Manhattan Club Lawsuit

Unfortunately I can't provide a link to the settlement, but I have read the Assurance of Discontinuance settlement of the OAG's lawsuit. In it, the TMC "Sponsors" have admitted to violations of the Martin Act from 2011-2014 as follows: 1) the Sponsors' sales staff failed to provide the offering plans to purchasers, 2) The Sponsors' sale staff made misrepresentations to purchasers, 3) The Sponsors' reservations agents failed to abide by the offering Plans for a "first come first served basis", and 4) the Offering Plan budgets underestimated bad debt expenses. The Sponsors have agreed to sell and give up their interest in TMC and pay back $6.5M over several years. The first payment ($3.25M) will be divided to timeshare owners who were eligible to make a reservation in 2011 through 2014 and were current on their payments and did not use all of their allotted nights. The second payment ($1.625M by 1 year anniversary) and third payment ($1.625M by 2nd year anniversary) are to be divided among owners at the time of the second payment and third payment to owners who were current "in the same proportion as such owner's annual maintenance fees in such calendar year are to the total maintenance fees charged to all owners in that calendar year."

"1) the Sponsors' sales staff failed to provide the offering plans to purchasers, 2) The Sponsors' sale staff made misrepresentations to purchasers, 3) The Sponsors' reservations agents failed to abide by the offering Plans for a "first come first served basis", and 4) the Offering Plan budgets underestimated bad debt expenses. The Sponsors have agreed to sell and give up their interest in TMC and pay back $6.5M over several years."

The fact they admitted to the wrongdoing is a big deal, I think. From what I know of SEC enforcement actions, the SEC typically settles for some nominal amount, BUT the settlement provides enough proof so that a lawsuit filed by any aggrieved party (ies), can refer to the charges admitted and the suit has an excellent chance of winning.

While this settlement does not involve the SEC, I think the pattern is similar.

Moreover, I think the default position in most of the cases that are settled is for the defendant to settle without admitting any wrongdoing so the fact they admitted to the charges meant they believed they would lose.

My wife an I have been owns from the first offed timeshares in the late 1990s, all of the changes we have read so far are very true even from the beginning. We still don’t know what action we should take at this point. We meet are of the requirements for the payout but are not sure how to proceed.J.Jones

I’ve been thinking about the gross inequity of the settlement being proposed by the AG to terminate his investigation into allegations of fraud against Ian Bruce Eichner and his associates at The Manhattan Club. It has occurred to me that with a newly assigned judge, Justice Melissa A. Crane, she may not be aware of the extent of the civil and criminal allegations of wrong doing which the AG has leveled against these respondents, in addition to, and beyond violations of the Martin Act, which the settlement seems to focus on almost exclusively. I just sent the judge the following letter encouraging her NOT to accept the settlement which is being proposed and to familiarize herself with the history of the AG’s investigation, and the extensive allegations of criminal misconduct leveled against Eichner et. al. I’m encouraging all Manhattan Club owners to write to the judge expressing dissatisfaction with the settlement similar to mine. The text of my letter follows:

///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

October 25, 2017

Justice Melissa A. Crane Supreme Court of the State of New York 71 Thomas Street, Room 303 New York, New York 10013 Re: Case # 451536/2014 Schneiderman v. Eichner Dear Judge Crane:

I understand that you took over the above referenced case from Justice Eileen Rakower. I also recently learned that the NY Attorney General has reached a settlement with the Respondents in this case, and is ending his investigation into the operation of The Manhattan Club timeshare with the signing of an “Assurance of Discontinuance.” As a Manhattan Club timeshare owner, I am writing to urge you to reject this settlement agreement. While it is true that the settlement will result in the removal of some really “bad apples” from the NY timeshare business, it fails to address most of the allegations of wrongdoing committed against us timeshare owners by Ian Bruce Eichner, a Manhattan real estate billionaire, and his close circle of associates. During his investigation, the Attorney General established that Mr. Eichner, members of his family, and a close circle of associates played a direct role in carrying out a huge timeshare scam against an estimated 14,000 to 18,000 owners for at least 10 years, defrauding them out of tens of millions of dollars. My wife and I and literally thousands of other timeshare owners have suffered very significant financial losses due to the fraudulent conduct of the Eichner family, The Manhattan Club, and its related companies. While still living in NY, we purchased 2 timeshare units at The Manhattan Club in 2005 based on a sales presentation, during which just about every claim or promise made by the sales rep was false, misleading, or an outright lie; and the NY Attorney General’s undercover investigators have evidence of it all recorded on video. The Manhattan Club’s obligation to me as a timeshare purchaser was to make 7 days per year available to stay at the property. Instead of making those days reasonably available, The Manhattan Club engaged in an organized scheme to routinely tell me, and other timeshare owners who called to make a reservation, that the desired days were not available; while at the same time, representatives were selling the same rooms for the same dates to the general public on the Internet. Again, based on evidence gathered by the AG, we have learned that, for years, Eichner has been personally skimming 6 million dollars a year from The Manhattan Club through a shell management company called “Urban”. This company for years had no employees and provided no services to the operation of the timeshare property, yet our timeshare corporation was paying them (Eichner) $6 million a year! Having come to this case very late, you may not have had a chance to read the complete file, but you will be astounded at the mountain of evidence the AG has collected during his investigation of The Manhattan Club. Perhaps one of the most revealing documents is the AG’s July, 2015 court filing, “MEMORANDUM OF LAW IN OPPOSITION TO RESPONDENTS’ MOTIONS (MOTION SEQUENCE #1 AND #2) AND IN SUPPORT OF PETITIONER NEW YORK STATE ATTORNEY GENERAL’S CROSS-MOTION (MOTION SEQUENCE #3)” which itemizes a remarkable list of allegations of civil and criminal conduct on the part of The Manhattan Club. I have enclosed a copy of this filing for your ready reference in case you would like to read the complete document.

https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=arMAhc2Z8epneiTXUbb_PLUS_yQ==&system=prod

With such a preponderance of evidence in hand, I am at a complete loss to understand how the AG could choose to ignore 3 years of investigative effort and all the evidence of misconduct it uncovered, and end his investigation with nothing more than a financial slap on the wrist to Eichner, while leaving thousands of defrauded owners out in the cold, and in legal limbo as to their ownership status. As a result of the fraudulent conduct perpetrated against us by The Manhattan Club and its affiliates as well as the NY Attorney General’s allegation of fraud and other criminal conduct, I urge you to reject the settlement agreement proposed by the parties as inadequate.

Sincerely yours,

Robert A. Biello

encl. AG Memorandum of Law

Robert - Excellent summation. I too am baffled that the Attorney General's office would spend that much time and taxpayer money and then accept a settlement for such a paltry amount. You're right, considering Eicher's wealth and his fraudulent behavior, it was not even a slap, it amounted to a feather brushing!!! How could the Attorney General conceivably believe he had secured justice for the scammed purchasers of which a large number of them are New York residents. Eichner wasn't even required to return the $6,000,000 a year he had collected for years through his bogus management company? Something seems fishy to me.

Robert, Excellent letter. I will write one today to the new judge and encourage others to do the same. Thank you! Wendy LaHood

Thank you, Mr Biello, for the excellent recap of this multi year travesty we have/are experiencing. The facts are available to her, without emotional distraction.

robert bello,

it is so very unfortunate that the ideas and essence of your excellent letter weren't expressed prior to the culmination of the nysag's case against TMC/IAN BRUCE EICHNER. it seems schneiderman got his victory without regard for us owners but merely for sake of winning and adding another feather to his legal cap. it became very clear that schneiderman wasn't working for TMC owners but only for his "boss", new york state, then on to bigger and more new york state voters'issues...........perhaps seeking to extend his voter base.

