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More Nightmares on Timeshare Street

Today’s article is rather disturbing, it highlights how members of the armed services and veterans are being targeted by unscrupulous sales agents. For people who put their lives on the line, this behaviour is particularly obnoxious.

Timeshare Wars

Samuel Melendez, our Advocacy group thanks you for your service to our country

troops

By Irene Parker

Diamond and ARDA seek to destroy me. I know that sounds melodramatic, but sources tell me it’s true.  I’m confident this will happen sooner rather than later. The industry and ARDA’s answer to our advocacy efforts is to behead the messengers rather than examine the business practices of top selling agents. I’m told one executive even commented, “They are victimizing the uneducated,” in regard to Timeshare Advocacy Group™ and our efforts.

Please read the American Resort Development Association’s (ARDA) Code of Ethics and Eron Grant’s article about the code before reading the following ten reader reports about their allegations of deceit.

http://www.arda.org/ethics/

http://insidetimeshare.com/fridays-letter-america-14/

Diamond Resorts and Bluegreen each give $1 million a year in the form of voluntary “opt out” donations to the timeshare lobby, a PAC, called ARDA ROC. Members are told it is a nonprofit that helps timeshare members. It is doubtful many members even know what the letters ARDA ROC stand for. Marriott’s contribution is an “opt in” donation. It took several calls to have my $7 removed from my account. When I called in November, I was told it was a delinquency. Having researched timeshare for over two years, I was able to determine the $7 was moved from one account to another. I suspect it was to have me forget about it as it mushed into the 2018 invoice.    

In a span of ten days, Inside Timeshare has been contacted by seven active duty and retired military, describing how they say they were defrauded by predatory timeshare sales agents from four companies.  A 100 page summary of 249 complaints against timeshare sales agents and companies is available upon request by regulatory authorities. Of the 249 complaints, 233 are against Diamond Resorts.  I am a Diamond member. I did not choose to do business with Diamond. We were acquired in the ILX Arizona acquisition. If I were instead a Bluegreen member, 233 out of 249 complaints would be against Bluegreen. Bluegreen members have their own Advocacy group supporting members who want out of their Dream Vacation that can become a Nightmare when a life crisis occurs.  

troops2

Today we thank Samuel Melendez who spent 21 years in the army training soldiers, working with colleges, teaching chemical, biological and nuclear defense. When a military family is forced into foreclosure because they were lied to about being able to sell back points or finance at a lower rate, they don’t just lose their money. This can jeopardize their security clearance and their job.  Amanda Jones, featured in Tuesday’s article, has suggested individual base commanders be informed in the hope they will ban service members from attending timeshare presentations and events. “The Diamond sales agent that sold us points said he was a Marine. If he is not, that’s stolen valor. Base commanders need to be aware of the predatory nature of timeshare sales. My husband George and I, Navy computer technicians, feel we were victimized.”   

The Tuesday Slot with Irene

If seven members of the military, describing how they say they were defrauded were not enough in a week, Gay and Ed Brewer called me yesterday. My husband and I owned a bioavailability pharmaceutical research laboratory, but I have heard more grave medical conditions in the last two years assisting timeshare members, than I did in ten years as president of our company.   

Gay Brewer, 74 and Ed Brewer, 77

First, here is Diamond’s Rebuttal to my article written for Jim Cramer’s TheStreet about Apollo’s acquisition of Diamond dated June 30, 2016.

It is also incorrect to state that Diamond Resorts is “not interested” in liquidity in the resale market for timeshares because the company profits from “reclaiming” vacation ownership interests that are defaulted on by the customer. To the contrary, Diamond Resorts understands that customers experience life events that change the circumstances from when they originally purchased vacation ownership interests. That is why the company not only permits resales, but we also recently announced a new “Transitions Program” to launch soon, and will allow those in good standing to relinquish their points to the company in a simple, safe and respectful manner.

https://www.thestreet.com/story/13624491/1/is-apollo-returning-to-its-junk-roots-with-its-acquisition-of-diamond-resorts.html#2

The snag is “in good standing” because almost all timeshare members contacting Inside Timeshare say they were pressured into high interest rate loans. All timeshare companies can and do cancel loans. I’ve come to learn it is a matter of who wears down whom first.

According to Gay Brewer,

Ed’s heart stopped beating three times this past year. He has had a prior heart attack. He has had a Pacemaker defibrillator implanted which has fired three times. He cannot fly on an airplane or be exposed to high altitudes. He is monitored 24/7 by a Holter monitor. We had to evacuate our California home due to the Liberty fire. At present we are receiving 12 collection calls a day (six each) from Diamond’s collection agents.

Deneice Vargas, another Diamond member in foreclosure (her husband Louis is diagnosed with Bell’s palsy), told me “When DRI Consumer Advocates are not busy advocating for members by researching and providing the member’s initials on the fine print, in response to “the sales agent said”, they make collection calls.” The oral representation clause may make this legal robbery, but Social Media is eventually going to catch up. Several attorneys have told me the oral representation does not allow timeshare companies to get away with sale agents who lie, but there is virtually no enforcement. State enforcement is spotty at best.

The Brewers were Monarch owners. Like so many, they were told they had to give up their deeded week. This was not true. Four or five contracts later, after the last up-sell at Diamond’s Polo Towers Resort, they decided they regretted buying points due to disappointment in availability. While I find good value in Arizona and Orlando using points, limited availability is a major complaint voiced by Diamond and Bluegreen members. The Brewers have written to DRI Consumer Advocacy:

Diamond Resorts Consumer Advocacy

We are asking our loans be cancelled due to medical and financial hardship. We were told we would not be able to use our Monarch week unless we bought DRI points and that our Monarch week was worthless. We were never told of the option to deed back the week to DRI. Due to the burden of medical bills, we have not made payments since July and will not be able to make future payments.

