Midtown Manhattan Timeshare Admits To Scamming Buyers, Settles With NY AG For $6.5 Million

Operators of a Manhattan timeshare business are forking over $6.5 million to the NY State Attorney General's office after admitting they lied to shareowners about the availability of units. "The owners of the Manhattan Club lured thousands of timeshare buyers with false promises and shady sales tactics that violated New York law," Attorney General Eric Schneiderman said in a release.

"I have been an owner for about a decade and have been beyond dissatisfied since the beginning. Rooms are NEVER available when I want them. It is insane to require owners to book nine months in advance. How do I know what concert I want to book, what show I want to see, what opera I'd like to attend nine months in advance," an alleged owner complained on a consumer affairs-geared website.

Back in 2014, Schneiderman announced a court order halting all sales at The Manhattan Club, a building at 200 West 56th Street, noting that many people had complained about paying "tens of thousands of dollars to become Manhattan Club 'owners' but have been 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 are being rented over the internet to the general public. About 14,000 people currently own timeshares in the hotel’s 286 suites."

An ad for the timeshare intones, "The Manhattan Club introduces a unique experience; blending a vacation ownership retreat with a luxury suite hotel."

Many of the buyers paid $10,000 to $40,000 upfront, plus yearly maintenance costs in hopes of owning a little bit of NYC real estate, even if only for a few weeks a year, according to the NY AG's office. However, they found that besides being unable to book rooms, their maintenance costs were spiraling out of control.

An Arizona man who said he bought a unit in 2005 wrote on ConsumerAffairs.com website, "Our first year was at $500, and then it slowly jumped to $750.00. Eight years or so, all hell broke loose. For a while, the maintenance almost doubled a year. Then it started with the jumping 25%, now it's almost $3,000 a year."

Another poster lamented:

We purchased our first week at The Manhattan Club around 1997 when it was just opened. We had been staying at Park Central during Thanksgiving week, when we were approached by a salesman in the lobby who told us about this new Timeshare that was opening and how it would be a great deal for us since we came back to the City to stay every Thanksgiving. We took the tour and listened as the salesman told us the benefits of purchasing a unit there, he told us it would be ours forever, it could be left to our kids, we would always be able to get Thanksgiving week, it would go up in value and the maintenance fees would be less than the price of staying at a hotel in the City. We fell for his story and purchased our unit and paid in full for it in cash.

The first few years were as promised, the fees were reasonable, so we decide to purchase 2 more weeks. We were able to get our Thanksgiving week and it was great for a few years but then the fees started jumping up and we were told that Thanksgiving was not available for us, as it all of a sudden became a red week, but we were told if we paid more to upgrade that week would always be available to us, even though when we purchased it, that was the week we had purchased it and we were told it would be available if we booked 9 months ahead.

Then it became we couldn't get any week except the one we paid more for New Year's eve. It went downhill from there: ridiculous maintenance fees for more than what a hotel would cost, not getting to book a week even after paying fees early. I contacted TMC many times about the issues and never could get a straight answer and now they are being investigated so I hope this brings some resolution to myself and all the other owners who are facing the same issue. I have spent so much money between buying the 3 weeks and all the fees I have paid since 1998 that I could have put a large down payment on a studio apartment in NYC and still made out better financially. Lesson learned "STAY AWAY FROM TIMESHARES!"

The Attorney General's office says this settlement is the "largest in recent history for the Attorney General’s Real Estate Finance Bureau" and that Manhattan Club's operators "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." Besides the $6.5 million fee, the operators are "barred from the timeshare industry; will sell their stakes to a third-party purchaser and relinquish management control;" and [will] "Remove all sponsor-appointed current officers and directors from their positions as members of the Board of the Timeshare Association."

Owners will be notified of their distribution of a settlement later, but using the most basic arithmetic, $6.5 million divided by the estimated 14,000 timeshare owners is... $464.29 per person.

"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," urged Schneiderman, who also included a link to his brochure on avoiding summer scams, like a vacation scam.