Federal Court Shuts Down Abusive Tax Scheme Involving Donate For A Cause

WASHINGTON, D.C. (September 30, 2016) — A federal court in Helena, Montana has permanently barred Montana-based attorney James Tarpey, as well as two companies he founded, including Project Philanthropy Inc., a District of Columbia corporation which does business as Donate for a Cause, and Timeshare Closings Inc., a Colorado corporation which does business as Resort Closings Inc., from promoting an allegedly abusive timeshare donation scheme, the Justice Department announced recently. Tarpey and the two companies agreed to the injunction. See the article here

Wisconsin Department of Justice files Suit Against Uri Fried

On June 25, 2015, the Wisconsin Department of Justice (“WI DOJ”), filed a complaint in Dane County Circuit Court against Uri Fried, owner of The Timeshare Group, Inc, and the Timeshare Company, LLC. Mr. Fried is currently in jail serving a sentence for filing a false tax return. The suit alleges that Fried and his companies engaged in a pattern and practice of violations of Wisconsin consumer protection laws in connection with their marketing and sale of “timeshare transfer” services to customers in Wisconsin and nationwide. Fried offered “timeshare transfer” services for customers who owned timeshares in both deeded and non-deeded jurisdictions. Upon contact by an interested customer, or upon referral by a third-party partner, Fried assembled information and documents regarding the customer’s timeshare ownership. According to the complaint, if the timeshare was deeded, Fried prepared a Warranty Deed describing the conveyance of the timeshare owners interest to a limited liability company (“LLC”) that was created and controlled by Fried. If the timeshare was not deeded, Fried filled out whatever transfer form was used at the customer’s resort, requesting ownership be changed into the name of one of Fried’s LLCs.

According to the complaint, Fried created at least 23 LLCs registered with the Wisconsin Department of Financial Institutions, with the registered agent being himself or one of his employees. The LLCs were created to hold transferred timeshares. After transferring the timeshare into one of these LLCs, the entity ceased to take any action to exercise the rights and responsibilities of ownership, such as paying annual fees or taxes. As some timeshare resorts began to recognize these LLCs, they refused to accept the transfer paperwork.

As well, according to the complaint, some of the timeshares Fried transferred into his LLCs were later marketed on Ebay for sale.

In addition, postcards were directly mailed to individuals nationwide. The postcards had a variety of claims on them regarding timeshare disposal. In the complaint, it is alleged that these claims are false, deceptive, or misleading; in particular, many customers would incur late fees and other charges for missed maintenance payments as a result of the refusal of the resort to recognize the transfer, even though the postcard claimed a customer could dispose of a timeshare for “only $585.”

The State is seeking permanent injunctive relief, civil forfeitures, and restitution for any persons who suffered a loss as a result of the defendants’ alleged illegal acts.

Justice Dept Files Complaint Against James Tarpey, Donate for a Cause/Project Philanthropy

Justice Department Sues to Shut Down Abusive Tax Scheme Involving Improper Deductions for Donating Timeshares

The United States filed a civil injunction suit seeking to bar James Tarpey, a Montana-based attorney, Project Philanthropy, Inc. (a District of Columbia corporation which does business as Donate for a Cause) and Timeshare Closings, Inc. (a Colorado corporation which does business as Resort Closings, Inc.) from promoting an allegedly abusive timeshare donation scheme, the Justice Department announced today.  The United States also filed suit against three of Tarpey’s associates – Ron Broyles of California, Curt Thor of Washington and Suzanne Crowson of Montana – all of whom, according to the complaint, assisted Tarpey in facilitating the timeshare donation scheme.

Here’s the full Press Release

The Complaint does not even address the financial damages suffered by timeshare associations caused by this operation’s transfers to individuals and companies who subsequently defaulted in the payment of assessments.

California issues Desist and Refrain against companies associated with David MacMillan

On July 14, 2014 the California Bureau of Real Estate filed a Desist and Refrain Order against the following companies and individuals: RESORT MEMBERS ASSOCIATION, also known as RMA, DONATE TITLE, INC., individually, and doing business as Resort Members Association, VACATION SMART INTERNATIONAL, GRAY WOLF TRANSFERS, INC., doing business as PACIFIC TRANSFER, TRANSFER SMART, TONY ESPINOZA, ROXANNE ESPINOZA, DAVID MACMILLAN and CHRIS BODIG.

