Over the next few weeks Inside Timeshare will be publishing exclusive information on the complex setup of one of the largest timeshare empires in Europe, we all know it as Silverpoint. Behind it was the late Bob Trotta, who as you will see in each article along with his cronies was very adept at moving his enormous wealth around. Today we start with a little background and introduce the major character in this very elaborate financial game.
In the early 1980s, Bob Trotta founded the company Resort Properties based in Tenerife, the first stage in establishing one of the largest timeshare companies in Europe. He was very much seen as one of the founding fathers of the timeshare industry in Europe and built 4 resorts in Tenerife, selling around 200 Million Pounds worth of timeshare, becoming a millionaire in the process.
Bob Trotta married for a second time to Ragni a Norwegian lady who was a former Timeshare Marketing person living in Tenerife. On leaving Tenerife they relocated to London where they enjoyed Non-Domicile Tax Status.
Setting up his Global HQ in the UK with offices in the exclusive area of Mayfair, Bob and Ragni certainly enjoyed the high life, living in their multi-million-pound townhouse in Chelsea and driving the very best Aston Martins.
We now introduce into the picture one person who was to become one of the most important and influential people in the Trotta Empire, Kwang Boon Sim.
Kwang was hired with only one purpose in mind, NOT TO PAY ANY TAX. As you will see, he was the mastermind behind the huge and complex web of offshore companies which exist today, using a very clever offshore trust.
The trust which is owned by a bank with Bob Trotta and his wife Ragni being the sole beneficiaries and controllers of the trust until his death in December 2017.
Kwang Sim is well known in the timeshare industry and is affectionately known as “The Chinaman” or “El Chino”. Kwang gives the impression of being a very religious man, with ties to the Mormon Church where he works as a Mormon Bishop. It looks like a script from a James Bond movie, when a “clever American Tycoon” brings in another equally clever man masquerading as a religious leader (Licence to Kill comes to mind), who very quietly and stealthily creates a very complex web of offshore havens with the sole intent on depriving many local economies and countries of their rightful and lawful tax.
It has certainly done the job, over the years Kwang managed to avoid paying any tax and moved 10’s of millions of pounds from one lot of companies through the web of others into tax havens disguised as intercompany loans. The local managers of these companies had no control over the money or what happened to it. It was Kwang who controlled and ran the financial department from his Mayfair HQ with what can only be described as an “Iron Fist”.
In order to avoid the ever-prying eyes of the US tax authorities who have a policy and reputation for worldwide taxation of their citizens, Bob Trotta gave up his US citizenship. He took up Italian citizenship (again this could be the setting for another movie) living like a true Italian mobster in a huge mansion set in the estate of his hotel the Luxurious Castello Del Nero.
Bob and Ragni were living like a king and queen in their estate reputedly worth around 10 million pounds. The estate was set in 700 acres of rolling Tuscan countryside, all within the grounds of their Hotel worth 50 Million Euros. All the while Kwang kept the funds flowing into Panama and the British Virgin Islands
Bob along with his two daughters Jennifer and Erin Trotta spent the long summers in Italy with their respective families. One of the husbands (Jennifer’s) Douglas Campbell was for a while the groups CEO making sure the family fortunes were protected, all under the watchful eye of his mentor “El Chino”
That brings us to the end of this opening chapter and part one of our story, join us again on Monday 10 June for part two, where we find that all was not as cosy with the family as many were led to believe, greed plays its part.
If you can answer yes, then get in touch with Inside Timeshare through our contact page, we will explain where you legally stand and point you in the right direction to claim back your money and have your contracts declared null and void.
Welcome to this weeks Tuesday Slot, today we have an article by an Industry Observer, who we have kept anonymous as per their wishes, the question posed is How is a Timeshare Point Valued? Our writer begins with the question “Why does Spain not allow points-based perpetual contracts?” As you read the article the answer to that question does become very apparent.
So on with this weeks article.
How is a Timeshare Point Valued?
