Liberty Cove: A Timeline

A look at the major events in the history of land known as Liberty Cove, from 1946 to today

1946—A decree by the president of Mexico allocates 4.8 million acres in Sonora as part of a massive land redistribution for poor called Distrito de Colonización de Altar y Caborca. Land is classified fuera del comercio, or banned from sale, and is to be used only for communal farming or grazing.

Oct. 28, 1957—Eight residents of the Caborca area receive grants of land at Puerto Libertad as communal farmers, or colónos (colonists), under Ley Federal de Colonización. The eight are guided by Sonora businessman Porfirio Gastelum Lemus, who himself does not qualify. Each colonist must work in agriculture or livestock, the law stipulates.

December 1962—The government terminates the colonization program but keeps in place Ley Federal de Colonización to adjudicate disputes and changes.

April 1986—The eight landholders beholden to Gastelum provide him powers of attorney since there can be no buy-sell contracts, because colony property cannot legally be transferred unless withdrawn by the government or transferred/bequeathed following precise protocols. None of these criteria apply to the eight.

April 1986—Gastelum in turn transfers the powers of attorney to Ciudad Obregón attorney Eduardo Estrella Acedo and an assistant, Pedro Gorozpe Lopez.

1986—Tucson investors Donald R. Diamond and Morton Freedman start paying Gastelum for rights to the parcels. Still, no deeds can be issued, because sales of colony lands are forbidden.

Dec. 28, 1990—Pedro Gorozpe Lopez, the Ciudád Obregon lawyer, creates a trust through Banco de Atlántico that he contends can be used to sell the eight parcels. Gorozpe acts on behalf of the eight colonists, as well as Diamond and Freedman. The trust, valid for two years, provides the Tucsonans authority to give instructions to Banco del Atlántico as fiduciaries. On Dec. 11, 1992, the term on that trust is extended from two years to 30 years.

February 1992—Mexico passes a law permitting colonists (and other communal farmers/ranchers) to convert land to private property and obtain deeds—known as dominio pleno title—if requisites are followed. Trusts, however, have no place in the new law.

Sept. 2, 1997—Gorozpe and Estrella, the Ciudad Obregón attorneys, turn over to Miguel Angel Tapia Guell, attorney for Diamond and Freedman, the powers of attorney for the eight colonists. By that time, however, two have died: Juan Manuel Valenzuela González, on June 15, 1997; and Dora Huerta Calleja, on Oct. 9, 1993.

Sept. 28, 1998—Applications for private property deeds, including by the deceased, are reinitiated by Tapia. Dominio pleno deeds are issued to several of the colonists, and several more are issued in years to come.

January 2003—Diamond and Freedman agree to sell the eight parcels for $2.4 million to Nevada LLCs managed by Rockingham Asset Management LLC of Los Angeles. The sale is to be conducted through an initial buyer, David LeTourneau of Scottsdale. Diamond and Freedman's offer guarantees that title on all eight parcels is "marketable fee simple, free and clear of all claims, liens (and) encumbrances." Closing is postponed, however, because of boundary issues on two parcels.

August 2003—Tapia appears before Francisco Manzo Taylor, a notary public lawyer, claiming to possess powers of attorney for all colony owners, even though two of them have died. Tapia asserts his duties have "not been revoked, nor limited," even by the deceased. His intention is to incorporate all eight parcels, some with dominio pleno status, into a Banco del Atlántico trust. By this time, another two colonists, Francisco Valenzuela Serna and Angel Duarte Olivas, also have died.

May 20, 2004—Banco del Atlántico, in a fiduciary role, transfers all rights of the original eight colonists to Diamond and Freedman through attorney Tapia. Diamond and Freedman appear as the seller, and Construcciones Doble B, S.A. de C.V., owned by the same men, is the buyer. This sale signifies the dissolution of the trust, which is now unnecessary, Banco del Atlántico states.

July 1, 2004—A sale takes place between Construcciones Double B, S.A. de C.V. and the Rockingham affiliates, JNR Partners and Liberty Cove Resort Holdings, which hold the stock of the Mexican companies. First American Title Insurance Co. of Sunrise, Fla., issues the title policy. Six of the eight parcels supposedly change ownership, and it is agreed that the north and south parcels (Lots 1 and 8) will be closed when deeds are granted. This sale represents execution of the 2003 agreement, using the same $25,000 escrow deposit, according to Craig Ricketts, Rockingham's chief executive officer, and attorney Ben Aguilera of Phoenix. That means Diamond and Freedman are bound by terms guaranteeing title, the men say. Diamond and Freedman maintain the 2004 agreement is a new contract and, therefore, no longer carries any such warranty, Ricketts and Aguilera say.

