The presentation will be about Combating Fraud in the Changing Timeshare Environment, this is an area which affects timeshare owners worldwide, from dubious resale companies to false claims and law firms. In the USA there is a very severe problem of as he puts it “bad actors” who are taking advantage of owners and severely damaging the reputation of the entire secondary market (resale).
He states that these fraudulent companies who operate what is commonly called the “Viking Ship” programme, cause considerable harm to owners and resort associations alike. Regulators have been attempting to close down fraudulent transfer and resale companies who use unfair and deceptive trade practises, but Greg believes there is a great need for owner education and consumer protection.
On another matter, Greg also informed Inside Timeshare of a Senator who managed to block a bill which would have restricted owners access to HOA (Home Owners Association) rosters. These are the list of all members who own timeshare and are members of the association.
The bill would have made it impossible for the HOA to be able to communicate with other members, which would have had a considerable effect on informing them of board policies and HOA issues.
The bill was sponsored by ARDA (American Resort Development Association), and was a means of protecting owner confidentiality. In other words stopping a legitimate use of these lists thereby controlling any form of owners coming together for the common good.
According to ARDA this bill was to protect owners from predatory rogue transfer and resale companies. It transpires that ARDA did not even show any evidence that these rosters had ever been sold or misused.
Again this is a blatant abuse by the industry to prevent any dissemination of information which would be of use to owners. This is not just a problem in the US, we also have the same problem in Europe, whereby information is hidden or denied. Only recently we have found that one resort, Anfi, is contacting owners and denying any buyout of the Lyng family shares by IFALopesan and also denying any legal action being taken against them. All this even though it has been widely circulated in the European press. (Search Anfi for previous posts).
Once again a very big thank you to Greg and Irene for all the information they pass on, it is through collaboration that we all can find out what is going on. Without this we will be kept in the dark, it also helps to see what “scams” and other “schemes” may just be lying in wait, after all what happens here may happen there next year and vise versa.
Gregory Crist of the National Timeshare Owners Association in America has highlighted a scheme which a Federal Judge has shut down called Donate for a Cause. In this scheme timeshare owners paid a Montana company to donate and transfer their timeshares in exchange for tax deductions.
Prosecutors called it an “abusive timeshare donation scheme”, the Judge Sam Haddon ordered that Project Philanthropy which was also doing business as Donate for a Cause to turn over a list of all clients names, addresses, phone numbers and social security numbers for timeshares donated, going back to 2010. In the six years, thousands of owners have allegedly been provided with improper tax deductions for donated timeshares which promised generous tax savings.
The scheme relied on appraisals which overvalued by huge amounts the donated timeshare rights, which customers would use to claim large charitable tax deductions. According to the Justice department owners were encouraged to donate their ownership rights to Donate for a Cause.
It would appear that Donate for a Cause was only a conduit being used to briefly hold title to timeshares, before being sold at a fraction of the appraisal amount. One example includes a client who transferred a timeshare to Donate for a Cause which originally cost $10,597.50, this was then sold on ebay’s charity platform for only $81, yet the value it was given for tax purposes was $8,740.
The IRS (tax department) estimates that since 2010, the defendants (donate) have received over 5,523 timeshares donated to the scheme. The IRS estimates that the defendants have caused more than $19.4 million to be deducted from tax improperly.
The company´s CEO and President have both agreed to being permanently barred from marketing or promoting charitable contribution deductions and the defendants have also been prohibited from preparing property appraisals connected to federal tax returns.
It would seem that in the US another timeshare scam has been thwarted, it is not one that we are familiar with in Europe, due to the different tax laws we have. But I wonder how long it will be before some bright spark comes up with a similar scheme here?
Thank you to Gregory Crist and Irene Parker for this story, the full article by Greg is below in PDF form.
The local online news and information magazine Gran Canaria Info, has been following many of the events over the past year in regards to the ongoing story at Anfi.
In its latest article it explains very simply what has happened so far this year. The first part of the article explains the selling of the Lyng family´s 50% share of Anfi to IFA Lopesan. This is a well known hotel group in the south if the island, having major luxury hotels in Meloneras.
The question they posed is what does this mean for Anfi owners?
Lopesan has stated that they so far have no major plans for any changes at Anfi, or how it is run. Owners would not notice any changes, Lopesan maintained they are committed to the timeshare model which is Anfi´s main business. They also stated they plan to continue with the Tauro development project in it’s current form.
It is expected that Lopesan with its extensive funds should actually make Anfi better for owners, improving the facilities and updating the accommodation.
At present it is not known what the implications of this case will have on the beach project or the development of the Tauro valley. What is known is Anfi and the new partners Lopesan will have to apply for new permits to continue the development of new hotels and shopping center in the area behind the beach.
The article then goes on to explain in a simple way the laws and how they may affect owners, the changes such as perpetuity contracts, floating and points systems as well as deposits within the cooling off period. It also highlights how Spanish law works, also stating that “no win no fee” is not allowed in Spain and there will be costs involved in taking the case to court.
Gran Canaria Info is a valuable resource for expats and those on holiday, it highlights much of the news on the island and is one of the few English language news outlets giving concise and factual information. For the full article click on the link below.
