• Cat Island project principal gets lifetime bans

• And could face up to $54m ‘disgorge’ penalty

• Gov’t mum on project’s status, EIA hearing

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The lead principal behind a proposed $60m Cat Island resort project has accepted the imposition of sanctions over his role in an alleged $122m investment fraud, Tribune Business can reveal.

Manjit Singh ‘Roger’ Sahota, in legal documents obtained by this newspaper, has consented to a lifetime ban on “acting as an officer or director of a publicly-held entity” as well as a permanent bar on involvement with corporate vehicles in the US oil and gas industry that are offering securities to investors.

Besides agreeing to these “permanent injunctions”, the Securities & Exchange Commission (SEC) also informed the north Texas federal court on Wednesday, March 30, that Mr Sahota will “disgorge” all ill-gotten gains from the scheme and pay interest on this sum, as well as having a further fine imposed on him. The amount he must pay is to be determined at a future court hearing, with the “disgorgement” sum potentially reaching as high as $54m.

The agreed judgment, which also bans Mr Sahota for life from further violations of US federal securities laws, was reached without the Almost Paradise resort principal “admitting or denying” the accusations levied against him. The documents detailing the “consent judgment” were signed by Mr Sahota on March 25, 2022, but this has yet to be approved by the North Texas federal court.

The legal filings came one day after Tribune Business exclusively revealed the controversy engulfing Mr Sahota and his family after they were alleged to be the largest recipients of funds from what the SEC, the US capital markets regulator, branded as “an oil and gas offering fraud conducted over three years” by an entity called Heartland Group Ventures.

Chester Cooper, deputy prime minister and minister of tourism, investments and aviation, who has responsibility for the Bahamas Investment Authority (BIA), declined to comment when asked yesterday by Tribune Business to clarify the Government’s position on the Almost Paradise project and whether the public hearing called by the Department of Environmental Planning and Protection (DEPP) for next Tuesday will go ahead.

That virtual meeting is intended to discuss the project’s Environmental Impact Assessment (EIA), and advertisements promoting the meeting were still being carried in the daily newspapers as of yesterday, indicating that it may still be proceeding despite this newspaper’s revelations.

Mr Sahota and his family again could not be reached for comment, but he reportedly told other media they are “not backing out” of the $60m Almost Paradise project having “settled” with the SEC. However, he disclosed none of the lifetime bans, sanctions and forfeitures agreed to, and this will likely make it very hard for the Government to give the go-ahead to a project targeted at Prime Minister Philip Davis’ own constituency.

Mr Sahota’s wife, Harpit, and sons Monrose and Sonny, are all named as “relief defendants” in the SEC’s lawsuit because they either attended field trips used to promote the projects to Heartland investors or held corporate positions with the three family companies. It is uncertain whether the “consent judgment” agreed to by Roger applies to them also.

Magistrate Judge Hal Ray, in a March 18, 2022, verdict that rejected the Sahota’s bid to remove or adjust the freeze on their assets, noted: “On cross examination, Sunny Sahota testified his family could not have purchased the airplane, helicopter and properties in The Bahamas but for the $54m they received from Heartland.”

The SEC is alleging that $1.5m of the Heartland monies received by the Sahotas was used to acquire their existing Cat Island rental properties. And the court-appointed Heartland receiver is already moving to sell the family’s private jet and helicopter to recover funds for defrauded investors as the Sahotas have insufficient assets to cover what is owed.

This all raises the possibility that the receiver may seek to seize the family’s existing Cat Island holdings to recover the $1.5m invested, although it would likely have to initiate legal proceedings in The Bahamas to do so. The 50-acre site for Almost Paradise, the purchase of which this newspaper understands has yet to close, may also be financed by Heartland monies, which could expose a prime investment property to also being seized by the receiver.

The Sahotas have vehemently denied the allegations against them. But the SEC, describing Heartland as a classic Ponzi scheme, in which new investor monies were used to repay those who had been lured in earlier, claimed that its principals “ignored red flags” regarding Roger Sahota’s previous oil and gas projects and use of investor funds.

The US capital markets regulator alleged that in March 2019 they “learned of Sahota’s prior personal bankruptcies and Internet posts alleging that Sahota had committed fraud in multiple states and Canada, including by creating fake financial statements”.

Throughout Spring 2019, Heartland’s principals were said to have experienced and ignored “additional red flags regarding Sahota, including his repeated refusal to provide requested information about title, project status, revenue and costs. Sahota [said] his company could spend money it received from Heartland as it wished, and that he did not have to provide details of where the funds went”.

Heartland’s collection of investment funds raised a total $122m from more than 700 investors via five “unregistered” securities offerings. The funds raised were supposed to be invested in oil and gas drilling projects “producing hundreds of barrels of oil per day”, yet the SEC is alleging that these wells have yet to deliver a single barrel.

Instead, investor monies were diverted for other purposes, with the regulator’s December 1, 2021, lawsuit alleging that some $54m - just over 44 percent of the total raised - went to Mr Sahota and three family entities - ArcoOil Corp, Barron Petroleum and Dallas Resources.

“The Sahota defendants and Dallas Resources used millions of dollars in Heartland investor funds to purchase a private jet, a helicopter, real estate in The Bahamas and on other non-oil and gas expenditures for themselves,” the SEC alleged. It also accused Mr Sahota and the family’s companies of making “material misrepresentations” about oil well production, inflating and altering volumes and revenues.

Tribune Business’ findings blindsided the Government, which was seemingly unaware of the Sahotas’ legal woes. “It was approved by the former administration. I can confirm to you that it was approved by the prior administration in 2020,” a Davis administration spokesperson said. “ However, both Dr Hubert Minnis and his former senior policy adviser, Joshua Sears, said they knew nothing about the Almost Paradise project or the Sahota’s when contacted by this newspaper.

The Sahotas and Waypoint Consulting must have received some kind of encouragement to proceed as the EIA reveals that field work for the assessment was conducted in February, April and May 2021. A joint site visit with the Department of Environmental Planning and Protection (DEPP) was held on April 16.

While the SEC lawsuit was filed both after the EIA was completed, and the receipt of any approvals by the Minnis administration, Tribune Business’ findings raise disturbing questions surrounding the strength, and scope, of the Government’s due diligence on foreign investors and whether their backgrounds, and source of funds, are vetted sufficiently.

And, while the Government is especially eager to rapidly bring FDI projects out of the pipeline in its efforts to revive the Bahamian economy post-COVID-19, the Almost Paradise situation suggests more caution is required. The Almost Paradise project is targeted at a 50-acre parcel of land known as the Butler Tract. “The proposed development, ‘Almost Paradise’, is located on approximately 50 acres in southern Cat Island to the immediate south of Greenwood subdivision,” the EIA said.

“Almost Paradise is a $60m capital expenditure for a mixed-use development featuring a resort, villas, single family home, amenities and back-of-house operations to be constructed over three phases. Total developed areas including built infrastructure comprise approximately 60 percent of total land area.”