Angry investors put lien on Simpson Bay Resort assets

POSTED: 04/8/11 12:10 PM

Timeshare owners want $3.5 million back from Sutton and Corso

St. Maarten / By Hilbert Haar – Angry timeshare owners at the Simpson Bay Resort and Marina, united in the PCIP Investors Association, put a lien on all real estate belonging to the Simpson Bay Resort Owner Company, claiming payment of close to $3.5 million from a failed investment program. The lien thwarts plans by the current owners to sell the resort to a third party.

“There are rumors that the Simpson Bay Resort Owner Company is busy selling the resort. That is no longer possible as long as the lien is in place,” attorney Monique Hofman, who represents the association, told this newspaper yesterday.

The lien hits thirteen parcels of real estate in Billy Folly and Pelican Key, of which 58,384 square meters is held in long lease, while another 28,805 square meters are owned by the resort. The plaintiffs also hold Richard Sutton, director and shareholder of the Royal Resorts Management Company, and Richard Corso, the CEO of this company, personally responsible.

Jules James, a member of parliament for vice Prime Minister Theo Heyliger’s United People’s Party is, together with Royal Resorts, a statutory director of the Simpson Bay Resort Management Company, and acts as the resorts general manager.

The 46 timeshare owners united in the PCIP Investors Association invested over the years in the Pelican Capital Improvement Bond program (PCIP). The program started in 1998, when the property was called Pelican Resort. The program offered bonds with a minimum investment of $5,000. The bonds would mature in three years and yield 8.5 percent interest.

On the date the bonds expired, investors could opt for a pay-out of their investment plus interest, they could invest the total again in the program, or use it to buy more timeshare weeks at a 30 percent discount. The investments would be used for maintenance and improvements of the resort.

But after the introduction in 1998, and after many timeshare owners had pumped money into the program, it stalled until 2001. Three years later, in 2004 during a general membership meeting of the Timeshare Association Pelican Resort Club, Sutton and Corso offered the PCIP-program again.

Corso managed the program for years, together with his assistant Judy Besta. Until 2010, timeshare owners pumped close to $3 million into the program. Many of them even reinvested their money after their bonds expired, because they had confidence in the resort’s management.

But in 2009 the first signs of trouble surfaced. Investors were not paid out on time, or they were not paid in full. In January 2009, one couple that demanded its money plus interest back after their bonds expired learned in a meeting with Corso and Besta that they had no intention to pay. Instead, they urged the couple to stay with the program, and to cash out no earlier than 2017.

Corso said in that meeting that he invested $500,000 in the program. The plaintiffs say that they learned later that Corso told the same story to many others, in an attempt to keep them from cashing out.

But the investors association now claims that Corso misled them. In December of last year, when the Pelican Resort went on the auction block, it turned out that Corso got his $500,000 investment paid out, because he secured it with a mortgage. “Corso protected his own investment and at the same time he kept convincing PCIP investors that the program was safe,” the angry timeshare owners state in their request to the Court in First Instance to put a lien on the resort’s properties.

The couple that wanted to cash out in January 2009, learned something else in November of last year. When she attempted to cash out another bond, she was told that the program did not pay out anything anymore.

Earlier that year, in April, the Pelican Resort tenants association instructed Corso during its general membership meeting to pay out every bond that expired immediately – but Corso ignored the instruction.

In December the Pelican Resort was auctioned, and changed its name to Simpson Bay Resort. The Owner Company owns all the real estate, and the Royal Resort Management Company stayed put to manage the place.

The timeshare owners have lost all confidence in the resort management. In the lien request they demand all their investments back, also on bonds that have not matured yet. The total investment is valued at $2,645,000 and the outstanding interest at $20,421. Including interest and costs, the claim the association put to the court is estimated at $3,465,047.

The PCIP Investors Association holds Sutton and Corso personally responsible because they used the names and signatures of board members of the Tenants Association Pelican Resort Club without authorization for signing certain bonds. The Simpson Bay Resort Owner Company, as well as Sutton and Corso, have been summoned to pay, but they have not reacted.

The association represents 46 timeshare owners. Attorney Monique Hofman said yesterday that 90 percent of the investors have never been repaid.

The PCIP Investors Association has in the meantime filed a civil lawsuit against the owner company, Sutton and Corso. Court procedures – in the form of exchange of documents between parties – will probably get underway towards the end of this month or in May. Earlier legal action is also possible in case Sutton and Corso decide to file summary proceedings in an attempt to lift the lien.

 

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Comments (2)

 

  1. Dave in DC says:

    I made this assertion to “Today” the back in Feb and now it comes full circle. Just to refresh everyone’s memory of how the lackey lawyer Bloem tried to spin it I have his response to remind everyone.

    “Tenants Association moves assets to new foundation”
    03/1/11 12:49 PM

    “The attorney also asserted that it was flagrantly incorrect for anyone to state that Richard Corso, had taken money from the resort’s equity fund.
    “In fact the only money my client got was US $500, 000 for a loan that he gave the company that gave him the right of third mortgage. In order not to have to reckon with him Quantum decided to buy that right of third mortgage from him,” Bloem said.

    I bet if Corso were to defecate on someone’s lawn Bloem would argue he was just trying to help by fertilizing it. It’s all in how you spin it!