indeed, the result of this court case was, of itself, a sham and a joke. it offered us owners next-to-nothing even considering the dollar amount of the settlement. i hereby donate my so-called share of that money to an american charity, in which COLLECTIVELY it could do some good.

i will be on the list of letter writers to the newly-appointed judge who will, i hope, make THE EICHNER FRAUD DEBACLE A TRUE LAWSUIT RATHER THAN AN INVESTIGATORY COMPILATION LEADING TO A "SETTLEMENT" THAT WILL NOT COME CLOSE TO MAKING US TMC OWNERS FINANCIALLY WHOLE.

MANY THANKS, ROBERT

keep in touch.

chris

robertb1802 wrote:

I’ve been thinking about the gross inequity of the settlement being proposed by the AG to terminate his investigation into allegations of fraud against Ian Bruce Eichner and his associates at The Manhattan Club. It has occurred to me that with a newly assigned judge, Justice Melissa A. Crane, she may not be aware of the extent of the civil and criminal allegations of wrong doing which the AG has leveled against these respondents, in addition to, and beyond violations of the Martin Act, which the settlement seems to focus on almost exclusively. I just sent the judge the following letter encouraging her NOT to accept the settlement which is being proposed and to familiarize herself with the history of the AG’s investigation, and the extensive allegations of criminal misconduct leveled against Eichner et. al. I’m encouraging all Manhattan Club owners to write to the judge expressing dissatisfaction with the settlement similar to mine. The text of my letter follows:

///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

October 25, 2017

Justice Melissa A. Crane Supreme Court of the State of New York 71 Thomas Street, Room 303 New York, New York 10013 Re: Case # 451536/2014 Schneiderman v. Eichner Dear Judge Crane:

I understand that you took over the above referenced case from Justice Eileen Rakower. I also recently learned that the NY Attorney General has reached a settlement with the Respondents in this case, and is ending his investigation into the operation of The Manhattan Club timeshare with the signing of an “Assurance of Discontinuance.” As a Manhattan Club timeshare owner, I am writing to urge you to reject this settlement agreement. While it is true that the settlement will result in the removal of some really “bad apples” from the NY timeshare business, it fails to address most of the allegations of wrongdoing committed against us timeshare owners by Ian Bruce Eichner, a Manhattan real estate billionaire, and his close circle of associates. During his investigation, the Attorney General established that Mr. Eichner, members of his family, and a close circle of associates played a direct role in carrying out a huge timeshare scam against an estimated 14,000 to 18,000 owners for at least 10 years, defrauding them out of tens of millions of dollars. My wife and I and literally thousands of other timeshare owners have suffered very significant financial losses due to the fraudulent conduct of the Eichner family, The Manhattan Club, and its related companies. While still living in NY, we purchased 2 timeshare units at The Manhattan Club in 2005 based on a sales presentation, during which just about every claim or promise made by the sales rep was false, misleading, or an outright lie; and the NY Attorney General’s undercover investigators have evidence of it all recorded on video. The Manhattan Club’s obligation to me as a timeshare purchaser was to make 7 days per year available to stay at the property. Instead of making those days reasonably available, The Manhattan Club engaged in an organized scheme to routinely tell me, and other timeshare owners who called to make a reservation, that the desired days were not available; while at the same time, representatives were selling the same rooms for the same dates to the general public on the Internet. Again, based on evidence gathered by the AG, we have learned that, for years, Eichner has been personally skimming 6 million dollars a year from The Manhattan Club through a shell management company called “Urban”. This company for years had no employees and provided no services to the operation of the timeshare property, yet our timeshare corporation was paying them (Eichner) $6 million a year! Having come to this case very late, you may not have had a chance to read the complete file, but you will be astounded at the mountain of evidence the AG has collected during his investigation of The Manhattan Club. Perhaps one of the most revealing documents is the AG’s July, 2015 court filing, “MEMORANDUM OF LAW IN OPPOSITION TO RESPONDENTS’ MOTIONS (MOTION SEQUENCE #1 AND #2) AND IN SUPPORT OF PETITIONER NEW YORK STATE ATTORNEY GENERAL’S CROSS-MOTION (MOTION SEQUENCE #3)” which itemizes a remarkable list of allegations of civil and criminal conduct on the part of The Manhattan Club. I have enclosed a copy of this filing for your ready reference in case you would like to read the complete document.

