# VRI + Grand Monarch + Tahoe Seasons Resort – Legal Help



## jbercu (Dec 3, 2008)

The Annual meeting is coming up for Tahoe Seasons Resort in California.  
Roy Fraser, the owner of VRI is Vice President of the Board of Directors, and VRI is the management company.  In June, Tahoe Seasons Resort Board met in executive session and executed a contract with Grand Monarch to sell Grand Monarch 420 additional units.  The contract is privileged so the owners cannot see the contract, but VRI most likely got a 50% commission.  I was wondering why Monarch would accept a contract where 50% of what they paid would go to VRI instead of the HOA reserve account.  The reserve account is already depleted below state mandates, and Monarch is the largest owner.  The annual Dues are astronomical. 
Now, Monarch is running its own candidate for the Board of Directors of Tahoe Seasons.  Mr. Loren V. Gallagher who most recently was an executive with Sunterra, but previously spent 16 years with VRI, including President and COO of VRI.
Does anyone have any information on this collusion between Grand Monarch and VRI?  Is Loren Gallagher an executive of Monarch?  Why is VRI stuffing the Board with VRI and former VRI executives?
Thanks,


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## Bill4728 (Dec 4, 2008)

Interesting. I'd like to know too. 



One small thing it is Monarch Grand Vacations not Grand Monarch. Also, Pacific Monarch is the company which owns and operates Monarch Grand Vacations.


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## Mydogs2big (Dec 5, 2008)

Loren V. Gallagher has been the President of the Board of Directors for Palm Canyon Resort & Spa for the last couple years.

We did recently get new flat screen TVs and some updating (some), and the projected reserve balance was 51.5% funded for 2006 and 96.7% funded for 2007, without special assessments or great increases in our maintenance fees.

Maybe he'll do a good job?  Can he run 2 places at once, or maybe he runs all Monarch Grand Vacations Resorts?

Hmmm?


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## jbercu (Dec 5, 2008)

*Tahoe Seasons Resort*

The 2009 dues for Tahoe Seasons are $729 for 1 bedroom, $936 for a 1 bedroom master suite, and $1097 for a 2 bedroom.  I think this is higher than paying for Monarch Grand Vacation points.  What are the dues at Palm Canyon Resort & Spa?  Does Loren V. Gallagher allow owner involvement in the running, or is it more like a dictatorship?

Thanks,


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## Mydogs2big (Dec 5, 2008)

We own Monarch Points for Palm Canyon only and the maintenance fees are about $465 for 111 every year points and $608 for 133 every year points.

I think they assess 3.95 dues per point.

I'm not sure about Gallagher, but reading the notes from Feb 16, 2007 Regular Scheduled Board Meeting; He called the meeting to order and under Agenda he requested that Villa Rental Services Agreement be added under Old Business.
The General Manager reported what the resort had been focusing on and what needed to be done, which were seconded and passed by the board. The Villa Rental Agreement was presented to the board for their review. There were statements about the financials that reflect a slight variance in operating results compared to budget, delinquencies were in line with prior years and Pacific Monarch Resorts was getting ready to submit a cleanup application to the DRE to transfer the entire inventory to that the Association owns to the MGV program.

Not sure if this helps.  It's all I have.


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## lv_maui (Dec 21, 2008)

jbercu said:


> The contract is privileged so the owners cannot see the contract, but VRI most likely got a 50% commission.  I was wondering why Monarch would accept a contract where 50% of what they paid would go to VRI instead of the HOA reserve account.  The reserve account is already depleted below state mandates, and Monarch is the largest owner.  The annual Dues are astronomical.
> Does anyone have any information on this collusion between Grand Monarch and VRI?  Is Loren Gallagher an executive of Monarch?  Why is VRI stuffing the Board with VRI and former VRI executives?
> Thanks,




First, how do you know that VRI got a 50% commission.  I am not sure how the contract is privileged with the Board of the HOA.  You should be able to ask the Board for the details of the contract.  

Second, there is definitely some connection to Loren Gallagher and VRI.  Loren and Roy Fraser are friends and Loren worked for VRI for some time.  Loren does work for Pacific Monark as VP of Legal.  BUT, just because there is a connection, it does not mean that Pacific Monark received a preferential deal.

