Being Aware Of Fraud Extends To The Golf Course

It is a difficult time to find financing and investors. It is also a particularly important time for investors carry out their due diligence regardless of who's name may be associated with a project.

Although none of the current projects on hold in British Columbia have been or are now under any cover of suspicion of any kind, BC Golf News presents the following item as a reminder to investors of what can sometimes go wrong.

In Santa Ana, California four of six men accused of scamming hundreds of investors out of $52 million that was supposed to be used to develop luxury resorts and upscale communities next to golf courses are behind bars today in Orange County.

The six, including one man at large and another scheduled to surrender to authorities, were charged Thursday with a total of 89 counts alleging that Irvine-based Carolina Development Co. falsely claimed it partnered with Arnold Palmer in developing the properties, said Christine Gasparac of the California Attorney General's Office.

Those jailed were Lambert Vander Tuig, 50, of Rancho Santa Margarita; Jonathan Carman, 47, of Costa Mesa; Mark Sostak, 50, of Ladera Ranch; and Soren Svendsen, 43, of Coto de Caza, Gasparac said.

Scott Yard, 47, of Costa Mesa, remains at large, and Robert Waldman, 48, of Irvine, is scheduled to turn himself in, she said.

Attorney General Jerry Brown said the men conned their victims, including senior citizens who invested retirement funds.

"These six men callously conned hundreds of people into investing $52 million into a company that they treated as their personal bank account," Brown said. "They fraudulently took investors' money and spent it on an array of luxury items, relying on a Ponzi scheme to keep investors at bay."

The men claimed that the resorts and communities would be developed adjacent to golf courses designed by Palmer, Jack Nicklaus and Greg Norman, Gasparac said.

Investors bought anywhere from $15,000 to $1 million in stock. People who put in at least $100,000 were told that their money would be secured by deeds to specific parcels of land, but the claims were not true, Gasparac said.

The company, which peddled its stock between 2001 and 2005, bought some land in North Carolina and Texas, but did nothing to develop it, despite its claim that 85 percent of the $52 million would be used for land acquisition and development, Gasparac said.

Nearly half the money, or $24 million, was used for extravagant bonuses, personal medical bills, airplanes, fancy meals, BMWs, concert tickets and luxury vacations. To hold investors at bay, Gasparac said, the men used the Ponzi scheme method of paying older investors with money from new investors, Gasparac said.

The men are charged with grand theft and securities fraud, with most of the charges leveled against Tuig, who was president of the company, and Carman, who was vice president, Gasparac said.

The Securities and Exchange Commission filed a civil lawsuit prior to the criminal case. In 2007, the SEC won a $29.2 million judgment against Tulg and $2.1 million against Carman. The company was taken over by a receiver, Gasparac said.

If convicted, Tuig and Carman could be sentenced to more than 10 years in prison, while the others face lesser terms, Gasparac said.

Arraignment has been set for Feb. 11.