We contacted Exit Timeshare as they guarantee timeshare release but they said they would charge us $28,000. I contacted Irene Parker. She told us to contact Diamond Resorts Consumer Advocacy instead. She said DRI Advocates have helped many in our situation. We were not aware there was a DRI Advocacy program.

Please contact us as soon as possible. It was never our intention not to meet this obligation, despite the fact that there was never adequate availability when we tried to book and we were never told of the option to deed back our Monarch week. We have learned that on TUG Timeshare Users Group, DRI is accepting more than 95% of requests, if in good standing.  

Thank you for your consideration.

Gay Brewer

army

Samuel Melendez Response to DRI Advocate Ben from Irene Parker

Mr. Melendez, DRI Complaint #207/233, is the eighth Platinum member to contact Inside Timeshare alleging financial institution fraud, deceit and bait and switch by DRI agent Rick Casper. The depth of corruption and the degree of criminality is now over my head, based on Karen Varten’s and Samuel and Delores Melendez report preceded by 231 others. Mr. Melendez and Ms. Varten have both reported a negative outcome.  

The Melendez family Edward Jones financial planner contacted me, so I am responding on the family’s behalf. I retired from Edward Jones Hawaii. Their EDJ financial planner had researched timeshare a little and found a law firm offering legal assistance for well over $10,000. He asked me if he should refer the family to this lawyer. I have nothing against the firm he mentioned, but I told the EDJ broker to hold off because I have referred seven other Rick Casper Platinum up-sells to Diamond Resorts Consumer Advocacy and they have helped all of them. They reported a positive outcome, albeit one needed the assistance of the Arizona Attorney General. What did Mr. Melendez receive from their Diamond Consumer Advocate as a response? Basically, they received a reminder of the oral representation clause, and their initials on the fine print, despite seven other identical Rick Casper complaints from members who received positive outcomes.

I spent a good two hours on the phone Monday with the FBI. My new neighbor is a federal prosecutor on sabbatical from California. I asked him for advice, but he only knows about murders. After speaking with the FBI (for the fourth time), and a few lawyers, I am convinced the oral representation clause does not hold water when used to hide behind. The FBI explained what it’s going to take, so we are filing complaints first on the FBI website IC3.gov and then orally, on the FBI tip hotline, found on the FBI website. Rick Casper is not the only DRI sales agent pitching bogus resale and maintenance fee programs that don’t exist. We have recently received complaint about a Las Vegas sales agent by the name of Adam Mendenhall offering point upgrades that would allow paying maintenance fees at $.30 per point. This program does not exist. DRI sales agents that make $1 to $2 million a year in commission tend to get more attention.  

One of our core advocates is a Tampa detective. She has advised us to file with the Nevada Real Estate Division. She was duped by Bluegreen. Like the detective, Scotty Black, DRI Complaint #164, works in law enforcement and has a MS in Criminal Justice. At least I have some help.

George and Amanda Jones, DRI Complaint #211, a married couple living in Virginia, are Navy computer technicians. Scotty, George and Amanda cannot afford their timeshare because of being told it would be easy to get their timeshare refinanced at a lower rate because the DRI sales agents told them there are many companies that specialize in refinancing timeshares, among other allegations. Forced into foreclosure, they could lose their security clearance and their job.  

Last week I was contacted by seven members of the armed forces, active duty and retired, four DRI complaints. Only the Air Force is not represented. Karen Varten, DRI Complaint #219, a Platinum up-sell, was contacted by DRI Marketing San Diego, hosted by Florida DRI sales agents in Virginia. Karen owned 57,000 points. She was told if she bought 25,000 additional points (totaling  82,000), if purchased today, she would have double points so 165,000 points to cover all maintenance fees and still have points left to travel. What was the response to her complaint? She was provided her initials on the contract.   

Preying on the young and old is bad enough, but Mr. Melendez taught our young men and women in the army how to defend themselves against biological, chemical and nuclear weapons. He sent a lot of those young people to war, and some of them did not return, protecting (alleged) predators like Rick Casper and, as the reports below offer compelling and compounding evidence, Diamond Resorts as well. Circumstantial evidence is still evidence.

Mr. Melendez has filed complaints with the FBI and the BBB. In the unlikely event DRI will help this family, please contact him by Wednesday, before we publish this article. There would be nothing that would make me happier than to end the year with a happy outcome for someone who spent 21 years teaching soldiers how to be protected from biological, chemical and nuclear weapons, instead of forcing this family to fork over – more than $10,000 the family will need to pay an attorney to get them out of this mess if DRI does not help them. After the last Rick Casper up-sell, their monthly payment has escalated from $431 a month to $2200. They told me they told Mr. Casper they were worried about passing this burden on to their heirs.  

All of the Platinum members listed below liked DRI, but now tell me they think this is the most crooked company in existence. I feel a little like Martin Luther, thinking the Catholic Church would appreciate his exposing corruption in the Catholic Church.  ARDA has had the same reaction as the Pope did then. A copy of all reports is sent to ARDA’s General Council and CEO in the hoping they will read their Code of Ethic.  

Irene Parker

Seven other Rick Casper Platinum up-sells totaling $819,000 including Mr. Melendez $133,000.

1 CL $75,000

During our meeting we were told about all the new changes that had been discussed at the Dinner that would allow us to sell our points. My husband has Cancer so all that was going through his mind was trying to make a choice that would help me later on if the Chemo doesn’t work and when Rick Casper convinced him this was the answer that’s all my husband heard. When we were in that office he was Stage 4. He has Colo-rectal Cancer that has spread to his Liver and Lungs. Our Las Vegas trip was something we wanted to do before my husband started his treatment.

I don’t understand how the DRI finance team could even approve us for a $75,000 loan for Timeshare Points when we had been turned down from two different companies while trying to refinance our house just this past year. Both requests were for under $100,000.