Third, VRI wants as many VRI friendly people on the board as possible since that means that their management contract is very solid.  Simple.


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## jbercu (Dec 22, 2008)

lv_maui said:


> First, how do you know that VRI got a 50% commission.  I am not sure how the contract is privileged with the Board of the HOA.  You should be able to ask the Board for the details of the contract.
> 
> Second, there is definitely some connection to Loren Gallagher and VRI.  Loren and Roy Fraser are friends and Loren worked for VRI for some time.  Loren does work for Pacific Monark as VP of Legal.  BUT, just because there is a connection, it does not mean that Pacific Monark received a preferential deal.
> 
> Third, VRI wants as many VRI friendly people on the board as possible since that means that their management contract is very solid.  Simple.



Actually, I suspected that VRI got a 50% commission.  But now, we have an admission that VRI got a 50% commission.  Please read the draft published minutes of the annual meeting at http://www.tahoeseasons.com/owners/Ownersmting120608Draft2.pdf where "VRI will receive its 50% split of the revenue".  So the way this game is played is that The Board raises the Annual dues to a level that is not worth paying and the value of the ownership goes negative.  Owners call Tahoe Seasons to walk away from their units and VRI charges $385 to take away the deed and transfer it back to the association.  VRI and the rest of the unsuspecting owners split the County Tax payments 50/50 until the units are sold to Monarch, and that is when VRI collects 50% of the sale.  It is not a commission; it is just a split of the revenue.
Second, Monarch does not have a preferential deal.  As explained at the annual meeting, Monarch has the only deal.  While Monarch has the right of first refusal, some Tahoe Seasons Resort owners who tried to give away their units to Monarch were turned away and asked to deal with VRI instead.  So Monarch has the right of first refusal and VRI has the right of first refusal.  If anyone can buy any Tahoe Seasons Resort unit on e-bay for $1 why is Monarch paying $2050 per unit knowing that only $1025 goes into the TSR reserve account given that Monarch is the largest owner of units at TSR?  Is Monarch doing the best for Monarch owners or best for VRI?

Third, Loren Gallagher did not get elected.  The only explanation is that Monarch did not use its 2000 votes to elect its own VP of legal to the Board.  From last year’s election results published in http://www.tahoeseasons.com/owners/tsr-newsletter-feb08.pdf "The Results Are In" You can see that it only takes about 1500 votes to get on the Board.
Monarch was so convinced that the Board would do the right thing, that they gave the Board the proxy, and the Board decided not to vote for Loren.
Are there clouds in paradise? 
 VRI manages 150 resorts.  Tahoe Seasons Resort has been a management disaster for ever.  Does VRI need Tahoe Seasons or Does Tahoe Seasons need VRI?  I do not think VRI is after the management contract.  I think they want a lot more.


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## lv_maui (Dec 22, 2008)

*Response to JBercu*

"VRI will receive its 50% split of the revenue". That is a very large commission on just a purchase of intervals.  The one to discuss this with is the Board of Directors.  Roy is VRI/Monarch friendly.  Who are the other ones?  The BOD is one that approved this so they are the ones to answer.

So the way this game is played is that The Board raises the Annual dues to a level that is not worth paying and the value of the ownership goes negative. Owners call Tahoe Seasons to walk away from their units and VRI charges $385 to take away the deed and transfer it back to the association. VRI and the rest of the unsuspecting owners split the County Tax payments 50/50 until the units are sold to Monarch, and that is when VRI collects 50% of the sale. That does appear to be what is happening.  However, VRI is getting an interval back in the system that is current and dues paying.


If anyone can buy any Tahoe Seasons Resort unit on e-bay for $1 why is Monarch paying $2050 per unit knowing that only $1025 goes into the TSR reserve account given that Monarch is the largest owner of units at TSR?Because Monarch can put this in their club and receive a profit on the sale of its points.  The Club enhances the value of the week.

 Is Monarch doing the best for Monarch owners or best for VRI?I think for everyone

Are there clouds in paradise? I do not know what happened here.  FRaser resigned, they appointed Gallagher and then Fraser was back in.

