More Bad News for New York's Manhattan Club

Things still aren't looking good since our last update on New York City's Manhattan Club timeshare. Last December, we mentioned the timeshare in our blog on maintenance fee complaints. At that time, Manhattan Club owners were complaining that their rising maintenance fees weren’t getting them anything in return. Complaints about the inability to book rooms, or sell their shares were voiced by many owners. Manhattan Club developer Bruce Eichner was facing a New York State Supreme Court lawsuit in which timeshare owners alleged he sold over 14,000 ownerships for 286 rooms resulting in a minimum shortage of 69 rooms.

Bait and Switch Scheme

Developer Eichner and his partners are on their way to court again. Referring to the Manhattan Club as a "bait and switch timeshare scheme", Eric Schneiderman, New York's Attorney General, halted sales of timeshares and foreclosures of timeshares at the club last Friday.  Schneiderman's court order also requires Manhattan Club developers to appear in court on August 1 to answer questions about their sales pitches and other practices.  

Undercover Work

The court order was in response to continuing owner complaints on rising maintenance fees (some owners said they were forced to sell their shares for just $1 to avoid the fees), and their inability to book rooms while at the same time rooms were still available to the general public. Earlier this year, undercover investigators from the Attorney General’s office attended and recorded a sales presentation at the Manhattan Club. The investigators found evidence that the club’s sales tactics were much like a "bait and switch scheme." Buyers were told they could easily reserve rooms and that the hotel did not rent rooms to the public. Investigators found that the club’s offering plan stated that rooms were rented to the public, but the Attorney General's office says the club illegally withheld the plan from buyers until after they had bought their memberships. 

Developers Will Cooperate

The developers of the Manhattan Club, issued a statement through their spokesman, Eric Yaverbaum who said, "We intend to fully cooperate with the attorney general’s investigation and look forward to bringing clarity to the entire issue."  Because of the ongoing investigation, a spokesperson from the attorney general’s office would not comment on whether the attorney general would seek refunds for the property owners. The Manhattan Club has been the subject of at least two lawsuits from members. One suit was settled out of court, and the other was dismissed by an appeals court. The appeals court ruled in part that the club had disclosed to buyers that rooms could be rented to the public.

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