Fraud charges laid in time share scam
Thursday, Aug 04, 2011 06:00 am
Multiple fraud charges have been laid against two individuals, one from Canmore, and four companies in relation to a time share operation.
The four companies ran the time share operation at different times, offering access to Chateau Canmore Resort and the Banff Gate Mountain Lodge and Spa in Harvie Heights.
In all, Chateau World Vacations Inc. and its director Kim Schram of Edmonton, and Properties International Ltd., Royal Crown Resorts Ltd., and Royal Club Resorts Inc. and their director André Muran are facing 192 charges.
Of those, 168 are criminal code counts of fraud over $5,000 and 24 are Fair Trading Act charges of misleading or deceiving consumers, misrepresenting a consumer’s rights, remedies or obligations and using exaggeration, innuendo or ambiguity of material fact in a consumer transaction.
Service Alberta spokesperson Mike Berezowsky said the charges, representing 59 consumers, are just the tip of the iceberg.
“It has been an ongoing investigation of about three years,” he said. “We have had 678 complaints in total over the past few years and as you can imagine that’s a lot of information to go through.”
The 192 charges represent losses totalling more than $1 million, but Berezowsky said when going through the corporation’s files between July 1994 and July 2008, there were more than 8,600 contracts with a value between $60 million and $80 million.
“It is certainly one of the largest files we have had,” he said.
The charges have no relation to the current operations at either Chateau Canmore or Banff Gate.
While not every complaint resulted in charges, Berezowsky said investigators focused on those with a strong likelihood of conviction.
La Velle Goodwin, who has been fighting against the fraud she experienced by Muran and RCI in 2002, said she is thrilled charges have been laid and at the same time disappointed all the victims are not represented.
“I’m disappointed because these charges are specific to the issues of 59 members and we know there are a lot more victims than that,” she said.
Goodwin also expressed concern because Muran pleaded guilty to Fair Trading Act charges in the past and “got a plea deal, a slap on the wrist and a wag of the finger.
“I want to see serious penalties for this naughty corporate behaviour,” she said.
Under a previous name, Royal Club Resorts (RCR), the company and Muran were charged in 2004 with 125 charges in relation to failing to provide timely refunds to customers who cancelled their contracts.
In 2007, a plea agreement was reached with the Crown and Muran was ordered to repay $221,000 in refunds and contract cancellations to 29 consumers.
RCR also received $16,500 in fines after pleading guilty.
However, this time around, with 168 of the 192 counts being criminal charges of fraud there is a real possibility Muran and Schram will face jail time.
“In the contract there was a certain level of consumer protection that we allege was not the case,” Berezowsky said, adding the hotel properties were said to be held in trust as part of the contract. “The investigation revealed that trust did not exist.
“It goes beyond simple misleading of consumers with an intent to commit fraud.”
He explained if the facilities were held in trust when the banks foreclosed on the two properties last year, consumers would have still had access to them.
However, because the corporations held the facilities, creditors took possession of them after Muran, Schram and the corporations failed to make mortgage payments for two years.
And it doesn’t stop there. Berezowsky said Service Alberta continues to investigate other aspects of the operation that saw members continue to be charged fees even after the foreclosure.
He said the time share let people finance membership fees through the time share and pay over time. It then sold those debts to another company, Travelers Acceptance Corporation, which later became Crelogix Finance Company.
“They continued to collect on those fees even after February 2010 when the operation went under,” he said, adding the company has met with officials and is willing to work this out for consumers and has stopped collecting fees as of April this year. “We are still investigating this aspect.”
Goodwin said the harm the various corporations that have operated the time share units, along with Muran and Schram, have caused is unconscionable.
“I do not have words for what these companies have done. It goes beyond awful,” she said.
The first court appearance is scheduled for today (Aug. 4) in Calgary Provincial Court.