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
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
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:
- 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
- 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.
- 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
- 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.
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.
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.
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.