From Selling Time to Doing Time: U.S. Attorney for the Southern District of Illinois with U.S. Postal Inspection Service Prosecutes 34 in Various Timeshare Resale Schemes
Stephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced today his participation in a multi-state, multi-national law enforcement initiative against deceptive timeshare resale scams. The initiative involves over two dozen state attorneys general, various federal, state and local law enforcement agencies, the Federal Trade Commission, and several U.S. Attorneys offices.
"The Southern District of Illinois leads the nation in prosecuting telemarketing fraud - my office prosecuted more defendants in fiscal year 2012 for telemarketing fraud than any other district in the nation," U.S. Attorney Wigginton announced. The Southern District of Illinois prosecuted several timeshare resale scams throughout Florida, as well as in Las Vegas, Nevada. The cases were brought in the Southern District of Illinois because these scams bilked timeshare owners here. So far, thirty-six telemarketers (36) have been convicted. Of those, two dozen have been sentenced with the kingpin of one of the scam companies receiving a sentence of over fifteen (15) years’ incarceration.
"The scams we prosecuted generated over $50 million dollars in ill-gotten gains. Behind this vast fortune lies a vast crime," Wigginton said.
The scams follow a familiar pattern. The timeshare owner, who bought into a dream sold by the timeshare developer, for various reasons, finds that she needs to sell her timeshare unit. Some do because they have lost employment or face some other economic hardship. Some do because they can no longer afford the maintenance costs. Others find that they just don't use it. Whatever the reason, when a telemarketer calls her on telephone and tells her that the telemarketer has a buyer or interested party for her timeshare unit who will pay at, near, or even more than the owner originally paid, the timeshare owner often jumps at the chance. The typical advanced fee of $1,000 to $2,000, which is solicited by the telemarketer who represents it to be closing related expenses like deed preparation, title and maintenance reports, seems a small price to pay for the thousands of dollars that the timeshare owner is guaranteed to receive by cashier's check from the title company which will be closing the sale. But the buyers turn out to be an illusion because there is no substantial market for reselling timeshares where the timeshare owner can get what they paid when originally purchased. When the timeshare owner who paid fees to these companies based upon a lie calls these companies to find out about the status of their closing, they are then lied to further. Few ever get their money back when they complain.
Since there never were any closings, the fees were split among the telemarketers often fueling expensive drug habits. "In the experience of our investigators, this is an industry where having a criminal record and an active drug habit is considered a real asset." (Wigginton was speaking of the cases that have pleaded guilty and have been sentenced.) In the words of one timeshare resale company owner, having a criminal record meant that the prospective telemarketer "was no goody two shoes." Since, in the words of one of the convicted telemarketers, "good salesmen" are "good liars." The ability and willingness to lie is a key job skill for the industry.
“Tens of thousands of people across the country have bought timeshares they can no longer afford to visit or maintain, and those falsely claiming they have a buyer for these timeshares are simply thieves,” said C. Steven Baker, Director of the Federal Trade Commission’s Midwest Region. “By working together with the U.S. Attorney’s office in the Southern District of Illinois we’ve been able to stop these scammers cold, get money back to victims, and see the crooks get the jail time they deserve.” The FTC has been involved in many of the timeshare resale cases prosecuted in the district.
"At least a bank robber commits his crime without pretense. Telemarketers, by contrast, hide behind a telephone to gain the trust of their victims with lies and manipulation. These crimes are particularly pernicious because the victims are not only robbed of their money, they are also robbed of their ability to trust," said Pete Zegarac, Inspector in Charge, Chicago Division, U.S. Postal Inspection Service. The U.S. Postal Inspection Service has been the lead agency in all telemarketing and mass marketing cases prosecuted in the Southern District of Illinois.
Wigginton has two words of advice for consumers called by telemarketers offering to sell their timeshare unit…."Hang up!"