Accusations are flying high in an escalating legal battle over a multimillion-dollar luxury beach resort in the central Pacific coast town of Esterillos.
The case has pitted competing U.S. real estate developers against each other and dragged a former Costa Rican ambassador to the United States into the flurry of accusations.
It has also raised legal questions about who should be managing the $3 million, 27-room resort, MontereyDel Mar.
The Florida-based real estate investment group Whitney Information Network filed lawsuits last month in U.S. courts in New York and Florida against nine defendants, including former Costa Rican Ambassador Jaime Daremblum and his law firm, for allegedly conspiring to take control of the Costa Rican resort.
Also implicated in the case are U.S. citizen Barry Strudwick, a shareholder in the 700-acre beach and golf luxury community Del Pacifico in Esterillos Este, and New Yorkbased real estate developer Susan Weiss, a shareholder in the Monterey development.
The Tico Times consulted with Daremblum and the lawyers of Strudwick and Weiss, and all denied the case’s allegations ranging from slander, racketeering and conspiracy, to breach of fiduciary duty and malpractice.
Only Weiss’ lawyer confirmed having been served papers in the case.
“The goal (of the lawsuit) isn’t to win a case … it’s to create a scandal in Costa Rica that would ultimately harm (the plaintiff ’s) competitor, Barry Strudwick,” said Rafael García, of the law firm Daremblum y Herrera, which Daremblum founded but in which he is no longer active. García said he is considering legal action against the plaintiff, Whitney Information Network, owned by real estate developer Russ Whitney.
The suit, all 27 pages of which were posted on the Internet by a Whitney Information representative, alleges that shareholders of the Panamanian company MontereyDel Mar conspired with Daremblum and Strudwick to illegally seize control of the luxury beachfront resort property in 2006.
The suit alleges there was an illegal board meeting in Panama in April of last year, and a lawyer from Daremblum’s firm represented other shareholders there.
At the meeting,Whitney-backed company Monterey Management was voted out as the resort manager, and New York developer Weiss replaced the company as manager.
Weiss later discussed leasing the resort to a Strudwick-owned company, though that never happened.
Though Whitney Information alleges the meeting was illegitimate, García holds it was legal.
Whitney Information’s spokesman Michael Caputo said the company wasn’t informed of the Panama meeting. García said he did inform the management company, but received no response.
Despite the results of the Panama meeting, members of the Whitney-backed company continue to manage the resort.
“My understanding is they’re squatting on the resort; they refuse to leave,” said David Clark, Strudwick’s lawyer.
Caputo responded, “anyone who believes that Panamanian board meeting was legal would believe in the fairytale that the owners are squatting on that property.”
Daremblum is accused of malpractice in the case for having allegedly represented Whitney while members of Daremblum’s firm were representing Weiss.
Daremblum, who said he hasn’t been active in the Daremblum y Herrera firm for eight years, called the allegations “a total fabrication” and denied having represented Whitney.
“It’s a big lie, like the rest of this frivolous and fabricated story,” he told The Tico Times.
Strudwick is accused in the case of having shared confidential and proprietary information of Whitney Information.
Whitney Information Network also coordinates business education seminars in the United States, and Strudwick has worked with Whitney Information giving seminars, according to the case. Strudwick’s lawyer Clark denied the allegations. Caputo said Whitney Information Network also hired a local distribution company to circulate flyers in Esterillos warning people against investing with Strudwick.
Strudwick told the Tico Times he is “considering appropriate responses to protect our hard-earned reputation,” though he wouldn’t be more specific.
Caputo said he posted the case on the Internet as an effective way to communicate with the press.
Weiss is accused in the case of slander and aiding and abetting the other co-conspirators, allegations her lawyer, David Goodsell, denied. He called the case “unwarranted” and said he is looking into filing a counter suit.
Whitney Information Network was recently hit with a slew of class action lawsuits in Florida that accuse the company of violating federal securities laws by issuing a series of material misrepresentations to the market during the class period, thereby artificially inflating the price of the company.
Last December, the U.S. Attorney for the Eastern District of Virginia commenced a grand jury investigation into some of the company’s marketing activities.
“Clearly, (Whitney Information Network) is a company under siege,” Caputo said, though he refused to comment further on those cases.
Though the management of the resort is being disputed, Whitney Information is still the largest shareholder in the resort with more than 20% of the shares.
The Florida company bought its shares from Strudwick’s Costa Rican partner William Ramírez-León in 2003 after investors put up $1.7 million to renovate the resort.