First Lawsuit filed against Viking Ship LLCs / PCCs

[vacationhopeful]

Boca,
Initially, each individual deed transfer was not looked upon as an act of fraud. There were many normal LLC and family trusts with no intent to be a fraudulent acts buried in with the PCCs transfers with deed transfers at resorts.

As for a willing and arms length real estate transaction between buyers and sellers, the very nature of owners PAYING thousands of dollars to unknown persons to transfer and terminate their ownership rights is NOT NORMAL in most deeding processes. Money usually goes the other way - money is paid to the former owners. Owners did not get an interest or usage for the money they paid to the PCCs. ie Buying a membership in a bigger vacation club with ongoing fees and a business contract.

Now if the PCCs offered $100 for each deed, charged a paperwork charge of $500 to transfer the deed and NETTED out an invoice to the owner for $400 .. that would look MORE like a traditional sale of real estate. Remember in the law, the intent is what do reasonable and unrelated parties do. Going to a hotel with your deed to SELL your real estate ownership and leave with a $3500+ fee charged to your credit card? Is that not like going to a diner for coffee with a marriage consultant about your spouse and giving them $5000 to end the marriage and $5000 when the marriage is terminated?

They were smart enough to NOT charge 2 years MFs in advance, which as a license real estate company (or travel agency), they might have required those monies to be place in an escrow account.

 

[BocaBum99]

Boca,
Initially, each individual deed transfer was not looked upon as an act of fraud. There were many normal LLC and family trusts with no intent to be a fraudulent acts buried in with the PCCs transfers with deed transfers at resorts.

As for competent buyers and sellers, the very nature of owners PAYING thousands of dollars to unknown persons to transfer and terminate their ownership rights is NOT NORMAL in most deeding processes. Money usually goes the other way - money is paid to the former owners. Owners did not get an interest or usage for the money they paid to the PCCs.

Now if the PCCs offered $100 for each deed, charged a paperwork charge of $500 to transfer the deed and NETTED out an invoice to the owner for $400 .. that would look MORE like a traditional sale of real estate. Remember in the law, the intent is what do reasonable and unrelated parties do. Going to a hotel with your deed to SELL your real estate ownership and leave with a $3500+ fee charged to your credit card? Is that not like going to a diner for coffee with a marriage consultant about your spouse and giving them $5000 to end the marriage and $5000 when the marriage is terminated?

They were smart enough to NOT charge 2 years MFs in advance, which as a license real estate company (or travel agency), they might have required those monies to be place in an escrow account.

You are arguing that because the owner had to pay money in a real estate transaction that it is fraudulent. That couldn't be more wrong.

If I have a dead automobile sitting in my drive way and I call a company to take it away and I pay them $100 to take title, then you are claiming that is a fraudulent transfer. It is not. In fact, I have done this exact thing.

There are usually 3 parties to a transfer. A grantee, A grantor and the resort. The Grantee and Grantor must be competent and most of the time must have an agreement in writing in order for a transfer of title. There must be some type of consideration, but it doesn't have to come from the grantee. Then, the resort sets up a process for approving or recognizing a transfer. Once all parties acknowledge the transfer and all the rules for transfer are performed (e.g. deed recording), it's done. Title has transferred legally.

Transferring a deed to Donald Duck is fraudulent because Donald Duck cannot sign an agreement to transfer title since it is a fictional character. An LLC is a legal entity with a person who can sign legally on its behalf. Once they do, it's not fraudulent. Again, the entity may be fraudulent, but the transfer is not.

Of course, I am assuming that the transfers were done properly. It could be that the transfer/title company did bad work which could result in clouds over title, but that is probably not what is being alleged in this complaint.

 

[BocaBum99]

I forgot to mention that "competent" does not mean skilled. It means "not drunk", of proper age and of sound mind and body. They cannot be mentally ill.

 

[Centurion]

I still don't see this lawsuit being effective without suing the principals of the PCCs personally.

 

[TUGBrian]

most of the names involved also run PCCs

 

[BocaBum99]

I still don't see this lawsuit being effective without suing the principals of the PCCs personally.

As Brian mentioned, if you look at the individuals named as defendents, many of them are the brains behind PCCs. The Principals are being named.

