Timeshare Industry Fighting Back to End Exit Fraud: One Major Firm Disbarred and Another Files Bankruptcy

 

Consumers Should Report Timeshare Exit Scams

 
  

  

September 13, 2018 – WASHINGTON, D.C. – The timeshare industry, the American Resort
Development Association (ARDA) and ARDA Resort Owners’ Coalition (ARDA-ROC), have united
to stop the misconduct of those deceiving timeshare owners into paying for illusory timeshare
exit services through fraudulent means. Recently, the Supreme Court of Tennessee disbarred
attorney Judson Wheeler Phillips, founder of the Castle Law Group, on a myriad of charges
relating to consumer fraud complaints. In the past few weeks, Castle Law Group has ceased
business operations following federal lawsuits brought by developers against Castle Law Group
and those acting in concert with the firm. In another matter prosecuted by Wyndham
Destinations (NYSE:WYND) against American Consumer Credit (ACC), among the largest
timeshare exit companies, the pursuit of ACC, its principal, Dana Micaleff and its attorney,
Michael Saracco, Esq. resulted in ACC filing bankruptcy on September 7, 2018.

 
In Phillips’ case, the Tennessee Supreme Court disbarred Phillips after reviewing upwards of 18
client complaints, many of which made similar allegations of fraud, highlighting a pattern and
practice of misconduct. In its ruling, the Tennessee Supreme Court found that Phillips “poses a
threat of substantial harm to the public.” Central to the series of complaints were allegations that
Phillips and his business partners misled and/or defrauded consumers by taking exorbitant fees
from timeshare owners for purported timeshare exit or cancellation services based upon
fraudulent and misleading representations.

 
The ACC case is based on various legal theories, some of which are founded in federal law, known
as the “Lanham Act.” The case remains pending against Micaleff, individually, and Saracco,
individually, although an automatic stay has been issued relative to ACC in the U.S. District Court
action as a result of the bankruptcy filing. That, however, has not deterred the prosecution of the
case. As of today, there is a motion pending against Micaleff and Saracco to punish them for,
among other things, failing to appear for a deposition.

 
“The constant pressure that our member companies, owners and federal and state agencies are
putting on disreputable timeshare exit companies has again produced a positive result for the
consumer,” said Robert Clements, ARDA Vice President of Regulatory Affairs. “Seeing two
significant actions against these companies sends a very clear message to others trying to take
advantage of timeshare owners: You won’t get away with it.” Clements continued, “If you feel
you have been unfairly taken advantage of or defrauded by a timeshare exit company, please
contact your state Attorney General, local law enforcement or the ARDA-ROC Consumer Support
Team at 1-855-939-1515.”

 
In addition to ARDA’s advocacy efforts that support stricter laws, enforcement measures and
tougher penalties on offenders, ARDA created a Joint Investigative / Enforcement Taskforce last
fall to minimize fraud in the secondary market.

 
“A top priority for our industry and owners, and for law enforcement and other agencies, is to
protect consumers from dishonest individuals or companies trying to take advantage of them,”
said ARDA-ROC Chairman Ken McKelvey. “These actions send a strong signal to criminals that
fraud and deceptive activities will not be tolerated by our industry and it tells consumers that
we take the actions of these individuals very seriously.”

 
“We are committed to protecting our owners to ensure they aren’t taken advantage of,” said
Michael Brown, President and CEO of Wyndham Destinations. “Through our partnership with
ARDA, ARDA-ROC and regulatory and enforcement agencies, we support consumer protection
legislation and law enforcement’s efforts in cases like these. We encourage our owners to reach
out to us or ARDA for participation in legitimate available programs in order to avoid becoming
victims of timeshare exit company scams.”

 
Nearly two years ago, Diamond Resorts implemented an aggressive litigation strategy in pursuit
of third party exit companies for their nefarious and unlawful conduct in an effort to protect the
interest of their members who were promised outcomes that could not be legally accomplished.
In tandem, Diamond Resorts also pursued those unethical law firms, such as Castle Law Group,
which were assisting these timeshare exit companies in their illegal business practices. To date,
these efforts culminated in approximately 12 lawsuits prosecuted by Diamond Resorts
throughout the country, six of which have already resulted in broad injunctions against the
defendants, while the others remain pending.

 
Senior litigation counsel, Bud Bennington, of the law firm Shutts & Bowen LLP, counsel for
Diamond Resorts in the Castle Law Group litigation in the U.S. District Court in Nashville,
Tennessee, and, counsel for Wyndham Destinations in the ACC matter pending in the U.S. District
Court, for the Southern District of Florida, commented that “the various timeshare companies,
their law firms, ARDA and ARDA-ROC have undertaken a relentless effort to arrest the nefarious
and unlawful conduct of the multiple timeshare exit companies around the world and the
unethical lawyers that assist them in the perpetration of their deceptive practices.”

 
ARDA and ARDA-ROC continue to pursue and support appropriate timeshare resale and
transfer legislation in an effort to protect owners against fraudulent timeshare schemes. For
more information about the timeshare secondary market including resales, visit the
ARDA-ROC Timeshare Resale Resource Center at www.arda-roc.org/resales.