• Report: #209377

Complaint Review: RESORT HOLDINGS

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  • Submitted: Mon, September 04, 2006
  • Updated: Fri, April 16, 2010

  • Reported By:Gainesville Georgia
RESORT HOLDINGS
3222 Mishawaka Ave South Bend, Indiana U.S.A.

RESORT HOLDINGS - Vacation Properties - MICHAEL EUGENE KELLY - Resort Holding International RIPOFF OF A 99 YEAR OLD WOMAN FOR $25,000.00 BY an INSURANCE AGENT AND HIS REPRESENTIVE South Bend Indiana

*Consumer Suggestion: Michael E. Kelly Resort Holdings International, Majesty and Galaxy

*Consumer Comment: IP Fund1 Leaseholders come together

*Consumer Comment: IP Fund 1 leaseholders come together

*Consumer Suggestion: IP Fund report, the court appoints a Receiver for RHI.

*Consumer Suggestion: IP Fund report, the court appoints a Receiver for RHI.

*Consumer Suggestion: IP Fund report, the court appoints a Receiver for RHI.

*Consumer Suggestion: Resort holdings IPFUND1 files for Resort Management Group LLC to be appointed as Special Master

*Consumer Suggestion: IP FUND 1 filed for Resort Management Group LLC to be appointed as Special Master

*Consumer Suggestion: IP FUND 1 files for Resort Management Group LLC to be appointed as Special Master

*Consumer Suggestion: IP FUND 1 Resort Holdings Mike Kelly entered a plea of NOT GUILTY

*Consumer Suggestion: SEC Charges 26 Defendants in $428 Million Securities Fraud

*Consumer Suggestion: FBI agents have arrested an American hotel owner

*Consumer Suggestion: Lease Holders joining with other leaseholders

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In Chattanooga, Tennessee my 99 year old Aunt purchased a 25 year Universal Lease on Resort Holdings International. This was sold to her by a family friend Carol Horton who also lives in Chattanooga, Tennessee. Mrs. Bill Horton was paid a commission for this sale by an Insurance Agent, Mr. Paul R. Ross, who also has the buisness called Financial Desings.

This is a HUGE Rip-Off in my opion. Not only did Michael Kelly of Resort Holdings rip her off with hundreds of other people but Mr. Ross and Mrs. Horton also Ripped a 99 year old women off.

How could anyone sell a 25 year lease,FOR $25,000.00 to a lady that is 99 years old.This lady is now in an Assisted Living Home and is now 102 years old. She could use the $25,000.00 she invested in this RIP-OFF.

If anyone has information of how I can help stop these people from harming other people please tell me.

Claudine
Gainesville, Georgia
U.S.A.

This report was posted on Ripoff Report on 09/04/2006 07:32 AM and is a permanent record located here: http://www.ripoffreport.com/r/RESORT-HOLDINGS/South-Bend-Indiana-46615/RESORT-HOLDINGS-Vacation-Properties-MICHAEL-EUGENE-KELLY-Resort-Holding-Internati-209377. The posting time indicated is Arizona local time. Arizona does not observe daylight savings so the post time may be Mountain or Pacific depending on the time of year.

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#1 Consumer Suggestion

Michael E. Kelly Resort Holdings International, Majesty and Galaxy

AUTHOR: Ernest - ()

Leaseholders were denied their legal rigths by the DOJ and Special Master. USA v Michael E. Kelly US District Court Northern District of Illinois Eatern Division No. 06 CR 964.

We believe the Universal Lease was not a Security, it was a purchase, which encumbered the Hotels and had protection under Mexican consumer laws.

The timeshares were registered in Mexico and Panama and were sold in United States and other countries as timeshares, vacation club memberships and universal leases by a Panamanian company doing business in Mexico, therefore the SEC laws lack jurisdiction.  The Special Master also placed the court on notice that it too did not have jurisdiction over the assets and that Mexican law was controlling.

It is unconverted that one of the state securities broad investigated the universal leases and issued a no action letter to Yucatan Resorts after investigating the universal lease offering. This was conformed by Brantley H. Wright an attorney for Leagre Chandler & Millard. It is also unconverted that some states sent representatives to Cancun to review Kelly’s universal leases and they were obligated to perform a sufficient investigation into the universal leases and the management company after Kelly was issued cease and desist orders for the sale of 9 month promissory notes. 

The DOJ admits that Resort Holdings and other companies was legally formed under foreign laws, which the SEC did not contest. Therefore the purchase of the universal leases gave the leaseholders legal rights under Mexican laws as stated in the written materials and the leaseholders could have been pursued Kelly for fraud legally in Mexico for the purchase price and all income not paid to them since the Kellys' owned the management company. The leaseholders could have been awarded a money ruling and they could have placed a lien on the Kelly’s companies. Instead the leaseholders were striped of their legal rights.

The USAO and the Special Master took a position in this case that is absolutely adverse to the interest of the victims by touting that the Kellys’ properly formed business under Mexican and Panamanian laws and not money laundering. This allowed the Kelly’s to keep millions of dollars from the sale of Puerto Cancun and excludes an unknown amount of assets off the table, which should be used for Full Restitution. 

The USAO and the Special Master lost touch with what is in the collective best interest of the victims in the favor of assuring Kelly and his family’s wealth and payment to the Special Master, his hand picked professionals and taxes to the Mexican Government.  Therefore by claiming Kelly and his family properly formed business under Mexican and Panamanian laws the USAO guarantees millions in abusive legal fees, the payment of Mexican taxes and Kelly and his family a slap on hand leaving the victim with pennies.