 

[Centurion]

most of the names involved also run PCCs

That's good to hear. I'm sure the physical people being served will be the only respondents to the service of process. Searching the llcs posted shows that some are already inactive at the Secretary of State. If the plaintiff throws enough money behind this and they serve employees of these companies they may eventually get to the wizard behind the curtain if they are not already posted in the complaint.

 

[Fredm]

Of course, I am assuming that the transfers were done properly. It could be that the transfer/title company did bad work which could result in clouds over title, but that is probably not what is being alleged in this complaint.

Like you, I can't wait to see the actual compalint.

For a different resort, I do know that at least one of these characters did not legally transfer title. Despite having a POA from the owner, title was actually transferred by fraudulently signing the owners name, fraudulently having that signature "witnessed'', and being (by definition) fraudulently notarized.
I am going to assume that this was not a singular, isolated instance.
So, some of this will come down to how the ownerships wound up in the viking ships.

To cast a wider net, it will likely require that other plantiffs join the case.
Once the same actors are identified with a systematic pattern of behavior accross the board, it will be almost impossible to claim their intent was other than illegal.

Now, for the feds:
Although outside the yet unknown statement of the case, discovery can lead to related activities by some of these operators.
It is entirely possible that the front end activity of some transactions may be illegal. If it includes wire/mail fraud then it a federal crime.
Searching for Poy Developers LLC, I come accross complaints from owners contacted by several of the additional defendents.
Somewhere in there will likely be soliciting funds under false pretences.

So, we will have to wait and see. The kernal of this case can explode into a very big deal IF the industry has had enough. OR, it can do what it has always done; pass the problem off on responsible dues paying owners.

Americana Vacation Club has stepped up to the plate. Good for them!
Now, where is ARDA and the rest of the industry to give this some muscle?

 

[buzglyd]

This is very interesting.

I just returned from the TBMA meeting in Providence. If I had known, I would have mentioned it at the conference.

I hope these guys get hammered. Lots of those names are in our system.

 

[BocaBum99]

I don't think they colluded to defraud this resort specifically.
The collected bad actors are doing it to everybody.
Just that this resort is bringing action against everyone they can identify from their records.

That's why I say it is the tip of the iceberg. This case will bring other resorts out of the woodwork. They all have the same problem.

Fred,

How can you have a civil case against an industry? You are basically saying that the plaintiff is suing the industry because the industries collective actions resulted in deeds being in places that are not paying maintenance fees and they cannot get the deeds back. In order to prove harm, I think you need to prove that these entities did something illegal and as a result directly harmed the plaintiffs.

If I am Henry Ford and I create a new product called an automobile and that results in the mass bankrupcy of the horse and buggy industry, can a horse and buggy company sue Ford Motor Company because its actions put them out of business? I think not.

At the end of the day, the PCC business model is fine. Many of their tactics are unethical, but the business model is fine. They are basically getting paid to liquidate properties. The problem is that many of these properties are worthless and the resorts won't take them back, nor will they take action (e.g. cut maintenance fees or attempt to terminate the timeshare plan or create a sales and marketing program for returned property).

If these properties had value, the lawsuit would be much diffferent. The plaintiffs would simply be suing to reclaim property and asking the defendents to simply deedback property.

This is a complete shell game that can only be solved by the resorts. They must get their maintenance fees in line or go terminate the timeshare plan. If there aren't actions that force these 2 things to happen, nothing will work.

 

[BocaBum99]

Like you, I can't wait to see the actual compalint.

For a different resort, I do know that at least one of these characters did not legally transfer title. Despite having a POA from the owner, title was actually transferred by fraudulently signing the owners name, fraudulently having that signature "witnessed'', and being (by definition) fraudulently notarized.
I am going to assume that this was not a singular, isolated instance.
So, some of this will come down to how the ownerships wound up in the viking ships.

To cast a wider net, it will likely require that other plantiffs join the case.
Once the same actors are identified with a systematic pattern of behavior accross the board, it will be almost impossible to claim their intent was other than illegal.

Now, for the feds:
Although outside the yet unknown statement of the case, discovery can lead to related activities by some of these operators.
It is entirely possible that the front end activity of some transactions may be illegal. If it includes wire/mail fraud then it a federal crime.
Searching for Poy Developers LLC, I come accross complaints from owners contacted by several of the additional defendents.
Somewhere in there will likely be soliciting funds under false pretences.

