Deceptive
Timeshare, Campground and Travel Club Sales
May Do Time, But Not Sharing
05/24/03 One of the UK's most notorious criminals, timeshare
fraudster John "Goldfinger" Palmer, has been allowed
to keep his £33m spoils after a blunder by appeal court
judges, it was ruled yesterday.
Palmer, 53, of Bath, was jailed for eight years at the Old
Bailey in May 2001 for conspiracy to defraud in one of the
biggest timeshare frauds ever uncovered.
A £33,243, 812 confiscation order was imposed against
him in April last year, but it was overturned by the appeal
court in July on the basis there had been crucial flaws in
the procedure followed.
Yesterday the Lord Chief Justice, Lord Woolf, was sitting
with four other appeal court judges in a highly unusual move.
He ruled that the court had misunderstood and misapplied
the law and Palmer's case had been wrongly decided.
Lord Woolf's decision will not make any practical difference
to Palmer, who will be still allowed to keep the money as
the original decision to quash the confiscation order cannot
now be overturned.
Appeal court judges last November blocked an attempt by
the director of public prosecutions to take the case to the
House of Lords - the only court with the power to quash the
ruling. Lord Woolf said the issues raised were of broad importance,
which was why the unusual step had been taken of constituting
a five-judge court. "The court considers the law was
misunderstood and misapplied in Palmer," he said.
The decision to overturn the confiscation order had caused
panic in prosecution circles and there had been at least
10 test cases on the same issue. Lord Woolf said he hoped
the decision would put an end to the "string of appeals" against
conviction orders, sparked by the Palmer case.
The original confiscation order required Palmer to pay £20m
within two years. Around 360 victims of his frauds were due
to get a share of £2m. But £33m was earmarked
to go to the Treasury.
During another hearing last November, Palmer lost his appeal
against his eight-year sen tence. Dismissing the appeal,
Judge Findlay Baker told him: "Those who enter into
complex international conspiracies should not expect sympathy
when the process of being called to account turns out to
be burdensome."
Palmer defended himself throughout his fraud trial and claimed
he was a legitimate businessman,not involved in anything
fraudulent.
He maintains he has been persecuted by the police after
a jury acquitted him of handling gold from the 1983 £26m
Brink's-Mat bullion robbery at Heathrow airport. The case
earned him notoriety and the nickname Goldfinger. He moved
to Tenerife to set up his timeshare business in the 1980s.
Palmer's lover Christine Ketley, of Brentwood, Essex, was
also convicted of conspiracy to defraud.
In 2001, Palmer was ranked alongside the Queen in 105th
slot in the Sunday Times Rich List, with an estimated fortune
of £300m. He slipped to 129th position last year as £30m
was wiped off his fortune to reflect his timeshare fraud.
Palmer, born into a poor family in Solihull, went from selling
paraffin to dealing in cars before becoming a jewellery dealer.
He sold his chain of shops in the 1980s as he set up his
timeshare business, which operated close to Playa de las
Americas.
The Guardian - Helen Carter
Clubbed On The Head
You receive mailings and calls encouraging you to attend a sales
presentation for a travel club membership. You are promised "guaranteed
lowest price" travel along with large savings and rebates
on travel arrangements if you purchase a membership. Membership
in the club is said to also include access to vacation condos at
a reduced rate and special packaged trips and/or cruises.
To get you to buy a membership, costing $1995 to $4995, plus annual
dues of up to $200, they promise exaggerated savings, and state
that the Attorney General controls their sales methods by (1) requiring
them to sell only a limited number of memberships, (2) offering
for sale only certain packages for certain prices, and (3) requiring "one
day only" prices.
