Dr. Cem Kinay and others are being sued in U.S. courts for at least $50 million allegedly taken in a “massive fraud” in the development and sale of properties on Dellis Cay.
In a lawsuit filed Jan. 28 in U.S. District Court in Manhattan, N.Y., 20 parties filing the suit say they provided $50 million of the $75 million paid by Dellis Cay Villa purchasers, but that less than $7 million was spent on construction of the villas. “The balance was stolen,” the suit claims.
Construction began on Dellis Cay in June 2008 and lasted for just over a year. The project was put into receivership in October by lender Trinidad and Tobago Unit Trust Corp., which is accused of aiding and abetting Kinay and partner Oguz Serim in committing fraud on purchasers.
“I categorically deny all their allegations,” Kinay told the fp in an Feb. 2 e-mail. “I, my family, my businesses were never involved in bribery, nor fraud.”
As he has said before, Kinay said he is a victim of Turks and Caicos Islands politics and will fight all claims against him. He also says he is still trying to save the project.
The main defendants in the lawsuit are Kinay, described in the complaint as “an Austrian and U.S. national with a history of questionable business practices and associations,” and Serim, a citizen of Austria and resident of Turkey.
Kinay and Serim are accused of using clients’ money as a “personal piggybank,” paying off pre-existing debts and spending it on things such as “an $8 million Miami Beach home, bribes to government officials, unrelated real estate ventures, payments to related entities without consideration and globe-trotting on private planes.”
In 2005 Kinay and Serim bought 209 acres of Dellis Cay from then owner, Donatella Zingone, who kept four lots on the island. In early 2009, the U.K. and TCI government granted a 200-year license to the adjacent seabed, the lawsuit says.
Dellis Cay was aggressively marketed in New York, and news stories featuring Kinay and the project appeared in the New York Times and New York Daily News.
The suit claims that Kinay and Serim were assisted by their lender, TTUTC, in “a calculated scheme to extract millions” from buyers, knowing all along that they lacked funds to complete the project and that it would fail.
Kinay and TTUTC are accused of hiding from purchasers the fact that the project’s $62 million loan required a $47 million lump sum payment after two years at an interest rate of 15 percent. That loan gave Kinay more time to bilk purchasers and essentially sold the island to TTUTC, the suit claims.
Mandarin Oriental Hotel Group International Ltd., which was enlisted to manage the Dellis Cay hotel, is also named as a defendant, accused of letting Kinay use its name and logo even when it knew the project was failing.
Mandarin received 1.5 percent of villa and residence sales, plus a 2.5 percent bonus for any sale price exceeding $1,000 per square foot, according to the lawsuit.
Both TTUTC and Mandarin are accused of providing supportive letters for Kinay to use to comfort purchasers when both knew the project was doomed. They are being sued for damages for aiding and abetting fraud, aiding and abetting breach of fiduciary duty, and commercial bad faith.
Kinay and Serim also are accused of claiming to have hired a prominent international contractor to oversee construction of the project, but instead used their own shell company, Dellis Construction Ltd., which had no construction experience and was used to siphon money from the project.
The plantiffs also accuse Kinay and Serim of using SUU, a hotel chain with locations in Turkey and Costa Rica, to launder assets to get around a January 2010 order in the TCI Supreme Court freezing their assets.
Named as defendants are Kinay, Serim, TTUTC, Mandarin, O Property Collection USA Inc.; O Property Collection GmbH; O Property Collection TCI Ltd.; Turks Development LP; Turks General Partners Ltd.; Turks (BVI) Holdings Ltd.; Turks Ltd.; Dellis Construction Ltd.; The SUU Hotels; Avatar Real Estate Services LLC; William Tacon; Stephen Katz; Kinay’s wife, Marjorie Kinay; Kinay’s brother, Cenk Kinay; Mer Insaat; and Halis Sumer.
The plaintiffs are represented by Todd Soloway of Pryor Cashman LLP in New York.
Source:FP