https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=arMAhc2Z8epneiTXUbb_PLUS_yQ==&system=prod

With such a preponderance of evidence in hand, I am at a complete loss to understand how the AG could choose to ignore 3 years of investigative effort and all the evidence of misconduct it uncovered, and end his investigation with nothing more than a financial slap on the wrist to Eichner, while leaving thousands of defrauded owners out in the cold, and in legal limbo as to their ownership status. As a result of the fraudulent conduct perpetrated against us by The Manhattan Club and its affiliates as well as the NY Attorney General’s allegation of fraud and other criminal conduct, I urge you to reject the settlement agreement proposed by the parties as inadequate.

Sincerely yours,

Robert A. Biello

encl. AG Memorandum of Law

My husband and I bought at TMC in 2011 and were lied to throughout our purchase time. For example, they told us they would rent our week for us should we not be able to use our week because none of the rooms were available to the general public. Also if we ever wanted to sell, they had a resale team that would find a buyer for us guaranteeing we'd never sell for less than we paid. As the TMC Sponsors have admitted they violated the Martin Act during 2011 through 2014, we would like to join a class action lawsuit with anyone who also purchased during their admitted fraud period. Maybe there's reason to include those before 2011 as obviously they made lies to lots of buyers before we bought in 2011. Anyone?

I am definitely interested. I bought within the first few years after the Manhattan Club time share came into existence and I was told the exact same thing. I even put those statements into the letter I submitted to the Attorney General's office. We really do need to bring a class action suit. Chris or Louise perhaps can give us some input on a class action suit attorney. I know at one time there were some owners who had retained an attorney to bring a suit on their behalf.

We were lied to as well. We might be interested but when we sold our timeshare back for $200 we signed an agreement that we would not sue them. I don't know what good it would do us. Anyone know?

I would also love to join such a class-action suit. We too bought in 2011 and were told exactly the same story. I was convinced of a sensible and smart purchase only because of these promises. I should have gotten that in writing. But I still believe we do have a strong case. How do we go about it ? Please keep me in the loop.

Does anyone know what happens to the Manhattan Club Members Association? Is Eichner still the President?

Robert,

No one questions a word of your letter. I just wonder what you realistically expect to happen.

My understanding is that the role of the newly appointed judge is to monitor compliance with the settlement which has already been signed. After many years of unsuccessful individual efforts, and after 3 years of investigation and negotiation, the NYAG and the Eichner interests came to terms. Sadly, the owners seem to be an afterthought. I don't believe it's likely - or even possible - for the new judge to overturn the existing settlement.

If some law firm decides to pursue a class action suit, there seems to be a mountain of evidence. Based on this blog, I'm sure there will be many volunteers to participate. However, this is a civil matter, not a criminal matter. It will not be not a pro-bono undertaking. So unless a law firm is extremely well funded and willing to face off with the Eichners for years to come, I don't see this matter moving forward.

Do you see another endgame?

