[ MERGED ] Michigan family jailed in Mexico over timeshare dispute

[jp10558]

Only one problem with this -- if Palace had the "subject to change" clause in their contract, then by definition they didn't break the contract as it was perfectly legal to make those changes.

Kurt

If you read the various stories - this was in the first contract, hence why they couldn't do anything till Palace offered them a second contract that didn't have this clause for whatever reason around the time of the bachelor party bookings.

Of course now that I think of it, I don't think it is ever a good idea to sign a contract for a bunch of money with "subject to change" in it cause then... it's not much of a contract right?

 

[iftravel]

Seeing how ARDA stands for AMERICAN Resort Developers Association and is a lobbying group that cannot accept funds from foreign sources, I would say no, they're not part of ARDA.

Yeah Gulf of American is also aka Gulf of Mexico…lol

 

[Roger830]

My big takeaway here is surprise that the credit card company grabbed back 13 months payments.

I don't know how that system works, but with Wyndham udi points the monthly mf is for the current year. Someone could rent all of their points for January, then at the end of the month cancel autopay. It looks like they did something like that and also took action to be refunded for 13 months prior. Thus the could have received possibly two years of rents with no cost to them.

This might not be illegal but does appear to be dishonest. Then to brag about it on facebook and tell others how to do it does appear is hubris.

It seems that their best path is to agree to a financial settlement with the charges dropped so that they can be released from jail, of course after the check clears.

 

[trippka]

What is curious is that it sounds like the buyers paid $1M upfront for this program? Yikes. Where did a retired cop find $1 million to support this without a loan? It would have been obvious to Palace when they ran a credit check during the contract signing that they had insufficient income to cover maintenance fees and possibly the $1M loan and had to rent commercially to cover the costs.

Reminds me of the guy who paid $290k to buy a lifetime pass on United. Did he maximize it? Sure. Does United hate having to honor it 45 years later? Of course. But life goes on, United is still in business making money elsewhere (Lesson learned and they don't do this anymore).

(I recognize @PigsDad statement about Mexican laws, and agree. However such overreach will damage the Mexican Tourism industry and they have historically been very protective of that revenue source.)

In 1990, Tom Stuker bought a lifetime pass from United Airlines for $290,000. He has since flown 23 million miles and calls the purchase the 'best investment' of his life.

A United lifetime pass that Tom Stuker purchased in 1990 has helped him fly 23 million miles. His frequent-flier miles have unlocked major perks.

www.businessinsider.com

I don't believe he was a cop. I don't know for sure, but it sounded like he was hired as a consultant or some sort of contractor. Yes, he worked with the state police department, but she never said he was a cop. Secondly, it was my impression that there was family money. If I remember correctly, it was paid off. No spending limit on Amex. Just charge it and you have 30 days to pay and get a ton of points. Because she didn't work, she could spend huge amounts of time at Palace Resorts with the all-inclusive food, drinks, activities, etc.

 

[CalGalTraveler]

Thanks for clarifying @trippka. It sounds like AMEX recouped the money for the AI for the bachelor party rooms that Palace cancelled.

But buyer's $1 million initial payment is gone? Yikes that's a lot of money to lose. Why aren't they suing in the U.S. civil courts for breach of contract since Palace has an office in the USA? Do you think this jailing is pre-emptive to get them to negotiate because they do not want to deal with the U.S. courts and law?

This case is getting more complex.

 

[claraj]

According to LinkedIn, he is a Mechanical Engineer responsible for Physical Plants for the State Police.

 

[Patricia9]

While the situation for those who walk away from paying any more MFs to Mexican timeshares is quite different than this I have wondered if a company would try to get a warrant for you if you stopped paying them. My contract does say they can take action in a Mexican court for breech of contract. That court order wouldn't be valid in the US, but if I decided to take a vacation in Mexico I could see getting flagged as soon as I went through customs into Mexico. So my advice is if you do walk away from your Mexican MFs don't ever go back. Canada is nice.

 

[dioxide45]

Thanks for clarifying @trippka. It sounds like AMEX recouped the money for the AI for the bachelor party rooms that Palace cancelled.