The Special Master claims the hotels were encumbered by the Universal Lease Agreements and in order to sell the hotels for a higher price the leaseholders had to give up their legally protected rights under Mexican and Panamanian laws. (See doc # 885 page 3 ¶11 and page 4 ¶15 Motion to Terminate Leases and Management Agreements.) (USA v Michael E. Kelly United States District Court Northern District of Illinois Eastern Division NO. 06 CR 964)

The court striped the leaseholders of those rights at the request of the Special Master. Even after a Mandamus was filed early on. (See USA v Kelly NO 06 CR 964 doc #885 page 5 ¶¶19-20)      

The Special Master admits in court documents asking the court’s permission to cancel the management agreements stated the leaseholders had the option to hire a new management company ResortCom International. The Special Master discloses the value of each week to set the fees for the Universal Lease (See NO 06 CR 964 doc #885 pages 6 and 7 ¶25) For example a three bedroom Penthouse price for one week is set at $30,150 for each week. This sets the price for the three bedroom Penthouse @ $1,567,800 for 52 weeks and the price of a one bedroom at $17,343 for each week. This sets the price for 52 weeks @ $901,836. Far from worthless and a far cry from the valuation set by FTI Consulting and accepted the Special Master of $11 to 13 million for all the hotels. (See USA v Kelly NO 06 CR 964 doc #885 pages 3 ¶9). There were over 10,000 leaes and clearly the weeks that made up the timeshares were more than $13 million valuation set by FTI Consulting and excepted by the Special Master and The DOJ.

Judge Denlow’s recommendations lack subject matter jurisdiction to void or alter contracts governed by Mexican and/or Panamanian laws. In addition, Judge Denlow’s recommendations are in direct conflict with well established appellate level and the US Supreme Court rulings dealing with Mandatory Victim Restitution Act (MVRA). Furthermore, Magistrate Judge Denlow’s recommendations are based on questionable representations of limited “availability of sufficient funds”to make the victims “whole”. Magistrate Judge Denlow’s recommendations which were adopted by the Court was a violation of constitutionally protected rights under the Fourteenth and Fifth Amendments due process.

Clearly the established law allows the Victims full restitution to include lost profits. The USAO fails to make any legal argument against full restitution. The USAO’s only objection to full restitution to include lost profits and prejudgment interest is that it is unlikely that there is “availability of sufficient funds to even fully repay lost principal makes an award based on expected returns or profits moot.”  This is misleading, the USAO does not state that there are no funds, only that the funds are not available. Here is why!

Yahaira Gavidia the head of public relations for Puerto Cancun stated in a interview released on June 10, 2011 by SIPSE.com, Quintana Roo disclosed that the Special Master’s settlement from the Puerto Cancun amounts to only 25% of the assets leaving the Kelly’s hundreds of millions of dollars. The article reveals that three commercial lots make up 55.88 % of the $65 million settlement. The article goes on to explain that three other sections in the Puerto Cancun, not in the Special Master’s settlement, are valued at hundreds of millions of dollars. The director of Puerto Cancun Rafael Lang Uriarte would not comment on the value, however, the article exposed the value of three commercial lots. One is composed of 68 million metros, which is for sale for $400 per metro and another is composed of 10 million metros that are cleared to build a 20-floor condominium and is for sale for $620 per metro. Another Mexican newspaper article states that Grupo Kelly reported to the Mexican government sales of Puerto Cancun of more than $200 million in 2007 after Kelly was arrested. Another Mexican newspaper released 11/19/2011 states Group Kelly waits for profit of more than 500 million dollars for the selling of his properties and 2 billion dollars in additional investments in the next eight years. The leaseholders’ restitution calculation is based on legal contracts and the only objection advanced by the USAO and Magistrate Judge

Judge Denlow stated that full restitution is not likely and therefore there is no need to determine the victim’s full losses. This logic is not found anywhere in the MVRA or established legal precedents. Simply stated, nothing in the MVRA states that losses should be based on the defendant’s ability to pay restitution or that the defendant has the option to dictate what assets will be made availableto make restitution.

Judge Denlow’s recommendation calling for reduction for value returned is selective and in direct contradiction of MVRA and is in conflict with well-established rulings at the appellate level and the US Supreme Court rulings.  This calls for the calculation of all losses before reduction of restitution for value returned and undercuts the Victims seeking an additional civil remedy they are entitled to pursue.  Failure to determine the victim’s losses benefits the defendant and victimizes the victims anew and is in violation of the Mandatory Victim Restitution Act.

Michael E. Kelly, Resort Holdings International, Majesty and Galaxy clearly held themselves out to all its Leaseholders that they were engaged the business of resorts, travel company and management companies, which were legally formed under foreign laws. The Leaseholders, having every reason to believe that Michael E. Kelly was actually engaged in the business of resorts supported by travel companies and management companies have every right to avail themselves of all the protections afforded the Leaseholders under foreign laws to enforce management contracts which ensured the rental of their leases. 

The Leaseholders exchanged money for access to a strategy that would be implemented by leasing timeshares, creating an obligation that was settled when payment was made in whole or part to the leaseholders accounts from Kelly’s companies. From the Leaseholders' perspective, all withdrawals from their leaseholder accounts completed the leaseholder’s transactions and the Leaseholders gained control over the resulting money completed the transaction.

The USAO claims that Kelly was engaged in a massive Ponzi scheme claiming that Kelly used new money to pay the rental income to the leaseholders. The argument is unpersuasive because the USOA fails to take Kelly enterprise as a whole.