June 4, 2019
I created a Spreadsheet after we bought points back in 2004 to see if I was getting my money’s worth. I added in maintenance fees. Not sure if I’m right but the bottom line was the only value the points have is if you use them. I went to numerous free weekends. I figured I should count those. Our bottom line average is around $95 a night. Usually, we could get through painful sales pitches quickly but our last visit to Vegas turned into abduction. I figure they are getting desperate. If you bought thinking these points had value beyond their sales pitch you were sadly mistaken. If the timeshare industry wants to survive and thrive they better create a secondary market and quickly. The competition is fierce. Websites like VRBO provide lots of options for less than your annual maintenance fee. Quality will be all over the map. Tim Dugan’s Facebook post
By an Industry Observer
Why does Spain not allow points-based perpetual timeshare contracts? In America, we think we have a lot going for us. After all, “we” invented the internet after inventing the computer. “We” invented baseball, Mickey Mouse, and McDonald’s. And “we” blessed the world with Bill Gates, Warren Buffett, Harrison Ford, and Clint Eastwood….
Do “we” have the best of everything? No way… We have bad highways. Some of our bridges are crumbling. Our national debt is ballooning. We can’t agree on immigration. Our politicians constantly bicker.
“We the people” are supposed to have government agencies that protect us from threats inside and outside our borders – like the FAA (air travel), the FBI (crime), FDA (food and drug), DEA (drug enforcement), and CIA (foreign threats), to name a few.
Do “we” have a Vacations and Timeshare (VAT) agency to protect timeshare buyers? No, we don’t. Timeshare and vacation companies are regulated by individual states. There has been no action on the part of the Federal Trade Commission to step in. It is “buyers beware” on that venue.
There are some ominous and problematic indicators. Timeshare companies, at least two, are reporting loan loss provisions greater than 20%. If we calculated the actual dollar amount of foreclosed timeshare loans, given enormous revenue streams, the dollar amount would be staggering. This is just an accounting line item to the industry players, but the loan loss number includes a multitude of seniors and veteran families financially devastated after being up-sold into high-interest rate loans and higher interest rate credit cards. For those who maintained high lifelong credit scores, the foreclosure process is demeaning and degrading. Many have reported unfair and deceptive sales practices.
Wyndham has increased its loan loss provision to 21%, as reported by Jason Garcia at The Florida Trend:
Timeshare Companies and Exit Companies are Blaming Each Other for Rising Default Rates
Of the company’s nearly 900,000 owners, only 200,000 have loans. However, the company expects to set aside 21% of its gross sales to cover losses in 2018 — meaning it expects not to collect $21 of every $100 it loaned.
Timeshare CEOs don’t seem very worried about rising defaults touting increased sales and an increase in first-time buyers. A circle of sell, up-sell, foreclose and sell the same points again and again ensues. And points don’t depreciate like a car. It’s a cash cow.
Timeshare operators have been adept at capitalizing on the limited protections afforded their prospects. They’ve adopted:
The same day sale, after a gruelling sales session,
Electronic signing, difficult for even the most technically savvy to read,
Perpetual contracts, accompanied by rising maintenance fees,
No secondary market,
Pitfalls, like availability, that can’t be determined by reading the contract,
Ways to dodge the rescission period by not allowing access to the booking site until after the rescission period has ended,
Recording the closing, but not allowing the recording of the sales session,
Sales agents that coach buyers on how to “pass” QA,
Over-reliance on the verbal representations clause,
Point “members” stripped of all beneficial rights of real estate ownership,
False scare tactics about heirs inheriting the timeshare if deeded.
What’s right with timeshare points?
Point contracts do offer the flexibility of being able to stay for more or less than the typical week. They allow for incremental purchases.
What’s wrong with timeshare points?
Refer to Figure A and B below. A look at the original timeshare model shows that developers sold a week or weeks guaranteeing the customer that they would always be able to stay a particular week at a particular location. A common complaint comes from deeded week owners who complain they could not get access to the unit, and sometimes not even the resort they had stayed at for years after they gave up their deed. This is especially true at prime locations, like Virginia Beach during summer months.