But buyer's $1 million initial payment is gone? Yikes that's a lot of money to lose. Why aren't they suing in the U.S. civil courts for breach of contract since Palace has an office in the USA? Do you think this jailing is pre-emptive to get them to negotiate because they do not want to deal with the U.S. courts and law?

This case is getting more complex.

It is likely based on how the contract is written. Most all contracts I've seen in the US say any litigation will be done in such and such state. The same or similar terms are probably in the contract signed in Mexico that litigation needs to be done in Mexico. Of course that would just be a contract dispute. I suppose for fraud charges, which seem criminal in this case, they needed to take it to a Mexican court. Are they even seeking monetary damages? Perhaps their plan was to make an example of this couple?

 

[CalGalTraveler]

It is likely based on how the contract is written. Most all contracts I've seen in the US say any litigation will be done in such and such state. The same or similar terms are probably in the contract signed in Mexico that litigation needs to be done in Mexico. Of course that would just be a contract dispute. I suppose for fraud charges, which seem criminal in this case, they needed to take it to a Mexican court. Are they even seeking monetary damages? Perhaps their plan was to make an example of this couple?

Good point. I am not a lawyer but it would seem if payments were made to the U.S. entity at any time the buyer would have standing to litigate because funds supporting the contract were collected and enforced in the USA. Alternatively, if Palace attempts to report the buyer to U.S. credit bureaus would Palace have standing to put any reporting there (an action of contract enforcement) if it is deemed that the contract was signed soley under Mexican laws and authority?

IMHO it seems like it cannot just benefit one party if there is an office in the USA that collects payments against a contract and enforces the contract via credit score reporting.

 

[jbman]

Thought experiment - say someone bought an absurd number of Wyndham points from the developer, say 10 million points, and began paying monthly payments for both the maintenance fees and the loan for the purchase on a credit card.

When they bought the points, the Wyndham salesperson told them they could rent out the points for profit to pay their maintenance fees.

In the first year, they used all 10 million points for their own personal use and to let family and friends go on vacations as well.

After that first year, they start to rent out the points for profit, Wyndham sends them a cease and desist letter stating they cannot use the points for commercial purposes and cancels a number of reservations they have made for other people.

They then claim breach of contract as they were induced to purchase by the salesperson who told them they could rent out for profit and they contact their credit card company to reverse the all the charges incurred and the credit card company sides with them.

Now the contract itself and any future payments are clearly a civil matter which Wyndham could choose to pursue.

But what about the year of vacations they took and then decided they did not need to pay for, let's just say for simplicity, the maintenance fees on those points, which they actually used for their own benefit and did not have to pay for because the charges were reversed, was $100,000.00, does that become a criminal matter?

 

[Ckhawaii]

I live in Guadalajara. We are not a banana republic. If Immigration and customs detained them and are keeping them, it is something serious. It’s not because they just disputed a 100k credit card charge, permanent residents come down here run up their Mexican credit cards and bail all the time. So if that were the case, hundreds if not thousands of Americans and Canadians would be detained at the airport. Something else is going on, this is bad optics for the country and bad for tourism. Government wouldn’t let it escalate this far.

I’ll try to see if I can find more info in the local media of Cancun/ Quintana Roo

 

[CalGalTraveler]

@jbman I do not think that your scenario applies to this situation. AFAIK from the information supplied, AMEX clawed back $100k in AI fees that had been collected for reserved bachelor party rooms but Palace subsequently canceled the reservations and did not deliver the services that were paid for with the AI Fees. This is why AMEX refunded. There is no reference that they were behind on maintenance fees or were trying to recoup maint fees. YMMV I am only going from the info that I have.

I will be very interested in hearing what @Ckhawaii learns. $1M - yikes who pays that much for a timeshare when you can buy a wholly owned condo? Two contracts and Amex clawbacks. There must be more to this.

If she was living there months at a time, per the story, perhaps she was working commercially out of the timeshare in garnering referral rentals for the units and violating her visitor visa? That would be more serious. But that does not explain jailing her husband who apparently wasn't there all the time.