The USAO claims Kelly operated a massive Ponzi scheme, however, the typical Ponzi scheme involves a fraudulent business venture where early investors are paid off by funds obtained from later investors, rather than the business itself, with the intent of using that early success to entice further investment in the sham venture. See Official Comm. of Unsecured Creditors v. R.F. Lafferty & Co., Inc., 267 F.3d 340, 343-44 n.1 (3d Cir.2001) (citing Blacks Law Dictionary 1180 (7th ed. 1999)). The fact that a fledgling business uses capital rather than earnings to pay debts, however, does not automatically indicate a Ponzi scheme. It is widely recognized in the commercial world that new businesses often do not show a profit in their early years; the only way to pay debt frequently is through the recruitment of new capital. Thus, it is the nature of the business as a sham, which is the crucial consideration. The USAO claims that Kelly and his family control legitimate business Mexico and evidence shows that Kelly and his family dutifully managed the resorts and the timeshares leased for the duration of its existence and the Special Master stepped into Kelly’s shoes continued under the courts supervision until the hotels were sold. Kelly and his family had offices in Mexico and employed hundreds people in Mexico. Neither fact indicates that Kelly run a fraudulent enterprise, [un]supported by any underlying business venture, see Bald Eagle Area Sch. Dist. v. Keystone Fin. Inc., 189 F.3d 321, 323 n.1 (3d Cir. 1999)(internal citation omitted), as the USAO would have the Court believe.

The Special Master and the USAO want the leaseholders to believe that rental payments were fictitious profits that should reduce the Leaseholder’s restitution. However, the payments include the option to purchase which from the binding agreement. The Kelly’s used the leases to promote the other companies i.e. Puerto Cancun, timeshares sales, vacation club memberships, broker due diligence trips, broker marketing training and billed those companies for the use of the leases from the prospective companies operating budgets. Simply stated, Kelly committed common law fraud by cooking the books and diverted the Leaseholder’s profits from the use of their leases to further his and his family’s financial gains. Therefore the Leaseholder’s who received money from their account was for value and in good faith. The account statements were designed to track Leaseholders' funds as if they had been properly credited the rental income, option to purchase, interest and indicated that the accounts had grown. Therefore, all leaseholders have a claim for benefit-of-the-bargain damages for the balance of their accounts and should include rental income at the rate stated, interest, option to purchase and any other amount due the leaseholder less the amount paid to them as a withdraw.  

It is undisputed that the leases and the rental agreements are legal and binding making any money taken for value and in good faith. Therefore, the money received cannot be considered as payment of the original amount paid. Furthermore, the Special Master position would have the absurd effect of displacing even statutes of limitation which prevents the Special Master from recovering any money received more than seven years prior to the date on which the USAO filed its complaint alleging Kelly’s fraud.      

The leaseholders are victims of a corrupt process, a process that has victimized victims for more than 70 years of bad laws that allows a receiver/special master to take vested assets to line their pockets.

Our claim that a receiver/special master can not interfere with legal binding contracts is supported by well-established rulings and laws, in 65 Am. Jur. 2d RECEIVERS § 111. “ A receivership court may not impair the obligations of a contract, and a receiver may do nothing to impair a contract as between the parties to the contract  . . . Thus, it is held that the appointment of a receiver does not  . . . operate to excuse performance of an existing contract” 65 Am. Jur. 2d RECEIVERS § 91.

The IP Fund 1 Members continue their pursuit in a civil suit filed in Texas asking for full recovery of their losses. The IP Fund 1 was ordered by the Court to provide creditable proof of the members losses and is waiting for the court’s instructions after submitting the requested information.  This is an update and is not meant as legal advice.

Administrator,

Ernest Bustos

IP FUND 1

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#2 Consumer Comment

IP Fund1 Leaseholders come together

AUTHOR: Ernest - (U.S.A.)


The leaseholders need to intervene in Kelly's criminal case to protect their leaseholders rights to hold RHI, Grupo Kelly and others civilly responsible!  The order appointing the special master obligates the SM to cause Kelly to add Assets to Restitution Fund necessary to make full restitution and pay SMs fees and/or obligates the Court to expand the Restitution Fund to include all necessary Assets to make full restitution to victims and pay fees.  The appointment does not preclude victims from pursuing any rights they may have that do not encumber, restrain or dissipate the Assets, enforcement of any rights (specifically characterized as a lien) against the Assets or Legal Structure unless the Court orders otherwise. However, the special master's claim form is contrary to the courts order of appointment. The claim form bars victims not adhering to the Claims procedure from asserting a claim against SM, Claims Processing Agent; Restitution Trust, Kelly Business Entities or any successor in interest to or third party beneficiary of any asset owned by or affiliated with Grupo Kelly The claim form recognizes a possible difference between amount of loss calculated for criminal restitution and that could be awarded a defrauded investor in a civil lawsuit, and that criminal restitution does not supplant a civil judgment.  Assets collected by SM will not be available to satisfy any civil judgment against Kelly.


Coming Victim Claim Form  (i) D. Waiver/Release (a) terminates leases (b) bars claimant from asserting any claims against SM, CPA and waives claims regarding the universal Lease Program including lease, any assets purchased with proceeds, any remedy entitled to under the Universal Lease Program [waived and assigned in benefit of SM or designee. (c) bars claims against any transferee of or successor in interest to any asset or any third party beneficiary of any asset owned by or affiliated with Grupo Kelly.  The special master wants the leaseholder to terminate their leases claiming the hotels can be sold free and clear of liens, however, I believe that they are not canceling all the other timeshares Kelly sold. "Therefore the hotels would not be free and clear of liens". The special master also wants the leaseholders not to hold him responsible for his actions, however, when the court appointed him; the court gave him immunity as long as he did not do anything outside of his appointment. If his actions are in line with his appointment he would have no immunity. Why is he asking the leaseholders to waive their rights to hold him responsible for his actions?    