ORDER TO DESIST AND REFRAIN

The Commissioner (“Commissioner”) of the California Bureau of Real Estate (“Bureau”) caused an investigation to be made of the activities of these companies and individuals and has determined that they have each engaged in or are engaging in acts or practices constituting violations of the California Business arid Professions Code (“Code”) and/or Title 10, California Code of Regulations (“Regulations”) including engaging in the business of, acting in the capacity of, engaging in the business of, acting in the capacity of, advertising, or assuming to act, as real estate broker in the State of California within the meaning of Code Section 10131 subsection (a) (selling or offering to sell and soliciting or negotiating sales of timeshares) and/or Section 10131.2 (advance fee handling) .

Another Unburdening Approach – Contract of Adhesion

Recently a TTR subscriber reported they were contacted by a debt relief company demanding the Association accept a deed over and waive all past due assessments, The debt relief company asserted their claim was based upon that the contract to pay Assessments between the owner and the Association is a contract of adhesion. This dispute involves a California Resort. Simply asserting a contract is a contract of adhesion and then asserting that it is unenforceable, does not make it so. Only a court can decide this issue. The Subscriber responded:
Contract of Adhesion. You’ve asserted that, “this contract in question to be a legally unenforceable contract of adhesion.” As you or your legal team should be aware:

A. California Business and Professions Code Section 11265 requires that all interests in a time-share plan for which a Public Report has been issued are interests subject to the payment of regular and special assessments. The State of California is the drafting party of the terms of the contract to pay Assessments, not the Association.

B. It is only if a court determines that a contract is adhesive, the court must then decide whether to enforce the contract. In California, a determination that a contract is adhesive is merely the first step that courts take in deciding whether to enforce such contracts: “[t]o describe a contract as adhesive in character is not to indicate its legal effect.” The Scissor-Tail court stated that adhesion contracts are fully enforceable “unless certain other factors are present which, under established legal rules-legislative or judicial-operate to render it otherwise.” California courts consider two factors in determining the enforceability of adhesion contracts: (1) whether the contract or provision falls within the “reasonable expectations” of the consumer; and (2) whether the contract or provision is considered unconscionable. [Scissor-Tail, 623 P.2d at 172]

C. Reasonable Expectations. See Allan, 59 Cal. Rptr. 2d at 824.We see a substantial argument that your clients will be found to have reasonable expectations. With regard to whether the contract or provision to pay Assessments fall within your clients’ reasonable expectations, please be advised:

1. Constructive Notice. Please review your clients purchase and sale Documents.
(a) Paragraph 13. of their Purchase and Sale Agreement states:
Pursuant to the Declaration, Buyer shall be required to pay a Basic Assessment to the Association for each Time Share Interest purchased each year.
(b) Your clients signed a receipt stating “I have read the Commissioner’s public report,” evidencing that they were given The FINAL TIMESHARE PLAN PUBLIC REPORT File No. 010071HF. A prominent section of that report noticed your clients, “The Time Share Associations has the power to bring a lawsuit for damages and/or to place a lien on a Time Share Interest, and to prevent an Owner from reserving a Use Period if the Owner does not pay assessments (excluding Personal Assessments) or other charges due. The remedies available to the Association against Owners who are delinquent in the payment of assessments are set forth in the Declaration.”

D. Actual Notice. At the time of sale, your clients signed a Buyers Acknowledgement of Representations and each initialed the paragraph that reads: “In addition to the purchase price for a Time Share Interest, you will be required to pay to the Association an annual maintenance fee (the “Maintenance Assessment”) for as long as you own the Time Share Interest. Assessments are payable whether or not you use the Time Share Interest in any particular calendar year. Failure to pay Assessments may result in the suspension of your use privileges and a lien against your Time Share Interest. The Basic Assessment may be changed in the manner provided in the Declaration.

