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Manhattan Club Lawsuit (by Vicky M.):

I was able to get into that site and there are some really interesting documents there.

I'm not sure if this will work, but this was a very interesting document that stated exactly what we owners are going through, so here is a partial copy. Go onto the site yourself as lots of things happening now. VickyH SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ------------------------------------------------------------------------x In the Matter of an Inquiry by ERIC T. : Index No. SCHNEIDERMAN, Attorney General of the : State of New York, : : Petitioner, : AFFIRMATION IN : SUPPORT OF THE NEW Pursuant to Article 23-A of the New York General : YORK ATTORNEY Business Law in regard to the acts and practices of : GENERAL’S APPLICATION : FOR AN ORDER PURSUANT IAN BRUCE EICHNER, LESLIE H. EICHNER, : TO GENERAL BUSINESS STUART P. EICHNER, SCOTT L. LAGER, : LAW § 354 T. PARK CENTRAL LLC, O. PARK CENTRAL LLC, : PARK CENTRAL MANAGEMENT LLC, THE : MANHATTAN CLUB MARKETING GROUP LLC, : and NEW YORK URBAN OWNERSHIP : MANAGEMENT LLC, : : Respondents, : : in promoting the issuance, distribution, exchange, : advertisement, negotiation, purchase, investment advice : or sale of securities in or from New York State. : ------------------------------------------------------------------------x SERWAT FAROOQ, hereby affirms, pursuant to CPLR 2106, as follows: 1. I am an attorney admitted to practice before the courts of this State and an Assistant Attorney General in the Office of Eric T. Schneiderman, Attorney General of the State of New York (“NYAG”). I am familiar with the facts and circumstances of NYAG’s investigation of Respondents’ participation in fraudulent practices in the public offer and sale of real estate securities in The Manhattan Club, a timeshare hotel located at 200 West 56th Street, New York, New York. 2. I submit this affirmation along with exhibits, upon information and belief, based on personal knowledge and an examination of records and documents contained in the files of the offices of NYAG. 3. This affirmation is submitted in support of NYAG’s ex parte application pursuant to General Business Law (“GBL”) § 354, for the relief specified in the attached proposed order. 4. NYAG, having determined to commence an action under the Martin Act, GBL § 352 et seq., seeks an Order pursuant to GBL § 354 directing Respondents to testify and produce books and records because, upon information and belief, such testimony is material and necessary to NYAG’s ongoing investigation. 5. Moreover, because Respondents could further engage in fraudulent business practices that run the risk of causing continued injury to the purchasing public, immediate preliminary injunctive relief is expedient and proper. RESPONDENTS 6. Ian Bruce Eichner is an individual who resides in New York State, and is a principal of T. Park Central LLC, O. Park Central LLC, the Manhattan Club Marketing Group LLC and the New York Urban Ownership Management LLC. 7. Leslie H. Eichner is an individual who resides in New York State, and is a principal of T. Park Central LLC, O. Park Central LLC, the Manhattan Club Marketing Group LLC and the New York Urban Ownership Management LLC. 8. Stuart P. Eichner is an individual who resides in New York State, and is a principal of T. Park Central LLC, O. Park Central LLC, the Manhattan Club Marketing Group LLC and the New York Urban Ownership Management LLC. Stuart P. Eichner also is a Sponsor-appointed member and the President of the Manhattan Club Timeshare Association, Inc. 9. Scott L. Lager is an individual, a Sponsor-appointed member and the Vice- President of the Timeshare Association. 10. T. Park Central LLC is a New York limited liability company, and the sponsor of 2 Phases I, II and III, and Stage I of Phase V of the Manhattan Club. 11. O. Park Central LLC is a New York limited liability company, and the sponsor of Phase IV of the Manhattan Club (together with T. Park Central LLC, “Sponsor”). 12. Park Central Management LLC is a New York limited liability company, and the managing member of Sponsor. Park Central Management LLC has never been registered as a broker-dealer of securities in New York State, and was not identified as a principal of Sponsor in its expired broker-dealer registration statements. 13. The Manhattan Club Marketing Group LLC is a New York limited liability company, and Sponsor’s agent that sells ownership interests in the Manhattan Club to the public. 14. New York Urban Ownership Management LLC is a New York limited liability company, and the management company for the Manhattan Club (the “Management Company”). INTRODUCTION 15. Since 1996, Sponsor has been selling ownership interests in a timeshare known as the Manhattan Club. 16. The Manhattan Club timeshare hotel consists of 286 physical units, of four different accommodation types: 129 one-bedroom units; 112 executive suites; 24 penthouse suites; and 21 metropolitan suites. Annexed hereto as Exhibit A is a copy of Part I of the eighth restated plan for the Manhattan Club. The Manhattan Club is located in Midtown Manhattan. While the Manhattan Club is located in the same building as the Park Central Hotel, they operate on separate floors and have separate lobbies. See Ex. A at 8. 17. A typical timeshare plan allows a member or owner to use a specific property during a specific or “fixed” week every year. The Manhattan Club is not a typical timeshare, as the vast majority of owners were sold “flex time” or “flexible ownership” whereby they own a 3 fractional interest of a particular unit, but nevertheless have the ability to reserve any unit of the same accommodation type at any time of the year, subject to availability. See id. at 10. 