 

[1Kflyerguy]

Good point. I am not a lawyer but it would seem if payments were made to the U.S. entity at any time the buyer would have standing to litigate because funds supporting the contract were collected and enforced in the USA. Alternatively, if Palace attempts to report the buyer to U.S. credit bureaus would Palace have standing to put any reporting there (an action of contract enforcement) if it is deemed that the contract was signed soley under Mexican laws and authority?

IMHO it seems like it cannot just benefit one party if there is an office in the USA that collects payments against a contract and enforces the contract via credit score reporting.

How do you know the payments were made to the US entity? Do we even know what that office does? It may have nothing to do with the payments or the contracts?

Like Dioxide45 said, most contracts specify where any litigation will be handled.

I work for a major US tech company, we sell products and have offices all over the world. However we use a complicated corporate structure, the Double Irish Dutch Sandwich (its a real thing), and we have two locations for payments, and locations for any legal disputes are well spelled out in our contracts.

 

[CalGalTraveler]

How do you know the payments were made to the US entity? Do we even know what that office does? It may have nothing to do with the payments or the contracts?

Like Dioxide45 said, most contracts specify where any litigation will be handled.

I work for a major US tech company, we sell products and have offices all over the world. However we use a complicated corporate structure, the Double Irish Dutch Sandwich (its a real thing), and we have two locations for payments, and locations for any legal disputes are well spelled out in our contracts.

I said "If." I am well aware of contract clauses that declare the venue for lawsuits.

I was pointing out the oddity that IF they have a U.S. office for the purpose of credit reporting when buyers default, then why can they report i.e. an act of enforcement of the contract on U.S. soil, and not be held accountable for contract litigation on same. It seems one-sided. They should be limited to Mexican credit reporting if that is the venue for lawsuits.

 

[jbman]

@jbman I do not think that your scenario applies to this situation. AFAIK from the information supplied, AMEX clawed back $100k in AI fees that had been collected for reserved bachelor party rooms but Palace subsequently canceled the reservations and did not deliver the services that were paid for with the AI Fees. This is why AMEX refunded. There is no reference that they were behind on maintenance fees or were trying to recoup maint fees. YMMV I am only going from the info that I have.

I will be very interested in hearing what @Ckhawaii learns. $1M - yikes who pays that much for a timeshare when you can buy a wholly owned condo? Two contracts and Amex clawbacks. There must be more to this.

If she was living there months at a time, per the story, perhaps she was working commercially out of the timeshare in garnering referral rentals for the units and violating her visitor visa? That would be more serious. But that does not explain jailing her husband who apparently wasn't there all the time.

I agree there must be more to this every aspect seems preposterous.

I have no idea how the Palace Resorts system works, I was just trying to think of a scenario someone could try and use credit card charge backs to game the system to get benefits without paying in a more familiar system.

For me, I do consider either parties motivation to lie, for Palace Resorts, I don't see what motivation they could have to do this, in fact, as people have pointed out, it would seem even if they are in the right, it would still not be in their interest to proceed in this fashion due to the bad press. For the Akeo's though, if they did commit fraud, they, or their daughter, have every motivation in the world to claim they did nothing wrong.

I'm sure the truth will come out eventually, very interested to see what happens.

 

[dioxide45]

For the Akeo's though, if they did commit fraud, they, or their daughter, have every motivation in the world to claim they did nothing wrong.

There is a term that salespeople use "buyers are liars." Just like we say "how do you know they're lying? Their lips are moving."

 

[PPAES]

Interpol isn't an agency that has warrents out for anyone's arrest. They are an international intergovernmental police organization that is really just about information sharing. They issue notices so those with warrants issued in member countries can be picked up by any other member country. Their charges are in Mexico, the warrant was issued in Mexico and they were wanted on charges in Mexico. Though they could have been detained my any member country of Interpol. Also, where is this information about Palace Resorts being a US based company?

I do find the detainment to be excessive given non violent crimes, but this is Mexico and it's their country and their laws. It is also possible that if released and returned to the USA, they would never be returned to Mexico to face the charges.

The information about the HQ location was published by a few sites.

Michigan couple jailed in Mexico over timeshare, family says

Michael Lemke has spent the last three weeks working alongside his sister, Lindsey, to figure out why their parents, Paul and Christy Akeo, have been stuck in a Mexican jail over what they call wrongful credit card charges.

www.cbsnews.com

Couple Jailed In Mexico For Resort Credit Card Dispute: Mistake Or Fraud?