E. Unconscionable. With regard to whether the provision is unconscionable, In California, in order to prevail on an unconscionability claim, the complaining party must demonstrate that the contract is both procedurally and substantively unconscionable. [Stirlen v. Supercuts, Inc., 60 Cal. Rptr. 2d 138, 146 (Cal. Ct. App. 1997)] Since California Business and Professions Code Section 11265 requires that all interests in a time-share plan for which a Public Report has been issued are interests subject to the payment of regular and special assessments. This is a matter of public policy and by that definition alone your clients’ contract to pay Assessments cannot be found unconscionable.

Federal Indictment Against Unburdening Operation – USA vs. Kosco and Duffield

On November 17, 2014, DANA J. BOENTE, UNITED STATES ATTORNEY filed within the Eastern District of Virginia Case 4:14-cr-00066-RGD-DEM an indictment against Keith D. Kosco (24 counts), and Julie L. Duffield, (22 counts) Conspiracy to commit mail and wire fraud, mail fraud, wire fraud, aggravated identity theft and forfeiture. For a detailed article on this action – see http://insidethegate.com/gatehouse/2014/12/virginia-usa-timeshare-news-december-6-2014/

Subsequently, Julie L. Duffield, 45, of Eureka, MT, pleaded guilty yesterday to conspiracy to commit mail and wire fraud. See http://www.justice.gov/usao/vae/news/2015/01/20150113duffield.html

TTR has updated its 24 records connected with this unburdening operation.The following is a summary of allegations made within the indictment:

Between 2007 and 2013, Julie L Duffield owned and operated Professional Closing Company that provided closing services for the transfers of timeshare units, operating in Arizona and Montana.

Kosco offered services to developers of timeshare resorts in the business of selling new timeshare units. Kosco’s trade-in business model would allow a timeshare owner wanting to sell their unit, to trade the existing unit as part of the purchase, using Elite Equity Transfers (EET), which would then transfer the unit to a new owner.  The customer could also advertise the existing unit for sale or rent using Resort Solutions, Inc.  (RSI).

Kosco boasts that the bundled services of RSI and EET created one of the largest and most successful trade-in companies in the world, claiming success in transferring over 50,000 as of September 2013.  However, federal prosecutors state that EET did not accomplish the number of transfers claimed by Kosco.  He and his employees represented that the transfer of the timeshare units would be legitimate and result in a clean title transfer with no further obligations of maintenance fees or taxes after the transfer was complete.  EET would take the information on the unit to prepare transfer paperwork; including a new deed and transferring it from the original owner to the new transferee, provided that all maintenance fees and taxes be made current by owner.

Transfer paperwork was handled by EET in coordination with Julie L. Duffield and Professional Closing Company, (PCC), which served as a third party closing entity between 2007 and 2013 and was paid fees by EET until the end of 2013, ETT started using a law firm in Williamsburg, VA to handle the closing in the timeshare units transferred. These straw owners were not made aware of the consequences of such practice and were unable and unwilling to meet the obligations of timeshare ownership, including making payments of maintenance fees.

Starting in early 2009 Kosco and Duffield and their employees and others used names of stolen identities and straw owners (those who agree to have timeshare units transferred into their names for a fee paid by EET,) as the new owners for the transferred timeshare units.

In or about September 2013, following notification that a certain resort would not accept any more transfers to two straw owners, KOSCO began to fraudulently use the identity of his daughter, Kristianne L. Kosco, as a grantee. KLK was at that point incarcerated in Rockingham County, Virginia, and was unaware and did not consent to transfers made into her name.

One case of stolen identity, listed only as SL in the indictment, hundreds of timeshare units were transferred into this person’s name beginning in 2010. TTR believes this individual is Steven T. Levy. Kosco. Employees would falsely represent to resorts and original owners that the transfers were legitimate when, in truth and fact, Levy was unaware that hundreds of timeshare units were transferred into his name.  Under Kosco’s direction, employees of EET would falsely notarize Levy’s signature on transfer paperwork.  Kosco even created an email address for Levy, opened up a bank account and routed mailings to a PO Box in Williamsburg, VA, to which Kosco had access.  By 2012 and into 2013 resorts began declining Kosco’s attempts to transfer timeshare units into Levy’s name due to nonpayment of maintenance fees.