If you sign the claim form you are buying the pig sight unseen and you will have no recourse because you signed your rights away! It is clear the special master is attempting do keep the leaseholders from going after some of the assets and others. It is also clear that his actions are not inline with his appointment.  Furthermore the special master doesn't disclose how much of your money will be recovered. For all we know its pennies on the dollar! 


If you are a leaseholder and have not joined with other leaseholders please go to (((ROR redacted))) more information to join.


 


Ernest


San Antonio, TX 78209


(((ROR redacted)))


 


 

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#3 Consumer Comment

IP Fund 1 leaseholders come together

AUTHOR: Ernest - (U.S.A.)


The leaseholders need to intervene in Kelly's criminal case to protect their leaseholders rights to hold RHI, Grupo Kelly and others civilly responsible!  The order appointing the special master obligates the SM to cause Kelly to add Assets to Restitution Fund necessary to make full restitution and pay SMs fees and/or obligates the Court to expand the Restitution Fund to include all necessary Assets to make full restitution to victims and pay fees.  The appointment does not preclude victims from pursuing any rights they may have that do not encumber, restrain or dissipate the Assets, enforcement of any rights (specifically characterized as a lien) against the Assets or Legal Structure unless the Court orders otherwise. However, the special master's claim form is contrary to the courts order of appointment. The claim form bars victims not adhering to the Claims procedure from asserting a claim against SM, Claims Processing Agent; Restitution Trust, Kelly Business Entities or any successor in interest to or third party beneficiary of any asset owned by or affiliated with Grupo Kelly The claim form recognizes a possible difference between amount of loss calculated for criminal restitution and that could be awarded a defrauded investor in a civil lawsuit, and that criminal restitution does not supplant a civil judgment.  Assets collected by SM will not be available to satisfy any civil judgment against Kelly.


Coming Victim Claim Form  (i) D. Waiver/Release (a) terminates leases (b) bars claimant from asserting any claims against SM, CPA and waives claims regarding the universal Lease Program including lease, any assets purchased with proceeds, any remedy entitled to under the Universal Lease Program [waived and assigned in benefit of SM or designee. (c) bars claims against any transferee of or successor in interest to any asset or any third party beneficiary of any asset owned by or affiliated with Grupo Kelly.  The special master wants the leaseholder to terminate their leases claiming the hotels can be sold free and clear of liens, however, I believe that they are not canceling all the other timeshares Kelly sold. "Therefore the hotels would not be free and clear of liens". The special master also wants the leaseholders not to hold him responsible for his actions, however, when the court appointed him; the court gave him immunity as long as he did not do anything outside of his appointment. If his actions are in line with his appointment he would have no immunity. Why is he asking the leaseholders to waive their rights to hold him responsible for his actions?    


If you sign the claim form you are buying the pig sight unseen and you will have no recourse because you signed your rights away! It is clear the special master is attempting do keep the leaseholders from going after some of the assets and others. It is also clear that his actions are not inline with his appointment.  Furthermore the special master doesn't disclose how much of your money will be recovered. For all we know its pennies on the dollar! 


If you are a leaseholder and have not joined with other leaseholders please go to (((ROR redacted))) for more information to join.


 


Ernest


San Antonio, TX 78209


(((ROR redacted)))


 


 

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#4 Consumer Suggestion

IP Fund report, the court appoints a Receiver for RHI.

AUTHOR: Ernest - (U.S.A.)

Kelly's case has moved forward and the court has appointed a Receiver. The Fund filed a motion asking the court to allow the Leaseholders, as Resort Management Group (RMG), to serve as a Special Master to assist the court in the collection, administration and distribution of restitution to victims. Resort Management Group's board of Directors is made up of leaseholders who have vested interests in recovering all the money Kelly defrauded from the leaseholders and protecting the leaseholders' vested interests. The Leaseholders, as a Special Master, have an interest in holding down the costs, unlike a Special Master with no personal investment but who has a financial interest and would generate massive fees for attorneys and other professionals at the cost to Kelly's victims.

On December 19, 2008 the court granted the Fund's motion appointing RMG and then the Court, without explanation, amended its Order on December 22, 2008 and appointed Mr. Doetsch of Mayer & Brown as Special Master I believe that the Fund's Motion laid out to the court the Leaseholders' concerns of a Receiver victimizing them like other fraud victims in other cases. Judge Guzman pointed to another case before him, which is like Kelly's case, with assets all over the world and admits that it has been ongoing at a very high cost for eight years.

Judge Guzman stated: "The nightmare scenario in this type of case for those of us who are on the public servants' side of this case is for a million dollars in fees to expended from the assets of forfeitable property and no results be obtained for the allegedly defrauded investors. That's a nightmare scenario. That has happened in the past. It's also true in these cases, the dollars to investors is usually pennies. Usually pennies and nobody can predict or guarantee that such a thing won't happen in this case."

The record shows that, of all of the other candidates, the court believed Doetsch had the best combination of assets in terms of expertise, specialized expertise and real estate transactions in Mexico. The court stated that its concern was that even if the cost is higher the overall costs would be less because it would take less time to get things up and running. The cost of the attorneys and support staff will be at a blended cost of $465 an hour. This means that regardless of who does the work, one hour of work is at that rate. Everyone should be aware that if you call Mr. Doetsch's group to ask questions or complain the call will cost everyone money, a 15 minute call will cost $116.25! Furthermore, the cost of the Special Master's team is as follows: $400 and $300 an hour for the Mexican attorneys; Panamanian Counsel $250, $225, and $175 per hour; Financial Consulting FTI senior managing director $710; managing director $625; director $520; senior consultant $380 and other consultant $255; claims processing senior managing consultant $325; senior consultant $255 to $275; and team members consultant $165 to $245. Stenger & Stenger, the group the Judge mentioned who has been working on a case like Kelly's for eight years and was appointed as second claims processor, will paid up to $300 per hour.