Even though they say the sales presentation will last only about
sixty minutes yours exceeds three hours in length during which
time they state;
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the travel club membership can
be canceled at any time even though the contract states it
is non-cancelable and non-refundable; |
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that it's in your best interest
to sign an excessively one-sided contract giving them the option
to cancel, create or change conditions without your approval
or a corresponding right to cancel; |
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you are to get a five percent rebate
on all travel booked through Vacations Outlet, when in fact,
the rebates only apply to certain types of travel; |
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you are to get free airline tickets
for attending the presentation but fail to say they require
a seven to ten night hotel stay at your expense; and |
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that they are a member of various
tour operator and travel agency associations, when, in fact,
they are not. |
They fail to: make requested travel arrangements; obtain the lowest
price; honor their cancellation policy; deliver on promises that
you would save thousands of dollars in airfare and other travel
expenses; or disclose that flights will be canceled unless 50%
of each charter flight is booked in advance.
In addition to making false promises, they use "free prize" offers
to lure people to attend the sales presentations and fail to give
refunds within the required cancellation period. To take advantage
of these so-called savings, you would have to constantly be on
the go as your membership fees are more than what you would spend
in a year for travel.
No Praise for these Appraisals
Four Massachusetts residents and six Florida men have been named
in a fifty-count indictment for running a timeshare appraisal scam
that took in over $15 million from approximately 38,000 victims nationwide
over four years. The ringleader was arrested in St. Maarten, Netherlands
Antilles and detained pending his extradition to the United States.
Purporting to represent a real estate investment company based in
Florida and Texas that wants to market or buy your timeshare property
for a high percentage of its appraised value they would say an appraisal
must be performed first.
He and his co-conspirators, established a complex network of more
than a dozen companies designed to convince owners who were interested
in selling to purchase a $399 "appraisal" of their timeshare
which they would reimburse at the time of closing.
They would call saying they represented a large corporate buyer
called Swiss American Bank and that Swiss American simply needed
an assessment of the property's value. The caller would suggest
owners pick a company accredited by an independent multi-listing
service then refer you to a purportedly independent service, Multi-State
Listing Service ("MLS")-- a second boiler room, which would
provide you with a list of three to four "independent" appraisal
companies supposedly with personnel in the area of your timeshare.
Selecting one from the list you would then be called by a third
boiler room which stated they were actually calling from that appraisal
company. In this call, you were coaxed into providing your credit
card number and then immediately billed for the appraisal.
These purportedly "independent" companies, spread out
across the United States, produced reports which had virtually identical
formats, the same standard language and often contained the same
typos. Every one was opened for the sole purpose of executing this
scheme and was run by friends, family or promoted telemarketers.
They used names such as Resort Condo International Appraisals, Inc.,
Resort Certified Appraisals, Inc., Resort Evaluations, Inc., Interval
International Appraisals. and had locations in Mass., Rhode Island,
Florida, Michigan, Nevada, Georgia, Louisiana, and Windsor, Ontario.
Resort Condo International (RCI) Appraisals was a multimillion-dollar
international time-share-valuation business which shared office space
with a used-car dealership. The owners of RCI Appraisals, a Hyannis
couple who live less than a mile from Carquest, were raking in upwards
of $80,000 a month by providing appraisals of time-share properties
around the world, despite having no experience in real estate.
Roughly eight weeks later, they would mail you out a bogus two-page "appraisal" that
falsely represented that your timeshare had been inspected. Netting
them over $12 million, the reports were simply printed off a database
at a total cost of roughly $25 each.
According to Michael Upton's lawyer, the couple will say Jill's
father convinced them to open RCI Appraisals and they believed it
to be an honest business. A warrant to search the ramshackle
Carquest building yielded 30 boxes of documents, which led to seizures
in Texas and Florida.
Over four years, only eleven of the more than 38,000 people who
purchased appraisals actually closed on the sale of their timeshare.
The vast majority never received an offer or received paltry offers
far below the market value.
When timeshare owners pressed for answers, they were confronted
with unreturned phone calls, answering machines, disconnected numbers
or a litany of excuses for the delay in processing their paperwork.
All of the defendants are charged with multiple counts of mail and
wire fraud, each of which carries a maximum penalty of five years'
imprisonment and a $250,000 fine, as well as restitution.
