Last updated: 12:12 PM ET, Mon April 20 2015

Turks & Caicos Gov't: Civil Lawsuit Will Not Impact $224 Million Resort Project

Destination & Tourism | Brian Major | April 17, 2015

Turks & Caicos Gov't: Civil Lawsuit Will Not Impact $224 Million Resort Project

Photo: The Turks & Caicos government is partnering with developers to launch a 124-room resort on Grace Bay Beach. (Photo by Brian Major).

Questions have emerged following the Turks & Caicos government’s recent announcement of a $224 million luxury resort, set to open in Providenciales in 2018. Officials this week issued a statement acknowledging a lawsuit filed against the resort’s developer, the Desarrollos Hotelco Group.

“We are aware of the civil lawsuit against members of the Desarrollos Hotelco group. We are in receipt of representations from their attorneys, and note that those involved have filed defenses in the U.S. courts,” said Turks & Caicos government officials in a statement.

The lawsuit is tied to the case of Francisco Illarramendi, a Connecticut-based financier who in January was sentenced to 13 years in prison for running what U.S. prosecutors have described as Connecticut’s largest-ever Ponzi scheme.

Most of Illarramendi’s victims, who collectively lost $382.2 million, are based in his native Venezuela. Illarramendi allegedly made payments of at least $15 million to entities controlled by Walter Stipa, Desarrollos’ majority shareholder, ostensibly to fund hotel and resort developments. Stipa is now being sued for the recovery of the funds by receivers appointed by the U.S. Department of Justice and the Securities and Exchange Commission.

The Turks and Caicos’ governor’s office earlier this month announced an agreement with Desarrollos to build a 124-room resort on Grace Bay Beach that would be managed by Ritz Carlton Hotel Co. LLC.

In the statement, Turks & Caicos officials stress that the lawsuit will not impact the hotel development project. “We have carried out appropriate due diligence with regards to Mr. Stipa's Desarrollos Hotelco group and their proposals in the TCI,” the statement reads. “As due diligence is an ongoing process, we continue to request information from Desarrollos and other sources.”

Beginning in 2012 the government has been reviewing Desarrollos’ investor information using a variety of risk and compliance screening methods. Desarrollos has also provided “corporate documentation to substantiate shareholders and directors,” officials said.

“In addition, the Desarrollos Ritz Carlton development is being substantially financed by Marriott, a world leading luxury hotel chain. Marriott too met with the government to demonstrate their commitment to the success of this five-star development,” the statement adds. “Desarrollos and Marriott have a proven track record of having already developed four successful resorts together in the Caribbean region.”

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