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Universal Lease Program Claims

As set out in the links below, the following federal agencies and states have taken action regarding investments in “Universal Lease Programs” related to alleged timeshares and the following entities: Resort Holdings International, Yucatan Resorts, Majesty Travel, Avalon Resorts, and/or Phantasy Travel.

U.S. Dept. of Justice, Federal Bureau of Investigation:
http://chicago.fbi.gov/pressrel/2006/dec27_06.htm

In a December 27, 2006 press release titled “Suspect in Ponzi Scheme Arrested in Florida,” the FBI reported the arrest of Michael E. Kelly on charges of mail fraud related to “universal leases.”

United States Securities and Exchange Commission
http://www.sec.gov/litigation/complaints/2007/comp20267.pdf

As set out in the above-linked Complaint, the SEC has filed an action regarding the sale of Universal Leases against 26 Defendants including Michael E. Kelly, Resort Holding International, Panorama Communities, World Phantasy Tours, and some of the highest earning brokers / salespeople for the investment scheme. The Complaint describes the sales of the Universal Leases as well as the sale of similar “Residence Club Memberships” which began in March 2004.

Arizona:
http://www.ccsd.cc.state.az.us/enforcement/Actions/2006/Feb02-06.pdf

The Securities Division of the Arizona Corporation Commission alleged that the Defendants [including Yucatan Resorts, Inc. and Resort Holdings International, Inc.] sold “securities in the form of investment contracts” which were “not registered pursuant to … the [Arizona] Securities Act,” and that “Defendants misrepresented to investors that investments in the Universal Lease Program were fully safe, secure, and guaranteed, when in fact investing in this purported Central American timeshare program was inherently risky…”

California:
http://www.corp.ca.gov/enf/info/adm/stipek/dr.pdf

The California Corporations Commissioner issued a Desist and Refrain Order finding that investments in the Yucatan Resorts and Resort Holdings Universal Lease Program were “securities that were offered or sold in [California] by means of written or oral communications which included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, in violation of section 25401 of the Corporate Securities Law.”

Colorado:
http://www.dora.state.co.us/Securities/pdf_forms/pressreleases/welt.pdf

The Colorado Securities Commissioner filed a Complaint against a Boulder man related to the man’s sale of Universal Leases in Resort Holding International. The Securities Commission alleged violations of the securities registration, licensing, and anti-fraud provisions of the Colorado Securities Act. The Denver District Court banned the man from the securities industry and ordered him to pay $1.6 million dollars.

Illinois:
http://www.cyberdriveillinois.com/departments/securities/administrative_actions/

The Illinois Secretary of State, Securities Department, entered a Temporary Order of Prohibition against various companies and individuals involved in Universal Lease sales. The Secretary of State alleged that the Respondents violated the Illinois Securities Law of 1953 by selling unregistered securities, and further committed fraud in the sale of securities.

Kansas:
http://www.securities.state.ks.us/proceed/synops03/crtodd.html


Maryland
:
http://www.oag.state.md.us/Securities/Actions/2005/FreemanOwenCO_4_05.pdf

The Maryland Securities Commissioner found that “Respondents violated § 11-301, 11-302, 11-401,11-402, and 11-501 of the Maryland Securities Act with respect to the offer and sale of investments in the Universal Lease Program offered by Yucatan Resorts, S.A., Resort Holdings International, and Corporativo Nola.”

Minnesota:
http://www.state.mn.us/mn/externalDocs/Commerce/

A cease and desist Order was entered related to Resort Holdings International alleging that the Respondent offered unregistered securities.

Pennsylvania:
http://www.psc.state.pa.us/newsroom/enfreport/march04.pdf

The Pennsylvania Securities Commission issued a summary order to “cease and desist from offering or selling “Universal Lease Programs” issued by Yucatan Resorts, S.A. (Yucatan Leases) in violation of the securities registration, broker-dealer registration and anti-fraud provisions of the 1972 Act.”

Texas:
http://www.ssb.state.tx.us/orders/2006/1619.pdf

The Securities Commissioner of Texas entered an Agreed Cease and Desist Order which stated in its Conclusions of Law that “Universal Leases” issued by Yucatan Resorts, SA, Resort Holdings International, SA and Resort Holdings International, Inc. are “securities as that term is defined in Section 4.A of the Texas Securities Act.” The Order further found that these “securities” were not registered with the Securities Commissioner.

Utah:
http://www.securities.utah.gov/press/dennett.pdf

The Director of the Utah Department of Commerce announced the entry of a Cease and Desist Order which was the product of undercover investigators receiving a sales pitch from a salesman of “universal lease” investments for Yucatan Resorts. In the Order, the salesman admitted “misrepresenting information about the investment including claiming a 9% return was guaranteed, that investors would receive profits whether or not the rooms were rented, and the investment was liquid (meaning the company would repurchase the investor interest at any time).”

Wisconsin:
http://www.wdfi.org/_resources/indexed/site/newsroom/admin_orders/2005/ma_moderson_pet.pdf
http://www.wdfi.org/_resources/indexed/site/newsroom/admin_orders/2005/ma_troyer_pet.pdf

The Wisconsin Department of Financial Institutions, Division of Securities, alleged that the sale of interests in the Resort Holdings Universal Lease Program was a sale of securities which were not registered for offer or sale in Wisconsin.

by W. Scott Greco

 

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