Time Share Scams

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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;

blue bullet point the travel club membership can be canceled at any time even though the contract states it is non-cancelable and non-refundable;
blue bullet point 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;
blue bullet point 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;
blue bullet point 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
blue bullet point 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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