Part II

October 27, 2000

 EXCLUSIVE

THE STORY BEHIND THE PUNTA BANDA STORY:

A MEXICAN LAND SCANDAL.

October 27, 2000

Part I - Punta Banda, Ensenada, Baja California: A Mexican land scandal.

Baja Beach and Tennis Club owner sues Mexican government.

By Patrick Osio, Jr.

The Mexican Supreme Court has held against residents, most of them retired American expatriates, in a section of Punta Banda within the municipality of Ensenada, Baja California ordering their eviction. The court ruled that though the residents had entered into land-use-trusts or lease agreements in good faith, those with whom they entered into those contracts were not the legal owners of the land and thus the property rights of the lawful owners take precedence over the residents rights of occupancy.

The developers of the land with whom residents entered into contract, and either leased or built homes on those properties it would seem, are guilty of a shameful real estate scam.

But are they? Or were they victimized by a cabinet level Secretariat in the Mexican Federal government, and the ejido from whom they contracted for the rights to develop the site at considerable cost and investment?

A civil suit was filed on behalf of two enterprises, one operating the Baja Beach and Tennis Club (BBTC) and the other the residential developer surrounding the BBTC in the Punta Banda zone. Named as defendants are the (Federal) Secretaria de la Reforma Agraria (Secretary of Agrarian Reform), and the Ejido Coronel Esteban Cantu, the farming commune from whom the land was obtained for the BBTC and residential development.

The civil suit seeks payment for the value of two land parcels, which make up the BBTC land and the residential development, as well as their improvements. The second demand for money is for the improvements to the land and infrastructure including roads. The third demand includes costs and damages caused by the acts and omissions of the defendants. And the last demand is for court costs and attorney's fees incurred by the plaintiffs.

A copy obtained by HispanicVista.Com of the civil suit signed on December 9, 1999, by Carlos Teran del Rio, as the Sole Administrator of GRUPO KOSTER, S.A. DE C.V., and of HOTELERA PUNTA ESTERO, S.A. DE C.V., and filed with the Tenth Circuit Court for Baja California in Ensenada, alleges in detail how the two enterprises and resulting subsequent clients were victimized by the two defendants.

Though the documents filed with the court are a one sided presentation of facts as interpreted by the plaintiffs, sufficient supporting documentation is presented with dates and names. Government letters and documents are further identified with the official number given to every letter and/or document originating or received by each of the government offices, as mandated by the government for filing and easy tracking.

The court documents detail how in 1986, Dr. Ulises Lanestosa Zurita then Director General of Agrarian Promotions for the Secretary of Agrarian Reform, invited Carlos Teran del Rio as representative of Koster to investigate a number of opportunities for investment in lands forming part of farming communes (ejidos) not usable for agricultural purposes, but deemed usable for tourist related development.

According to Teran, the invitation was extended because of his previous experience in another agrarian project within what is now the municipality of Rosarito, in those days a part of the Tijuana municipality. There Teran invested and developed within Ejido Mazatlan the Quinta Chica hotel.

Teran was presented with various potential projects, from which after deliberation, he selected the one meeting parameters for successful tourist related development. The property measuring approximately 160 hectares (395 acres) is known as "Lengueta arenosa de Punta Estero," also known as "Medanos de Punta Banda."  The acreage is located in the zone known as Punta Banda in the Delegacion Municipal de Maneadero, Municipio de Ensenada. (Municipal District Maneadero within the city/county of Ensenada).

The representations made to Teran by the Agrarian office were that the acreage formed part of the Ejido Coronel Esteban Cantu. In fact, according to Teran, he was presented with property boundary and topographical maps showing the property within the limits of the ejido.

The acreage was described, as a long arm penetrating into the sea providing the formation of the Estereo de Punta Banda that is today an important ecological preserve. The locale was abandoned and completely desolated, without infrastructure or vegetation, and its only structure was the ruins of a massive half-constructed building (originally destined to be a hotel, construction came to an abrupt and unexplained halt in the early 1960s).

Administrators of the Ejido and personnel of the Secretary of Agrarian Reform provided documentation on the legal land boundaries.