2 Nancy Callahan, age 69 $142,000

http://insidetimeshare.com/another-nightmare-timeshare-street/

3 KK, age 61 $117,000

We have a picture of Rick and pitch

Questionnaire sheet last two questions: Had you attended dinner? What is your exit strategy? Apollo had dinners informing members Cloobeck was leaving.  Not everyone heard the presentation so Rick was talking to members Platinum about the Legacy program. He said DRI never allowed you to sell points. This will. He knows real estate people can get $5 on resale for DRI points. New members are paying $9 so if you buy at $4 it is easy to sell. He had contacts that he could set us up with. 12/29/2016

4 RB, age 66 $75,000

Mr. Casper said on at least four occasions I was eligible for a Pool Party Upgrade that would provide an exit strategy. He said the program was about to expire so I needed to write a sentence that said I wanted to do this and he would get the purchase approved. I never received a copy of the sentence. The purpose of the purchase, according to Mr. Casper, was to make my existing points more valuable. Mr. Casper went on to explain that this exit strategy would allow me to monitor and sell the points. He mentioned that he is a family man and does not want to pass his points and maintenance fees on to his kids.

5 JH, age 56 $132,000

“The main benefit that he presented was the ability to convert points directly into cash at $0.30 per point. If at any time during the year we had leftover points we could be reimbursed for those points in cash.  All we had to do was contact Dan Percy and he would process the transaction and put the money on our reloadable Visa card.”

I continued to ask questions about each benefit so that I would be certain.  I worded questions differently to see if I would get the same answer.  I threw out this scenario; “If at the end of the year I have 30,000 points still sitting in my account, you’re telling me that I can get reimbursed cash for these points at $0.30 per point.”  His response; “Absolutely – You contact Dan Percy and he will load $9,000 onto the Visa card.” We purchased 40,000 points to get us to the level of “Super Platinum”.

6 AC, age 68 $55,000

http://insidetimeshare.com/wednesday-article-america/

We purchased an additional 20,000 points on July 16, 2016 for $55,200 from Richard Casper, at Cancun Resort, Las Vegas. The reason we purchased these points is because Rick told us if we went from Gold, to Platinum status, he could sell the points if we needed to. In addition, he told us we could substantially reduce our maintenance fees by submitting receipts to him for goods and services. We have never seen a tangible way to reduce our current $8,685 maintenance fees.  

We contacted Richard Casper by email on April 7, 2017 because we need to sell the 20,000 points. We received an autoreply stating to contact VP Dan Percy. We talked with Dan Percy on April 14, 2017. He stated that Diamond Resorts sales personnel don’t assist people who need to sell points and are not allowed to provide any company names that buy and sell timeshare.

In addition, during our sales presentation with Richard Casper July, 2016 we asked about combining our eight contracts. He advised that any free and clear points sold on the resale market will have the same benefits except loyalty level as long as no more than 20,000 points to one individual and it would be better not to combine the points. He stated that many Gold owners would be happy to buy 20,000 points at the lower price to become Platinum owners.  

7 JM, age 61 $90,000

Rick Casper was introduced to me as a Platinum specialist. Mr. Casper said I made a big mistake buying Hawaii points and a bigger mistake transferring the 20,000 points I bought in Daytona, due to a class action lawsuit against DRI members causing exorbitant increases in maintenance fees because of storm related beach erosion.  

Mr. Casper said I had to transfer back to US Collection and if I owned 100,000 points I would be unofficially known as a double platinum member and I would be able to sell any unused points in November and December each year back to Diamond at 30 cents per point, as DRI could sell those points annually to other members. Mr. Casper said this was closely regulated by the authorities. Mr. Casper said by selling these point back to DRI at 30 cents per points I could pay some or all of my maintenance fees for that year and any years to follow. Mr. Casper said this would allow my children not to have to pay maintenance fees.  

“You are really passing your children a bill.  We have a new program if you reach me in November to let me know what you did not use. Diamond will buy them back at $.30 for that year only to, ‘put them back in the kitty’. We need the points because we can sell them to other people who need them.” He illustrated the money we would be paid on a piece of paper.  “What are you waiting for? This is a no brainer,” he said. Mr. Casper convinced me to return to the US Collection the 20,000 points I had transferred in Hawaii 2015 due to beach erosion. I purchased an additional 30,000 points. I now owned 115,000 points.

In November 2016 I called Rick Casper to inform him I had 80,000 points I wished to cash in so that I would receive $24,000 (at 30 cents per point) as Mr. Casper illustrated during our sales presentation.  However, he denied any knowledge of any such arrangement. I explained I had a guest with me at the time, S L, who heard everything he said.  .

Mr. Casper said the reason for the 30 cent per point program was due to the sale of Diamond to Apollo. Mr. Casper said Mr. Cloobeck wanted to do something for members who owned over 100,000 points to show his appreciation so he included the 30 cent per point program in the terms of the Apollo buyout.  SL and I clearly remember this conversation

My current loan payment at the time of the presentation was $1,650 per month. Mr. Casper multiplied that by 12 totaling $19,800 in payments annually plus $14,000 per annum in maintenance fees or $33,880 for annual maintenance fees and loan payments combined. He divided this figure by 12 resulting in $2,816 per month. In the 50,000 additional points Mr. Casper offered, he stated it would only cost an additional $400 per month or $4,800 per year. If I sold back the additional 50,000 points at 30 cents per point I would receive a check back for $15,000.

As stated previously, when I contacted Rick Casper to sell back 80,000 points, he acted as if he did not know what I was talking about. I own a truck leasing business and S is a secondary school teacher. In no way did we misunderstand the figures above.  

There was undue pressure to open a Barclaycard. I explained that I did not need an additional credit card. Rick Casper insisted I open a Barclaycard. I feel the Barclaycard is part of the strategy used to play out what I consider to be a con. 

I then spoke with Dan Percy and then Seth Johnson. I thought Mr. Johnson and I were close to a resolution when he suddenly stopped responding to me.   

