December 22, 2009
Attorney General Mike Cox today announced the arrest of three individuals accused of cheating 125 Michigan seniors out of their life savings by selling them time-shares in foreign resort properties that exceeded what were truly available.
Jeffrey Ron Mitchell, 39, of Walled Lake, Robert Valeri, Sr., 59, of South Lyon, and Robert Antonio Valeri, Jr., 32, of Canton allegedly participated with Indiana resident and scam mastermind Michael Kelly in a massive Ponzi scheme, selling time shares in the form of an unregistered security called a "Universal Lease" through a company called Resort Holdings International.
The Attorney General's office accused them of targeting senior citizens and retirees with marketing efforts that illegally promoted the lease as a safe investment opportunity with the promise of large monetary returns.
While seniors purchasing the lease were allegedly given the option to use the vacation property during specified times over a 25 year term, they were also given the option of having a purported third-party management company arrange for the rental of the unit during the same time period for a guaranteed 9 percent return--whether the unit was rented or not. They were encouraged to elect the latter option and everyone who purchased the lease did.
In reality, Kelly also controlled the third-party management company. The investment scheme took in an estimated $350,000,000 nationwide and as much as $9 million in Michigan. It imploded due to deliberate overselling of shares in the Universal Lease program, leaving investors with empty pockets and broken promises.
"Our parents and grandparents spent their lives working hard to provide for their families and to build the Michigan we enjoy today," said Cox. "They deserve to know that their investments are being made safely and that those who would steal from them are being held accountable."
Mitchell, Valeri, Sr. and Valeri were arrested today and are charged with Conducting Criminal Enterprise (Racketeering), a felony punishable by up to 20 years in prison and/or a fine of up to $100,000 and Conspiracy to Sell an Unregistered Security, a felony punishable by up to 10 years in prison and/or a $10,000 fine. Mitchell and Valeri, Sr. are also charged with Selling an Unregistered Security and Omitting to Disclose Material Information during the Sale of a Security, both felonies punishable by up to 10 years in prison and/or a $25,000 fine.
Each were arraigned in 19th District Court before Judge Richard Wygonik and assigned a $25,000 personal bond. Preliminary exams are scheduled for March 19.
Kelly is in federal custody and is facing federal fraud and securities charges.
The federal court has created a restitution fund, and Kelly's assets have been seized and are being controlled by court order. The value of the seized property is estimated at between $160,000,000 and $175,000,000. Michigan residents who were taken in by the Resort Holdings scheme have the opportunity to recover at least a portion of their investment.