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Diamond Resorts U.S. Collection Development

The Tuesday Slot: Diamond v Aaronson Trial

Welcome to another edition of The Tuesday Slot, today Irene Parker reports on days 2 and 3 of the Diamond v Aaronson Law Firm trial, which ended 3 days earlier than expected with a settlement.

Yesterday Inside Timeshare published the article about the Modern Honolulu Hotel and the redundancy of workers, this has already prompted many comments from our readers. The one factor they all share is their disgust at the lack of compassion and sheer greed of Diamond Resorts. Well, this is a fact we are all too well aware of at Inside Timeshare, as our “Nightmare on Timeshare Street” stories have shown.

So now for Irene’s report on the trial that has kept our readers in suspense.

Diamond Resorts v Aaronson Law Firm Trial

Lawsuit Resolved by Settlement

Anatomy of a Timeshare Trial:  A Summary

By Irene Parker

May 7, 2019

Day 1: https://insidetimeshare.com/fridays-letter-from-america-48/

The lawsuit Diamond Resorts filed against Austin Aaronson resolved by settlement Thursday, May 2nd on day three of what had been anticipated to be a six-day trial.

The crux of the lawsuit seemed to focus on a man in a grey suit that appeared in a video on Austin Aaronson’s website alleging that Diamond misappropriated maintenance fees. Diamond Resorts owns 10 to 15% of outstanding points. Currently, there are over a billion points outstanding. Members own approximately 85% of the outstanding points. Mr Charles Meltz, attorney for Mr Aaronson, presented the following figures:  

Member assessments budgeted: $141 million

Actual member assessments paid: $146 million

Developer assessments budgeted: $8.6 million

Actual developer assessments paid: $4.8 million

Plaintiff’s witnesses included Steven Wolf who testified that he conducted a forensic examination of 120 Diamond members who had stopped paying loans and maintenance fees. Diamond sells timeshare points as Collections. Diamond’s US Collection, Hawaii Collection and Diamond Resorts International Points were examined, in addition to an examination of maintenance fees and Club Fees that had not been collected.

Each group was broken down into three periods of time:

  • Period A consisted of the period of time from when a Diamond member had retained Austin Aaronson, going forward to July 31, 2018
  • Period B 30 days prior to retaining Mr Aaronson, and
  • Period C, the period of time beyond 30 days, prior to retaining Mr Aaronson.

For example, concerning the US Collection:

Period C beyond 30 days: $242,365,904 in uncollected funds

Period B 30 days prior to retaining Mr Aaronson: $295,455 in uncollected funds

Period A from the time Mr Aaronson was retained: $2,365,904

Total for the four groups in uncollected funds: $4,578,838

Judge Dalton asked if this amount had been reduced to summary judgment. It had not. He ruled that this amount was speculative.

Plaintiff’s witness Steven Wolf is with Capstone Advisory Group, LLC

http://www.mondaq.com/p/873000/Steven+Wolf/Capstone+Advisory+Group%2C+LLC

Mr Wolf’s firm was paid $250,000 for the forensic analysis and $475 per hour to observe the trial from 10 a.m. to 5 p.m. April 30 and May 1 through his testimony that continued through Thursday morning May 2.

Three former Diamond members testified as witnesses for the Plaintiff.

Witness 1 testified that buying additional points did not improve availability. He had purchased a total of 26,500 points. Diamond had sued witness 1 for $170,000, which included arbitration fees. The judgement against witness 1 was wiped clean in exchange for his testimony. Witness 1 confirmed that he was aware of Mr Aaronson’s website that stated the firm had leverage over Diamond resorts due to misappropriated maintenance fees and a breach of fiduciary duty.

Witness 2 testified on behalf of his mother about his contacting Aaronson Law Firm and that he was told Aaronson Law Firm had leverage over Diamond because Diamond was not handling maintenance fees correctly.

Witness 3 was role played, reading a prior deposition. The wife had testified at an earlier deposition. Her husband was retired Army, 100% disabled, exposed to Agent Orange. He suffers from PTSD. She testified that they went to a Branson sales centre and purchased 3,000 points for $16,030.  They wanted to learn how to use the system but were told to come back within 90 days for an orientation. They attended an orientation in November 2015. At the orientation, they were told by Branson sales agent Kimberly that they had not purchased enough points. They ended up buying 27,000 additional points for $72,850 which they could not afford.

