Millions lost in failed Turks and Caicos development

Caicos Beach Resort has been in development for some 25 years under the apparent direction of Brian and Patricia Rahl, attorneys in Florida, who are said to have somehow inherited the development from a deceased client. Until at least 2008, the domain name was registered at the same business address of the Rahl and Rahl law firm and Brian Rahl and Patricia Rahl each used the domain name in their email addresses in their respective Florida Bar membership listings.

Numerous explanations and excuses have been provided to investors over the years, including a dubious force majeure claim by the Rahls based on the failure by the TCI government to upgrade the international airport in South Caicos. Force majeure refers to a catastrophic and, most importantly, unforeseeable event beyond the parties’ control that renders the completion of a contract impossible. The fact that the TCI government would never complete the promised work on the South Caicos airport on a timely basis was, however, always a very predictable event.

The redevelopment of the South Caicos airport started under the former corrupt Progressive National Party (PNP) government, but was left in disarray after it ran out of money with millions missing.

However, none of these excuses prevented ScotiaBank from auctioning the property last week to recover some US$18 million it had reportedly loaned to the development. In addition, investors claim that the total amount invested by them is some $37 million. What is even more disturbing to the investors is the comparatively trivial sum of $3.8 million that the principals of the adjacent Sailrock development paid for the property. 

Several attempts were apparently made to rescue the development, including talk of a Providenciales-based hotel operator taking it over but that proved futile. Last year, a press release issued by an Asian finance firm claiming that investors in the property would receive British passports was debunked by Britain’s Home Office.

A petition to US state and federal agencies to start an investigation is currently being promoted on behalf of investors who have lost their money, including at least one person in the UK who bought two condominiums for his retirement and has lost his retirement savings in the project. Investors in the failed project span the entire globe, including USA, Canada, Europe and South America. 

Local businessman, Ports Authority board member and former parliamentarian Aulden Durham is listed as a part of the development company and, according to one investor, was the only person signing relevant documents on behalf of the developer.

The Caicos Beach Resort development has been in existence for some 25 years with stops and starts but not one building was ever fully completed. The project was said to consist of four phases of 250 units, with the first phase scheduled to be completed by December 1995. 

It appears that presales were expected, at least partially, to finance the project. However, the workmanship of the initial building phase was reported to be very poor and the project became insolvent. The project transitioned through several administrations in the TCI and was one of the first developments using low cost imported workers.

The Caicos Beach project has also had a somewhat checkered history of legal disputes, including accusations that investors’ money was removed from escrow accounts without authorisation.

In 2008, a complaint alleging fraud, racketeering, unjust enrichment, breach of contract, negligence and conspiracy was filed against the Rahls and others by a US investor, who claimed that from 1993 to 1996 he invested US$950,000 in the resort as well as an additional US$1 million in 2001. 

In 2011, the special investigation and prosecution team (SIPT) visited South Caicos as part of an ongoing investigation into alleged government corruption, especially so-called “land flip” deals, where Crown land was sold to belongers at greatly discounted values, only to be resold more or less immediately to foreign developers at far higher prices.

However, some South Caicos residents reportedly went into hiding during the team’s visit.

It is understood that several dozen South Caicos residents may have each received $50,000 checks as “front men” to facilitate the sale of some 1,000-plus acres of land to the Sailrock developers, much of which allegedly ended up in the account of the South Caicos branch of the PNP.

In particular, the purchase of over 1,000 acres of Crown land in South Caicos has drawn attention to the Sailrock development. It was believed the Chicago-based developer had obtained only a small Crown land section adjacent to its private land purchase. 

However, it was later revealed in the House of Assembly that the purchase of Crown land equaled that of the private purchase and the development represents some 2,500 acres on South Caicos.

“The land was sold to the developer during the [Peoples Democratic Movement] PDM administration,” PNP minister Amanda Misick asserted when the purchase was discussed in parliament. 

However, the records show that the acquisition occurred in 2008, when McAlister ‘Piper’ Hanchell, who was both the minister of natural resources and the representative for South Caicos, was in office.

With this new purchase, Sailrock is now the dominant landowner on the island, controlling most of the north section of the island. Sailrock has not been implicated in wrongdoing.

The SIPT has so far declined to respond to a request for comment on any ongoing investigation or other interest it may have in the $37 million of investors’ money that has gone missing from the Caicos Beach Resort project.

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