AUGUST 16, 2017 — MANHATTAN. After more than three years of investigation and litigation, the New York Attorney General’s Office today announced the settlement of the Big Apple’s most notorious timeshare case.
The AG announced that hundreds of owners at The Manhattan Club will share in a $6.5 million settlement approved by the long-troubled operators of the swank timeshare near Central Park. While details of the settlement are still to emerge, it is clear that this is not only a victory for the AG, but for thousands of TMC owners who paid top dollar for timeshares that, over time, they could not easily use. As part of the settlement, the operators of TMC agreed to sell the club to a new company that, presumably, will restore some order and confidence for club members. RedWeek talked to attorneys who represent owners and will share their comments as more details emerge. For the meantime, please see the complete announcement from the AG’s office.
A.G. Schneiderman Announces $6.5 Million Settlement With Midtown Manhattan Timeshare That Scammed Purchasers
The Manhattan Club, Timeshare In Midtown Manhattan, Will Pay Restitution To Hundreds Of Purchasers That Were Misled About Their Ability To Reserve Rooms And Resell Shares
Settlement Is The Largest In Recent History Of The AG’s Real Estate Finance Bureau
Schneiderman Reminds New York Residents To Be Wary Of High-Pressure Sales Traps Utilized By Some Timeshare Companies
NEW YORK – Attorney General Eric T. Schneiderman today announced a $6.5 million settlemnt with the owners and operators of the Manhattan Club, a timeshare building in Midtown Manhattan, over the sponsor’s repeated false promises to potential and current share owners.
The settlement is the largest in recent history for the Attorney General’s Real Estate Finance Bureau. Under the terms of the settlement, the operators of the Manhattan Club, at 200 West 56th Street, acknowledge that they repeatedly misled shareowners about the club’s reservation process, their ability to sell back their shares, and the details of the club’s state-approved offering plan.
“The owners of the Manhattan Club lured thousands of timeshare buyers with false promises and shady sales tactics that violated New York law,” said Attorney General Schneiderman. “While timeshares can be legitimate enterprises, scams like this one are common. To avoid becoming a victim, always be wary of high pressure sales tactics.”
The club bills itself as a “unique” “residence-style boutique hotel” that blends “a vacation ownership retreat with a luxury suite hotel” and that offers “a hard-to-find haven in the midst of this active city.” The website appeals to people who “frequently visit New York City to enjoy Broadway theatre, fine dining and shopping, [and] classical performances.”
The owners and operators in this case are T. Park Central LLC, O. Park Central LLC, Park Central Management, LLC, Ian Bruce Eichner, Leslie H. Eichner, Stuart P. Eichner, Scott L. Lager, Hospitality Advisors, LLC, New York Urban Ownership Management, LLC, and Manhattan Club Marketing Group LLC.
In addition to the $6.5 million restitution to eligible timeshare owners, the settlement requires:
- The owners and operators to be barred from the timeshare industry
- The owners and operators will sell their stakes to a third-party purchaser and relinquish management control
- Remove all sponsor-appointed current officers and directors from their positions as members of the Board of the Timeshare Association.
Eligible timeshare owners will be contacted by a Claims Administrator at a later date about disbursement of the restitution.
The Office of the Attorney General (OAG) began investigating the Manhattan Club in 2014 after receiving repeated complaints from shareowners who paid tens of thousands of dollars to become Manhattan Club “owners,” but were unable to make reservations due to a claimed lack of available rooms by the hotel’s operators. At the same time, rooms in the Manhattan Club were being rented over the internet to the general public, in violation of the timeshare’s offering plan.
In Spring 2014, OAG sent undercover investigators to record the Manhattan Club’s “Vacation Ownership Experience” sales presentation. Investigators found evidence indicating that the Manhattan Club’s sales tactics amounted to a bait-and-switch scheme.
Prospective purchasers were baited by a relentless sales pitch that included a number of misleading promises, including that ownership in the Manhattan Club is “better than money in the bank.” Prospective buyers were also told that the club does not rent rooms to the general public, that reservations were easy to make, and that few restrictions apply to reservations by owners.
But these promises were false. For example, contrary to the club’s explicit promises in its offering plan, room availability to owners was greatly limited because rooms were being rented out to the general public. That means that all reservations are subject to availability and owners, in some cases, were unable to use any of the time they purchased. Further, the owners’ annual common charges jumped approximately 200% in the last ten years – to about $2,000 per ownership interest per year for the smaller units – on top of the upfront purchase costs that ranged from just under $10,000 to over $40,000 per ownership interest. Some frustrated owners have sold their ownership interests back for a mere $1, just to escape the burdens of paying these charges.
In July 2014, pursuant to General Business Law section 354, a provision of New York’s Martin Act that confers broad powers on the Attorney General to investigate and halt fraud, a Manhattan Supreme Court justice barred the Manhattan Club from selling timeshare interests, preventing them from withdrawing money from certain bank accounts, and stopping them from foreclosing on Manhattan Club purchasers during the pendency of the investigation.
For information about how to protect yourself from timeshare, home improvement and vacation scams, click here for the Attorney General’s brochure “Don’t Get Burned: Attorney General’s Guide To Protecting New Yorkers From Summer Scams.”
This case was handled by Louis M. Solomon, Chief of Enforcement in the Real Estate Finance Bureau, with assistance from Assistant Attorneys General Nicholas Minella and Kimberly Ver Ploeg in the Real Estate Finance Bureau, as well as Matthew Woodruff, Senior Enforcement Counsel, Assistant Attorney General Tanya Trakht, and paralegals Natalya Fadeyeva and Pascual Noble in the Investor Protection Bureau with notable contribution by Jonathan Werberg, Senior Data Scientist, Research & Analytics. This case was investigated by former Supervising Investigators Luis Carter and Michael Ward, Supervising Investigator Sylvia Rivera, Investigators Karon Richardson, Elsa Rojas and Former Sr. Investigator Richard Friedman, under the direction of Deputy Chief John McManus and Chief Dominick Zarrella of the Investigations Bureau. Former Assistant Attorneys General Serwat Farooq and Elissa Rossi also assisted on the case. The Real Estate Finance Bureau is led by Bureau Chief Brent Meltzer and overseen by Executive Deputy Attorney General for Economic Justice Manisha M. Sheth.