At a meeting in Palm Springs, CA between Christmas and New Year’s 2016, we met with someone who seemed to be an ombudsman about the poor accommodation we had been assigned. During the course of our meeting I mentioned Rick Casper. She closed her book and said, “This meeting is over.”  I asked several times why and she finally said Rick Casper was under investigation.

I want to return to the 50,500 points I originally owned prior to the deceitful sales. I was not unhappy with Diamond until the deception started.

8 The first Monarch complaint I read in 2015 back in the day when I thought the Cancun Resort was in Cancun.

Burns

Former DRI CEO David Palmer’s friend from ADW Capital, recommended Diamond’s stock because there is no secondary market. This is a mock interview I published after reading the above complaint, shortly before I received an executive perk agreement leaked to us about how Diamond founder and former CEO Stephen Cloobeck was allowed, as a perk, 50 hours use of the most expensive aircraft in the DRI fleet with the flight crew, for non-business use. Last time we checked, Mr. Cloobeck is running for Nevada Governor, lauded for donating $400,000 to the victims of the Las Vegas shooting.  

http://insidetimeshare.com/new-across-atlantic/

Leon Black, founder of Apollo Global Management, is worth $6.5 billion, according to Bloomberg. David Palmer earned $19 million in two years, a small portion of the wealth generated for his family during his tenure as DRI CEO.  As a former stockbroker and financial planner, I have nothing against generating great wealth, but not like this.

Diamond’s response to the six military who say they were defrauded: Free tickets for military members for their next event.

https://www.insidethegate.com/2017/12/military-first-responders-to-receive-complimentary-tickets-to-third-annual-diamond-resorts-invitational/

 

Friday’s Letter from America

It’s that time of the week again, so welcome to this week’s Friday’s Letter from America, this week we publish Part II of Timeshare Debt and Hedge Funds. This article is from Justin Morgan and Michael Nuwer, with the introduction from our very own Irene Parker. But as usual a roundup from Europe.

It has been a very busy week in the courts again with many case being heard, with sentence still to be issued by the judge but there have been a few announced.

gavela

On Monday there were two announcements, the first was the judge of the Court of First Instance in Maspalomas found against Anfi, once again the contract was declared null and void, the client in this case will be returned over 12,000€ plus legal interest. The courts are certainly sticking to the letter of the law.

In the second case that was announced, the Court of First Instance in Tenerife found against Silverpoint (Resort Properties). In this case the judge found that the contract was in breach of the timeshare law 42/98 in that it exceeded the 50 years that is allowed, this should have also been explained to the customer before signing.

The judge declared the contract null and void, ordering Silverpoint to pay the client over £59,000 plus legal interest.

The following day, Tuesday, another sentence against Anfi was announced by the Judge of the Court of First Instance in Maspalomas. Another contract was declared null and void, with Anfi being ordered to return over 26,000€ plus legal interest.

Back in September Petchey Leisure (now MGM Muthu) was ordered to repay over 16,000€ and declared the contract null and void, by the High Court in Tenerife. The client in that case has now had the money transferred to their bank account.

On Thursday, there were three court sentences announced, Once again Anfi have been ordered to return over 20.000€ plus legal interest, this was by the Court of First Instance in Maspalomas. The judge also declared the contract null and void.

In Tenerife the Court of First Instance declared a Silverpoint contract null and void, ordering the return of over 30,000€ plus legal interest.

In the High Court in Tenerife, Regency Resorts was ordered to return £35,200 plus an extra £35,200 as double the deposit taken in the cooling off period, which is forbidden by law. This particular client will now be receiving £70,400 plus legal fees and legal interest. A nice Christmas present for this client!

Today as we this article was being prepared for publishing the following news was issued in a press release:

The Supreme Court in Madrid issued another damning sentence against Silverpoint, the Court ordered the return of the full purchase price plus double the deposit and all legal fees. The contract was also declared null and void. In this case the client will be receiving over £105,000.

All these cases have been brought on behalf of clients by the Arguineguin law firm Canarian Legal Alliance, who are certainly at the forefront in the field of timeshare law.

cla-brochure

Inside Timeshare is still receiving many enquiries regarding “claims” companies and “law firms” contacting owners with the promise that they have cases and can get their money back. Many of these readers don’t even own in Spain, or even upgraded in Spain since the law came into place in 1999, so how can these cases go to the Spanish Courts?

Some of these are also being told that they pay for a relinquishment, then the claim will be filed on a no win no fee basis. This can only mean one thing, an attempt to claim under Section 75 of the Credit Consumer Act 1974. Another aspect to this is the client will also be told at the meeting the only way they can do this is by purchasing another product! Sounds like the classic “bait and switch”!

There is also more news which at present we cannot publish as it has not been verified, so that is it from Europe, now on with our Letter from America.

Timeshare Debt and Hedge Funds – The Developer vs the Member

wall st

By Justin Morgan and Michael Nuwer

November 17, 2017

On Monday Inside Timeshare published an article comparing hedge fund involvement in Puerto Rico to hedge fund involvement in timeshare. Today we examine further how debt affects timeshare with help from Economics Professor Michael Nuwer and private equity investor Justin Morgan.

http://insidetimeshare.com/tuesday-slot-american-perspective-comparison/

Introduction by Irene Parker

As a Diamond Resorts member, I have access to information I would not have about other timeshare companies, so once again Diamond is used as an example with help from Michael Nuwer, also a DRI member, and Justin Morgan, a former DRI member, to explain the mechanics of timeshare inventory valuation and timeshare debt.

I asked Inside Timeshare Australian Contributor Justin Morgan how a company like Diamond can have a $2.2 billion dollar valuation when the entire inventory of points is worthless to the members, given so many complaints about the lack of a secondary market. Of course, there is value to staying at a property, but for discussion purposes, timeshares are a liability on an individual member’s net worth statement. Inside Timeshare has received 196 timeshare complaints from our readers against four major developers. The majority allege they were sold or upsold by deceit and bait and switch. I have interviewed many families devastated, sometimes just weeks after purchase.