On the old real estate system, due to location and seasons, each resort had a quantity of valuable weeks, and also “dog” weeks. July 4th in Hilton Head would be a valuable week. So would Christmas in Aspen, Colorado. But winter in Cape Cod would be dog weeks. Customers knew this and usually didn’t buy into “dog” weeks. In a “weeks” model, a graphic representation of anyone resort might look like Figure A. The very best weeks would be in the centre of the graph, with value declining until you reach the very outside of the circle. If your resort was in a great location, with great weather year round, like Hawaii, you would be in the bullseye year round.
Imagine now, a complete resort system converted into points as illustrated in Figure B. Instead of red, blue and white weeks, you are now sold loyalty levels. There are no more ‘best red weeks’ in the system. The buyer has lost control. The developer now controls who gets to vacation when and where. Add to this scenario the developer’s ability to rent out inventory and you have an unfair advantage of developer over point buyer.
But wait – what is the area outside the second line from the bullseye showing the “good and best” points? That is where the developer can sell points, but the chances of taking a great vacation may not be possible. A fixed week buyer knew they were buying Branson in January, maybe hoping to exchange it. The buyer that buys 2,500 points compared to the Platinum member’s 50,000 points dictates less availability. Certainty is gone. The “point” to remember is that in a points-based system, the “dog” weeks become part of inventory just like “best” weeks. This puts a load on the “best weeks” inventory. When it comes to booking, somebody won’t get what they want.
In a pure points system, the developer is NOT selling a vacation. The developer is selling the “opportunity” to vacation SUBJECT TO AVAILABILITY. Two factors determine the success of timeshare owners in a pure points system:
Having enough points to meet your vacation needs, and
Booking at the earliest possible date.
The complaint sites are littered with people, some even highest loyalty members, complaining about availability. Say a buyer bought 5,000 points because that is what they could afford on a monthly basis. Those 5,000 points might get them a week in Myrtle Beach – in the winter but only two days at Myrtle Beach in the summer, if you’re lucky. The sales agent can promise anything, “Any place you want to stay, any time you want.”
The first time buyer is scheduled for an orientation in which they are told, “I can’t believe that sales agent sold you so few points! You can’t stay anywhere with 5,000 points!” The member is sadly informed of his dilemma. BUT, the new and improved sales agent “corrects” the mistake created by the first agent. Buy more points!
As an inducement to upgrade, some systems have early bookings for highest loyalty level members, then advance booking for one tier down, and finally open booking for everyone else. Consider this day and age of the instant internet. Booking vacations over a year out seems antiquated.
Granted, if you have a fluid vacation schedule, as many retired do – and can travel slightly offseason, you might find a pure points system to be of value. But don’t go to a sales meeting unprepared, facing a tag team of three against two. Be an informed timeshare buyer. Read what existing members have to say on Tug2.net, Redweek and member sponsored Facebooks. The point system can be unfair and have drawbacks, but they can be resources for those who know how to maximize their use.
The informed consumer is the best consumer. Don’t fall for a pipe dream vacation.
Self-help groups we feel are not industry influenced including TUG, which consists of a balanced group of members for and against timeshare.
We seek to provide timeshare members with a way to proactively address membership concerns; to advocate for timeshare reform; to obtain greater disclosure from the company; to advocate for a viable secondary market, and to educate prospective buyers.
We began with the question Why Spain does not allow points or perpetuity contracts, the simple reason is availability, with a fixed week system your are guaranteed the holiday time you purchased, you basically own that particular week. With points you own nothing, just a right to use subject to availability, you are a member of a vacation club not an owner. According to the ruling from the Spanish Supreme Court, points and floating week systems lack any substance, you are paying for a promise, or to put it simply you are buying fresh air.
For example we have a resort with 180 apartments, with fixed weeks they can only sell 51 weeks in each, that gives you a total number of weeks available at 9,180, that means you may only have that number of owners, great they all get their weeks. Now let us change this to a points based system, let’s say the vacation club only doubles its membership, we now have 18,360 members. Hang on we only have 9,180 weeks available, that means 9,180 members will not get their holiday at that resort this year.
Along with that, yes, you guessed it, the timeshare company has now also doubled their income in management fees!