The Court ordered Kelly to pay $1,000,000 to fund the initial phase of the restitution plan which includes the Receivership fees and to transfer $5.4 million from the sale of Hazama Corp Desarrollos, the owner of Pok ta Pok golf course, to the Receiver within one week of the Receiver's request. This money will not be used to pay the victims, it is to pay the Receivership costs first. For more information go to www.ipfund1.com
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#5 Consumer Suggestion

IP Fund report, the court appoints a Receiver for RHI.

AUTHOR: Ernest - (U.S.A.)

Kelly's case has moved forward and the court has appointed a Receiver. The Fund filed a motion asking the court to allow the Leaseholders, as Resort Management Group (RMG), to serve as a Special Master to assist the court in the collection, administration and distribution of restitution to victims. Resort Management Group's board of Directors is made up of leaseholders who have vested interests in recovering all the money Kelly defrauded from the leaseholders and protecting the leaseholders' vested interests. The Leaseholders, as a Special Master, have an interest in holding down the costs, unlike a Special Master with no personal investment but who has a financial interest and would generate massive fees for attorneys and other professionals at the cost to Kelly's victims.

On December 19, 2008 the court granted the Fund's motion appointing RMG and then the Court, without explanation, amended its Order on December 22, 2008 and appointed Mr. Doetsch of Mayer & Brown as Special Master I believe that the Fund's Motion laid out to the court the Leaseholders' concerns of a Receiver victimizing them like other fraud victims in other cases. Judge Guzman pointed to another case before him, which is like Kelly's case, with assets all over the world and admits that it has been ongoing at a very high cost for eight years.

Judge Guzman stated: "The nightmare scenario in this type of case for those of us who are on the public servants' side of this case is for a million dollars in fees to expended from the assets of forfeitable property and no results be obtained for the allegedly defrauded investors. That's a nightmare scenario. That has happened in the past. It's also true in these cases, the dollars to investors is usually pennies. Usually pennies and nobody can predict or guarantee that such a thing won't happen in this case."

The record shows that, of all of the other candidates, the court believed Doetsch had the best combination of assets in terms of expertise, specialized expertise and real estate transactions in Mexico. The court stated that its concern was that even if the cost is higher the overall costs would be less because it would take less time to get things up and running. The cost of the attorneys and support staff will be at a blended cost of $465 an hour. This means that regardless of who does the work, one hour of work is at that rate. Everyone should be aware that if you call Mr. Doetsch's group to ask questions or complain the call will cost everyone money, a 15 minute call will cost $116.25! Furthermore, the cost of the Special Master's team is as follows: $400 and $300 an hour for the Mexican attorneys; Panamanian Counsel $250, $225, and $175 per hour; Financial Consulting FTI senior managing director $710; managing director $625; director $520; senior consultant $380 and other consultant $255; claims processing senior managing consultant $325; senior consultant $255 to $275; and team members consultant $165 to $245. Stenger & Stenger, the group the Judge mentioned who has been working on a case like Kelly's for eight years and was appointed as second claims processor, will paid up to $300 per hour.

The Court ordered Kelly to pay $1,000,000 to fund the initial phase of the restitution plan which includes the Receivership fees and to transfer $5.4 million from the sale of Hazama Corp Desarrollos, the owner of Pok ta Pok golf course, to the Receiver within one week of the Receiver's request. This money will not be used to pay the victims, it is to pay the Receivership costs first. For more information go to www.ipfund1.com
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#6 Consumer Suggestion

IP Fund report, the court appoints a Receiver for RHI.

AUTHOR: Ernest - (U.S.A.)

Kelly's case has moved forward and the court has appointed a Receiver. The Fund filed a motion asking the court to allow the Leaseholders, as Resort Management Group (RMG), to serve as a Special Master to assist the court in the collection, administration and distribution of restitution to victims. Resort Management Group's board of Directors is made up of leaseholders who have vested interests in recovering all the money Kelly defrauded from the leaseholders and protecting the leaseholders' vested interests. The Leaseholders, as a Special Master, have an interest in holding down the costs, unlike a Special Master with no personal investment but who has a financial interest and would generate massive fees for attorneys and other professionals at the cost to Kelly's victims.

On December 19, 2008 the court granted the Fund's motion appointing RMG and then the Court, without explanation, amended its Order on December 22, 2008 and appointed Mr. Doetsch of Mayer & Brown as Special Master I believe that the Fund's Motion laid out to the court the Leaseholders' concerns of a Receiver victimizing them like other fraud victims in other cases. Judge Guzman pointed to another case before him, which is like Kelly's case, with assets all over the world and admits that it has been ongoing at a very high cost for eight years.

Judge Guzman stated: "The nightmare scenario in this type of case for those of us who are on the public servants' side of this case is for a million dollars in fees to expended from the assets of forfeitable property and no results be obtained for the allegedly defrauded investors. That's a nightmare scenario. That has happened in the past. It's also true in these cases, the dollars to investors is usually pennies. Usually pennies and nobody can predict or guarantee that such a thing won't happen in this case."