July 25, 2004—Westridge REIT is introduced to fund Liberty Cove. Rockingham solicits at gatherings of "investor clubs" and conferences sponsored by International Living, a division of Baltimore-based Agora Inc., whose magazines and seminars specialize in overseas retirement. The REIT brings in approximately $19 million in two years. It is to pay investors 10 percent annually and offers investors a 35 percent discount on lots. It is followed two years later by another REIT, called Warrington, which raises more than $2 million. Rockingham tells investors that it maintains three years of interest payments in a "set-aside" account in case there's no revenue. A clause in the private placement memorandum, however, states the company has no such obligation.

January 2005—The township of Pitiquito, Sonora, which controls zoning in Puerto Libertad, changes classification of the eight parcels from ranching/grazing to Zona de Uso Especial 2, allowing multiple uses. The Sonora government provides conditional approval of Liberty Cove as 60,000-unit development.

Jan. 5, 2005—Bruce Greenberg, principal of Tucson-based Bruce D. Greenberg Inc., real estate appraisers and consultants; and Valuaciones Montaña Verde S.A. de C.V., assigns a $605 million value to Liberty Cove on an "as if" basis. The document is presented regularly by Rockingham. "(A)ll assignments conform to the Uniform Standards of Professional Appraisal Practice (USPAP), Appraisal Institute (MAI/SRA), American Society of Appraisers (ASA) and International Valuation Standards," Greenberg asserts.

October 2005—Carlos Ruink, a Hermosillo attorney, working with Marco Antonio Encinas Cajigas, a Universidad de Sonora instructor and expert on agrarian law, issues a report concluding that the title is clouded. Ruink cites a number of reasons, including that powers of attorney were exercised illegally on behalf of the four deceased colonists. The report is commissioned by Liberty Cove's project manager, Walter Bouchard of W.L. Bouchard and Associates of Scottsdale. Ruink's conclusion: "Because of flaws in the prior transactions ... we can conclude that the title currently held by MXC Properties de R.L. is not a clean title." At a meeting in Tucson at Diamond Ventures Inc., Diamond and Freedman maintain the sale is legitimate.

2006—Rockingham announces it is starting construction on Liberty Cove.

2007—Rockingham's Ricketts, who is obligated to place a lien on the property for investors, agrees to pay $4 million more—$2 million apiece—to Diamond and Freedman for the remaining two parcels in exchange for "full release" of a parcel upon which construction is to begin. Diamond and Freedman take notes for the debt and stock in companies controlling Liberty Cove as collateral.

Sept. 18, 2007—A press release from PR Newswire, an international corporate news wire service, announces, "Construction Begins on North America's Largest Resort and Retirement Community—Liberty Cove." Among the venues for the announcement: a marquee in New York's Times Square.

October 2007—A squatter movement takes place on the property. Those in the movement allege that land has been taken from them improperly.

April 30, 2008—MortgageIT, a subsidiary of Deutsche Bank, sends a "preliminary letter of intent" to Rockingham stating it is willing to create "a permanent mortgage structuring program" through which it will offer mortgages up to $300 million. It is signed by Doug Naidus, managing director, and Alex Gemici, director.

Feb. 23, 2009—Four REIT investors sue Ricketts and partners in Maricopa County Superior Court, claiming securities fraud, breach of contract and misrepresentation of expertise. They ask for $582,000. Ricketts, in turn, demands that Diamond and Freedman pay for the legal defense. They do. The lawsuit is dropped.

March 13, 2009—A lawsuit is filed by Pedro Murillo Garcia of Caborca and Edgardo Ortega of Hermosillo on behalf of three living colonists and heirs of five others against Diamond, Freedman, the two Mexican entities controlled by Ricketts, lawyers, notary lawyers and others involved in all the sales to date of the eight parcels. It alleges that properties have been taken illegitimately from the original colonists and that all sales should be annulled.