I've asked this before but don't think I've gotten a response: What's the role of our board in these matters?

nathanz2, "Sadly, the owners seem to be an afterthought." put it this way, the owners were used to help mr schneiderman build his case...........c'est tout! finis! that's it. and he used us very effectively: most of us assumed we would benefit financially and otherwise. that's it. he's a nys employee, working to win cases for his employer, with little, if any regard for us owners in this case. true, he litigates cases for which crimes have been committed against nys residents. if he wins in this case, the citizens benefit. concerning the MANHATTAN CLUB CASE, i firmly assume his victory in court was to STOP EICHNER FROM FURTHER TIMESHARE ACTIVITY. he was successful in this venture, but i remain amused at the monetary victory, to wit, $6.5 million.....with no idea of how it is to be distributed to ABOUT 14 TO 18 THOUSAND owners at TMC. furthermore, with these numbers in mind, i would just as soon donate my "cut" to a deserving american charity, like the wounded vets, et al. my wish on the real endcase justice decision would be to have an owner-voted board of directors composed of real owners; a substantial reduction of our current maintenance fees; and a fair and reasonable reservation policy for all owners........who should come first in line on the reservation list, and the leftovers for those non-owners who make reservations for immediate time on booking.com or some other online facility. i'm not sure of the following but here goes.............. i seem to remember the possibility that criminal charges were discussed, but somehow, through eichner's incredibly adept legal team, these charges were somehow squashed. lies, scams, fraud, deceit, mr schneiderman's own undercover proof of fraud, misrepresentations, and lies during sales presentations (sounds to me a bit like bernie madoff without a noted ponzi scheme presented) which all could be interpreted as criminal, as opposed to civil, actions on eichner's part.

that being said, perhaps the new judge would consider criminal accusations against eichner, et al. if that became a reality, i would hope that a court referee (or whatever the position is called) be appointed to monitor the length of time allotted for this trial, which could then become an actual LAWSUIT (WHICH SCHNEIDERMAN'S PART SEEMS TO REMAIN AN INVESTIGATORY PROBE AND A CIVIL RESOLUTION, WITHOUT A JURY, NOT A LAWSUIT.)

by the way, it's my opinion that eichner could easily maintain his presence in the timeshare industry. all he needs to do is what he seems to have prior expertise in: create and fund a dummy company and voila, he's back in the timeshare business. but that's another issue, isn't it?

unified and united,

chris

nathanz2 wrote:

Robert,

No one questions a word of your letter. I just wonder what you realistically expect to happen.

My understanding is that the role of the newly appointed judge is to monitor compliance with the settlement which has already been signed. After many years of unsuccessful individual efforts, and after 3 years of investigation and negotiation, the NYAG and the Eichner interests came to terms. Sadly, the owners seem to be an afterthought. I don't believe it's likely - or even possible - for the new judge to overturn the existing settlement.

If some law firm decides to pursue a class action suit, there seems to be a mountain of evidence. Based on this blog, I'm sure there will be many volunteers to participate. However, this is a civil matter, not a criminal matter. It will not be not a pro-bono undertaking. So unless a law firm is extremely well funded and willing to face off with the Eichners for years to come, I don't see this matter moving forward.

Do you see another endgame?

I would like to part of this forum. What is the best way to find out if I am part of the settlement? If the owners are divesting themselves of TMC, who is taking it over? Thanks for any info someone can offer. I apologize for asking something that has been answered before. Eileen

(Please Forgive any and all typos as I'm writing this quickly)

Hi All,

For those who don't know me, my name is Corinne Smith and I got the class action lawsuits started back in 2011. Just an introduction so you all know I've been studying and annoying TMC management for years. I've also studied the applicable laws.

WHY I'M ANGRY ABOUT THE SETTLEMENT In the Facebook group where I'm an admin (Manhattan Club Timeshare Scam), it is agreed that AG Schneiderman dropped the ball on our case because he's using all his resources on the Trump case(s). This is an obvious political move giving him National attention. Our case is so similar to what the AG's office is not working on that it has been like a "practice case" for parts of the potential lawsuits against DT.

To wit, I'm furious!!

Changing judges is a tactic used very often by defendants with enough power and influence to sway the decisions made to their favor. Eichner, et al hired a new law firm, had the case transferred to a "judge of choice" who obviously has no conception of what was in the numerous motions after the initial investigation including the reason for locking down their bank accounts. Nothing is mentioned about the Court Required new Offering Plan cited as being good (but not pertinent to any of us who purchased before 2014). Obviously, neither the judge not the Court Clerk read through the voluminous court documents before agreeing to the settlement.

