Carbon Acquisition Group presented DC Hotel to investors without having a building permit or having an option to obtain the right to build.
PHILIPSBURG--More than two years after a judge in civil proceedings against Melbon Enterprises, the holding company of Carbon Acquisition Group, concluded that owner Dwain Carbon is running a Ponzi scheme, Carbon has not been criminally charged. Despite several complaints filed with police in the past two years, the Prosecutor’s Office stated on Monday that “the paperwork submitted to us is still under review.”
A “Ponzi scheme” is an investment fraud scheme. Organisers of Ponzi schemes focus on attracting new money to make promised payments to earlier-stage investors to create the false appearance that investors are profiting from a legitimate business. Ponzi schemes require a consistent flow of money from new investors to continue. These schemes tend to collapse when it becomes difficult to recruit new investors or when a large number of investors ask for their money to be paid back.
In the case of Melbon Enterprises, the Carbon family – owner Dwain Carbon, his wife Josefina “Arony” Nunez Carbon and his parents (Carbon Sr. represented his son in court after providing the judge with proof that he is company shareholder) collected money from the pre-sale of real estate merely existing on paper and from down payments for parcels of land in Guana Bay with the right to build homes. On June 22, 2023, this land was publicly auctioned at the request of the lender.
The last post on the Carbon Acquisition Group’s Facebook page is from November 19, 2020. In this post titled “Profit in Paradise”, Carbon offers “Limited opportunity to own shares in St. Maarten's FIRST Boutique Hotel”, situated on the “renowned Golden Simpson Bay Strip”. By paying US $7,500, investors would get a $15,000-worth share in the new to-be-built DC Hotel – named after Dwain Carbon.
The hotel was to arise on Welfare Road, at the entrance road to Isle del Sol Marina, opposite Captain’s Rib Shack and the public parking near Kim Sha Beach. On April 12, 2019, Carbon had posted on Facebook a photo-shopped picture of the hotel and surrounding area, with an explanation of the concept:
“Our DC Hotel, will be a luxury brand and service-oriented high-end boutique hotel. The design phase has been completed and the construction phase will be starting soon. Our goal is to create a unique boutique hotel experience by providing personalized service and gracious hospitality in a beautiful Caribbean setting. DC hotel will be offering fractional ownership options, please contact us for more information should you be interested in living the dream and owning a piece of Paradise.”
Enquiries by The Daily Herald to the Ministry of Public Housing, Spatial Planning, Environment and Infrastructure VROMI reveal that Carbon Acquisition Group did not have a building permit for DC Hotel, and could not qualify for a building permit because there was no parking at the hotel; the public parking on the other side of the road would therefore be overloaded by cars of future guests of the hotel. Despite the lack of a building permit, Carbon et al kept offering “fractional ownership options” for the DC Hotel for at least another year and a half.
In the same period, Carbon Jr. had to repeatedly appear in court in civil cases brought by investors in Carbon Grove, a far-from-completed gated community on a hillside in Cole Bay overlooking Simpson Bay Lagoon and the airport. On August 11, 2021, in two separate summary proceedings, the Court of First Instance ordered Melbon Enterprises to deliver the rights to three apartments.
Under agreements of sale, purchase and construction of April 2019 and September 2020, three litigants had purchased apartments against payment of US $115,000, $125,000 and $195,000, respectively. Delivery of the apartments had not yet been forthcoming, although the purchase agreements stipulate that delivery should have taken place no later than December 31, 2020.
These two court cases were far from isolated cases. The court stated it was aware of “numerous” other conflicts between Carbon and buyers of apartments in the Carbon Grove project. The judge mentioned down payments of more than 10 per cent of the purchase price, which are prohibited under the civil code. Also forbidden by civil law are direct (down) payments made to Carbon and to his wife’s account at a New York bank.
Payments made by real estate buyers must be deposited under a public notary and not made directly to a developer before delivery has taken place. However, Carbon lured clients with “in-house financing” with zero percent interest for five years. “Any insolvency risk of Carbon is, therefore, wrongly placed with the buyers of the apartments,” the judge stated.
The Carbon Grove gated community was designed to consist of 92 homes, 64 condominiums and 28 town-houses. All units would be delivered before the end of 2020; however, none was completed by then. Buyers would soon discover that the developer was in default and was taking out loans to complete the Carbon Grove project.
Unbeknownst to the owners of “town-houses” in Carbon Grove that were yet to be delivered, the developer had resold their units to new buyers. Investors reported to The Daily Herald that Carbon sold units two, three or more times after contracts were signed and down payments were made.