Hernandez was dismissed from his post in July, after an investigation by the Guardia Civil into irregularities in the permissions and licences granted for the project to build a beach and other amenities.
The project to convert the area into a manmade beach was authorised initially by the Ministry of the Environment, but was subject to certain conditions. The prosecution state that the head of the Coastal Authority (Hernandez) did not consider these conditions and gave a verbal order to begin the works. The senior engineer had warned him (Hernandez) by email that significant and important documents were missing and the project did not meet with the Ministerial conditions.
The engineer then refused to sign the minutes for the commencement of the work, also documenting a series of violations in writing to the General Director of Sustainability of the Coast and the Sea.
The prosecutor Javier Ródenas considers that Hernandez verbally authorised the works despite warnings of serious breaches then committed an act of forgery by drafting a document which was then signed by him in April. This document gave the impression that it was written in February when the work actually commenced.
At the beach itself a wall has now been built to protect the people living there from the high tides that are common at this time of year. Rocks have also been placed at one end to stop the sea from flooding around the wall, the work on the footpath is still going on, obviously this is being done as to leave it, it would become a safety concern.
It now remains to be seen if Hernandez had accepted any form of inducement to allow this to happen, if so this story will get much bigger. As more news comes in it will be published here.
Late on Friday 30 September 2016, Canarian Legal Alliance issued a statement on the latest Supreme Court victories. This involved two rulings by the Supreme Court on another aspect of how timeshare is sold. (see the full release below).
This particular ruling confirms what many believed was in fact timeshare, but was being sold as something completely different and outside the scope of the timeshare laws, Fractional. Inside Timeshare ran an article: Fractional: What is it? Back in April.
In this article it was called a “Pig in a Dress”, mainly because sales staff were promoting it as property and an investment, also as a way out of your timeshare contracts. In the article it explained what fractional ownership actually is, genuine fractional is a real estate transaction, usually by a group of people going into partnership to purchase a property outright and sharing the costs. This type of transaction would be done following normal real estate practices, it would also follow the trends of property prices, either up or down, allowing the owners to sell on the open market as normal. The other aspect is that you would know the other owners, you would then be bound with them in a contract covering; use, costs and the rules governing the sale of any given share. In the model sold by the timeshare companies, it is doubtful if you would ever meet with the other owners of your fraction, let alone know them.
In the first case to be ruled on by the Supreme Court, Puerto CalmaHoliday Club Finland, had sold a so-called fractional to a client, implying that they were purchasing a share in the property. They even had the contracts signed in the presence of a notary, just to add credibility to the deal. The Supreme Court ruled in this instance this was not a property sale but did in fact come under timeshare regulations, therefore it is timeshare, awarding over £235,542 to the client. Under these laws it is illegal to sell any timeshare product (including fractional) as an investment.
The second ruling has come against another Gran Canarian operator, Palm Oasis, Tasolan SL, in Maspalomas. In this ruling the court rejected the belief that suggesting to timeshare owners they actually own a share in the property is designed to evade the timeshare laws. This then leaves the purchaser without any legal protection. The court in this instance awarded the client over 20,000 euros. They also reaffirmed that contracts over 50 years (perpetuity) are illegal.
This latest news now puts into doubt the legality of other fractional contracts sold by other operators, including Club la Costa and Diamond. Is this the start of a new round of litigation, putting another black mark on the timeshare industry.
The question also needs to be asked, why has the RDO not made any comment of this in the past?
Why have the RDO not warned their members that they may be selling another product illegally?
The simple answer is the RDO is paid by the industry and works only for the industry. After all an RDO member the FNTC did warn about this along time ago. Did the RDO just choose to ignore their advice?
CLA Press Release Friday 30 September 2016
SUPREME COURT VICTORY AGAINST PALM OASIS
Canarian Legal Alliance is proud to be able to announce another ground breaking decision of the Supreme Court in clarifying and declaring illegal the modus operandi of Palm Oasis and resorts using similar schemes.
This company in common with, for example, Puerto Calma in Gran Canaria, in the name of timeshare sold their clients an indivisible share of a property and suggesting that timeshare laws did not therefore apply, leaving their purchasers unprotected.
This sentence clearly rejects the notion that suggesting to timeshare owners that they actually own a fraction of a property evades timeshare laws. Implying that the clients are, in any way, owners of the property is strictly forbidden in law
The justices of the highest ranking court in Spain have no doubt that timeshare law does and must apply and accordingly declared our clients contract null and void on the basis that its term exceeded the 50 year maximum. The clients were awarded over 20,000 euro.
With this ruling the Supreme Court has maintained their consistency in finding “in perpetuity” contracts to be illegal, just as they pronounced 18 months ago as doctrine in favor of another Canarian Legal Alliance client. Since that time we have celebrated numerous victories at all levels of the Spanish legal system and against a whole range of different timeshare resorts. Our law firm is not only the first one, but still the only one to have brought timeshare matters before the Supreme Court for discussion.
Canarian Legal Alliance is the market leader in payouts to unhappy timeshare owners with over 2 million Euros already PAID BACK to our clients. If you would like to receive expert advice on the legality of your timeshare contract do not hesitate to contact us, the law firm who made legal history in Spain.