Originally, the Ejido was legally recognized by the then Governor of Baja California making up 10,110.10 hectares (24,981.81 acres). This was modified by the President of Mexico, Luis Echeverria Alvarez, extending the Ejido holdings to 15,005 hectares (37,077.355 acres) on August 30, 1973 and making it official by the publication of the modification in the Diario Oficial de la Federacion (Federation's Daily Gazette) on November 17, 1973.

The boundaries allocated to the Ejido were apparently determined by the Agrarian Consultant Corps on August 17, 1973, and were consistent in showing the parcel "Lengueta Arenosa de Punta Estero" as part of the Ejido land. (The majority of the Ejido's acreage is located south of a two-lane road intersecting the land from Punta Banda.)

Teran further details that on August 24, 1987, the Ejido was given the executed Presidential Resolution donating the land to the Ejido Coronel Esteban Cantu. The Resolution has detailed topographical and land boundary maps. These include on site entries and measurements marking all property boundaries by the civil engineer commissioned by the Secretary of Agrarian Reform. Here again the "Lengueta Arenosa de Punta Estero" was included as part of the Ejido holdings.

The administrators and other ejido members were present at the public presentation of the Presidential Resolution donating the lands to the Ejido. After the ceremony the Head of the Ejido Committee related his satisfaction for the work that had been done, and with that let it be known that they were aware of the engineering records indicating the boundaries of their Ejido holdings.

The Ejido represented to Teran that the parcels he was invited to investigate for possible tourist related development were part of their holdings. He was also told that there were no liens or land disputes connected to those parcels. In support, Teran was given a certificate executed by the Registrar of Property showing that as of the 23^rd of July 1981, which showed no liens or disputes on the land.

In addition, Teran was provided with letters from Armando Fierro Encinas, Adolfo Espinoza Garcia and Ing. Francisco I. Montijo Grijalva, all officials of the Baja California State's Secretary of Agrarian Reform each letter containing an identical paragraph reading:

            "….. TO WHOM IT MAY CONCERN: It is attested to those who may have an interest in Presidential Resolution of August 30, 1973, and the land maps approved by the Agrarian Consultant Corps dated August 17, 1973, that for the benefit of the Ejido Coronel Esteban Cantu, Municipality of Ensenada of this federal entity, that among other parcels those known as the "Lenguete Arenosa de Punta Estero" are included……"

Teran went through great pains in his court documents in itemizing his case against the Ejido and the Secreatary of Agrarian Reform to show that since the inception of the invitation to invest in those parcels, he was given every assurance that the land belonged to the Ejido, and that there were no liens or disputes as to ownership.

Teran then relates how after numerous meetings, trips to Mexico City, Mexicali the capital of Baja California, and other places, on August 26, 1986, his enterprise signed the first of two contracts with the Ejido. The contract before its execution was approved by the Ejido general assembly on July 22, 1986.

The contract was signed by the Ejido Commissioners on behalf of the Ejido, by Teran on behalf of his company, and witnessed by Ing. Ruben Huerta Gallegos, an Agrarian Delegate in the State of Baja California, and by Ing. Celestino Salcedo Monteon, the Secretary General of the League of Communities and Agricultural Syndicates in the State of Baja California.

Teran reiterates that all the assurances regarding the inclusion of the land under the contract were included as part of the contract and that the contract met all the legal requirements imposed by Mexican laws in such matters.

The first contract included the usage of 18 hectares (44.48 acres) for a period of 30 years. The contract allowed the start of construction, the drilling for water and construction of an aqueduct, a sewage treatment plant and usage of the reclaimed water for landscape irrigation (with permits from proper authorities), electrical power plant, an airplane landing strip, ingress and egress roads, and the development of a marina, were some of the items mentioned by the court documents.  All improvements were at the expense of Teran's enterprise.

The third clause in the contract authorized the creation of a trust for the land for a period of 30 years. (The court documents did not address what would occur thereafter.)

The seventeenth clause stipulated that the Ejido was delivering the land free of all encumbrances, disputes or any other problem.

From the Teran court documents, assumptions may be made that the Ejido was not aware that the land was not a part of their holdings, and they too were victimized by the Agrarian department. Though conceivable, one must ask what motive there would be for victimizing those whose obligation it is to protect and help, and outside investors? As in most cases of fraud, there is an economic gain at stake by one or more parties.

(Part II - Payments to the Ejido and the Second contract.)