In an article I wrote for TheStreet, I expressed concern over inventory valuation irregularities that delayed DRI’s second quarter 2016 earnings report, the last public report before being taken private. Diamond previously reported 11 quarters of consecutive robust earnings growth. After announcing the delay, just after the Apollo acquisition announcement, earnings had to be restated from 2014 going forward.

“After the correction, the change resulted in a decrease in net income of $5.6 million for 2015 and a $1.3 million decrease for the first quarter, in each case from amounts originally reported, according to the second-quarter release. Significantly, second-quarter net income decreased $10.1 million or 28.5% to $25.5 million year over year, compared with a first quarter increase of $8.4% or 32.6% to $34.4 million, prior to the restatement.”

https://www.thestreet.com/story/13702895/1/diamond-resorts-international-s-second-quarter-earnings-reversal-is-worrisome.html

Justin Morgan’s analysis

The whole industry itself uses some quite questionable inventory valuation methods that may be designed, according to some, to target more the financing arrangements that were the traditional model in the industry when GMAC and others were underwriting timeshare sales departments. This is why private hedge fund equity in the industry has somewhat caused a shift in thinking. If private equity is funding the model based upon equity vs loan models, the capital structures underneath begin to change. The same accounting reports will still be drawn upon to make sense of the numbers, but let’s not forget that inventory valuations do have a bit of leeway to move. Even financial reporting itself can diverge from standard reporting models, but it usually is flagged as a change in accounting methodology that would have otherwise tipped off Apollo.

Like Enron, it depends upon who’s looking, and who might be wanting to look away to get a deal done. Even if Apollo did know, it doesn’t mean they’d fess to the knowledge of spotting an irregularity if they believed they were able to profit in the end, and I believe that Michael Nuwer showed the sort of cap structure that Apollo introduced. It largely turned the debt into the membership, so whilst Apollo may have even noticed non-standard valuations, it might have only forced a better price to come from Diamond vs flagging the issue or walking away from the overall deal. Clearly, Apollo are their own beast in these type of private equity deals which reap profits and shift debt restructuring unwittingly into club members. This is a bigger issue. It’s like taking a loan out in someone else’s name and handing them the bill after you’ve taken what you want for the deal. Club members were only ever at Apollo-DRI’s mercy after this.

There are definitely some important and significant value-implied shifts from these numbers since the street uses earnings to make their valuations, but the valuation of inventory is an area that is somewhat suitable itself. The industry bodies know how to make it work and actually fought to use non-standard inventory models. But I’ve not gauged for differences between the pre-order hedge fund industry and the one we’re seeing rise out of the seas today.

I have looked with horror upon the entry of these private hedge funds because I know that they have little interest in the product itself. They are only in it to devour the membership of as much as they can get, and given the legal models, that could be the scariest evolution to date. At least cryptocurrencies attempt to establish some monetary supply rules, but timeshare clubs know that they can just keep raising budgets legally to cover their required rates of returns.

In an industry that generally looks for 30% per annum returns as a rule of thumb, that’s going to cause some high maintenance fee jokes in the future. But I remember the old DRI hiking maintenance close to 25% circa 2007 and then again in 2009. They first blamed a strong economy, whilst the second blamed the weak economy. More like a satyr blowing hot and cold in the one breath! But the disturbing thing to me is how Apollo financed this whole arrangement. They shifted the debt onto the members. They made their money from the start…The rest is just cream…The debt which now pays the Apollonian entities is the debt Apollo created and lumped into the membership at the financing stage.

We must be clear. They created the debt specifically to land it on membership; so really, it is as if the DRI members paid a good chunk of the deal. If the Attorneys General don’t see this, then they’ll miss what chicanery has been done here.

Michael Nuwer

Diamond reports show increasing levels of bad debt accompanied by decreasing membership since the peak in 2013.

chart1

Membership is down 9% since 2013

chart2

One thing that is not clear to me is the economic value of points. It often appears that a developer sells the points (say 10,000 points) for, say, $20,000. But, the next day, if I (the owner) try to sell those points in the secondary market, they are worth, maybe, $1,000. (If Bluegreen points; DRI points are worth $0.) The economist in me thinks the developer originally sold me points for $1,000 plus a club membership for the remaining $19,000. Thus, if my points are foreclosed and resold for the full $20,000, only $1,000 is the value of the points.

So, the question here is: what is the developer selling. Is the sale just vacation points or is the sale a bundle that includes points plus other stuff? I’ve read my DRI contract many times and still can’t tell what it specifically covers.

So what happens when someone buys timeshare points?

Let’s look at this example:

Say Diamond makes a sale for $30,000. The buyer might make a down payment of 20% or $6,000. The remaining $24,000 is a loan. Diamond now has a short term financing problem. They have $6,000 in cash and $24,000 in a non-liquid asset. But Diamond has immediate operating costs. A bit more than $15,000 from the sale is needed for advertising, marketing, and commission expenses. The carrying cost of the inventory must also be paid. Additionally, Diamond faces G&A costs (general and administrative) which need to be paid. All of these are current expenses, but Diamond only has the cash down-payments to cover them.

To pay current expenses, Diamond borrows money from a bank (the jargon is a “warehouse facility”). This facility is a credit line agreement, and, just like my credit card, Diamond’s credit line has a limit. Before Apollo, Diamond’s credit line was $100 million with Capital One.

In short: Diamond must borrow money from a bank to cover the current year’s expenses while it waits 7-10 years to get re-paid on the outstanding loans made to members.

Securitization of the outstanding loans is a way to oil, and thereby speed-up, the lending machine. Once Diamond reaches its $100 million credit limit, it will not be able to offer more loans for the purchase of points. Thus, to overcome this limit, the company bundles outstanding loans into a trust fund and sells shares in that fund as an Asset-Backed Security. The proceeds from selling these shares are used to pay down the credit line and Diamond’s perpetual loan machine continues.

