., George Phelps, also d/b/a Safe Estate Plans, John E. Tencza, also d/b/a American Investment Management Group, Inc., American Elder Group, L.L.C., Carl Q. Lee, Carl Lee and Associates, Inc., Roy D. Higgs, Warren T. Chambers, William K. Boston, Jr. and Century Estate Planning, Inc. Finally, the complaint names Avanti Motor Corp. and DMK Properties, L.L.C., two entities affiliated with Kelly, as relief defendants, alleging that they received ill-gotten gains from the scheme.
Comments
My father bought a universal lease(L5193)from Resort Holdings,that was adminisyered by World Phantasy Tours,subsequently replaced by Galaxy Property Mabagement.
The lease was sold to him by Daniel Dennett a financial advisor working out of Las Vegas , and Boulder City NV. My Father Died , and left the lease to me.
Posted by: Henry P Thomas | August 3, 2008 12:06 PM
I am affiliated with a law firm that represents investors in schemes like Resort Holdings. We are investigating this scheme and looking for possible avenues for investor recovery.
If anyone could point us to a good source of information (i.e., parties involved, middle-men such as salesmen, brokers, other related parties), as well as more info about the scheme, we'd appreciate it. You can reply to this post, or contact us via email at investmentlawfirm_at_gmail.com (investmentlawfirm@gmail.com).
Thank you.
Posted by: Investment Fraud Attorneys | October 29, 2007 4:07 PM