Canada's Elliott Companies file US$120 million counterclaim in the United
States District Court for the Southern District of Florida

TORONTO, Feb. 10 /CNW/ - On February 1, 2010, Canadian real estate developers Fred Elliott, Derek Elliott and the Elliott Companies filed a defense and a US$120 million dollar counterclaim in the District Court for the Southern District of Florida (Miami) against Klaus Hofmann and 175 others. The 356 page document, filed by the Elliott Companies before U.S. District Judge Alan Gold, comprises the Elliott Companies' Answer, Affirmative Defenses and Counterclaim to a lawsuit originally launched by Hofmann and others on March 3, 2009. The lead counsel for the plaintiff groups were Michael Diaz, of the Miami area firm Diaz Reus, LLP, and Hilda Piloto of the Chicago based firm Arnstein & Lehr, LLP. Mr Diaz pulled his plaintiffs out of the lawsuit in October, 2009 by filing a voluntary dismissal.

Among other things, the Hofmann Complaint accuses the Elliotts and their companies of mail and wire fraud, money laundering and violations of the Federal Racketeer Influenced and Corrupt Organization (RICO) Act. The Elliotts and Elliott Companies deny all such allegations, which they state are wholly without merit, and vow to vigorously defend the same.

In their Answer, the Elliotts and Elliott Companies allege that the lawsuit was orchestrated by James Catledge and his Impact companies, including Impact Net Worth, Impact America and NetWorth Solutions, all based in Las Vegas, Nevada. The Answer alleges that Catledge and Impact were contracted by the Elliotts to be exclusive U.S. sales agents for Elliott real estate products. The Answer further alleges that Catledge and Impact misrepresented the status of their securities and real estate licensing (they had none) and actually provided false documentation to the Elliott Companies suggesting that Catledge and the Impact agents did have valid regulatory licenses. The Answer goes on to state that, in response to misrepresentations regarding licensing and "grossly deficient" sales practices, the Elliott Companies terminated Catledge and Impact in June, 2008 and issued a demand letter in October, 2008, demanding payment of US$29,000,000 in compensation for damages caused by Catledge and Impact. In response, the Answer alleges, Catledge and Impact launched the Hofmann lawsuit. The Answer goes on to state:

    
    Upon information and belief, in October 2008, Catledge, in an effort to
    deflect attention away from himself, and in order to take revenge on the
    Elliotts for asserting claims against him, began a brutal campaign to
    discredit and destroy the Elliotts and their companies with litigation
    and defamatory publicity spanning multiple jurisdictions, including this
    one.
    

The Elliott Companies' Florida legal team (Peter Russin and James Moon of Meland Russin & Budwick, P.A.) focused on a number of core affirmative defenses including, among other things, Plaintiffs' failure to state a claim, after 11 months of litigation, failure to add James Catledge and the Impact entities and agents as indispensible parties and the failure, to supply sufficient (or in some cases any) documentation in support of the Plaintiffs' claims.

The Elliotts and Elliott Companies counterclaimed against many of the Plaintiffs for failure to pay on their purchase promissory notes, which helped cause the Elliott Companies' financial difficulties, and against all Plaintiffs in the amount of $120 million for damages caused by abuse of process. Specifically, the Elliott Counterclaim alleges that Catledge, Impact related individuals, Diaz and Piloto essentially conspired with the Plaintiffs to put the Elliott Companies out of business. The Counterclaim alleges that the elements of this abuse of process included obtaining ex parte injunctions against the Elliott Companies in Florida, the Turks and Caicos Islands and the Dominican Republic. (The Florida injunction expired and was not renewed by the court and the Turks and Caicos Islands injunction was overturned due to misrepresentations made to the Turks and Caicos court.) The Elliott Companies allege that, as a result of these actions, the Elliott Companies' resort properties at Cofresi and Juan Dolio, Dominican Republic, were foreclosed upon, resulting in a loss to the Elliott Companies of approximately $120 million, based on appraised values.

Fred and Derek Elliott were introduced to Catledge in 2004 who, at that time, was principal of what the Elliotts understood to be a legitimate financial services company offering mortgages, annuities, insurance, mutual funds and real estate/time share products out of Henderson (Las Vegas), Nevada. Catledge owned and still owns a web of network marketing companies known by various names such as Impact, Inc., Impact America and Net Worth Solutions. From 2004 through 2008, the Elliott Companies exclusively contracted Catledge and the Impact Entities and their representatives (sales agents) to offer and sell Elliott Company resort - related vacation ownership products to individuals in various jurisdictions, including the United States. Catledge and Impact are currently being prosecuted for securities fraud and registration violations in Idaho and are under investigation by the SEC in Utah.

Derek Elliott, President of a number of the Elliott Companies, stated: "This was never a "ponzi-scheme" or "ponzi-like" scheme. At all times sales were fully backed by inventory. It cannot be more apparent that Catledge and his attorneys instigated and directed the litigation strategy against the Elliott Companies in a very effective pre-emptive strike to deflect blame and to short circuit our planned litigation against Catledge and the Impact Entities."

The Elliott Group of companies was founded 35 years ago by Canadian Frederick C. Elliott. The Elliott Group which described itself as "a real estate company in the hospitality industry", developed the well regarded Sun Village - Cofresi Resort on the north coast of the Dominican Republic.

The Elliott Group was the most recognized Canadian hotel group in the Dominican Republic. The expansion of the Sun Village Resorts brand to the south coast of the Dominican Republic, was underway with their Juan Dolio resort development, formerly set to open in 2010. The Elliott Group employed over 400 people in the Dominican Republic, prior to the launch of the Hofmann Plaintiffs' lawsuit, all of whom lost their jobs as a result of the suit.

SOURCE ELLIOTT COMPANIES

For further information: For further information: see www.sunvillageresorts.blogspot.com; Lowell Hall, Director Operations, LH Metropolis Communications, lowell@lhmetropolis.com, (C) (416) 887-1636

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ELLIOTT COMPANIES

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