The record shows that, of all of the other candidates, the court believed Doetsch had the best combination of assets in terms of expertise, specialized expertise and real estate transactions in Mexico. The court stated that its concern was that even if the cost is higher the overall costs would be less because it would take less time to get things up and running. The cost of the attorneys and support staff will be at a blended cost of $465 an hour. This means that regardless of who does the work, one hour of work is at that rate. Everyone should be aware that if you call Mr. Doetsch's group to ask questions or complain the call will cost everyone money, a 15 minute call will cost $116.25! Furthermore, the cost of the Special Master's team is as follows: $400 and $300 an hour for the Mexican attorneys; Panamanian Counsel $250, $225, and $175 per hour; Financial Consulting FTI senior managing director $710; managing director $625; director $520; senior consultant $380 and other consultant $255; claims processing senior managing consultant $325; senior consultant $255 to $275; and team members consultant $165 to $245. Stenger & Stenger, the group the Judge mentioned who has been working on a case like Kelly's for eight years and was appointed as second claims processor, will paid up to $300 per hour.

The Court ordered Kelly to pay $1,000,000 to fund the initial phase of the restitution plan which includes the Receivership fees and to transfer $5.4 million from the sale of Hazama Corp Desarrollos, the owner of Pok ta Pok golf course, to the Receiver within one week of the Receiver's request. This money will not be used to pay the victims, it is to pay the Receivership costs first. For more information go to www.ipfund1.com
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#7 Consumer Suggestion

Resort holdings IPFUND1 files for Resort Management Group LLC to be appointed as Special Master

AUTHOR: Ernest - (U.S.A.)

IP FUND 1 INC. (Fund) moves the court to allow the Leaseholders, as Resort Management Group LLC, (RMG) to serve as a special master pursuant to 18 U.S.C. 3664(d)(6) to assist the court in the collection, administration and distribution of restitution to victims.

The Fund asks the Court to allow RMG to serve as a Special Master to protect all the leaseholders' vested interests. RMG's Mangers are leaseholders who have vested interests in recovering all the money Kelly defrauded from the leaseholders.

RMG would institute a claims verification procedure to quantify the losses
suffered by each victim, identify all assets available for liquidation and/or repatriation for the benefit of the victims if needed, and select an appropriate method and timetable to liquidate.

RMG may not need to repatriate available assets because of the costs associated with repatriation; they would oversee and accomplish the liquidation for the benefit of the victims, and apportion any available funds among the victims pursuant to orders of this court.

RMG would accomplish the liquidation including, as may be appropriate, the posting of public notices and distribution of claims verification forms to give a more complete identification of the victims eligible for restitution in this case.

RMG would form a Mexican Corporation to force the Mexican government to cooperate directly with the leaseholders under Mexican law. In order to conserve assets for the payment of restitution to victims, RMG will use all of the information from the investigations in the best interests of justice and the victims.

A full copy of this motion is on www.ipfund1.com
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#8 Consumer Suggestion

IP FUND 1 filed for Resort Management Group LLC to be appointed as Special Master

AUTHOR: Ernest - (U.S.A.)

IP FUND 1 filed a motion in the Northern District of Illinois Eastern Division.

IP FUND 1 INC. (Fund) moves the court to allow the Leaseholders, as Resort Management Group LLC, (RMG) to serve as a special master pursuant to 18 U.S.C. 3664(d)(6) to assist the court in the collection, administration and distribution of restitution to victims.

The Fund asks the Court to allow RMG to serve as a Special Master to protect all the leaseholders' vested interests. RMG's Mangers are leaseholders who have vested interests in recovering all the money Kelly defrauded from the leaseholders.

RMG would institute a claims verification procedure to quantify the losses
suffered by each victim, identify all assets available for liquidation and/or repatriation for the benefit of the victims if needed, and select an appropriate method and timetable to liquidate.

RMG may not need to repatriate available assets because of the costs associated with repatriation; they would oversee and accomplish the liquidation for the benefit of the victims, and apportion any available funds among the victims pursuant to orders of this court.

RMG would accomplish the liquidation including, as may be appropriate, the posting of public notices and distribution of claims verification forms to give a more complete identification of the victims eligible for restitution in this case.

RMG would form a Mexican Corporation to force the Mexican government to cooperate directly with the leaseholders under Mexican law. In order to conserve assets for the payment of restitution to victims, RMG will use all of the information from the investigations in the best interests of justice and the victims.

A full copy of this motion is on www.ipfund1.com
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#9 Consumer Suggestion

IP FUND 1 files for Resort Management Group LLC to be appointed as Special Master

AUTHOR: Ernest - (U.S.A.)

IP FUND 1 filed a motion in the Northern District of Illinois Eastern Division.

IP FUND 1 INC. (Fund) moves the court to allow the Leaseholders, as Resort Management Group LLC, (RMG) to serve as a special master pursuant to 18 U.S.C. 3664(d)(6) to assist the court in the collection, administration and distribution of restitution to victims.

The Fund asks the Court to allow RMG to serve as a Special Master to protect all the leaseholders' vested interests. RMG's Mangers are leaseholders who have vested interests in recovering all the money Kelly defrauded from the leaseholders.

RMG would institute a claims verification procedure to quantify the losses
suffered by each victim, identify all assets available for liquidation and/or repatriation for the benefit of the victims if needed, and select an appropriate method and timetable to liquidate.

RMG may not need to repatriate available assets because of the costs associated with repatriation; they would oversee and accomplish the liquidation for the benefit of the victims, and apportion any available funds among the victims pursuant to orders of this court.

RMG would accomplish the liquidation including, as may be appropriate, the posting of public notices and distribution of claims verification forms to give a more complete identification of the victims eligible for restitution in this case.

RMG would form a Mexican Corporation to force the Mexican government to cooperate directly with the leaseholders under Mexican law. In order to conserve assets for the payment of restitution to victims, RMG will use all of the information from the investigations in the best interests of justice and the victims.

