I purchased a fractional unit at Bacolet Bay for US$30,000. The sale was originally through Steve Flann at Cape Verde TOPA, and handled by Nick Cheesman at Bacolet Bay. The contract entitled me to 10% interest paid quarterly, so US$750 per quarter.
First quarterly interest payment received as stated in contract.
My first email to Heather Bain to ask why quarterly payments have not been received. These will become a regular occurrence in the months to come.
Purchasers receive a letter from Kash Lais announcing that Bacolet Bay are to temporarily suspend interest payments until the end of Q1 2014. You can see the original letter here.
Kash informs me that they are now in a position to begin repaying the quarterly payments.
I finally receive my quarterly payments backdated to August 2013.
Hidden away on the last page of a glossy Purchaser Update is an announcement that the developers will cease paying interest payments and will issue variance contracts asking purchasers to agree to roll up their investment until completion date. 4 years on and I have still not been sent this variance contract. Pressure is also put on purchasers not to go public or take legal action as this will apparently threaten the entire project.
Update from Heather Bain at Bacolet with the usual waffle. The upshot is, they’re still not paying the quarterly income as required by my contract.
Another update from Heather regarding the application for Grenada CBI (Citizenship by Investment). Michael Gunn finally agreees to pay me what I am owed but asks for a long list of documents – which have to be notarised at my own expense – as proof of ID to get the money out of escrow. I point out that they already have proof of my ID. Kash Lais then reneges on Michael’s agreement to pay me.
David Arnold of the FRC (which has yet to be formally announced) contacts me to make it clear that they have no intention of honouring my contract, and warns me off going public with my story. “We are aware that you propose a social media campaign against the project. Our understanding is that all the current investors and purchasers would wish the company to take all available actions, including legal action, to protect the collective interests of investors and purchasers. If damage is suffered then that could well set off a chain reaction with other individual investors pursuing any likely source of the damage, including individuals. The investor group comprises a range of High Net Worth individuals including lawyers, accountants, software directors etc and like you they have skills to pursue or protect their own interests. However they are supporting our collective efforts at present.”
An update from Heather announcing the appointment of the FRC (Financial Risk Committee) to help bring the project to fruition. No mention of purchasers’ quarterly payments or variance contracts. I also finally hear from Steve at TOPA who apologises for the way Bacolet have treated me but says there is nothing he can do about it. I report him to the NAEA (National Assocation of Estate Agents), whose logo is on his website; they reply that his company is not registered with them. “We were a member of NAEA but I think this has lapsed due to the cost of membership. You are right it is still on our web site but I will get this removed when I have the funds to pay the web company” Steve replies. This is the last I ever hear from him; he seems to have washed his hands of the whole thing.
Heather mails out a report from the FRC, with pressure again put on purchasers not to go public or take legal action. It is also made clear that they have no intention of paying investors the money they are owed.
I get in touch with a UK lawyer who looks at my paperwork. The only possibility of UK action is against TOPA but unless we can prove they specifically advised me to make the investment there is little chance of success. because the development is in Grenada, any legal action would have to be taken there. I contact several Grenadan lawyers; not one of them bothers to reply.
The FRC’s promised ‘regular updates’ still do not materialise. I forward details of my case to Action Fraud and the UK Financial Ombudsman. Neither of them follow up with me.
I chase Michael & Kash for an update. Their emails bounce back to me.
Update from Heather announcing that the project has been given CBI status and will be going ahead. Again, purchasers are warned off asking for their money back or taking any legal action, but that there is now a path to selling units once construction recommences and that they will be in touch soon.
Still no contact from Bacolet Bay, and only after sending them multiple emails do I get a reply from Michael Gunn.
Skype call with Michael Gunn. He follows up with:
“The intention is to put together an offer which enables your deposit to be returned to you out of the proceeds of sale of a unit through CBI channels. The monies paid by the CBI investor are paid into an escrow account and drawn down against milestones in the delivery process. Your deposit would be repaid to you out of these drawdowns…In terms of timetable, we plan to launch the sales under CBI by the end of this year. It is therefore important that we enter into detailed discussion with you as soon as possible.”
Proposal from Michael Gunn:
“The following is the proposal that is being sent to all purchasers. I also address the position specifically in relation to your fractional share.
As previously advised, the approval of the project under Grenada’s Citizenship by Investment program (“CBI”) presents the opportunity to progress the delivery of the project. This represents the greatest progress towards that goal and it is imperative that the criteria set for continued inclusion in the CBI program are met and that this opportunity is taken.
In turn, that enables BDF to offer to existing purchasers the choice of either:
- Recovering your deposit plus a return earlier through the CBI scheme; or
- Completing the acquisition of your unit.
We would like to arrange a telephone call or meeting with you to discuss which approach you would prefer to take. What follows is a brief outline of the proposal in relation your unit being released back to BDF for sale under CBI. We can address the detail as we progress and understand your position.