Offering “fractional ownership options” for a ghost hotel was probably seen by Carbon as a way to raise funds for the completion of Carbon Grove. Another project Melbon/Carbon Acquisition Group presented online was the, sale of 19,100 m2 of hillside land near Guana Bay Road. In a video showing architectural drawings of two-storey buildings, parcels of land were offered for $100,000 each. With 50 percent deposit required for “in-house financing”, the public was urged to “take advantage of this amazing offer” to get the rights to build one of 10 two-bedroom, one bathroom apartments.
The first stone was never laid for the Guana Bay project. The land was publicly auctioned on June 22, 2023, by Notary Boekhoudt at the request of FirstCaribbean International Bank (FCIB). This bank also has the rights to Carbon Grove. By notarial deed of November 13, 2020, the 23,250-square-metre plot in Cole Bay was mortgaged with a credit of $7.5 million in favour of FCIB.
On Sunday afternoon, Dwain Carbon wrote to his duped clients, around 150 investors in total: “I am writing to you today, knowing there has not been much communication, but you can rest assured that work and effort to salvage our situation have remained my top priority. I have continued to do so in high gear and my lack of communication is only because I understand at this point that parties want to know more than the intricate details, they want results. With that, I was advised that it is better to be silent until I have substantial development.”
About his approach to salvage the situation, he said: “Our first attempt was Guana Bay asking parties to remove the liens wanting to pay the bank through the client who was ready to pay off the loan for Guana Bay. We saw that as a strategy that would have allowed the bank to release one million dollars of undrawn monies for Carbon Grove and those funds would have been applied to finishing the project and the sales process would have paid full debt. This plan was unsuccessful.”
The developer, who was born and raised in St. Maarten, left the island with his family early 2022 to settle in upscale Windermere, Florida. After two failed attempts to get financing from banks in the United States, Carbon wrote on Sunday that he is now making a fourth attempt to save investments made by some 150 local and international clients.
He advised them: “While it's still up in the air if the bank is going to make a move on Carbon Grove through auction, what I urge as many parties to do as possible is secure a deed in Carbon Grove only because the project must be completed. This allows us to make step 1 first which is Security, and step 2, recoil your monies.”
In the worst case scenario, Carbon Grove will be completed by the bank assigning someone to do this, Carbon stated. “Of course, any difference that is owed to all of my creditors apart from the ones who secured a deed is one that I have committed to paying even if I have to work every single day of my life to do so. This remains the goal because of the uncertainty of the bank pursuing this option.”
He further informed his duped clientele that he had resumed communication with an investor, “again trying to assure them that though the situation is complicated it could be resolved quite simply by a new investor who can treat the resolution of the matter quite simply by refunding parties their deposits and finishing the project. This gives them enough equity to resell and make some money.”
Conversations are developing positively, Carbon said, “but I advise parties if they can try as many persons as possible to get deeds to secure at least their investment which allows us even more time.”
In conclusion, Carbon asked his clients to help him with the electricity bill for Carbon Grove. As the current residents, most of whom obtained the keys to their property after taking Melbon Enterprises to court, are not yet in possession of deeds, they were not able to obtain a contract with GEBE for the use of electricity. A private party offered a solution where the gross domestic use of electricity would have to be funded by all users at Carbon Grove together.
“As many know, for the past four years I have been bearing almost 50% of the GEBE bill. There has not been one given month for the past four years that I have not had to contribute between US $1,500.00 to $2, 000.00 to pay towards the utility,” the Carbon Grove developer wrote, telling the residents that “this is also becoming unbearable with arrears of some $5K.” He warned those living in Carbon Grove: “This bill balance has to be paid tomorrow [Monday September 28, 2023 – Ed.] which is another area I request parties’ contribution towards to prevent the disconnection.”
The Daily Herald understands from the party that is owed money that the payment arrears are not $5,000, but in fact close to $25,000.
Carbon explained in his letter to creditors that he has gone through a lot since he left the island with his wife and children. “We spent about a year and a half pursuing the US Bank financing route, spending over one hundred thousand USD and again, being a sole person working physically every day trying to maintain an office and expenses as there is no revenue being generated, was no easy feat.”
Carbon Acquisition Group, incorporated 12 years ago on June 22, 2011, is a Florida limited liability company in Windermere, a small town in Orange County that celebrities Tiger Woods and Wesley Snipes have called home. Carbon’s office is close to Walt Disney World, in a mall and shopping centre that serves the affluent communities of Windermere.
Carbon’s office is also the business address of Glamour by Arony LLC, the company of Carbon’s wife Josefina, nicknamed Arony, who provides “premium quality hair extension and hair treatment services at affordable prices.” This company was incorporated on May 31, 2022.
The Carbon family has maintained their office on St. Maarten, located in Puerta del Sol Plaza Shopping Mall on Welfare Road in Simpson Bay. Since the departure of their son, Carbon Sr. and his wife have been welcoming old and new clients to the office.
