In a bid to recover some of their losses and restore their reputation, Fred Elliott, Derek Elliott and the Elliott Companies have launched US$120-million counter-claim against Klaus Hofmann and 175 others in a Florida superior court.

The counter-claim is in response to a March 2009 Hoffman complaint against Elliotts, in the District Court for the Southern District of Florida (Miami) which accuses Elliotts and their companies of mail and wire fraud, money laundering and violations of the Federal Racketeer Influenced and Corrupt Organization (RICO) Act.

Hofmann and others were investors, through James Catledge and his related companies, in Sun Village Juan Dolios (SVJD), an Elliottdeveloped resort in the Dominican Republic.

The Elliotts and Elliott Companies deny all allegations in the Hofmann complaint, which they state are wholly without merit, and vow to vigorously defend the same. At one point in 2009, the Elliotts were accused of operating a Ponzi or Ponzi-like scheme – an accusation denied by Fred Elliott in an interview with the Orangeville Citizen last Friday.

He said a Ponzi, generally something more commonly referred to as a “pyramid” club or scheme, is when there is an absence of a product. In this instance, the investments were meant to be into a resort that was employing a reported 400 persons, and were “fully covered by inventory,” says Fred’s son Derek in a news release.

Nevada-based James Catledge and his multi-level network marketing companies Impact, Inc., Impact America and Net Worth Solutions, were introduced to the Elliotts in 2004 as what Elliotts “understood to be a legitimate financial services company offering mortgages, annuities, insurance, mutual funds and real estate/time share products.”

Unknown to the Elliotts, who “exclusively contracted Catledge and the Impact Entities and their representatives (sales agents) to offer and sell Elliott Company resort-related vacation ownership products to individuals in various jurisdictions, including the United States” from 2004 to 2008, the Catledge companies were not licensed to sell securities and are “currently being prosecuted for securities fraud and registration violations in Idaho and are under investigation by the SEC (Securities Exchange Commission) in Utah.” (Court documents in support of this are available on the Internet.)

In Salt Lake City, Radio Station KSL News in 2009 included a Catledge company in its investigation of what it called “affinity fraud. In many cases, that means the cost of mixing faith and fortune.

“The pitch sounds perfect: a low-risk investment that can lead to a better lifestyle. It might sound too good to be true, but what if someone you trust—at work or in your church—tells you it is OK? Too many Utahns have learned the answer to that question the hard way.”

The radio station said Layton resident Michael Coons said “yes” to the accommodations, completed and planned, at two ocean-side resorts in the Dominican Republic.

“Five- and four-star accommodations, and it was absolutely gorgeous,” KSL quotes him as saying.

It goes on to say, “Coons (and others) belong to The Church of Jesus Christ of Latter-day Saints. When they learned the project salesmen they were dealing with, and many others in the sales company were also LDS, the men dropped their guard.

“We had more trust in what was gonna happen, and that it was gonna work out for us, because there was a lot of LDS people involved,” Coons explains.

In fact, so many LDS members were involved that when Coons visited the Dominican Republic, he was treated to some unusual and specific accommodations.

“They provided buses for us to go to church services,” he says. “And all those that were LDS would get on the buses, and we’d head over to the local church and we’d go to church services.”

Mixing business and beliefs is a scenario the director of the Utah Division of Securities, Keith Woodwell, sees all the time.

“It’s insidious and unfortunate,” Woodwell says, “but that’s what works.”

Last Friday, Fred Elliott said he was shown false documents of registration by Catledge.

“In response to misrepresentations regarding licensing and grossly deficient sales practices, the Elliott Companies terminated Catledge and Impact in June, 2008 and issued a demand letter in October, 2008, demanding payment of US$29,000,000 in compensation for damages caused by Catledge and Impact. In response, the

Elliott) Answer (statement of defence) alleges, Catledge and Impact launched the Hofmann lawsuit. The Answer goes on to state:

“Upon information and belief, in October 2008, Catledge, in an effort to deflect attention away from himself, and in order to take revenge on the Elliotts for asserting claims against him, began a brutal campaign to discredit and destroy the Elliotts and their companies with litigation and defamatory publicity spanning multiple jurisdictions, including this one.”

In fact, responding to the KSL investigation in November 2009, Catledge said: “Impact is no longer in business because the fraud that was perpetrated by the Elliotts destroyed the company. Many of Impact’s associates and each of its officers invested personal money with the Elliott resort projects. After learning of the Elliott’s fraud, Impact joined over 700 others as plaintiffs in a federal lawsuit currently pending in Miami, Florida. Impact had members of all faiths as part of its corporate culture and believes that religion should never be used in evaluating any investment or purchase.”

Fred Elliott said last Friday the state of the global economy figured into the demise of the resort. He said there isn’t a resort anywhere that isn’t facing financial challenges.

Mr. Elliott founded the Elliott Group of companies 35 years ago The Elliott Group, which described itself as “a real estate company in the hospitality industry,” developed the well regarded Sun Village – Cofresi Resort on the north coast of the Dominican Republic.

The Elliott Group was the most recognized Canadian hotel group in the Dominican Republic. The expansion of the Sun Village Resorts brand to the south coast of the Dominican Republic, was underway with their Juan Dolio resort development, formerly set to open in 2010. The Elliott Group employed over 400 people in the Dominican Republic, prior to the launch of the Hofmann Plaintiffs’ lawsuit, all of whom lost their jobs as a result of the lawsuit.