Thursday, December 18, 2014

FBI Arresting Timeshare Frauds (finally)

Some Hilton Head Island timeshare companies are known to work with at least some of the (allegedly) fraudulent timeshare transfer companies, namely Elite Equity Transfers and Resort Solutions, discussed in a recent article by Inside the Gate House located here.

Countless transactions right here on Hilton Head Island involve Elite Equity Transfers and Resort Solutions.  The complete list of the companies named in the article, though I have not heard of them on Hilton Head Island other than Elite Equity Transfers and Resort Solutions, are:  "Resort Realty, Inc., Resort Solutions, Inc., Resort Rental, K&K Property Consultants, Auction America Resort Rentals International, Royal Elite Vacations, Royal Equity Transfer, Exotic Equity Transfers, LLC, (also doing business as Elite Equity Transfers), Royal Elite Exchanges, Resort Rentals Mexico, Resort Advantage International, Timeshare Auctions USA, Resort Rentals Worldwide, Grand Premier Vacations, and Priority Exchange Network."

The scenario that I have written about extensively on this blog and that my office works with on a daily basis is described in the article as the "phony table buy-back" scam.  The article explains:

"Here’s how it worked: If an individual customer who already owned a timeshare sought to purchase a new timeshare unit from a resale or retail developer, the customer was presented with options for their existing timeshare unit. The customer could trade in the existing timeshare unit as part of the purchase, using the services of [Elite Equity Transfers] EET, which would then “transfer” the unit to a new owner or “grantee.” Alternatively, the customer could advertise the existing unit for sale or rent using the services of [Resort Solutions International] RSI."

"Got it so far?"

"According to the indictment, Kosco advertised the bundled services of RSI and EET to various resort companies. In doing so, he claimed to have created in EET one of the largest and most successful trade-in companies in the world and claimed success at transferring over 28,000 properties as of August 2012 and almost 50,000 as of September 2013. He claimed that resorts had a sales and closing increase of 15-1 8% using EET and that EET’S success was a sales tool to overcome objections if a potential buyer of a new timeshare unit already owned too many timeshare units, as EET could accomplish transfers of such units, thus, removing the timeshare obligations of the original owners."

"In truth and fact, however, EET did not accomplish the number of transfers claimed by Kosco."

The "phony table buy-back" scam allows sellers of timeshares to induce people into purchasing a new timeshare with the promise that they will be relieved of the burden of their other timeshare.  It also almost always involves the promise that the purchaser can use the proceeds from the sale of their other timeshare to pay off the loan the purchaser takes out with the seller of the new timeshare to buy the new timeshare, often approaching an interest rate of 20%.

For these reasons, the "phony table buy-back" scam is a more despicable and shameful version of the telemarketing resale scams for which people are going to prison around the country and as are also described in my previous blog here.

The "phone table buy-back" scam is a more despicable and shameful version of the telemarketing resale scam because people are not just being ripped off of $500.00 that they paid to someone over the phone to sell their timeshare and whose phone number then immediately stops working.  People are not just out $500.00 and stuck with their timeshare that timeshare transfer companies like Elite Equity Transfers and Resort Solutions fail to sell.  They are also often out many thousands of dollars for the purchase of another new, often worthless, timeshare with an interest rate approaching 20% for the thousands of additional dollars that they likely owe on the loan that they took out from the timeshare seller in order to buy the new timeshare.

Based upon the recent rash of arrests and indictments of timeshare fraudsters around the country, it appears that the FBI, Attorney Generals, and police are finalizing their investigations and taking a stand against rampant timeshare fraud.  Stay tuned.