Chesterton Tribune

'Dunes Country' failure prompts criminal charges

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Nearly two and a half years ago, in September 2009, a group of investors in “Dunes Country”—a proposed New Urbanist, mixed-use development in Pine Township—filed a lawsuit in Porter County against principals Gary Atkinson and Donna Harris, alleging that the two had bilked them of hundreds of thousands of dollars.

Now Atkinson and Harris—the latter also known as Donna Meade—have been charged with securities fraud and the unlawful sale of securities, and are accused of using investors’ money for personal use.

Atkinson, 57, of Lafayette, and Harris, 59, of Hammond, are each charged with one count of securities fraud, one of failing to register as a broker-dealer, and seven counts of illegally selling unregistered securities.

Each of the nine charges is a Class C felony, punishable by a term of two to eight years.

Atkinson and Harris promoted Dunes Country as a planned unit development—permitted as such by the Porter County Commissioners in 2000—with 330 single-family homes and a business district south of U.S. Highway 20 and east of Brummitt Road. There were to have been clusters of housing, neighborhood-type shops, and open space, plus innovative stormwater management practices and a constructed wetland sewage treatment facility.

Atkinson and Harris—operating as Dunes Country Mortgage Partners LLC—were talking up Dunes Country as late as November 2003, when they held an invitation-only reception at least partly to rebut a newspaper story intimating the project’s demise.

In April 2007, however—as investigator Kimberly Haskett stated in her probable cause affidavit—Atkinson and Harris entered into a consent agreement with the Indiana Secretary of State Securities Division, under which they admitted selling unregistered securities and agreed to be permanently barred from the investment advisor and securities industry.

Despite that consent agreement, Haskett stated in her affidavit, Atkinson and Harris continued to issue promissory notes under the name of Dunes Country Mortgage Partners, pledging an annual return of 10 percent or better. Those notes “typically would ‘roll-over’ and interest accrued over a year would turn into principal.”

In addition, Haskett stated, Atkinson and Harris “continued to send letters updating victims on the progress of their investments and encouraging them to invest more”; the victims “also received notes from Kentland Bank updating them on their investments and stating that money existed in their accounts which did not”; and those “statements were based on figures given to them by Atkinson and Harris and were unsubstantiated by the bank.”

Haskett stated that her records indicate “continued illegitimate investments of approximately $1,266,370” to have been received by Atkinson and Harris.

“Atkinson and Harris spent money given to them by investors on salaries, a vehicle, moved money between their various listed companies, and took cash withdraws out for personal use,” Haskett stated. “Victims of the scheme were unable to obtain money from their accounts.”

Haskett’s affidavit lists 20 separate victims.

One couple invested $274,000 in Dunes Country Mortgage Partners, by rolling over an IRA account, dipping into a trust account, and taking out a home equity loan “which Atkinson and Harris promised to pay and stopped paying after a few months,” Haskett stated.

Another couple who invested $71,000 would “receive new notes yearly with interest rolled up into the principal,” Haskett stated. “The last notes received were in 2007 and in effect through 2008.”

A third investor, who put in a total of $166,000 in 10 separate investments, received his last renewal in 2009, Haskett stated.

The lawsuit filed in 2009 by 25 Dunes Country investors—some of whom bought stock, others of whom bought promissory notes—alleged that Atkinson and Harris swindled them of $2.7 million: $300,000 in 12,000 shares of stock in the AHA Development Corporation, at $25 per share; $1,098,156.07 in 39 promissory notes; and total losses to investors of $2,718,188.

That suit also alleged that Atkinson and Harris “employed a device, scheme, or artifice to defraud” the investors and “made untrue statements of material facts and/or omitted to state material facts.”

 

Posted 2/2/2012