This brings to five, the number of Agent Orange disabled veterans harmed by their decision to purchase Diamond points:

  1. 70% Disabled Agent Orange exposed Army Veteran George Yamada who reported he purchased Diamond points as an investment. George is a pension administrator. https://www.opednews.com/articles/Let-s-Honor-our-Veterans–by-Irene-Parker-Fraud-180908-59.html
  2. A 100% disabled veteran, up-sold by a Diamond sales agent Inside Timeshare has received 21 complaints against. This veteran was issued a $170,000 1099 C after his loan was terminated. We pointed him in the right direction so his CPA could resolve the 1099.
  3. Leo Gomez was told he must switch from Premier Vacation Club to US Collection because his resort went bankrupt. Leo only had 30 days left to live when he contacted me, suffering from pancreatic cancer. He did not call to complain. He wanted to know what he could do about the loan. It was not true Leo needed to switch from PVC to US Collection. I own the same points. Leo was 100% Agent Orange disabled. His last words to me were, “I want my story told.” Leo earned two Purple Hearts. https://www.opednews.com/articles/A-Fourth-Agent-Orange-Vete-by-Irene-Parker-Fraud-180917-513.html
  4. A 100% disabled Agent Orange veteran earned a Purple Heart because he had been shot in Vietnam. His dispute has been resolved.

These veterans put their life on the line to protect me. I will do all I can to do my part to reform timeshare because of the 806 families who have contacted Inside Timeshare, 103 veterans and active duty service members. Five Agent Orange veterans so stressed because they purchased too many timeshare points are five Agent Orange disabled veterans too many.

Attorney Charles Meltz asked about the likelihood of someone age 88 meeting the obligations of a ten-year loan.

Diamond’s attorney Richard Epstein of Greenspoon Marder responded,

“Are old people allowed to take vacations?”

This comment follows recent publications describing how the Lusk family, nearly 90, were sold $150,000 worth of timeshare points, as reported by USA Today and Diane Burkhardt’s father sold $250,000 worth of Diamond points between the ages of 86 to 88, after Diamond refused to take back the timeshare that her father had purchased and paid for free and clear at age 85, reported by Consumer Affairs.

Inside Timeshare has heard from way too many seniors who purchased a timeshare from several developers. These seniors are stressed beyond words. Most have maintained a high credit score their entire life, now bracing for timeshare foreclosure. They signed off on high-interest rate loans and sometimes higher interest rate credit cards.

Seniors don’t need this.    

Lawsuit details:

Diamond Resorts International Inc, Diamond Resorts U.S. Collection Development, Hawaii Collection Development LLC, and Diamond Resorts Management Inc, filed a lawsuit against Austin N. Aaronson and Aaronson, Austin, PA.

Case No. 6:17-1394-ORL-37-DCI

Attorneys Richard W. Epstein, Jeffrey A. Backman, and Olga M Vieira of Greenspoon Marder LLP are plaintiffs’ attorneys. Mr Aaronson is represented by Charles J. Meltz of Grower Ketcham, Eide, Telan & Meltz, P.A.

As reported by ABA Journal January 30, 2018:

Diamond Resorts had claimed Aaronson and his law firm solicited timeshare members in an advertising campaign that weaves a false narrative, causing timeshare members to stop contract payments and subjecting Diamond Resorts to baseless arbitration proceedings.

Aaronson had claimed his firm’s advertising was not false or misleading because it constituted opinion or puffery.

http://www.abajournal.com/news/article/judges_refuse_to_toss_suits_claiming_law_firms_interfered_with_timeshare_co

Mr Meltz, attorney for Aaronson, reported how Diamond maintenance fees had more than doubled from 2007 to 2015 from $.07 per point to $.145 per point and that there is no secondary market for Diamond points.

After Thursday’s lunch break, Judge Dalton would not allow Diamond’s next witness to testify. After a consultation, attorney Richard Epstein announced that they had reached a settlement. He then asked Judge Dalton to instruct me not to report details of the settlement. Judge Dalton kindly said to me that I could report that the lawsuit was resolved by settlement.

Two additional Plaintiff witnesses had testified. The first was Kathleen Wheeler, who serves on several Diamond Resort Boards. She is one of four asset managers. The second was Lisa Levere, VP of Operations and Financial Services. Both testified as to the audited care and attention taken to ensure maintenance fees are not misappropriated. Due to the settlement reached, the defence did not have an opportunity to call any of their witnesses to support their allegations that Diamond misappropriated maintenance fees. I was looking forward to hearing how witnesses called by the defence were to support their claims.