Irene asked how Apollo Global Management will fare in their purchase of DRI. Will the restatement of inventory valuation have an impact?

DRI EBITDA in 2015 was $385 million and thus the valuation multiple ($2200/385) is a mere 5.7. Apollo got the company for a steal. If they can spruce it up and get 10x, the valuation will be $3.8 billion. There’s Apollo’s 30% profit.

trust earned

Thank you to Michael Nuwer and Justin Morgan for their analysis. I have nothing against private equity, but extraordinary investment returns at the expense of timeshare members or Puerto Ricans is not acceptable if so many complaint allegations are true. In addition to 192 Inside Timeshare readers who are timeshare members, I have interviewed ten current and former timeshare sales agents that all confirm predatory sales practices are widespread in this industry. There have been several recent investigations and settlements by Attorneys General including New York, Wisconsin, Missouri, Arizona, Tennessee and Colorado as well as lawsuits too numerous to mention. It is our hope developers will confront the problem and work with member complaints to improve the quality of timeshare sales today rather than continue to deny such practices exists. Contact Inside Timeshare or an Advocacy Facebook if you have timeshare concerns.   

Timeshare self-help Facebook groups

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

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

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

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

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

Thank you to Justin and Michael, also to Irene for her introduction. This week Irene has been very busy dealing with the many enquiries we have received from US owners / members. Within an hour of publishing Tuesdays article, we received 3 pleas of help, these are sent to Irene who then makes contact with the relevant advice and which of our advocacy team can help. Keep up the great work US Team.

If you need any information or help with any timeshare matter and don’t know where to turn, Inside Timeshare is here to help.

Also remember to do your homework before engaging with any company that either contacts you or you find in an advert. This last one rings very true for one UK reader, She found an advert in the Royal British Legion Magazine for a company that said it could help with a claim. Being in the British legion magazine she believed it would be genuine, well we all would! Unfortunately, adverts are not checked for authenticity, they are sold by a marketing company to pay the cost of publication, the same is also true for any newspaper or magazine. So the it proves that you need to do your homework!

On that note, Friday is here, the weekend is once again upon us, so have a great weekend and we will be back on Monday.

friday dog

 

Friday’s Letter from America

Welcome to another edition of Friday’s Letter from America, today Irene Parker asks the Florida Attorney General Pam Bondi, What about us? Ms Bondi seems to have a reputation for backing big business rather than the consumer, but more of that in Irene’s article. As usual we begin with what is happening in Europe.

CLA Logo

Some news which was breaking yesterday has now been confirmed, Canarian Legal Alliance issued a press release informing us of the latest Supreme Court victories.

Legal history has now been made with CLA achieving their 60th victory in Spain’s highest court, we say legal history as this is unprecedented. No other law firm has ever managed to get this number of cases through the Supreme Court. This is a fantastic achievement since their first victory in March 2015, in the past two and a half years they have not only made history but have also made law.

Their latest victories have been against Silverpoint, in sentence number 59, the court ordered the return of over 65,000€ plus the payment of First Instance legal fees and legal interest. The client’s contract was also declared null & void, which now makes them timeshare free with no more ongoing maintenance fees.

With sentence number 60, the same court ruled that the contract be declared null & void, ordering Silverpoint to return over 92,000€ plus Appeal Instance legal fees and legal interest. This now makes a total of 21 judgments from the Supreme Court against Silverpoint alone.

Then the following day, the Judge at the High Court Number 3 in Tenerife, followed the Supreme Court rulings declaring another client’s contract with Silverpoint null & void. The judge also ordered the return of over 11,000€ plus legal interest.

Not only must the clients be celebrating, but I will wager there was some celebrating going on in the Lawyer’s office!

amador-galeca-300x191

Following the publication of yesterday’s article on the new fake law firm Amador Galeca Abogados, we received an email from a reader who has already been taken in by them. Unfortunately they have already paid the Procurator a fee, but at least it was not a large sum, yet something prompted them to start checking the internet for information before they paid them next amounts.

As we said yesterday it would only be a matter of time before we found out the new name of the Procurator and the bank account they are using, here it is:

Procurator: Graham Ingum Gorrin

Address: C/ Layanva, Edif Colmenas, Oficina 2223, 38003, Santa Cruz de Tenerife.

Bank: Deutsche Bank Sociedad Anonima Espa, C.P.A. BCN, Ronda General Mitre 72-74 Barcelona.

IBAN: ES3900190172854010033761

As for the address of the procurator, searching on google and google maps it does not exist, so any post sent there will obviously never be delivered.

This reader has also supplied some new and interesting information, Amador Galeca informed them that the directors of their timeshare had pleaded guilty in court and that all their assets had been seized, not bad, it seems that all the directors according to this group of fake law firms plead guilty!

The amount paid was for a relinquishment through the Spanish courts, which needed to be done first before they could go to court for compensation. The strange thing is, once again it seems that the jurisdiction of the Spanish Courts now extends beyond the borders of Spain and encompasses timeshare in the UK!

These readers have been lucky, they have not lost a huge amount, they have also informed their bank who is going to issue an alert to all other banks.

This does prove the point, never believe what you are told, especially when it comes to timeshare,

IF IT SOUNDS TOO GOOD, STOP THINK AND DO YOUR HOMEWORK!

homework

Now on with Irene’s article.

Florida Attorney General Pam Bondi – What about Us?

Irma Iniki and Timeshare

most people

By Irene Parker

Friday September 22 2017

Florida Attorney General Pam Bondi expressed her outrage over price gouging during hurricane Irma. While her dismay is understandable and commendable, why has there been so little effort expended to come to the aid of Florida timeshare buyers alleging they were deceived into buying a timeshare? Nationwide there have been lawsuits and Attorneys General investigations too numerous to mention.