An American couple claims to have been arrested in Mexico after disputing fraudulent credit card charges. However, the government disagrees.

onemileatatime.com

 

[Fido Chuckwagon]

does that become a criminal matter?

No. Not even close in your thought experiment. First of all, they didn’t have the intent to defraud at the time they took the vacations, which is what would be required to make it criminal, but honestly, even if they did, no US based law enforcement agency or prosecutor is ever filing a case like that. That’s what we have civil courts for.

 

[easyrider]

There is a term that salespeople use "buyers are liars." Just like we say "how do you know they're lying? Their lips are moving."

Yup. Buyers are liars, sellers are swindlers and the rabbit always wins.

Bill

 

[pedro47]

According to LinkedIn, he is a Mechanical Engineer responsible for Physical Plants for the State Police.

View attachment 108325

IMHO, there is more to this story than what have been released by the media.

 

[Mongoose]

I agree there must be more to this every aspect seems preposterous.

I have no idea how the Palace Resorts system works, I was just trying to think of a scenario someone could try and use credit card charge backs to game the system to get benefits without paying in a more familiar system.

For me, I do consider either parties motivation to lie, for Palace Resorts, I don't see what motivation they could have to do this, in fact, as people have pointed out, it would seem even if they are in the right, it would still not be in their interest to proceed in this fashion due to the bad press. For the Akeo's though, if they did commit fraud, they, or their daughter, have every motivation in the world to claim they did nothing wrong.

I'm sure the truth will come out eventually, very interested to see what happens.

There is: https://www.dailymail.co.uk/news/article-14545671/american-couple-cancun-timeshare-fraud.html

 

[Roger830]

The dailymail piece above has a screen shot of a post from Christy's Facebook account where she encourages others to cheat Palace out of of credit card charges.

Also a good description of how they used the Palace system.

"The messy saga centers around a timeshare investment they first made in 2016 and continued to upgrade 18 times as the years wore on, totaling a $1.409million investment into Palace Hotels.
Christy herself told another hotel goer that she often visited the resort once a month to escape Michigan's dreary weather, making the most of her $500,000 investment into the venue.
According to the resort, she and Paul 'made a total of 1,570 bookings' during the course of their membership, which was last upgraded in 2021.
But when they weren't using the resort, they would advertise their room out on social media channels, primarily Facebook, offering all-inclusive food and drink packages, manicures and massages, as well as the accommodation.
Christy claimed her relationship went south with Palace because she and Paul successfully referred so many members that they'd amassed a huge amount of free week-long stays, which were used as incentives for members to lure in new clients."

 

[jp10558]

The dailymail piece above has a screen shot of a post from Christy's Facebook account where she encourages others to cheat Palace out of of credit card charges.

IDK, sounds like advice given on TUG all the time - stop paying MFs as "the only sure way to get out of a timeshare". Seems like a novel definition of fraud to me. It also sounds like when I read that screenshot it was only to stop future payments.

Also a good description of how they used the Palace system.

"The messy saga centers around a timeshare investment they first made in 2016 and continued to upgrade 18 times as the years wore on, totaling a $1.409million investment into Palace Hotels.
Christy herself told another hotel goer that she often visited the resort once a month to escape Michigan's dreary weather, making the most of her $500,000 investment into the venue.
According to the resort, she and Paul 'made a total of 1,570 bookings' during the course of their membership, which was last upgraded in 2021.
But when they weren't using the resort, they would advertise their room out on social media channels, primarily Facebook, offering all-inclusive food and drink packages, manicures and massages, as well as the accommodation.
Christy claimed her relationship went south with Palace because she and Paul successfully referred so many members that they'd amassed a huge amount of free week-long stays, which were used as incentives for members to lure in new clients."

This still really confuses me - the reason Christy says she stopped paying is Palace stopping them from using the paid for weeks. Palace hasn't disputed that yet - their whole complaint seems to be that they were unhappy she was booking so much time at the resort - but she was paying them for every week or using weeks they awarded her. She even said they were OK with the forward looking change as that was allowed in the contract, but the attempt to remove already awarded and booked weeks was what they didn't like. (Well, I mean what made them stop paying).