I was employed by CASA, Court Appointed Special Advocates for children in foster care. For three years I wrote court reports and edited our volunteers’ CASA reports. I attended all hearings and trials. I miss Family Court, so I have to admit I am a courthouse buff. Following are the trials remaining for the rest of 2019:

Westgate v. Mitchell Sussman, Esq. – 6:17-cv-1467 (MD FL)

July 1, 2019 trial before Judge Dalton (cross-MSJ’s pending)

OL v. RHA 17-cv-1542-Orl-31DCI (MD FL)

August 5, 2019 trial before Judge Presnell (cross-MSJ’s pending)

Wyn v. Totten Franqui Law Firm 9:18-cv-81055 (SD FL)

September 10, 2019 trial before Judge Middlebrooks

I will be there

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.

https://www.facebook.com/timeshareadvocategroup/

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

https://tug2.com/Home.aspx

https://everythingabouttimeshares.com/consider-exchange-options/

https://www.facebook.com/groups/180578055325962/

https://www.facebook.com/groups/465692163568779/

https://www.facebook.com/groups/1639958046252175/

Thank you, Irene, Inside Timeshare and our readers really appreciate you giving up your valuable time to attend the hearing and covering this story. One thing is certain, Inside Timeshare will continue to report on Diamond Resorts and any other timeshare company, we do this in the interest of our readers and all consumers. We make no apology about it and do not really care if it upsets the industry!

If you have any comments on this or any article published, please use our contact page, we welcome and value them.

Have you had a “Nightmare on Timeshare Street” if so, we would love to hear from you. If you would like your story to be shared with our readers lets us know and we will be happy to publish.

Friday’s Letter from America

Welcome to another edition of Friday’s Letter from America, this week Inside Timeshares Irene Parker reports on day 1 of the trial she attending in Orlando, Florida. This is a case between Diamond Resorts and Aaronson Law Firm, this is yet another law firm being taken to court by the timeshare industry.

So unlike our usual Friday editions, we will forego news from Europe and go straight to Irene’s report.

Diamond Resorts v Aaronson Law Firm Trial

Day 1 of 6: Jury Selection and Opening Arguments

Anatomy of a Timeshare Trial

By Irene Parker

May 3, 2019

Having recently experienced Part I of a deposition that lasted six hours against another law firm that provides timeshare exit assistance, I was motivated to attend a six-day timeshare trial in Orlando District Court that began Tuesday, April 30. The cost of a deposition or a six-day trial is staggering. Ultimately, the timeshare member pays. It’s too bad we can’t just sit down and talk to each other, but I guess attorneys have to make a living.

Diamond Resorts International Inc., Diamond Resorts U.S. Collection Development, Hawaii Collection Development LLC, and Diamond Resorts Management Inc, filed a lawsuit against Austin N. Aaronson and Aaronson, Austin, PA.

Case No. 6:17-1394-ORL-37-DCI

Attorneys Richard W. Epstein, Jeffrey A. Backman, and Olga M Vieira of Greenspoon Marder LLP are plaintiffs’ attorneys. Mr Aaronson is represented by Charles J. Meltz of Grower Ketcham, Eide, Telan & Meltz, P.A.

As reported by ABA Journal January 30, 2018:

The Florida suit was filed against Orlando lawyer Austin Aaronson and his firm Aaronson, Austin. In a Jan. 26 ruling, U.S. District Judge Roy Dalton Jr. of Orlando tossed RICO and malicious prosecution claims by Diamond Resorts but allowed claims for false advertising under the Lanham Act, tortious interference with contract, trade libel and deceptive trade practices.

Diamond Resorts had claimed Aaronson and his law firm solicited timeshare members in an advertising campaign that weaves a false narrative, causing timeshare members to stop contract payments and subjecting Diamond Resorts to baseless arbitration proceedings.

Aaronson had claimed his firm’s advertising was not false or misleading because it constituted opinion or puffery.

http://www.abajournal.com/news/article/judges_refuse_to_toss_suits_claiming_law_firms_interfered_with_timeshare_co

Opening day started with jury selection. Six of the eighteen potential jurors reported a negative timeshare experience:

  1. Lots of pressure from a timeshare presentation in the 80s,
  2. Purchased Marriott 30 years ago, lots of pressure,
  3. Westgate was difficult to exchange and was unsellable. An attorney was contacted. The attorney said Westgate is not sellable. Timeshare is a waste of money.
  4. Negative experience,
  5. Agents are pushy and don’t give up,
  6. An engineer said he had a negative bias.

