Two of the biggest names in tourism have terminated their partnership with Seaside Mariana Spa & Golf Resort, a massive development project planned for Nicaragua’s central Pacific coast.
Wyndham Hotel Group and Nicklaus Design have independently issued termination letters announcing their pullout from Seaside Mariana due to concerns about the project’s legal troubles and slow progress.
“Due to the owner’s prior failures to perform its obligations under the agreement in a timely manner, and in view of recent developments which have called into question owner’s statements concerning the future construction of the golf course and the ability of owner to perform the agreement, the company has no alternative but to invoke its termination rights,” reads a letter sent by Nicklaus Design to Grupo Mariana chairman Kevin Fleming last Monday. “Our association with the project in any capacity is having an adverse effect upon the company and Jack Nicklaus’ name, stature and reputation.”
Fleming and his lawyers insist the root cause of the problem is an “illegal lawsuit” filed against Seaside Mariana by a disgruntled investor who is seeking more than $2 million in damages. The plaintiff is demanding $1 million to compensate for the “constant stress caused by the loss of trustworthiness and prestige among his friends” for investing in the project, and $423,000 in alleged loss of profits that he might have earned had he instead invested his money in his “thriving 12% per annum mortgage business in Canada.”
The lawsuit against Seaside Mariana was officially filed and registered last August in Managua’s Seventh Civil District Court, despite a challenge by Fleming’s lawyers who argue the case should be nullified due to procedural irregularities. The defense counsel argues the damages suit brought against Seaside Mariana is illegal based on contractual and legal provisions stipulating that arbitration or mediation—neither of which occurred— are a prerequisite to all civil action suits.
In any event, Fleming’s lawyers insist the lawsuit is a “personal action” that does not challenge Seaside Mariana’s ownership rights to the property, so the damages lawsuit should not be recordable.
Since Fleming’s legal team immediately challenged the merit of the case, they claim they were taken by surprise months later to find out the case had indeed be registered by the court. Fleming claims neither he nor his lawyers were notified that the case was accepted.
Seaside Mariana wasn’t the only one surprised to discover the status of the lawsuit. When Wyndham caught wind of the case last month later from their own lawyer in Managua, they were not happy. On Nov. 5, Wyndham Hotels and Resorts sent Fleming a letter of termination, arguing that his failure to advise them of the lawsuit was a “clear violation” of their agreement.
Wyndham also raised concerns about Fleming’s slow progress in developing the Seaside Mariana hotel project.
“We have determined that it is not possible for you to comply with the construction completion date of March 15, 2013,” Wyndham said in its termination letter.
Fleming then informed Nicklaus Design of his legal problems and the Wyndham pullout, in an attempt to avoid further issues with his other big-name partner. Nicklaus, which is designing an 18-hole Jack Nicklaus Signature Golf Course at Seaside Mariana, thanked Fleming for being forthcoming, and then followed Wyndham out the door.
“While we appreciate your recent disclosures regarding these matters, we cannot in good faith continue to have a design or marketing relationship with the project or owner under the current circumstances,” the golf company wrote in its Dec. 10 termination letter.
Fleming, who worked tirelessly for years to bring those two name brands to Nicaragua, was crestfallen that they both jumped ship in less than a month.
“We are going to have to work hard to recover from this,” Fleming told The Nicaragua Dispatch in an extensive interview this week.
“It was a Herculean task to get the brands to Nicaragua, and to lose them because of the illegal lawsuit is not good for the rule of law in Nicaragua or attracting other investors to the country,” Fleming said.
The 42-year-old Canadian thinks the lawsuit is part of a plot to obstruct his development project.
“When the guy that is suing you registers a lawsuit illegally, doesn’t want to meet with you and doesn’t even want to pursue the lawsuit, then what can I do? All they are doing is putting out garbage,” Fleming says.
In a press release that Fleming is sent out this afternoon, he explains that Grupo Mariana “has suffered untold damages as a result of a single lawsuit—a suit that was improperly filed, illegally recorded and previously nullified.”
Seeking government help
Fleming is also asking investment-promotion agency ProNicaragua to get involved, because he says the issue will affect Nicaragua’s image and its nascent investment climate.
“This is more than a private dispute; this is an illegal action that has caused the loss of two of the world’s big brands from Nicaragua. Forget about my project, they pulled out of Nicaragua,” Fleming said. “And I’ll tell you something, after three years of trying to find funding for this project, the biggest complaints and fears that investors have are related to Nicaragua’s political nature, stability and the rule of law. And now this happening, with no rule of law, scares the hell out of investors.”
As a result, Fleming says, ProNicaragua should “take an extreme amount of interest” in his case. The pro-investment group needs to “respond quickly to resolve this in a public way to show how much they support rule of law,” he says.
If not, Fleming laments, “then the dream of Mariana might come to an end, because the dream of Mariana is really depending upon the government and the institutions being stable. And if the perception of stability is not there, it’s going to hurt not just me; it’s going to hurt everybody.”
