From E. Scott Reckard in Sunday's L.A. Times Business section:
For $25,000 or more, investors were told they could own part of a company developing luxury resorts and residences, authorities say. One supposed project was next to an Arnold Palmer-designed golf course. At another resort, Greg Norman's company had been hired to design the course.And...
The salespeople pitching the deal also dropped the names of other golf greats, authorities say, and urged investors to get in quick before the company went public.
Carolina Development, the Irvine company peddling the real estate partnerships, recruited many of its 50 salespeople from an addiction recovery program operated by Saddleback Church in Lake Forest, authorities say. To help endear themselves to Christian investors, they said, some sales agents distributed copies of "The Purpose-Driven Life," a best-selling inspirational tome by Saddleback Pastor Rick Warren.
But Carolina and its founder, Saddleback member Lambert Vander Tuig, had other motives, according to the Securities and Exchange Commission. The SEC has accused the Rancho Santa Margarita man of fleecing about 700 investors across the country and in Canada of $50 million by exaggerating Carolina's holdings — in some cases fabricating its ownership of property and in other cases disguising the fact that it held only options on land or had taken on heavy debt to buy it.
This year, the SEC filed a civil complaint against Carolina Development, its 47-year-old founder and its vice president and sales chief, Jonathan Carman, 43, of Aliso Viejo.
Authorities say that Warren and golf greats Palmer and Norman had no role in misleading investors. Warren said he was unaware of the alleged scam and did not know that his book was distributed by sales agents for Carolina, until he was contacted recently by a Times reporter.And...
Alastair Johnston, chief operating officer of Arnold Palmer Enterprises, said his company became aware of Vander Tuig's operation last year, when a stock brokerage approached Palmer with questions about Carolina's investment pitch.
"It was quite clearly, in our opinion, a violation of North Carolina securities laws in making misleading statements," Johnston said.
An attorney for Palmer wrote cease-and-desist letters to Vander Tuig in July, August and October, warning that he was infringing Palmer's commercial rights and breaking trademark and securities laws by "falsely implying an endorsement," Johnston said.
Johnston said the company complained to the SEC and North Carolina regulators late last year when the misrepresentations continued.
Norman's golf course design company, by contrast, went into business with Carolina Development, accepting a $200,000 down payment for course architecture, according to Thomas Seaman, the court-appointed receiver.
Bart Collins, the president of Great White Shark Enterprises, declined to discuss how his company linked up with Vander Tuig. But Collins said it was not uncommon for Norman's firm to "enter contracts with people who own a piece of land and are developing private communities."
"We try to do what we can to protect ourselves from this type of thing," Collins said. "We try as best we can to complete our due diligence."