Judge Dalton explained that Plaintiffs are required to convince the jury that Austin Aaronson is guilty by a preponderance of evidence. Criminal trials require a stricter standard – beyond a reasonable doubt.

The four claims against Austin Aaronson are:

  1. False advertising that harmed the reputation of Diamond Resorts and caused damages,
  2. Tortious interference,
  3. Intentionally publishing disparaging information on a website,
  4. Deceptive and unfair practices.

There are a total of 134 joint exhibits.

Mr Epstein, attorney for Diamond Resorts stated that there are few complaints against Diamond Resorts. He alleged Aaronson accused Diamond of wholesale unsavoury conduct.

Mr Meltz, attorney for Aaronson, reported how maintenance fees had more than doubled from 2007 to 2015 from $.07 per point to $.145 per point and that there is no secondary market for Diamond points. He explained how Diamond Resorts controlled Board of Directors hires Diamond Resorts managers to manage Diamond properties. As to the claim that Diamond misappropriated maintenance fees, both sides will bring in accounting expert witnesses to prove or disprove how maintenance fees were misappropriated.

In a lighthearted moment, Judge Dalton asked one of the Plaintiff attorneys if she was chewing gum. She was. She was asked to leave the courtroom to dispose of her gum.

Judge Dalton instructed the jury not to read newspapers, Facebook posts or blogs about the case. He said in the old day’s reporters attended the trials, but these days they just talk to those who attended as they exit the courtroom. He said he was amazed that when he reads an article about one of his trials, how little of what was reported actually happened in the courtroom. I was proud that Inside Timeshare will be in attendance for the duration of the trial taking copious notes.

Inside Timeshare and our readers just want the timeshare industry to admit that unfair and deceptive sales practices exist on the front end of the sale. I have always said half a problem goes away when confronted, but I doubt this will happen.

I have contacted four timeshare exit providers. Two of the larger firms report receiving 3,000 calls a month from members desperately seeking release from a timeshare contract. These firms only accept 100 to 150 cases as they require a strong case of unfair and deceptive practices. This stay vacationed or else strategy has created a timeshare exit industry timeshare developers want to crush, but Social Media is not going to put this Pandora back in her box. The lack of a secondary market is financially devastating family after family.

Greenspoon Marder contends all is well because Diamond Resorts has 460,000 timeshare members with few complaints. I feel 6,000 families reaching out to just two timeshare exit providers monthly is a real problem. There is no other product that has spawned an entire industry devoted to responding to customers with nowhere to turn, desperately seeking release from unused and unwanted timeshares. Many report they learned they were duped just days or minutes past the rescission period.

In Florida, timeshare division reviewers received 1,600 complaints in 2017 and 1,600 complaints in 2018, mostly about the initial sales presentation, 50% seniors. The AG engaged 42, mostly about timeshare resales. That means 1,600 families annually feel they were duped by a timeshare, there is no secondary market, maintenance fees doubled in seven years for at least one timeshare company, and this is not a problem.

Yes, it is.   

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.

https://www.facebook.com/timeshareadvocategroup/

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

https://tug2.com/Home.aspx

https://everythingabouttimeshares.com/consider-exchange-options/

https://www.facebook.com/groups/180578055325962/

https://www.facebook.com/groups/465692163568779/

https://www.facebook.com/groups/1639958046252175/

Than you Irene, we look forward to further reports on this trial and I’m sure that all Inside Timeshare readers are hoping that the outcome will be in Favour of Aaronson. One thing is certain, Diamond does not like criticism, but Inside Timeshare will continue to publish the “Nightmare on Timeshare Street” stories of our readers, be they Diamond or any other timeshare company.

In Spain, Diamond has lost in the courts for selling illegal contracts, along with other timeshare companies, many of them are the big players in Europe. Spanish timeshare law is based on the European Timeshare Directives but has been strengthened to protect consumers of unfair, misleading, predatory sales tactics and illegal contracts. It leads the way in Europe and we may see other countries following suit.

If you have any comments on this or any article or have a “Nightmare on Timeshare Street” story of your own, then use our contact page and get in touch we look forward to hearing from you.

Have a great weekend and join us again next week.