Sales success among constant troubles
Kevin Fleming moved to Nicaragua in January 2005 with his Nicaraguan wife, for whom Seaside Mariana is named. Fleming came with big ideas for a series of resort projects, anchored by the massive Seaside Mariana Resort, which he says he wanted to turn into an international brand-name destination.
“We are building a destination alongside Nicaragua trying to build a destination,” Fleming says. “I am not trying to build one hotel, I am trying to build a destination and all of our efforts go towards that goal.”
Seaside Mariana, according to Fleming’s vision, will be a massive complex of half a dozen hotels, condos, and bungalow, with a golf course and a community of 5,000 people spread out along 923 acres of beachfront in Masachapa. Five years ago, Fleming’s plan was even more grandiose. He originally talked of developing a total of 25 tourism projects around the country, including hotels in León, Granada, Managua and San Juan del Sur.
But Fleming ran into trouble right out of the starting blocks. In 2007, one of Fleming’s original partners in his project “Isla Mariana” bought the land adjacent to his on León’s Isla Real de las Peñas. A nasty legal battle and mud-slinging campaign ensued. Fleming spent three years trying to sort out his land title and defend his reputation against slanderous attacks in the blogosphere.
“Fleming is the Hitler of Central America and his thirst for money and power has no boundaries,” someone posted in 2007 on the website Rip-off Report.
Despite the noise, Fleming managed to net $11.7 million in property sales over the next few years—thanks, he says, to his vision for the country and his transparency with buyers.
“They believe in what we are trying to accomplish, but more importantly people feel like they are part of the development process,” Fleming says of his buyers. “We are very upfront with people telling them how it is we are using their money, what it’s for and what it is we are trying to accomplish, and I believe people put a sense of trust in us because we have always been transparent. Otherwise, how can we be so successful with nothing on top of the land? I can’t be that good, where people just want to give me their money. There’s no way. Think about it, I’ve sold 240 home sites in five years. Why is that? I can’t be that good. It’s because people are part of the development process—people want what it is I’m doing because I am passionate about doing it this way.”
Fleming finally resolved the Isla Mariana issue through what he says were “proper channels” in 2010. He plans to restart the Isla Mariana project next year. But as soon as the dust settled on that project, the scandals and allegations of fraud followed him to Seaside Mariana.
In the past month, Fleming has again begun writing explanatory emails to his investors to address another volley of Internet allegations, email blasts, character assaults and a lawsuit. In the blogosphere, Seaside Mariana is being called a Ponzi scheme and real estate fraud, and Fleming is being lambasted as a snake oil merchant.
“Mr Fleming is an Impressively Brilliant Marketer and Master Manipulator and extremely efficient at parting unsuspecting and trusting investors from their money and spending it wildly and tucking it away in unknown places knowing the eventuality that his high deceptions would hit the wall and the Fleming Kindom [sic] would come crashing down,” reads an anonymous post published on Rip Off Report on Nov. 6.
Since that post, Fleming and his wife have received a series of threatening and equally sub-literate emails, written with the same disregard for capitalization, punctuation and spelling. The threatening emails caused Fleming, who is now in Canada, to cancel a trip here in November. On Nov. 24, Fleming penned another explanatory letter to his investors to give his side of the events, which he is also posting on his website.
Fleming’s critics claim his is a conman because he hasn’t built anything on his site after six years. But Fleming says a big project like his takes time, and that legal issues have only slowed his progress.
“A delay is something that is postponed or moved to a date later than expected. Fraud is deliberate deceit or cheating intended to gain an advantage. To equate the two is irrational,” Fleming told his investors in a letter last month.
“For our organization, taking things to a new level (a level not yet seen in Nicaragua) has required extra time in planning, due diligence and proper permitting. We could have cut corners in order to move faster, but that is not the development we set out to create, nor the development our investors deserve,” the letter reads.
Fleming says he’s still optimistic about the country’s future and the prospects for Seaside Mariana, despite the setbacks.
“I’m married to a Nicaraguan, I have lived there for eight years and I really do love the place,” Fleming says.
He says he is hopeful that Wyndham and Nicklaus will change their minds and rescind their termination letters.
Indeed Nicklaus Design said in its termination notice, “We continue to believe that the design work we have performed to date could be the basis for an excellent golf course and we will retain the work on file towards a possible future engagement in the event the current legal and public relations problems can be resolved and we are presented a satisfactory proposal to use our work in the completion of the golf course at some time in the future.”
But if those brands don’t return, Fleming says he’ll try to find others instead. The irony of the situation, he says, is that all his permits are almost ready. In that sense, he’s never been in a better position to move forward.
“Our goal was to get funding based on our permits and our brands; now we are going to have our permits but we lost the brands,” Fleming says. “This illegal lawsuit has caused the loss of Wyndham and Nicklaus and will make it more difficult to place funding in the development. Not impossible, but certainly not as attractive as we were when we had the brands.”
In the end, Fleming says, he wants to make the project work to “create a lasting legacy not only for Nicaragua but for our family.”
“I am certainly not going to stop with my efforts of moving forward by promoting Nicaragua and letting people know what the country has to offer,” he says. “We are going to have to work through this.”