Recovering your deposit, plus a return
It is relevant to understand that the CBI program is a government initiative designed to capitalise the delivery of approved resorts and generate employment on the Island. As such, only BDF is authorised to sell units under CBI (the secondary market does not convey citizenship). In addition, BDF must not prejudice the ability to meet its obligations to a new CBI investor as a result of an arrangement with an existing purchaser.
However, we recognise the long standing commitment and patience of purchasers in the project and have sought within this proposal to align the interests of all stakeholders to a collective and individual benefit.
In order to recover your deposit (with a return) then you will need to release your unit back to BDF for sale under CBI:
- Under this arrangement, the contract between you and BDF for the delivery of your unit would be replaced by a contract for repayment to you of your deposit paid and an agreed uplift, on the terms explained below.
- Your fractional interest is a hotel cottage. Under CBI, we propose to sell hotel cottages as fractional products. Two CBI investors will each (through a leasehold interest structure) own a one half interest in the cottage. All monies are paid into an escrow account and drawn down against milestones in the delivery process. In addition to the cost of construction of the unit, the proceeds of sale will need to meet the cost of commissions to secure the sales (which are extremely high in the CBI market), Government Fees, infrastructure cost, facilities cost and overheads such as professional advisers and staff. It is also vital that monies are applied to continued sales and marketing costs to ensure continued sales under CBI and momentum in the project. However, sufficient surplus will be generated by the sale of the cottage to repay to you your deposit payment concurrent with its delivery.
- Your deposit will be 100% repaid on handover of the keys to the unit to the CBI investor. At all times the monies are ring-fenced in the escrow account. Through scheduling of the repayment of your deposit in this manner we are able to demonstrate that the funds raised in the CBI program are being applied to create employment and deliver construction, but at the same time enable repayment to you through a secure mechanism.
Specifically in relation to your fractional share, your interest is in unit 87. There are 10 fractional purchasers in 87, which makes the proposition less workable. We therefore propose that your interest is moved to unit 96. This is in a better location with a south facing (rather than east facing) outlook. It is therefore more marketable and should be sold and constructed at an earlier stage in the process.
In relation to the payment of any uplift or return on top of the deposit, it is again imperative that the criteria set for continued inclusion in the CBI program are met and that we retain the support of all investors and purchasers. It is vital that such distributions are made after:
- Delivery of facilities and infrastructure to the CBI sold units;
- Repayment of the investors secured debt (the equivalent of their deposit payments);
- Repayment of the deposits to all purchasers who choose to take the route of their unit being released back to BDF for sale under CBI have also been repaid their capital invested.
This enables BDF to demonstrate to those incoming CBI investors that the program for delivery including infrastructure and facilities will continue without delay (which will assist in procuring the sales to facilitate your exit), it also aligns your interests with the equity investors in the projects whose loan capital is secured by a first charge and existing purchasers whose unit will be sold and delivered after you have received a refund of your deposit. That is a substantial step forward in improving your current position.
This uplift or return on top of the deposit will be calculated as 50% of the sum that you paid by way of deposit.
The project will remain under significant scrutiny by the Government CBI committee. BDF can only make a proposal which is compatible with the objectives of the program. The sales market for resort property will become dominated by the citizenship market, this proposal finds a path which enables you to benefit from that program and the enhanced value it generates.
Once we know how you wish to proceed, we can provide to you a draft contract and discuss the detail with you.
We can discuss the estimated timetable specific to your unit. In general terms, however, the intended timetable is to launch sales under CBI before the end of this year. It will only be possible to provide a meaningful timetable after the sales program has been launched and it is possible to make informed projections about future rates of sale.”
Michael agrees to repay me my original $30,000 investment by 7 December 2018, which the $15,000 interest due by 7 December 2019. I specifically ask for the contract to be worded “IN ANY EVENT BY 7 DECEMBER” so it is not linked to the progress of the project.
I ask Michael Gunn for an update. He tells me that construction will start within the week, and finishes with “You are in a priority position. I therefore anticipate that we will be able to meet the December date.” I feel this is as close as I’ve got to getting my money back since this whole debacle started.
As we approach the 7 December deadline, Michael goes very quiet, so I get in touch with Joachim Fleury at the FRC, and he drops a bombshell.
“The other side of the coin is that the company does not have funds today to repay any purchasers or indeed pay anything except the absolutely essential. Assuming that construction does start in the next few months, however, your unit could then also be built – or there may be a way in which you could be bought out, if your unit could be sold under the CBI program instead, but this is something that would need to be looked into.” And once again he warns me off going public.
I finally hear from Michael, who, as usual, is just about to get some financing. “I don’t sleep particularly well as I find the pressure immense. I am an honest person.”
Joachim Fleury confirms that “there is no chance that purchasers will be repaid in the short term”. This begs the question as to why Michael Gunn agreed to a refund contract a year ago, and assured me 3 months ago that it would be paid as agreed. They are both lawyers – are they not aware of how unethical it is to sign a contract you never had any intention of honouring?
The Bacolet Bay Investors website and Facebook group are launched, as I try to get in touch with other investors and hear their stories.
The 7 December deadline for repayment of my original investment comes and goes without the money being received.