Money laundering charges, each of which carry a maximum penalty
of twenty years' imprisonment and a $500,000 fine were added because
they wired over $7 million to accounts which used these funds to
further promote the scheme by paying telemarketer commissions and
operating expenses, such as rent, utilities, and the purchase of "lead
lists" of potential sellers.
Case Update 10/22/02 (Boston) - Donald L. Gonczy, age 68,
of Florida, was sentenced to 7 years' imprisonment, to be followed
by 3 years of supervised release, for running a highly sophisticated,
nationwide telemarketing fraud operation that victimized over 38,000
people out of $15.4 million.
The judge also imposed a fine of approximately $142,000, representing
all of his assets held in his Austrian bank account and barred him
from any employment involving sales.
Donald Gonczy, pleaded guilty after the first week of his trial
in June 2002 and has been in federal custody since he was arrested
in St. Maarten in January 2001.
Gonczy's son, Scott was sentenced to 3 years and 10 months' imprisonment,
his daughter, JILL Gonczy Upton, who cooperated with the government,
received a sentence of 3 months' community confinement, to be followed
by 1 year and 3 months of home detention. Her husband, Michael Upton,
was sentenced to 2 years' incarceration. Todd Gonczy, his oldest
son, who pleaded guilty at the outset of this case and assisted in
the prosecution of his father and siblings, received a sentence of
5 years' probation.
They all say they're broke. On his affidavit filed to obtain a court-appointed
lawyer, Donald Gonczy claimed to have just $1,000 cash and no other
holdings or property. He had been living, he said, on Social Security
payments and dividends from an investment in the Bahamas — an
offshore company authorities say he created to hide his money. At
the deposition, the government claimed Gonczy moved $1.1 million
to the Bahamas and at least $200,000 to a bank in Austria.
Peter Train and Buck Shelton, two unrelated participants,
received sentences of 2 years and 3 years and 5 months' imprisonment
respectively. Two other defendants, S. Joel Epstein and John
Handel, were convicted following a four-week trial and will be
sentenced later this fall. Epstein, whose sentencing is scheduled
for October 29, 2002, was convicted of conspiracy, mail fraud, wire
fraud and money laundering. Handel, 51, of Yarmouth, was convicted
on five counts of mail fraud for his role in this scheme and will
be sentenced on December 11, 2002.
In addition to the defendants who have already been convicted, one
other individual, Roger Canzano, an attorney in Michigan,
is facing trial in January 2003 on these charges. Two others who
were indicted, Vincent Corey and Edward Loney, are
fugitives.
According to the evidence presented at trial, Donald Gonczy, Joel
Epstein, and their co-conspirators, established a complex network
of more than a dozen companies designed to persuade timeshare owners
who were interested in selling their timeshares to purchase a $399 "appraisal" of
their timeshare.
The scheme passed timeshare owners through a series of boiler rooms
to complete the fraud. First, the defendants established a number
of purported "buying companies" based in Florida and Texas
which contacted timeshare owners and made a host of misrepresentations,
including that they would buy the person's timeshare if the owner
obtained an appraisal and that they would reimburse the owner for
the appraisal fee at the time of closing.
The buying companies falsely claimed that they received no fees
from the appraisal companies and had no part in the appraisal process.
Once the buying company persuaded the timeshare owner into selling
the timeshare, the buying company referred the timeshare owner to
a purportedly independent service, Multi-State Listing Service ("MLS"),
which in fact was a second boiler room.
The timeshare owner would be told that the MLS would put the timeshare
owner in touch with "independent and internationally recognized" appraisal
companies. MLS then provided the timeshare owner with three "independent" appraisal
companies supposedly with personnel in the area of that person's
timeshare. Every one of these appraisal companies was phoney and
established solely to execute this fraud scheme. The "appraisal" companies
were run by Donald Gonczy's children, close friends, or former telemarketers
from the boiler rooms.
