Gale, who declined to comment to the Sun Sentinel, is now representing himself in the federal lawsuit before U.S. District Judge James Lawrence King in Miami.
King will determine whether the case can proceed as a class-action lawsuit.
Customers interviewed by the Sun Sentinel said they learned about Paragon Properties through Internet searches or unsolicited e-mails. They said the offer seemed risk-free: Put down a deposit usually $25,000 or more for an undeveloped piece of Costa Rican land. Once infrastructure like roads, sewage and electricity was put in, the buyer could finish paying for the land and then contract with another company to build a home on the property.
Paragon Properties helped pay for clients to fly down to Costa Rica to look at their parcels. After the trip, there was a 10-day window to ask for a full refund, according to customers' contracts. In at least five lawsuits filed against Paragon Properties, clients allege they made such demands but the company didn't give their money back.
There appeared to be other protections in place. Some of the contracts had clauses that buyers could get their money back if the infrastructure wasn't completed within 18 months "unless prevented by an act of God or other event not within the control of Seller." Some contracts promised people all their money back if for some reason they weren't able to pay the full purchase price of the land in five years.
Customers also believed their deposits were being held in escrow, Sarelson said.
Howard Coleman, a Chicago entertainment booking agent, made $62,000 in deposits for a property with an ocean view. For four years, he said, Paragon representatives promised him the infrastructure for his development was near completion. Last year though, Gale stopped returning his phone calls, he said.
"Obviously they didn't follow through, Coleman said. "It doesn't seem like they even intended to follow through."
Sarelson said the investors he represents are out between $19,100 and $274,000 apiece.
"Psychologically it's been devastating for them on two fronts," he said. "First, the dream of having a retirement home or a vacation home in a beautiful paradise like Costa Rica is gone. Second and perhaps worse, it's a big hit to your pride and ego when you find out you are a victim of a fraud."
Gale said in his deposition that of Paragon Properties' 16 planned developments, basic infrastructure such as roads and drainage had been completed for two of them and five houses none for customers had been built.
But without $12.5 million in financing everything stalled, Gale said. In addition, he said, the company had been waiting almost three years for the Costa Rican government to approve construction permits.
Scott Oliver, founder of a website geared toward Americans looking at living in Costa Rica, said getting such permits can be problematic, but dozens of projects have been completed during the last six years in Costa Rica's Central Pacific region
The federal lawsuit alleges Gale was aided by Tashman, who grew up with him in Miami Beach. In earlier business dealings, Tashman left behind a string of angry investors and failed companies. A North Miami Beach company he helped run was ordered by a judge in 1987 to pay more than $12 million for misrepresenting oil and gas leases to investors.
In 1995, another company Tashman was involved in was ordered to pay a $3 million judgment after the U.S. Securities and Exchange Commission said it defrauded people who thought their money was being used to buy and breed ostriches. And in 2006, U.S. District Judge Kenneth Ryskamp leveled a $28 million judgment against Tashman and another company he helped run: Hollywood-based Telecard Dispensing Corp, which sold vending machines for prepaid phone cards.
Tashman "does not appear to have engaged in any operation that was not tainted by fraud," Ryskamp wrote in a July 2006 order.
Tashman told the Sun Sentinel he was involved in Paragon Properties in its first year of operation, but then went to work for Costa Rican Land & Development, a separate company owned by his son-in-law. Tashman said he has no idea why he has been named in the federal lawsuit against Paragon.
"There are no improprieties here," Tashman said. "I got nothing to hide and nothing to lose."
"Paragon has done nothing wrong," he said. "They did everything they could, but when they ran out of money, the s--- hit the fan."
Miami attorney Jeffrey Tew, who has represented Paragon Properties in previous cases, is acting as the lawyer for Tashman's daughter and son-in-law, Lisa and Julian Siegel, and Gale's wife, Judith Gale. They are among the 32 defendants named in the federal lawsuit.
Tew declined to comment to the Sun Sentinel, but in court documents said the federal suit brought by dissatisfied Paragon customers "includes a host of allegations that are immaterial, impertinent or scandalous."
With no clear answers to what happened to her money, Fox said her hopes of a tranquil getaway for her golden years have been replaced with frustration.
"That was supposed to be my retirement money," she said. "I think I'm more embarrassed than anything else because I believed them."
Jon Burstein can be reached at jburstein@Sun-Sentinel.com or 954-356-4491.