Ms. Bondi has been quick to investigate timeshare resale scams.

Florida Attorney General Pam Bondi has filed a lawsuit against a company she accuses of violating Florida’s Timeshare Resale Accountability Act.

Florida has a specific law covering timeshare resales because it has so many of the properties, whose owners are often desperate to unload them.

In this latest case, Bondi sued Prime Resorts International, based in central Florida. She accuses the company of making telephone calls to timeshare owners all over the country, telling them they have a buyer for their timeshare. She says the company also claimed to be able to guarantee the deal would close.

https://www.consumeraffairs.com/news/florida-sues-another-timeshare-reseller-031116.html

The Berkley Group

Sources tell us Ms. Bondi is investigating The Berkley Group. The Berkley Group owns Vacation Village Resorts. With a BBB rating of F, looking into this company is a start, but acting on only 110 out of 2,360 timeshare complaints filed from April 2012 to April 2014 seems underperforming at best.

https://www.bbb.org/south-east-florida/business-reviews/timeshare-companies/vacation-village-resorts-in-fort-lauderdale-fl-4003645/reviews-and-complaints

Ms. Bondi opened this resale investigation after receiving 85 complaints.

The attorney general opened her investigation after she said her office got more than 85 complaints, claiming to have lost more than $110,000. The suit seeks a permanent injunction against the company, consumer restitution, and a civil penalty of $10,000 per violation.

Inside Timeshare has received 144 timeshare complaints of which 130 allege they were deceived on the front end of the sale. The dollar amount in question concerns well over one million dollars. The 14 not alleging deceit say they seek relinquishment because they say they cannot afford the annually increasing maintenance fees. ARDA and the industry continue to ignore deception exists, and with lawmakers turning a deaf ear, the court of public opinion seems the only avenue open for families reporting how they have been financially devastated by their timeshare plan.

follow money

Timeshare revenue in Florida is a lot of dollars to tamper with.

As the state’s No. 1 industry, tourism is crucial to Florida’s economy – generating 23 percent of the state’s sales tax revenue and employing more than one million Floridians. In 2011, tourism was responsible for welcoming 86.5 million visitors to Florida and generated $67.2 billion in direct economic impact.

http://www.flgov.com/governor-scott-applauds-floridas-tourism-marketing-2/

The industry will be quick to respond that there are nine million who own timeshares. What difference does a couple hundred families make? It makes a world of difference to the families affected who have contacted Inside Timeshare.

Recently, the Finn Law Group took issue with the lack of disclosure provided to timeshare buyers. If feeling deceived, after spending $5,000 to over $500,000 on a vacation plan, families are shocked to learn their timeshare has no secondary market and the contract is perpetual. Contracts are deceptive in that they often state points can be sold. Buyers are not informed about the lack of buyers should they need to sell.

LARGO, Fla.–(BUSINESS WIRE)–An administrative petition has been filed against Florida’s Department of Business and Professional Regulation alleging that the agency’s approval of a request by timeshare developers to make statutorily mandated public offering statements available by providing an online address at the closing rather the furnishing hard copies violates Florida law.

http://www.businesswire.com/news/home/20170905006015/en/Finn-Law-Group-Files-Petition-Florida-Agency

Ms. Bondi appeared on Las Vegas Attorney Bob Massi’s Property Man Show in 2016 explaining how the Florida Attorney General’s office worked with ARDA and the Department of Justice to shut down timeshare resale or release scams. Mr. Massi encouraged timeshare members to contact a member of the Licensed Timeshare Resale Broker Association if they need to sell their timeshare. When I contacted LTRBA about selling our Diamond timeshare points, I was informed by several LTRBA members they know of no licensed LTRBA broker who will even accept a listing for our points due to secondary market restrictions.

https://www.youtube.com/watch?v=VHCdcS2Ds-U

Inside Timeshare has also started hearing from Bluegreen members. One member is Lela Renea, a Bluegreen member and a detective. Lela Renea says she was deceived into buying a timeshare. If a Florida detective, allegedly reports being a victim of deceptive sales, what chance does the average timeshare buyer on the street have?

http://insidetimeshare.com/fridays-letter-america-11/

When I wrote an article for TheStreet, Jim Cramer of Mad Money’s investment news service, challenging what is in my opinion gestapo like tactics demanding Diamond members stay vacationed, Diamond demanded a rebuttal, stating they understood life’s changes could render their product a liability so they were introducing a program called Transitions that would allow qualified members in good standing a way out. That was June of 2016, yet the company has yet to introduce the program. “Qualified” is the key word. Most members contacting Inside Timeshare have loans, and many allege they succumbed to high interest rate loans and credit cards after hours long aggressive sales presentations. A timeshare must be unencumbered to be eligible for any voluntary surrender program.

https://www.thestreet.com/story/13624491/1/is-apollo-returning-to-its-junk-roots-with-its-acquisition-of-diamond-resorts.html

“Is Apollo Returning to its Junk Roots?” is the article Diamond found objectionable. Most remember the subprime mortgage crisis, but a decade earlier was the Drexel Burnham Lambert junk bond scandal that sent Michael Milken to jail for securities fraud. DBL founder and banker Leon Black filed bankruptcy on DBL only to reform and rebrand as Apollo Global Management, purchasing Diamond Resorts in 2016. If DBL liked junk bonds, which had some value, timeshare points that have no value the moment the contract is signed, should a buyer need to sell, must seem attractive.