Professional Closing Company is an Arizona registered name filed September 7, 2010. The agent/owner is listed as Julie L. Duffield. This company’s address is 16485 N. Stadium Way, #3021, Surprise, AZ  85374, 602-291-9042.  Another company name found registered to Ms. Duffield is TITLE TRANSFER RELIEF, an active entity since August 3, 2011. Address is listed as PO BOX 2350, EUREKA, MT 59917-2350.

Between 2005 and 2013 Keith D. Kosco owned and/or operated a number of entities involved in the timeshare industry: Resort Realty, Inc., Resort Solutions, Inc. – this company was in the business of providing advertising and marketing services for individuals seeking to sell or rent their timeshare units in exchange for an advance fee charged to the owner.  Company’s status is listed as active in corporate records. Resort Rental LLC – Company began February 2005 and is currently listed as cancelled in corporate records. K & K Property Consultants – Company began in August 2005 and cancelled as of August 2011. Auction America, LLC – began in 2006 and cancelled August 2011.  GLADTrips.com – Company began May 2007 and was cancelled September 2012. Resort Rentals International – began May 2007 and now cancelled. Royal Elite Vacations – Company began March 2008.and now cancelled.  Royal Equity Transfer – Company began May 2009 and now cancelled in corporate records. Exotic Equity Transfers LLC, (also doing business as Elite Equity Transfers) began in 2007 company conducted timeshare transfers in exchange for a fee charged to the original owner. Company is listed as ACTIVE. Royal Elite Exchanges – Company began May 2009 and is now cancelled.  Resort Rentals Mexico  – Company began November 2011 and is currently listed as active.  Resort Advantage International –Company began April 2012 and is currently listed as active. Timeshare Auctions USA – began April 2012 and is now cancelled. Resort Rentals Worldwide – Company began April 2012 and is currently listed as active. GPV International, LLC – Company began in June 2012 and its status is currently active. Grand Premier Vacations – Company began January 2012 and is now cancelled. Priority Exchange Network – Company began in July 2013 and its status is active in corporate records.

Washington State vs. Gibbs Deadline is January 1, 2015

If you haven’t already sent your conveyance documents to reclaim your deed(s), the deadline is fast approaching!

TTR has been informed that the proper method to acquire timeshare interests that were transferred to asset-less entities and individuals as part of the Jonathan and Christine Gibbs operations is to submit a set of conveyance documents (typically a deed) to them. You need to provide whatever documents are necessary to record the conveyance documents for their signature. They will not prepare the documents but after verifying the original transfer, they will sign and notarize them. They will not act on any relinquishment requests that are not accompanied by the necessary conveyance documents. So, if you put in a request without conveyance documents, you need to resubmit. Your relinquishment requests and documents should be submitted to:

Erica Hilderbrant
855 Trosper Road SW #108-322
Tumwater, Washington 98512
email: Erica.h@summitmkg.com

NOTE: This address was confirmed by the Washington State Attorney General’s Office on October 6, 2014.  According to the AGO, The P.O. Box, reported in the  Mar/Apr 2014 Timesharing Today publication, has being closed.

TTR recommends that if you have any questions regarding how the conveyance documents should be formatted that you contact Ms. Hilderbrant prior to submission. To expedite verification, we suggest also providing a copy of the deed that was used to transfer the timeshare from the original owner to the asset-less entity or individual. Although this was not clear at the time, you should provide your own resort specific conveyance documents instead of the standardized form previously provided by TTR.

HOA’s that have been dealing with any of the following companies should proceed immediately with reclaiming your lost deeds. You must apply by January 1, 2015.