So, we will have to wait and see. The kernal of this case can explode into a very big deal IF the industry has had enough. OR, it can do what it has always done; pass the problem off on responsible dues paying owners.

Americana Vacation Club has stepped up to the plate. Good for them!
Now, where is ARDA and the rest of the industry to give this some muscle?

I agree that there could be faulty transfers. I am not sure whether or not this rises to the level of fraudulent. Incompetent for sure. The remedy for that is to do the transfers over or to clean up title and have the entities pay for it. The remedy is not to nullify the transfers.

I think you have to prove a conspiracy to commit fraud. But, I think it extremely hard to prove. It would be like trying to prove that mortgage companies tried to defraud Fannie Mae and Freddie Mac by getting people who could't pay for mortgages to apply and get big mortgages. It happened. The whole country suffered, but there wasn't necessarily a conspiracy to defraud.

 

[buzglyd]

I agree that there could be faulty transfers. I am not sure whether or not this rises to the level of fraudulent. Incompetent for sure. The remedy for that is to do the transfers over or to clean up title and have the entities pay for it. The remedy is not to nullify the transfers.

I think you have to prove a conspiracy to commit fraud. But, I think it extremely hard to prove. It would be like trying to prove that mortgage companies tried to defraud Fannie Mae and Freddie Mac by getting people who could't pay for mortgages to apply and get big mortgages. It happened. The whole country suffered, but there wasn't necessarily a conspiracy to defraud.

Yes but in the mortgage case, it was the gov't ordering banks to make those loans. They were ALL complicit.

In this case, it would seem fraud would be easier to prove.

 

[BocaBum99]

This is very interesting.

I just returned from the TBMA meeting in Providence. If I had known, I would have mentioned it at the conference.

I hope these guys get hammered. Lots of those names are in our system.

I met Ken McKelvey this week. Ken is the Chairman of ARDA-ROC. He is one of the driving forces behind the legislation in many states regarding transfer companies.

Speaking to him was illuminating to me. His personal objective is to push the resale transfer legislation to get rid of the bad entities in the process. He also said that after that is passed, he is going to work on bankruptcy law changes to allow timeshare plans to go out of business. I was surprised at how vocal he was about this topic.

Ken is a sharp fellow and he understands the issues surrounding these laws. He also understands that there will be significant unintended consequences of these laws. I asked Ken why resorts don't have their own deedback programs that charge a fee with 1-2 years maintenance fees. He said because he can't get HOAs to do the right thing. That was refreshing to hear.

I told him that once we get rid of these transfer companies that one of the unintended consequences is that resorts will be even less motivated to fix their problem because owners will be locked in with no way out. He seemed to believe that owners enmasse would just stop paying maintenance fees.

 

[vacationhopeful]

You are arguing that because the owner had to pay money in a real estate transaction that it is fraudulent. That couldn't be more wrong.

If I have a dead automobile sitting in my drive way and I call a company to take it away and I pay them $100 to take title, then you are claiming that is a fraudulent transfer. It is not. In fact, I have done this exact thing.

There are usually 3 parties to a transfer. A grantee, A grantor and the resort. The Grantee and Grantor must be competent and most of the time must have an agreement in writing in order for a transfer of title. There must be some type of consideration, but it doesn't have to come from the grantee. Then, the resort sets up a process for approving or recognizing a transfer. Once all parties acknowledge the transfer and all the rules for transfer are performed (e.g. deed recording), it's done. Title has transferred legally.

Transferring a deed to Donald Duck is fraudulent because Donald Duck cannot sign an agreement to transfer title since it is a fictional character. An LLC is a legal entity with a person who can sign legally on its behalf. Once they do, it's not fraudulent. Again, the entity may be fraudulent, but the transfer is not.

Of course, I am assuming that the transfers were done properly. It could be that the transfer/title company did bad work which could result in clouds over title, but that is probably not what is being alleged in this complaint.

Boca,
We are not in total disagreement. You asked for theory and remedies. I am not a lawyer.