They make more money but at the expense of the members who cannot get the holidays they want.
Spain also outlawed the perpetuity contract, this particular law came into force on 5 January 1999, the duration for any contract was to be a minimum of 3 years and a maximum of 50 years and was ignored by the industry. It was also envisaged that the age of the purchaser should also be taken into consideration, for example a couple aged 55, would not really require the maximum of 50 years, so why not sell them 25 years. The law makers also believed that perpetuity was inherently unfair to the children of purchasers, as timeshare was always sold with the idea it was property or real estate and therefore would be inherited. Their motive was why should the children be liable for the ongoing liability of maintenance on a contract they did not instigate.
These points are now the subject of many legal actions going through the Spanish courts and it is costing the industry millions in repayments along with all contracts being declared null and void. Spain is at the forefront of protection for consumers regarding timeshare and how it is sold, it is only a matter of time before others do the same.
So here we are at the start of another week, today we start with the news from the courts at the end of last week, we also republish the link to a TVE 1 news report about timeshare law in Spain and an interview with Eva Gutiérrez from Canarian Legal Alliance. We also highlight a new “claims” company that has just come to our attention.
At the end of last week after publishing out Letter from America, Canarian Legal Alliance published their results for the week. Once again it was a busy week for the courts and the lawyers with no less than 15 new victories on behalf of their clients.
In frame with the most rulings against them was once again Anfi Del Mar, with 10 cases heard by the Court of First Instance of San Bartolomé de Tirajana in Maspalomas. In the High Court of Las Palmas Gran Canaria, Anfi del Mar had 4 appeals rejected and sent back to the lower courts for the execution of sentence.
In Tenerife at the High Court in Santa Cruz, Silverpoint also lost an appeal, with the case being sent back to the Court of First Instance, again for the execution of sentence.
The total amount being returned to clients is a massive 517,056.50€ this amount doe not include legal fees or legal interest that is calculated separately. Contracts were also declared null and void. The infringements of the timeshare laws ranged from contracts over 50 years in duration, floating weeks and points systems plus the taking of payments within the 14 days cooling off period.
Considering the Supreme Court rulings of which there are 129, and the number of cases being found against the timeshare companies at the lower courts, it does make you wonder why the timeshare companies insist on prolonging the process and taking the lost cases to appeal. All we can surmise is that they are trying to delay making any payments as they still believe the courts have interpreted the law incorrectly.
In response to that belief, Inside Timeshare republishes a link to the National Spanish TV Station TVE1, in this news item they look at the Supreme Court rulings and explain why the timeshare companies are being taken to court. In the item, they also interview one of the Senior Lawyers at Canarian Legal Alliance Eva Gutiérez. This clip will put you the reader in doubt as to who is telling the truth.
Another new name in the “claims” business has just come to our attention, Refund My Claim with the website:
It was registered on 9 February 2019 with the actual owner and registrar being hidden, the website has been regestered for one year only and is set to expire on 2 February 2020, these are never good signs.
The website itself gives very little information, with no company registration details only the company address, telephone number and email:
53 Fountain Street, Manchester, M2 2AN. Once again this is rented office space with postal and telephone answering service run by Regus, one of the biggest suppliers of serviced and rental office space on long term or daily basis.
On their Home Page, they state, “We are a free advice service that identifies the best Lawyers, Solicitors or Claims management company that best suits you for your claim.” They also explain the “Claims management” is big business in the UK and then go to list all the types of claims they work with including timeshare.
Now considering the age of the website, the lack of company information, no Company House registration and no mention of any lawyers or regulated claims managment company names, makes this is look like a very dodgy set up.
If you are contacted by any company with offers of getting you your money back for any timeshare or holiday club, do your homework before engaging with them. Make sure they are genuine, if you need help or advice on this, then use our contact page and we will be happy to help.
Tomorrow in our Tuesday Slot we publish an article titled How is a Timeshare Point Valued, this has been written by an Industry Insider and we have kept them anonymous as per their wishes. So join us tomorrow for more information and news on the world of timeshare.