SUMMIT MARKETING ASSOCIATES LLC
FINANCIAL RECOVERY SOLUTIONS LLC
WE COLLECT TIMESHARES LLC
TIMESHARE FREEDOM
DIRECT TRANSFERS LLC
PRUDENTIAL WEST LLC
SAVE HANDS TRANSFERS LLC
APEX PROFESSIONALS LLC
CORNERSTONE CLOSINGS LLC
GREAT TIMESHARE BARGAINS LLC
MARMAC ETT LLC
EAGLE VENTURE ASSOCIATES LLC
ELLIOTS WORLD LLC
GLOBAL ACQUISITION ASSOCIATES LLC
GOLDEN ROYALTY ADVISORS LLC
LUDDERS WINE LLC
POY DEVELOPERS LLC
THE GOLDEN GRILL LLC
THE MIDDLE SEAT LLC
THE THROWN APPLE LLC
VAN DRIVERS CONSULTING LLC
CALLAHAN AND ZALINSKY ASSOCIATES LLC
ST HAMM MANAGEMENT LLC
REALTIMESHAREHELP.COM
TIMESHARE FREEDOM LLC
TIMESHARE HOLDING COMPANY LLC
VACATION CHOICES LLC
CHOICE RESORTS VACATIONS LLC

If you are a Washington State resort, The Gibbs agreed to pay $700,000 to the State of Washington, Office of the Attorney General to create a Timeshare Restitution Fund.  The fund shall be distributed to Washington State consumers as provided for in the following paragraph:

Washington State Consumers may apply to the Office of Attorney General for a refund with the following criteria: (1) a consumer for whom contracted timeshare transfer services, (either timeshare title and/or point transfer services) and /or the Lien Release services have not been provided prior to entry of this Consent Decree; and (2) who have not already received refunds in whole or in part by the Defendants prior to entry of the Consent Decree; (3) the consumers must have purchased Defendants’ timeshare transfer service from January 1, 2008 to July 1, 2013; and the Attorney General’s Office must receive a notice of a request for restitution prior to January 1, 2015.

 

For more information regarding this case see  Complaint against Jonathan and Christine Gibbs and AG Bob Ferguson announces settlement of major timeshare scam case.

 

Important Update on Washington State vs. Gibbs

TTR has now been informed that the proper method to acquire timeshare interests that were transferred to asset-less entities and individuals as part of the Jonathan and Christine Gibbs operations is to submit a set of conveyance documents (typically a deed) to them. You need to provide whatever documents are necessary to record the conveyance documents for their signature. They will not prepare the documents but after verifying the original transfer, they will sign and notarize them. They will not act on any relinquishment requests that are not accompanied by the necessary conveyance documents. So, if you put in a request without conveyance documents, you need to resubmit. Your relinquishment requests and documents should be submitted to:

Erica Hilderbrant
855 Trosper Road SW #108-322
Tumwater, Washington 98512
email: Erica.h@summitmkg.com

NOTE: This address was confirmed by the Washington State Attorney General’s Office on March 18, 2014. According to the AGO, The P.O. Box, reported in the most recent Timesharing Today publication, is being closed.

TTR recommends that if you have any questions regarding how the conveyance documents should be formatted that you contact Ms. Hilderbrant prior to submission. To expedite verification, we suggest also providing a copy of the deed that was used to transfer the timeshare from the original owner to the asset-less entity or individual. Although this was not clear at the time, you should provide your own resort specific conveyance documents instead of the standardized form previously provided by TTR.

We received the following explanation from the Washington State Attorney General’s office:

The Consent Decree states “Defendants shall transfer title and/or ownership of every timeshare transferred by defendants to all timeshare resorts located within the United States, including those outside the State of Washington, with whom the defendants conducted timeshare transfer or lien release services if requested in writing by timeshare resorts.” 

It does not require the defendants to generate the transfer documents themselves.  The next section of the Decree that refers to transfers involving individual (non-business) transferees even states “nor are the Defendants or their designees under any obligation to execute any other documents other than the limited power of attorney as set forth in this section.”   I believe that both the defendants and the state anticipated that resorts would require that their own transfer documents be used.

The initial letter that went out to resorts perhaps could have used more instructive language.  For example, it seems the word “relinquishment” might be causing some confusion.  While I can appreciate that the letter from the defendants may be confusing to some resorts, it does ask that resorts “please mail the relinquishment/transfer documents identifying the timeshare intervals you want to take back together with a separate sheet of paper containing a complete legal description of the property you wish to transfer.”  

I would take “relinquishment/transfer documents” to mean whatever documents each resort uses to memorialize and complete the transfer of a timeshare property or interval.  I may be assuming too much to think that each resort has documentation it uses for that purpose.  But even if a resort does not have specific documentation of its own, then it would have to use whatever documentation would satisfy that resort’s legal, technical and practical requirements.