As for my term "competent" buyers and sellers ==> I will edit that to be "a willing and arms length real estate transaction" between buyers and sellers.

Resorts currently recognize and process a deed on simple items; unit number, week, former owner, new owner and account balance on MFs. $75-100 is what MOST resorts charge and reflects the clerical time to update records. This has been the standard for most independant HOAs (good or bad for years). But as noted by others here on TUG, some deeds presented are not correct and the resorts had found prior recognized deeds were incorrect. And the resorts DO correct those mistakes WHEN FOUND. Wyndham (and several of the other chains or resorts) require a BIGGER deed transfer fee. Yes, $299 for each Wyndham deed is 4X what my one resort charges. But each Wyndham deed is NOW reviewed by their contracts or title department and many resale deeds are sent back to the seller to be corrected. Standards do change.

 

[BocaBum99]

Yes but in the mortgage case, it was the gov't ordering banks to make those loans. They were ALL complicit.

In this case, it would seem fraud would be easier to prove.

okay, state your case for the fraud and I will state the case against fraud. Then, you will see that it is not easy to prove.

 

[BocaBum99]

Boca,
We are not in total disagreement. You asked for theory and remedies. I am not a lawyer.

As for my term "competent" buyers and sellers ==> I will edit that to be "a willing and arms length real estate transaction".

Your definition of competent and the legal definition of competent are not the same. That is what I was pointing out. That lead you to conclusions that don't follow.

Maybe a better term would be our theories and completely opposite. You believe that the transfers will be nullified thereby putting the onus on the owners to take action and incur cost to make the transfers happen. I believe that the transfers will be held to be legal (except in cases such as where FredM describes fraudulent signatures, witnesses and such) thereby putting the burden of proof on the resort to show intent to defraud. Each theory is dramatically different in the types of actions that would be required by all parties. If Americana Vacation Club could get a judgement such as what you suggests, they would be dancing in the street. I highly doubt that will happen.

 

[vacationhopeful]

... If Americana Vacation Club could get a judgement such as what you suggests, they would be dancing in the street. ....

I believe a competent lawyer KNOWs the written law, but a good lawyer SELLs a concept to the client whereas a great lawyer convinces the JUDGE his position is the LAW with his client being the winner.

 

[buzglyd]

okay, state your case for the fraud and I will state the case against fraud. Then, you will see that it is not easy to prove.

Well, true.

It's not going to be easy and if they can prove fraud, what happens to the deeded weeks?

Also, let's say in some cases, the owner KNEW he was deeding it to a Viking Ship. Then what happens?

I think the TS industry is more on top of these things know and is putting systems into place to prevent these transfers but there are thousands of them out there.

 

[vacationhopeful]

...Maybe a better term would be our theories and completely opposite. You believe that the transfers will be nullified thereby putting the onus on the owners to take action and incur cost to make the transfers happen. I believe that the transfers will be held to be legal (except in cases such as where FredM describes fraudulent signatures, witnesses and such) thereby putting the burden of proof on the resort to show intent to defraud. Each theory is dramatically different in the types of actions that would be required by all parties. If Americana Vacation Club could get a judgement such as what you suggests, they would be dancing in the street. I highly doubt that will happen.

If Americana Vacation Club gets other resort chains to join forces with them, divide up the listed defendants, find these ro-bo-signed deeds and notary signatures... it might be possible. It happened in the banking industry and their mortgage business with their home foreclosures.

 

[Fredm]

How can you have a civil case against an industry? You are basically saying that the plaintiff is suing the industry because the industries collective actions resulted in deeds being in places that are not paying maintenance fees and they cannot get the deeds back. In order to prove harm, I think you need to prove that these entities did something illegal and as a result directly harmed the plaintiffs.

Boca, I agree they need to prove they did something illegal.

At the end of the day, the PCC business model is fine. Many of their tactics are unethical, but the business model is fine. They are basically getting paid to liquidate properties. The problem is that many of these properties are worthless and the resorts won't take them back, nor will they take action (e.g. cut maintenance fees or attempt to terminate the timeshare plan or create a sales and marketing program for returned property).