18. Thus, in theory, an “annual ownership interest” in the Manhattan Club means the ability to reserve and use a room for seven consecutive or nonconsecutive nights per year. Accordingly, Sponsor may sell up to 52 annual ownership interests per actual, physical unit in the timeshare hotel. See id. at 16.1 19. Moreover, Purchasers are induced by the promise of enjoying luxury accommodations in Manhattan not just as overnight guests, but as owners. 20. In reality, it is extremely difficult if not impossible for Manhattan Club owners to actually reserve rooms. 21. Over time, the types of flexible interests being offered, and the corresponding rights and obligations, have changed. Meanwhile, the owners’ yearly common charges have increased by approximately 200% over the past decade. The discrepancy between what Manhattan Club owners are getting, versus what they are paying for, is so extreme that a few owners have sold ownership interests back to the Sponsor for only $1, just to escape the burden of paying the common charges. 22. Reportedly, because there is no resale market for ownership interests in the Manhattan Club, Sponsor has compiled a waitlist of Manhattan Club owners who are willing to sell their interests back to Sponsor for $1, but there is no guarantee that Sponsor will buy back an 1 The offering plan expressly states that: Ex. A at 10. Under the Offering Plan, each Purchaser of an Ownership Interest will acquire an undivided interest in a Timeshare Unit in the Timeshare Project (1/52 in the case of an “Annual” Ownership Interest or 1/104 in the case of a “Biennial” Ownership Interest or 1/156 in the case of a “Triennial” Ownership Interest or 1/208 in the case of a “Quadrennial” Ownership Interest), as tenants-in-common with all other Purchasers of Ownership Interests in the same Timeshare Unit. 4 ownership interest from anyone on that waitlist.2 23. Of particular concern is the conduct of Sponsor, and its principals and agents in relation to the rights of owners of flexible interests in the 129 full one-bedroom units and the 112 executive suites at the Manhattan Club (Phases I, II and III). Flexible ownership interests account for about 93% of interests sold in in these two accommodation types, but despite their majority ownership, their rights are inferior to the approximately 7% of owners who own so- called fixed interests, event interests and holiday interests. 24. While owners of flexible interests have brought class action lawsuits alleging that it is virtually impossible for them to reserve a room at the Manhattan Club, two of those lawsuits were dismissed on the ground that Sponsor has represented in writing, in an offering plan, that there are numerous restrictions on the ability of an owner of a flexible interest to reserve a room, including because the Management Company rents rooms to the general public. See Bisk v. Manhattan Club Timeshare Ass’n, Inc., 987 N.Y.S.2d 164 (1st Dep’t June 19, 2014); Sheppard v. The Manhattan Club Timeshare Ass’n, Inc., 11 Civ. 4362, 2012 U.S. Dist. LEXIS 72902 (S.D.N.Y. May 23, 2012).3 25. Thus, Sponsor has successfully used the offering plan as a shield from private litigation. 26. Over the past several years, NYAG has received nearly 100 complaints concerning the Manhattan Club. Sponsor repeatedly claimed that its conduct complied with the Martin Act, which governs the offer and sale of ownership interests in a timeshare and the sales 2 See http://therealdeal.com/blog/2012/07/23/timeshare-owners-in-eichners-manhattan-club-are-desperate-to-sell/ (last visited June 25, 2014). 3 A third lawsuit was dismissed on grounds of res judicata. See Smith v. Manhattan Club Timeshare Ass’n, Inc., 944 F.Supp.2d 244 (S.D.N.Y. 2013). 5 of other real estate securities.4 27. NYAG recently commenced an investigation into the conduct of Sponsor, and its principals and affiliates to determine whether they are violating the Martin Act. 28. As part of this investigation, NYAG’s staff attorneys reviewed Manhattan Club records filed with NYAG, including Sponsor’s broker-dealer registration statements and complaints made by owners of flexible interests in the Manhattan Club. On three separate occasions, NYAG sent undercover investigators to the Manhattan Club to video record the Sponsor’s sales presentation for flexible ownership, entitled “Vacation Ownership Experience” (respectively, the “Richardson Video,” the “Friedman Video” and the “Rivera Video”).5 NYAG’s staff attorneys then compared Sponsor’s selling agents’ oral representations with Sponsor’s written representations in the Manhattan Club offering plan, and other publicly filed documents. 29. Thus far, the investigation has revealed that: i. As part of Sponsor’s marketing scheme, its selling agents deliberately withheld the offering plan from prospective purchasers, violating the legal requirement that written disclosure be used in the offer and sale of real estate securities. ii. Worse yet, two sales agents invoked NYAG as the reason that prospective purchasers make their purchase decisions immediately upon the conclusion of the oral presentation. iii. Sponsor’s selling agents misrepresented the equity or resale value of an ownership interest. iv. Sponsor’s selling agents misrepresented that the Manhattan Club does not rent rooms to non-owners. v. Sponsor’s selling agents misrepresented the reservation policies applicable to 4