Jill Gonczy Upton and her husband, Michael Upton,
ran one of the appraisal companies, known as RCI Appraisals, located
in Hyannis, Massachusetts. Scott Gonczy, another son, operated
Interval International Appraisals ("IIA") in Providence,
Rhode Island. Other "appraisal" companies were opened in
Florida, Michigan, Nevada, Georgia, Louisiana, and Windsor, Ontario.
At trial, the government proved that after speaking with an MLS representative,
and selecting an appraisal company, the timeshare owner was next
contacted by a third boiler room operation called the Appraisal Referral
Center ("ARC").
The ARC telemarketers falsely represented that they were actually
calling from the appraisal company the timeshare owner had selected.
In this call, the timeshare owner was coaxed, through more misrepresentations,
into providing his or her credit card number. At this point, the
timeshare owner was then billed approximately $399 for the appraisal.
Eight weeks later, the appraisal companies mailed the timeshare
owner a bogus two-page "appraisal" that falsely represented
that the timeshare had been inspected as part of the appraisal process.
The government proved at trial that these reports were simply printed
off a database at a cost of just $7.50 to the appraisal company.
The established time-share-exchange company RCI (Resort Condominiums
International) took issue with the name RCI Appraisals and sued to
make the Uptons drop it. Then Interval International, another property-exchange
business, challenged Scott Gonczy for naming his Providence company
Interval International Appraisals. (The Providence business took
another jolt when Scott was nabbed for soliciting minors over the
Internet and jailed for two years.) As all this was happening, Michael
and Jill Upton faced complaints from their credit card processing
companies, which revoked their merchant accounts.
They weren't very good at eluding authorities though. When Donald
traded in his Bentley for a BMW, he asked the dealer to deliver it
to the Caribbean island of St. Maarten. Pam, meantime, leased a post
office box in Pompano Beach and had their mail forwarded to High
View, 54 Guana Bay Road, St. Maarten, Netherlands Antilles.
Experienced fugitives would have settled on the French side, St.
Martin, since the French are more hesitant than the Dutch to extradite
people to the United States. But Donald and Pam were right there
on Guana Bay Road on January 30, 2001, when authorities arrived.
Jill and Michael were also there, and after learning they, too, were
facing indictments, they returned home to surrender.
John Handel signed roughly 10,000 fraudulent appraisals for RCI
and IIA, and was paid $5 for each report he signed. He also signed
several thousand reports using a fictitious name he created, James
Rose.
The appraisal reports issued by these purportedly "independent" companies
had virtually identical formats and standard language, and often
contained the same typographical errors. The bank records at trial
proved that the defendants sold $15,409,000 in fraudulent appraisals
to approximately 38,000 timeshare owners located throughout the country.
The evidence at trial also established that Epstein and Vincent
Corey, ran the financial operations of these enterprises, resulting
in Epstein's money laundering convictions for using the proceeds
of illegal activity to further a mail fraud and wire fraud scheme.
The vast majority of the more than 38,000 timeshare owners who purchased
appraisals as part of this scheme either never received a purchase
offer from the buying company or received "low-ball" offers
that were 15% of the "appraised" value. When timeshare
owners pressed the buying companies for answers, they were confronted
with unreturned phone calls, answering machines, disconnected numbers
or a litany of excuses for the delay in processing their paperwork.
Only 11 out of the 38,000 people over the course of the five years
the scheme operated were able to sell their timeshares to the buying
companies.
At their upcoming sentencings, Epstein and Handel each face maximum
penalties of 5 years' imprisonment and a $250,000 fine on each mail
fraud and wire fraud conviction, as well as Epstein's conspiracy
conviction. In addition, Epstein faces maximum penalties of 20 years'
imprisonment and a $500,000 fine on each of the 5 money laundering
counts.
The case was investigated by the U.S. Postal Inspection Service
and the Florida Department of Law Enforcement.
So, if you own a vacation timeshare, go for a company that offers
to sell for a fee only after the timeshare is sold.
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