As such, myself and others will be composing a petition to address these issues. We want to direct it to State Officials, City Mayor and our US Senators from NY. I may even come up with more in the interim to address this to. The Nov 14th "compliance date" to follow up on the settlement will probably need to be pushed back to a later date. The "sale" of TMC and the Court's Administrator (who will deal with us) probably won't be in place at that time.

I would like you all to check your documents and see that there are 2 Boards of Directors involved with this case. For years, our deeds have read "single family unit." Once TMC saw the AG coming in July 2014, the deeds were changed to "Timeshare." Also in your paperwork you should find that we all signed POWERS OF ATTORNEY for both the Timeshare Board and the Condominium Board. That's how TMC was able to continuously change the Offering Plan (without sending updates) and control the Boards because, unknowingly, they could act 'on our behalf'! The most deceptive part of this scam was the Offering Plan CONTINUOUSLY being updated! We purchased in 2009, called the AG's office for a FOIA request to see any amendments made up through a few months into 2011, and were told that there were so many pages that it would cost Hundreds, possibly Thousands to get copies!! (They charge per page for the copies.) We were never privy to any changes!

What the OP version that was supplied to the Court back at the beginning of the investigation now says is a MYSTERY TO US yet it is cited in the settlement! The Judge notes how the OP is properly filed and sales can begin again.

What? So simplistic after all the detailed arguments/motions in the case!? The fact of their being a Condominium Board was not addressed so was this disbanded when our deeds were changed? This was never addressed. Nor were the Powers of Attorney that made us essentially helpless

I ran out of room but am almost done.

The AG's attorneys in the RE Bureau had seen our paperwork and read through our documents. Since the Asst AG, Defendants' attorneys AND the judge were changed, this settlement is nothing short of insulting!

So, a petition will be posted here when completed. Please sign and share when you receive it.

Thanks All! Corinne

corinne, we have been duped beyond belief from the first second we sat in the second-floor horror chamber, aka sales office, of the infamous MANHATTAN CLUB. we, as owners, have continued to be (perhaps duped is not an appropriate word here) ignored as FINANCIALLY AND OTHERWISE INJURED PARTIES involved in this ill-called lawsuit, i..e., nysag vs TMC/eichner, et al. it should never have carried the moniker of "the manhattan club lawsuit" in this redweek.com forum. it should have been called "legal proceedings" or some other more appropriate name rather than a lawsuit. the outcome of this proceeding should be, in my opinion, an embarrassment to mr schneiderman, nysag and any of his deputies who took part in these proceedings. it certainly was a ridiculous outcome for the defendants who were, at one point in time of these proceedings, headed toward criminal accusations eichner had his cadre of brilliant attorneys deftly squash that attempt.............that i recall.

ok..........off my soapbox.........for this response to your comments. but more to come; discussing this issue is becoming a therapy session.

YES, YES, YES.......i will be a signatory to your letters to those politicos that you enumerated, currently in office. don't leave out governor cuomo who should get a special notification of the, in my opinion, poor handling of this legal matter by his attorney general, eric schneiderman, emphasizing the fact that we owners are still not financially or otherwise whole concerning our TMC ownership and that we have not yet benefitted from the nysag's victory. he garnered another feather in his legal cap for winning this case for the STATE, not at all assisting the very people (TMC OWNERS) who provided him with the information he needed to build his case from our unfortunate experiences as owners at TMC.

keep in touch.

chris

corinnes32 wrote:

I ran out of room but am almost done.

The AG's attorneys in the RE Bureau had seen our paperwork and read through our documents. Since the Asst AG, Defendants' attorneys AND the judge were changed, this settlement is nothing short of insulting!

So, a petition will be posted here when completed. Please sign and share when you receive it.

Thanks All! Corinne