On November 8, 2018, the Federal Trade Commission (“FTC”) held a press conference to announce a lawsuit against what it claims is the largest real estate scam the FTC has ever encountered. According to the FTC Complaint, through false claims in its marketing materials and sales pitches, the Sanctuary Belize Enterprise (“SBE”) took in more than $100 million through its sale of lots in what was meant to become a luxury development equipped with amenities similar to American luxury resorts. On October 31, the FTC filed its complaint against Andris Pukke, the creator of the scam, and numerous other defendants. The Complaint raises several interesting issues and provides useful insight into the worldview of the new slate of FTC Commissioners, which could give us clues as to where enforcement action is heading in a number of contexts.

First, the FTC sued a foreign bank for the first time. The FTC does not have jurisdiction over domestic banks. In this case, the FTC sued Atlantic International Bank (“Atlantic International”), a foreign bank with no branches in the United States and not regulated by any American financial authority. The FTC alleges Atlantic International provided Belizean banking facilities for SBE and the consumers targeted by SBE, knowing its clients were based in the US, in addition to other forms of aid. Atlantic International also accepted wires from American correspondent banks. As more payment processors do business offshore, this may be the first step in an effort by the FTC to hold foreign banks responsible in situations where the FTC cannot sue domestic banks.

Second, the FTC’s pursuit of Pukke indicates how seriously it takes order compliance and asset disclosure. The FTC alleges Pukke perpetuated the SBE scam with a piece of parcel he should have turned over to the FTC in a 2006 order in FTC v. AmeriDebt Inc. In 2010, Pukke refused to turn over assets and was held in contempt of court, leading to an eighteen-month incarceration. Through a series of workaround transactions, Pukke allegedly was able to maintain control of the Sanctuary parcel despite his incarceration and court order. The FTC has filed three contempt actions against Pukke and other defendants. Through these actions, the FTC sends a clear signal that when the FTC tells you to hand something over, they want you to hand it over.

Third, the FTC actively pursued the defendants here using some novel tools. The FTC created a fake exercise and fitness company in an attempt to fit the profile of a typical SBE target. The FTC went so far as to create a website for their fake business to lure SBE in. Some believe that in the consumer protection realm, the Chairman Simons led FTC may bring fewer cases, but the investigations brought will be more robust and the remedies sought more severe. This case would seem to fit that paradigm. How common this type of “sting” operation becomes remains to be seen.

After twelve years the story of Sanctuary Belize is far from over. Stay tuned.