Tahoe Seasons Resort has been a management disaster for ever. TSR has always had a repuration of a resort in a great location, but always held back by financial problems from long time ago.  The original developers screwed it up.  VRI admitted to me that it was a challenge

Does VRI need Tahoe Seasons or Does Tahoe Seasons need VRI? A better question for you is wether any other management company would just openly walk into this hornests nest.  TSR needs somebody and right now, VRI is doing it.

I know of FRaser, VRI, Gallagher and Pacific Monarch and I do not think they are dong anything illegal or wrong, but they are businesses (men) that strive to make profits.

I also saw that your name was in the minutes and they politely wrote that they would handle questions in writing.  Good Luck.


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## jbercu (Dec 23, 2008)

Are there clouds in paradise? I do not know what happened here.  FRaser resigned, they appointed Gallagher and then Fraser was back in.

The same Board that rejected Gallagher on December 5, appointed Gallagher on December 18.  

lv_maui:
I can see that on December 5 at the annual meeting, the incumbents were re-elected, and Fraser's seat was not up for election.
Then the minutes of the December 18 Special meeting, show that Loren Gallagher is a Director and Fraser is an Advisor.  Where do you see that Fraser is back on the Board?

Do you need an open meeting of the Board to accept a resignation and appoint a new member that just ran for the Board and lost?


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## lv_maui (Dec 23, 2008)

*I was wrong*



jbercu said:


> The same Board that rejected Gallagher on December 5, appointed Gallagher on December 18.
> 
> lv_maui:
> Then the minutes of the December 18 Special meeting, show that Loren Gallagher is a Director and Fraser is an Advisor.  Where do you see that Fraser is back on the Board?
> ...



I was wrong as I was reading the dates wrong.  Frasor resigned and Gallagher is in now.  This does not surprise me.

You need to have a open board of directors meeting to do what happened.  They do not have to give the Owners the right to participate or have an open forum.  The board has the right to appoint a replacement when one resigns

I still would like to know who the other board members are from whether they are Pacific Monarch employees or not.


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## jbercu (Dec 27, 2008)

*TSR  Tahoe Seasons Resort Revealed*



lv_maui said:


> I still would like to know who the other board members are from whether they are Pacific Monarch employees or not.



All the other Board members pre-date Monarch involvement with Tahoe Seasons Resort.  No new owners have been able to get on the Board in over 10 years.  There are three members that are very active.  The president of the Board (E.C. van Eckhardt) who owns one week smallest unit low season, controls the Board to make sure everyone is in line with VRI.  Vice President Roy Fraser who owns VRI and also owns one week smallest unit low season, and makes sure that VRI is over compensated.  Roy Fraser explained at the last annual meeting that TSR was one of the first timeshares VRI ever managed, and as such, to him managing TSR is more than just a business decision.  Secretary Gary Ransone who is the workhorse of the association.  He negotiates and signs most contracts outside the VRI dealings and has extensive construction experience.  He was the last to get on the Board after spending a few years as a Board Advisor, and he owns a few units including prime season units.  The other two board members are fillers to make sure nobody else gets on the Board.
The new deal for the 500+ units that Monarch is purchasing is being financed.  The finance company made it a condition of the deal that Monarch put a person on the Board of TSR.  Loren Gallagher ran for the Board with over 2000 votes and should have been elected, but Mr. Eckhard had a last minute realization that an incumbent would have to lose, so somehow Loren Gallagher could not get the Monarch votes.  After the election, the finance company insisted that Monarch get a person on the Board so Roy Fraser became an advisor and Loren took his spot on the Board.  It does not matter much since Roy Fraser and Loren Gallagher are very close in business and in private life, so Monarch and VRI will find win-win situations to the exclusion of the rest of the owners.  For example:  The $3.4 million remodel left the reserve account below state mandatory limits.  The sale of 500+ units at $2050 per unit would have restored the Reserve Account; however, VRI is taking 50% of the sale price.  Why would Monarch want to buy units in a development where their money does not go to restore a depleted reserve account?  Is there any wonder that TSR units have no value?


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