A full copy of this motion is on www.ipfund1.com
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#10 Consumer Suggestion

IP FUND 1 Resort Holdings Mike Kelly entered a plea of NOT GUILTY

AUTHOR: Ernest - (U.S.A.)

Kelly entered a plea of NOT GUILTY to the Department Of Justice claims that he borrowed money from the leaseholders, Kelly will claim he sold Timeshares! This will be interesting considering that the DOJ has been stating for over a year that Kelly would plead guilty and make full restitution! This should make the IP Fund 1 complaint of RICO much stronger. For more information go to www.ipfund1.com
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#11 Consumer Suggestion

SEC Charges 26 Defendants in $428 Million Securities Fraud

AUTHOR: Ernest - (U.S.A.)

The IP Fund 1 complaint claims RICO, it takes a big bite out of the wrongdoers and the SEC only paints a picture of greed and fraud. SEC cmplaint makes our case that there were many involved and that they conspired to defraud. RICO! (read below)

I have seen this before and it is very important for everyone to come together under one voice! We expected this to happen and are ready to meet them head on. I believe we will be on the winning side of the argument.

Joel Held one of RHI attorneys wrote in a case filed in Texas claiming securities fraud and RICO: "It is as if the Fifth Circuit of Appeals was referring to the complaint in this action when it observed:" "A Complaint can be long-winded, even prolix, without pleading particularity. Indeed, Such a garrulous style is not an uncommon mask for an absence of detail" Southland Securities Corp. v. Inspire Insurance Solutions, Inc., F. 365 3rd 353,362 (5th Cir. 2004)

The SEC complaint is a classic example of an ill-conceived, shotgun pleading in search of defendants and cause of action to justify a SEC-Receivership. They already state the leaseholders have lost their money. "The fraudulent Universal Lease scheme eventually collapsed, leaving investors with losses that exceed $300 million."

What losses! RHI and other asstes are there and can be claimed to pay the leaseholders.

We all know at this point that Kelly and his family owned and controlled RHI and the other companies. It appears that the SEC is more concerned about the brokers than real justice!

In any case, we will challenge any SEC-Receiver appointment of their own receiver "the fox garding the chickens" and request that the court appointed receiver be the RMG group made of leaseholders. We are in for a fight and what we want has been done before by another group.


SEC Charges 26 Defendants in $428 Million Securities Fraud That Targeted Senior Citizens and Retirement Savings Commission's Crackdown on Financial Fraud Against Seniors Continues

FOR IMMEDIATE RELEASE
2007-172

Washington, D.C., Sept. 5, 2007 - 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, Ill., charges 26 defendants and alleges that they participated in a massive fraud that involved the sale of securities in the form of "Universal Leases." The 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 fraudulent Universal Lease scheme eventually collapsed, leaving investors with losses that exceed $300 million.

The case is part of the Commission's crackdown on financial fraud against senior citizens, which has already resulted in more than 40 enforcement actions over the past two years.

In the latest action, the SEC alleges that Michael E. Kelly and those working with him duped 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. For most of the scheme, the complaint alleges, Kelly and his organization used new investor funds raised in the scheme to make illusory "rental income" payments to Universal Lease investors. The SEC also alleges that Kelly and others ran the scheme from Cancun through a number of foreign entities in Mexico and Panama.

"This case illustrates the Commission's continuing commitment to hold accountable those who prey upon the retirement funds of older Americans," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. "Kelly and his cohorts told investors they were purchasing a safe, high-income investment suitable for a retirement account. In reality, investor funds were at grave risk as investor funds were used in a way that guaranteed the collapse of the scheme."

Merri Jo Gillette, Regional Director of the SEC's Chicago Regional Office, added, "Kelly and those involved in his operation may have hoped to evade U.S. law enforcement by operating the Universal Lease scheme from abroad. The action we filed today shows that the SEC will vigilantly pursue those who target older Americans, no matter what the obstacles. The SEC plans to aggressively seek recovery from the defendants to offset the huge losses they inflicted on investors."

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 several 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 percent 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. (Viajest Fantasia Por El Mundo, S.A.), also doing business as 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 doing business as Safe Estate Plans, John E. Tencza, also doing business under the name of 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.

The SEC's complaint charges the defendants with violating the antifraud and registration provisions of the federal securities laws, and seeks permanent injunctions, disgorgement of ill-gotten gains, and civil penalties. The SEC acknowledges the assistance of the German government (Bundesanstalt fr Finanzdienstleistungsaufsicht), the Mexican government (Comisin Nacional Bancaria y de Valores) and a significant number of state securities agencies.

Combating financial fraud against older investors will be a focus of the Commission's second annual Seniors Summit in Washington, D.C., on Sept. 10. The Summit also will include the release of findings from regulatory examinations of 110 firms offering "free lunch" investment seminars aimed at seniors.

The SEC's Seniors Summit will begin at 10 a.m. ET on Sept. 10 and will be webcast live on the SEC Web site at www.sec.gov. The event will further examine how regulators, community organizations, and others can increasingly coordinate efforts to educate older Americans and protect them from abusive sales practices and investment fraud. Registration information and other materials about the Seniors Summit are available at: http://www.sec.gov/spotlight/seniors/seniors_summit.htm.

# # #

For more information, contact:

Merri Jo Gillette
Regional Director
312-353-9338

Timothy L. Warren
Associate Director
312-353-7394

John J. Sikora, Jr.
Assistant Director
312-353-7418

SEC's Chicago Regional Office

Additional materials: Complaint


http://www.sec.gov/news/press/2007/2007-172.htm
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#12 Consumer Suggestion

FBI agents have arrested an American hotel owner

AUTHOR: Ernest - (U.S.A.)