Hurricanes and Timeshare

hurricane

One of the top complaints Inside Timeshare has received concerns upsells by timeshare sales agents on the US mainland selling against timeshare agents in Hawaii. This would be normal competition were it not for the fact the dueling agents work for the same company. Buyers tell us sales agents on the mainland side tell existing members they should not have purchased a Hawaii timeshare because of damages from hurricane Iniki that struck Hawaii on Kauai in 1992. They are encouraged to buy more points and transfer to US mainland points, despite Florida resorts included in their purchase. Obviously, Florida is at risk for hurricanes.

pam bondi 1      Ms. Bondi, please listen to us. The Arizona Attorney General has received over 900 timeshare complaints about Diamond Resorts:

http://insidetimeshare.com/arizona-attorney-generals-assurance-discontinuance/

Wyndham former timeshare sales agent Trish Williams was awarded $20 million by a jury concerning overly aggressive and predatory timeshare techniques:

https://www.nytimes.com/2016/11/25/business/my-soul-feels-taller-a-whistle-blowers-20-million-vindication.html?mcubz=0

Eric Schneiderman’s $6.5 million settlement with The Manhattan Club:

http://nypost.com/2017/08/17/new-york-ag-reaches-6-5m-settlement-with-manhattan-club/

In addition to member families,Charles Thomas at Inside Timeshare has heard from eight current and former timeshare sales agents alarmed at the escalation in predatory sales. The following comment made by a former experienced sales agent mirrors the others.

“I watched every day, agents selling DRI for double and close to triple what it was supposed to be sold for but management laughed and congratulated them for doing it.  The maintenance fees statement about buying more and using that to pay your maintenance fees was a practice that was encouraged, but be careful.  Some of the agents, who still work at DRI, would sell the program for $98k when it was only in the 50k range.  One of the guests came back to cancel but the agent said no worries, “I have it packed 40k but I’ll give then 15 off and still make a killing!”   This made me sick because these particular guests were in their late 70′ early 80’s.  I asked the agent if he had a conscience and he just laughed…if you can get them to pay more you’re a hero!!  They have the money!!

Deception actually goes back further than that.  We were told to pack the price for a trade in and imply that it was what they got back for their TS… we sold it for the regular price….they got nothing for their TS!”

(Charles Thomas, editors note: we have published on many occasions on the “stack and drop” tactic. This has been used for many years and we have seen it throughout Europe. It is used as a tool for upgrading or poaching other companies members. The consumer then believes they have had value for their other purchase).

It is our hope Diamond Resorts will listen and respond, along with Wyndham, Bluegreen and others, to improve timeshare sales today after the rise of “right to use” programs. In my opinion, such programs leave wide berth for misrepresentation and deceit.

The following are self-help Facebook pages representing over 1000 timeshare member families:

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

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

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

A few of the 144 families who have contacted Inside Timeshare:

Marsha, Ann and Marjorie

http://insidetimeshare.com/fridays-letter-america-18/

Bonita Hill

http://insidetimeshare.com/tuesday-review-clarity/

Eron Grant ARDA’s Code of Ethics

http://insidetimeshare.com/fridays-letter-america-14/

Irina Allen

http://insidetimeshare.com/monday-start-another-week/

Justin Morgan and Michael Nuwer June 30, 2017

http://insidetimeshare.com/fridays-letter-australia-no-read-correctly/

Alan Callner

http://insidetimeshare.com/wednesday-article-america/

Detective Lela Renea

http://insidetimeshare.com/fridays-letter-america-11/

David Franks Chapter 4

http://insidetimeshare.com/fridays-letter-america-15/

Karen Garello Secret Shopper June 22, 2017

http://insidetimeshare.com/works-industries-not-timeshare/

Romeo and Lily

http://insidetimeshare.com/fridays-letter-america-9/

Dr. Jeffries

http://insidetimeshare.com/fridays-letter-america-7/

Angela Johnson

http://insidetimeshare.com/timeshare-advocacy-group-update/

Neina Orrillo

http://insidetimeshare.com/diamond-in-the-news-again/

Barclaycard and Member stories May 17 2917

http://insidetimeshare.com/timeshare-barlcaycard-us/

Marjorie Menacker

http://insidetimeshare.com/another-nightmare-timeshare-street-client-experience-diamond/

Eron Grant May 12, 2017

http://insidetimeshare.com/fridays-letter-america-4/

Barclays Bank Charles May 11, 2017

http://insidetimeshare.com/timeshare-finance-barclays-hot-water-high-court/

Nancy Callahan April 24, 2017

http://insidetimeshare.com/another-nightmare-timeshare-street/

A Filipino Family April 13, 2017

http://insidetimeshare.com/anatomy-timeshare-foreclosure/

Laurie Sabbagh March 17, 2017 Clarity Review

http://insidetimeshare.com/friday-review-news-across-ocean/

A Military Family March 6, 2017

http://insidetimeshare.com/consumer-protection-week-usa/

The Hurleys January 25, 2017

http://insidetimeshare.com/timeshare-advocacy/

Irina Allen January 13, 2017

http://insidetimeshare.com/timeshare-news-across-atlantic/

Kathie Old December 6, 2016

http://insidetimeshare.com/call-change-us-timeshare-industry/

Wyndham Trish Williams $20 Million Whistleblower Jury Award December 5, 2017

http://insidetimeshare.com/wyndham-whistleblower-update/

The Peasant of Venice and the Queen of Versailles November 7, 2017

http://insidetimeshare.com/peasant-venice-queen-versailles/

Sylvia Saldana and the Barclaycard October 25, 2016

http://insidetimeshare.com/irene-parker-write-barclay-card-usa/

Hug Your Haters! By author Jay Baer on the importance of Social Media

http://insidetimeshare.com/customer-service-message/

need you

Will anyone listen? Author Jay Baer is to be keynote speaker at the upcoming October Interval International Shared Ownership Investment Conference, attended by developers and private equity firms. In Hug Your Haters, Mr. Baer strongly urges companies to listen. Members are hopeful, but doubtful, developers will listen to him.

Thank you Irene and those that proof read your article and gave advice, timeshare is a crazy world, which is such a shame as it is a great idea, with many who have enjoyed it for many years. There are some very good developers and resorts, but the reputation of the industry is being spoilt by a few.

Have a great weekend.

weekend-picard