There were up to 1,700 investors who put in up to $170 million, according to a court-ordered report in a separate lawsuit filed by investors in Florida.
Ken Israel, regional director of the SEC's Salt Lake City office, said about 250 of the Catledge investors were from Utah. That represents about 15 percent of all investors and their proportional share of the total raised is about $25 million.
A "special master" appointed by a federal court in Florida said investors' funds are "almost completely lost" and many of them are "financially destroyed."
"The investors' plight is tragic," wrote Thomas E. Scott in his 2009 report. "The cause of that plight is criminal."
Catledge reportedly has hired prominent Las Vegas criminal attorney David Chesnoff to represent him. Chesnoff did not return a phone call to his office seeking comment.
On his website, Catledge says he was raised by a single mother in Memphis and worked odd jobs, paying his own way through college and for his two-year LDS mission. He studied business and communications at Brigham Young University, the website says.
Israel said he didn't believe the Utah investors were enticed through affinity fraud in which a member of a group takes advantage of shared trust and ties to defraud fellow adherents. Utahns who are members of The Church of Jesus Christ of Latter-day Saints have been hit by a wave of affinity fraud in the past decade.
"My impression is they were perfectly willing to take money from anybody," he said. "I don't think they targeted [members of the LDS Church]."
According to court documents, Elliott and his father, Frederick Elliott, contracted with Catledge to raise funds for two resorts in Santa Domingo located at Cofresi and Juan Dolio beaches.
To market the investments as timeshares or ownership interests, Catledge created Net Worth Solutions, a multilevel marketing company.
Those who join MLMs are paid commissions on sales made by others who they have recruited into the company, with commissions flowing upward through various layers.
"Catledge was at the top of the 'pyramid,' " the SEC said in the Las Vegas complaint.
From 2004 to early 2009, Net Worth sold millions of dollars in investments.
But of the $170 million taken in, $74 million went to commissions, including $42.2 million to Catledge and related entities, Scott said in his report to the Florida court.
Other monies were used to pay interest to earlier investors in a Ponzi or Ponzi-like scheme, he said.
"The most glaring finding of the preliminary forensic analysis is what appears to be a Ponzi scheme that was created by both the Elliotts and Catledge," said Scott in the report. "Though the scheme was developed jointly by both the Elliotts and James Catledge, Catledge was the driving force behind the 'development' of the products to be sold and the ongoing marketing of those products to the investors."
Scott recommended a criminal investigation of Catledge and others.
The SEC is asking that Catledge be prohibited from further violations of federal laws, be fined an unspecified amount and ordered to "disgorge ill-gotten gains."
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