For more information regarding this case see  Complaint against Jonathan and Christine Gibbs and AG Bob Ferguson announces settlement of major timeshare scam case.

Washington State Attorney General Settles Case

The Washington State Attorney General’s office settled their complaint against Jonathan and Christine Gibbs. You can read about it at AG Bob Ferguson announces settlement of major timeshare scam case

As part of the Consent Decree Christine Gibbs has agreed to return the timeshares in her possession to the Associations. Resort Associations are confused by the letter that they have received advising that certain companies and individuals are agreeable to return timeshare intervals to them. The actual sender of the letter is not identified and the language in the letter is confusing.  It is from Christine Gibbs.

TTR recommends that when responding, you should not only provide the information specified in the letter but also review the deed from the original owner to the Shell person or entity to see if there were any defects in the legal description. You should note these and send a copy of the deed with your single sheet request.

You need to provide whatever documents are necessary to record the conveyance documents for their signature. They will not prepare the documents but after verifying the original transfer, they will sign and notarize them. They will not act on any relinquishment requests that are not accompanied by the necessary conveyance documents, so if you previously put in a request without conveyance documents, you need to resubmit.

Your relinquishment requests and conveyance documents should be submitted to:

Erica Hilderbrant 855 Trosper Road SW #108-322 Tumwater, Washington 98512. Note this addrress was confirmed by the Washington State Attorney General’s Office on March 18, 2014. According to the AGO, The P.O. Box reported in the most recent Timesharing Today is being closed. email: erica.h@summitmkg.com

Washington State Attorney General Announces Major Timeshare Transfer Case

TTR is very encouraged to see the State of Washington take comprehensive legal action against one of the largest unburdening operations. We will keep you updated as this case progresses through the courts.

To see the entire complaint please go to: Complaint against Jonathon and Christine Gibbs

 TTR has updated and cross referenced its records on the companies, Asset-Less Entities and individuals identified below:

On May 30, 2013 the Attorney General of the State of Washington filed a lawsuit alleging violations of the Consumer Protection Act and other state laws based on Defendants’ timeshare transfer and discount travel membership schemes. This lawsuit was filed against JONATHAN GIBBS, individually and his marital community; CHRISTINE GIBBS, individually and her marital community and all of their Timeshare and Travel Related Businesses, including SUMMIT MARKETING ASSOCIATES LLC, FINANCIAL RECOVERY SOLUTIONS, LLC WE COLLECT TIMESHARES LLC, dba TIMESHARE FREEDOM, DIRECT TRANSFERS, LLC; PRUDENTIAL WEST LLC, SAFE HANDS TRANSFERS LLC, APEX PROFESSIONALS LLC, PREFERRED TRANSFERS LLC, CORNERSTONE CLOSING LLC, GREAT TIMESHARE BARGAINS LLC, MAR MAC ETT LLC, EAGLE VENTURE ASSOCIATES LLC, ELLIOTS WORLD LLC, GLOBAL ACQUISITION ASSOCIATES LLC, GOLDEN ROYALTY ADVISORS LLC, LUDDERS WINE LLC, POY DEVELOPERS LLC, THE GOLDEN GRILL LLC, THE MIDDLE SEAT LLC, THE THROWN APPLE LLC, ALEW, LLC; VAN DRIVER’S CONSULTING, CALLAHAN AND ZALINSKY ASSOCIATES LLC, ST HAMM MANAGEMENT LLC, REAL TIMSHAREHELP .COM, a Domain Name; TIMESHARE HOLDING COMPANY LLC, VACATIONCHOICES LLC,  CHOICE RESORT VACATIONS LLC, and other yet unknown Timeshare and Travel Related Businesses and Jane Does and John Does. In addition, transfers from these operations were made to the following individuals: Shanta Grover, Keith Barkas, Yvonne Barkas, George Barkas, Cynthia Barkas, Stella Dirks, Charles Banyard, Timothy Jackson, and Ruthie Hayes.  The Gibbses reside in Olympia at 3630 Pennant Court NW, Olympia, 2 Washington 98512; their current mailing address is P.O. Box 13199 Olympia, WA 98508.