The business model may be fine, in theory. No argument.
But, every PCC I know of accepts fess to liquidate properties that they know IN ADVANCE cannot be liquidated on the scale that they assume them.
The Viking ships exist to dispose of the inventory that they know will be the byproduct of collecting the liquidation fee. THAT is what has to be demonstrated. Given the volumes involved accross the entire industry, I think the outcome speaks for itself.

This is a complete shell game that can only be solved by the resorts. They must get their maintenance fees in line or go terminate the timeshare plan. If there aren't actions that force these 2 things to happen, nothing will work

.

I agree that the industry must address the problem in an enlightened way. That is not a defensive argument for what some of these folks are doing.
If we agree that the only way the problem can be addressed is by the things you describe, then we should also agree that PCC's will, by definition, encounter the same market forces that exist in their absence. Therefore, the wholly predictable outcome will be a viking ship. It becomes a circular argument. Indeed, if a PCC were to use that argument to justify their actions, it would be self-indicting.

Show me a PCC that rejects a liquidation fee because they know they cannot find productive home for it, and I will change my mind.

As to actions that force HOA's to do what is necessary, if you are saying that Viking ships serve that purpose, and are therefore a positive force for good, - well - that is one way to rationalize it.

In my view the PCC business model can serve a constructive purpose if performed in partnership with an enlightened HOA. Essentially, a contractor relationship. But, it does require HOA's to wake up. Meanwhile, lack of action by the HOA's has created the void that these bad actors fill.

 

[Bill4728]

Anyone have a theory for the complaint and what the remedy might be to settle the case?

It seems to me that the Vacation Club would argue that all of these parties implemented a business model to leave timeshare intervals in LLCs and leave them to die with a fraudulent intent to not pay maintenance fees.

This very likely was the model they used.

The defendents would claim that they tried to sell them off and create inventory for vacation clubs. But, the resort was so poorly managed that the inventory became worthless. So, there was no intent to defraud, but there was mismanagement by the resorts that lead to the zero value.

Then, the defendents would offer to give back all the intervals at no cost. In other words, simply surrender the assets to the resort. The Vacation Club would agree to take it back if they brought all fees up to date plus maybe one year.

This is a very interesting idea. Many resorts which have no resale value are still selling units via the developer for big money. Why couldn't they be charged with fraud too. selling something that they know has no resale value seems to me to be just as illegal.

 

[ronparise]

I sure would like to read the complaint

and even if the vacation club proves their case and wins; Whats the remedy?


My 2 cents...I think the vacation club is going to regret bringing this action. because the end result will be a justification of the PCC business model. If the vacation club is lucky they will get their weeks back without foreclosing

 

[timeos2]

If these properties had value, the lawsuit would be much diffferent. The plaintiffs would simply be suing to reclaim property and asking the defendents to simply deedback property.

This is a complete shell game that can only be solved by the resorts. They must get their maintenance fees in line or go terminate the timeshare plan. If there aren't actions that force these 2 things to happen, nothing will work.

Ah but there IS value as in nearly every case 85-90% or more of the owners ARE paying. In many cases there is a sales force on site still selling for thousands or even tens of thousands. And of course the tax man is there assessing value and NEVER declaring it to be $0. So the weight of proving "value" would usually go to the Association / Resort not to those trying to claim no value - no foul.

This is but one of a number of fronts this war is going to be fought on. In many cases just the knowledge that they could potentially be successfully sued will discourage both the perpetrators of these operations and the owners foolish enough to fall for them. No one PAYS $2500+ thinking they got "a deal" to be out of a timeshare. They know something is wrong and are just hoping they can saddle others with their problem child rather than correctly handling it themselves.

I'm very happy to see these actions. Trying to lump into this the fact that there are older, smaller resorts that should be dissolved is a separate issue from this one. Those that are truly obsolete can and should disband using the process available to them to accomplish that. These operations are a roadblock to that process not any type of help. The sooner these crooked operations can be eradicated from existence the better off everyone in timesharing will be.

 

[VictorW]

I notice none of the ones who actually sell their inventory on the back end (J&J Timeshare [Donate for a Cause], Timeshare Relief, etc.) aren't mentioned. I wonder if this one was on their "Do not take" because the inventory doesn't sell. Speaking of which, does anyone have the Do Not Take list?

 

[DeniseM]

Incorrect - some of these entities are listed under the owner's name - rather than the business name.