March 2009—To protect REIT investors, a lien for $25 million is placed on Liberty Cove Parcel 2, which is supposedly free and clear, and is to be the site of first construction. The amount represents investments made in the REITs by the more than 200 investors, plus interest.

June 26, 2009, First American retains Tapia Robles and Cabrera, a Hermosillo law firm, to handle a claim contending the title insured by company in 2004 is clouded.

July 1, 2009—Ricketts refuses to pay Diamond and Freedman $1.52 million due on the two $2 million notes to which he agreed in 2007. The March 13 lawsuit by Murrillo and Ortega freezes Rickett's ability to continue the project and demonstrates title was never legitimate, he maintains.

Aug. 7, 2009—Rockingham's president, Stephan Haah, in conflict with Ricketts, asserts that he and his Hermosillo lawyer, Alberto Bringas Cañez, have rights to all parcels. Ricketts says the claim is invalid because Haah has been expelled from the corporation.

October 2009—A payment of $25,000 is made to Porfirio Gastelum by Diamond and Freedman's attorney, Miguel Tapia, in order to satisfy heirs of a Dora Huerta, a colonist, who have disputed the sale, Ricketts is told by Diamond and his U.S. lawyer, Benjamin Bauer. Ricketts calls the payment "hush money" and "a wasted payment," and contends it offers additional proof as to the lack of certainty over title to parcels.

Oct. 13, 2009—Rockingham receives a letter from attorney Eduardo Ortega of Hermosillo advising the company that he represents colonists, and that the land has never been legally transferred.

February 2010—A lawsuit by REIT investors against Rockingham companies is dismissed in Maricopa County Superior Court.

July 2010—Ricketts accuses Diamond and Freedman of bad faith and wire fraud, alleging the two are liable for the $25 million to investors for having knowingly "sold" property to which they didn't have title.

July 27, 2010—The first of two conference calls organized by REIT investors Dean Stein and Gary Leavitt of Phoenix brings together investors previously unknown to one another. They share experiences and agree to fund a group to look into legal actions.

November 2010—Robert Chernick, Rockingham's chief financial officer, reveals, in response to repeated inquiries, that Rockingham records had been sold at auction after nonpayment at a Scottsdale storage locker. Backup copies should be available, however, he says.

Dec. 23, 2010—Rockingham receives a subpoena for records from Peggy Scozzari, a special investigator with the Arizona Corporation Commission's Securities Division. The ACC does not confirm ongoing investigations, and says in late January 2012 that it has "no current enforcement action."

April 2, 2011—Matt Mickley, an early investor with Rockingham and a supporter of Ricketts, commits suicide.

May 26, 2011—Pima County Superior Court Judge Kenneth Lee finds in favor DF-MX Holdings LLC, owned by Diamond and Freedman, in a breach-of-contract action against Rockingham affiliates JNR and Liberty Cove Resort Holdings. Lee rules that Ricketts' failure to make a 2007 payment must result in the return of all eight parcels to Diamond and Freedman. The decision is narrow, finding only that JNR and Liberty Cove Resort Holdings failed to meet the $1.52 million payment due July 1, 2009, on promissory notes dated April 20, 2007. The ruling does not take into account proceedings in Mexico or allegations of fraud that predate the promissory notes.

June 2011—First American Title sues JNR and Liberty Cove Resort Holdings, contending that it owes nothing because of a statute of limitations on the title claims.

July 2011—Sonora Attorney General Abel Murrieta says he is aware of the controversy surrounding Americans who have lost money on the Liberty Cove project, but has taken no action because there have been no complainants. He says his office, lest it be accused of favoritism, will not take any action unless it receives a formal complaint.

Sept. 23, 2011—Garcia Murillo, the Caborca lawyer, says all sales of property to date are void because powers of attorney were used for the four deceased, a violation of Mexican law. (It would have to be the estates of the deceased that, through another process, sold the parcels, according to the lawyer.) The previous suit had not mentioned use of powers of attorney for the four deceased.

March 23, 2012—Fennemore Craig, P.C., Tucson, publishes in El Imparcial, a Sonora newspaper, plans to auction the 46,500 acres that make up the Liberty Cove project. Attorney Bauer does not respond to an inquiry about the sale.

Nov. 18, 2012—Tatiana Gómez, a spokesperson for Sonora attorney general Carlos Alberto Navarro, says there are no civil or criminal investigations pending in the state.