I have trouble seeing them as committing fraud - from what's been reported anyway they would have continued paying as they did since 2016 to 2022 if Palace kept providing the paid for service. From what I can tell, none of this was for a loan, it was for the actual MFs to use the weeks. As I understand it, they felt they had to keep paying, and would have tried if Palace just changed the terms going forward as allowed in their contract. I have trouble imagining you can retroactively claw back booked weeks and issued weeks by a contract language change after those were issued as a contractual matter.

But lets leave out legal things - I certainly don't want to go to Mexico if their legal system works like this - debtors prison is not a good look ever. What do they do when people just don't have money cause of life changes at Palace?


I also don't understand how any of this makes sense for Palace - They have a couple that has bought a membership in 2016, upgraded 18 times through 2021, paid 1.4 Million dollars, and pays the ongoing fees for their intervals. The problem is they actually used the intervals they either paid for or got awarded. This boggles my mind, and makes me think Palace is a scam - they must be overbooking or something and really don't want anyone to actually use what they paid for.

Even if they found the award weeks "too much" the smart thing to do would to end that promotion and just grin and bear people using up the already awarded weeks.At the rate they were going, it would have been a year or two to use up the 75 weeks? It sounds like they were overlapping interval use.

Instead, what Palace has done is make anyone seeing any of these news articles re-think Mexico for vacation, and certainly think to avoid Palace and probably all Mexico timeshare systems.

 

[CalGalTraveler]

The dailymail piece above has a screen shot of a post from Christy's Facebook account where she encourages others to cheat Palace out of of credit card charges.

Also a good description of how they used the Palace system.

"The messy saga centers around a timeshare investment they first made in 2016 and continued to upgrade 18 times as the years wore on, totaling a $1.409million investment into Palace Hotels.
Christy herself told another hotel goer that she often visited the resort once a month to escape Michigan's dreary weather, making the most of her $500,000 investment into the venue.
According to the resort, she and Paul 'made a total of 1,570 bookings' during the course of their membership, which was last upgraded in 2021.
But when they weren't using the resort, they would advertise their room out on social media channels, primarily Facebook, offering all-inclusive food and drink packages, manicures and massages, as well as the accommodation.
Christy claimed her relationship went south with Palace because she and Paul successfully referred so many members that they'd amassed a huge amount of free week-long stays, which were used as incentives for members to lure in new clients."

So far there doesn't appear to be anything wrong in what was stated here in this post. Did they maximize Palaces generous sales referral program for bonus weeks? Yes but that was in their contract and Palace acknowledges that below. If I spent over a million I would want my money's worth. And the Sales Reps in the office probably encouraged the use of bonus weeks - we know how they work. So far nothing wrong here.

The AMEX charges appeared to be from AI charges from upcoming bookings that Palace cancelled for her son's bachelor party. That appears legitimate.

Perhaps I am missing something. They state that she was encouraging others on Facebook for unhappy customers to stop paying and charge back their credit card . That is not much different than advice I see here on TUG for people to get back their original payment if they have not used their unit - no service rendered.

That does not mean that the jailed buyers did this themselves. Unless there is other evidence, this is not a crime. People (especially politicians) post lies in the Internet and press all of the time. And certainly does not rise to the level of jailing someone for 6 months without evidence to prove that fraudulent postings were made.

I know there is flight risk but Palace does have an office in the USA...

 

[WorldT]

IDK, sounds like advice given on TUG all the time - stop paying MFs as "the only sure way to get out of a timeshare". Seems like a novel definition of fraud to me. It also sounds like when I read that screenshot it was only to stop future payments.

Not the same advice as given on TUG.
This was not just about the individuals stopping future payments. The successfully got the previous charges on their card reversed (a total of 13 charges totalling over 100k). I am not saying they are wrong or right, I am just saying that is not what we recommend on TUG.
On TUG, we usually recommend two things:

1. For a person who is still under the cancellation window and has followed the contractual procedures to cancel the contract but did not receive their money, they should pursue a charge back with their card.
2. For a person who is outside the cancellation window, stopping any future payments will effectively end the contract.