Well, Christmas came twice this year. Back in March of this year we sent an email to our members to inform them that a Grand Jury had been seated to investigate Kelly, however, there was no release of information.

We had meeting already set for today with the attorneys to go over the RICO complaint to be filed before the end of the year, however, this meeting took on a different meaning and the attorneys were very happy to see that Kelly was arrested on the 22nd of this month.

Our original attack plan was to file and then breing in the FBI to investgate the complaint now, we are now attempting to make contact with the FBI to offer our assistance and information to round up all the bad actors. With Kelly's arrest it will make it easier for our complaint be filed and accepted by the courts.

I believe he is a flight rusk and should be kept in jail. This is truly great news. Please read the press release.

Thank you for your support,
Ernest Bustos

http://www.chicagotribune.com/news/local/northwest/chi-0612280031dec28,1,636967.story
Mexico hotel owner charged in swindle of time-share leases
By Rudolph Bush
Tribune staff reporter

December 28, 2006

FBI agents have arrested an American hotel owner on charges he ran a $400 million pyramid scheme through the sale of time-share leases in Mexico.

Michael E. Kelly of Cancun was arrested Friday in Jacksonville, Fla., and charged with cheating hundreds of investors, including several from Illinois.

According to a criminal complaint released Wednesday, Kelly sold "universal leases" on Mexican time shares to investors who thought they would get return rates of up to 11 percent.

Kelly, 57, purportedly told the investors that an independent third-party company would rent their time shares. He promised that the investors would receive high returns even if their properties weren't rented, the complaint alleges.

In fact, Kelly owned the third-party companies and controlled the returns provided to investors, authorities allege.

An attorney for Kelly could not be located Wednesday. He is in custody in Florida and is expected to come to Chicago for an initial appearance at a future date.

According to authorities, Kelly's scheme netted some $400 million from investors from 1997 to March 2004.

During that time, he owned five hotels in Mexico and one in Panama. Time shares at the Mexican hotels were used to further the scheme, authorities allege.

Although many investors initially did receive returns on their leases, the scheme collapsed when several states cracked down on Kelly's operation and new investors from the U.S. dried up, authorities allege.

Meanwhile, Kelly used the proceeds of the scam to pay for a lavish lifestyle that included a private plane, a yacht and Cancun homes for himself and three children, authorities allege.

He also bought a luxury car dealership in Georgia that required regular infusions of cash to stay afloat, according to the criminal complaint.

Once the bottom dropped out, investors stopped receiving any returns and began asking for their money back.

One victim in Illinois took a reverse home mortgage to fund a $100,000 investment in the time-share scheme. Another put $500,000 of his own money and $305,000 of his mother's into Kelly's time-share business.

Someone working for one of the purported third-party companies told another investor that the chance of getting any money back was "slim," the complaint alleges.

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#13 Consumer Suggestion

Lease Holders joining with other leaseholders

AUTHOR: Ernest - (U.S.A.)

IP FUND 1 INC.

Dear Lease Holder,

As some of you already know, Mike Kelly of RHI stopped paying the Lease Holders their rental income over a year ago and is attempting to buy back the leaseholders' leases for less than the full price paid. I do not want to alarm the Lease Holders, however, the leaseholders must take steps to protect their rights so that your money and your rental income can be fully recovered. This is why I am proposing the Lease Holders join with other leaseholders to remove the current management.

Regulators in at least six other states have taken formal action against one or
more of the following: Michael E. Kelly of South Bend, Indiana, Yucatan Resorts, Inc., Cancun, Mexico and South Bend, Indiana; Resort Holdings International, Inc., Cancun, Mexico and South Bend, Indiana; World Phantasy Tours, Inc., Panama. Kelly, Yucatan, Resort Holdings and World Phantasy. These states forced Kelly and his companies to pay back 100% of the money collected by Kelly's Universal Lease Program. However, Regulators failed to collect the leaseholders' rental income.

Mr. Kelly made many misrepresentations: Kelly represented to leaseholders that if
they left the rental income to accumulate; RHI would pay as high as 11% interest. In reality, RHI, Kelley, and his co-conspirators have wasted, secreted, and otherwise dissipated the lease purchasers' funds, revenues, and other assets acquired and held in connection with the sale of RHI. Though RHI has collected the sums of rental income due and credited the accumulated interest to the accounts, RHI has not paid the leaseholders their monthly rental income.

RHI has also refused to release the accumulated rental accounts. Kelly and his co-conspirators are attempting to defraud the leaseholders by claiming that Galaxy and Majesty are separate from RHI, Kelly, and his co-conspirators. On that claim they escape liability by asking owners to seek the rental income from Galaxy/Majesty. However, Galaxy is not independent from RHI and is controlled by Kelly and Kelly also controls Majesty. As many as 80% of the leaseholders have not received a dime of their rental income, which could be as much as $200 million. RHI, Kelly, and his co-conspirators are running the classic shell game. When a leaseholder looks underneath the wrong shell the corporation's funds are gone and the leaseholders lose.

In the Arizona complaint on RHI and Kelly The National White Collar Crime
Center stated, "A detailed investigation revealed that investor funds were shuttled between numerous US-based financial institutions and later wired to undisclosed locales, including dozens of companies and individuals in Mexico." Classic Money Laundering!

What needs to be done and how should it be done? The IP Fund 1 intends to file a
complaint of fraud on behalf of its members, the Lease Holders, and to petition the court to allow the Lease Holders to remove Kelly along with RHI's current management and replace them with a committee of Lease Holders. They will oversee the operation and hire a new management team. They will determine what courses of action should be taken for the best interests of the Lease Holders. Even though there are no guarantees in any action, I believe this is the best way for leaseholders to pursue their recovery.
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