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By jbercu

Yahoo Group for Independent Owners

Did any owners join the Yahoo Group TBS_Owners? It is Simple. http://groups.yahoo.com/group/TBS_Owners/

Thanks

Last edit by jbercu on Jul 06, 2013 12:54 PM.

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4 years ago
May 15, 2012

By jeff_reports
RedWeek.com Team

Yahoo Group for Independent Owners

A lot has happened since TBSC Board members Jake Bercu and Alfred Fong started fretting about Diamond Resorts' intentions when the company started buying delinquent intervals in bulk purchases. That was back in 2012, when the timeshare market was slow and delinquencies were high, putting resorts like TBSC in awkward financial shape. So back then, Diamond's infusion of cash and maintenance fees was probably a welcome development. But over time, it took on a sinister cast, as the company's acquisition strategy became clear. Diamond now owns 25% of the club's weeks. Check out this article in TimeSharing Today Express to see what's transpiring down by the lake right now. It would make a great reality TV show on cable! =============================================================================================================

Timeshare Election in Lake Tahoe Pits Legacy Board Owners Against Diamond Resorts

By Jeff Weir

A nasty election contest is taking place on a sunny beach in Lake Tahoe, where a razor-slim 3-2 majority of the board members at Tahoe Beach and Ski Club, a sleepy 140-unit legacy timeshare in the shadows of Heavenly's ski slopes, is fighting Diamond Resorts' attempt to take control of the board and, perhaps, the resort.

The TBSC-Diamond feud is taking place in the board room and on the beach --- literally, a 420-foot stretch of white sandy lakefront that the resort owns but which Diamond allegedly covets (and denies) because of its proximity to Diamond's Lake Tahoe Vacation Resort right next door. The battle is also boiling in the El Dorado County (CA) Superior Courts, where Diamond is suing the three majority board members, President Alfred Fong, Treasurer Jake Bercu and Vice President Sedric Ketchum, for rejecting Diamond's Dec. 11, 2014, purchase of 241.5 vacation plans arranged by the club's former management company, VRI. Diamond is also pushing its case at the ballot box. Frank Goeckel, a Diamond corporate executive, and Cathy Ryan, a former board member who wants to work with Diamond, are running to unseat Fong and Bercu at the resort's annual HOA meeting Sept. 26. If one or both of them succeed, the board's majority will swing in favor of a pro-Diamond future at TBSC. The other two board members, Shannon Krutz and Steve Williams, are considered pro-Diamond votes.

"For us, it's all or nothing," Bercu said. "If we lose one seat on the board, the whole resort is gone."

Bercu owns 14.5 weeks and has spent nearly every summer at the resort during the past 20 years. He is a business consultant adept at using social media to build owner discussion forums. He is an intensely passionate defender of the resort's original owners and also extremely skeptical of all things Diamond. In a July 3 letter to fellow board members, Bercu described Diamond as a "Goliath" making biblical threats to the Association's 'David.' As the board's lightning rod --- he and other board members call Goeckel a 'bully'--- Bercu is willing to ramp up the negative rhetoric about Diamond's timeshare practices in order to galvanize owners to vote for himself and Fong. Their concern, he says, is that Diamond will not only take over the resort, but transform it into a Diamond-like entity that will treat original deeded-owners like second-class citizens, raise maintenance fees and change the reservation system in favor Diamond Club members.

Goeckel, Diamond's senior VP of Management Services Development, is equally forthright about his company's objectives. "Diamond's here to stay. We're not going anywhere. If we don't win this election, we will win next year. But there's a lot of hostility here I don't understand."

Classic Example of Changes in the Industry

The case --- pitting longtime owners resisting a giant timeshare company's attempt to take control of a resort by buying up delinquent units on the secondary market --- is a real-time example of changes within the timeshare industry: Consolidation of resorts and inventory by major conglomerates, such as Diamond, who target legacy resorts in high-value markets for acquisition; compared to the challenges faced by a stand-alone legacy resort --- in a prime location --- trying to stay financially afloat and independent despite double-digit delinquency rates caused by original owners who are older, unable to travel, and/or unwilling to keep paying maintenance fees.

Diamond recently completed a massive renovation project at the Lake Tahoe Vacation Resort, which sits 100 yards away from TBSC, but which has no beach of its own. The company also has reservation and usage options at four Tahoe resorts, including TBSC. During the past two years, Diamond has methodically acquired TBSC timeshares at tax sales and foreclosures --- and now owns 25 percent of the resort's timeshares. By any yardstick, it is already the majority owner of the resort. Those purchases set off alarms on the TBSC board. Last fall, the board informed its then management company, VRI, not to process any more bulk transfers without advance board authorization. It also terminated VRI's longtime contract, effective Jan. 1. Despite that admonition, VRI processed the sale of 241.5 additional Vacation Plans to Diamond in December, based on an affidavit from Krutz, the board secretary and an executive with Vacations Internationale. She said that VRI had continuing legal authority to pursue the sale.

The Legal Case Goes Ballistic

Board President Fong, a retired postal worker who owns eight weeks at the resort, repudiated the sale in a Jan. 9 letter to Diamond on grounds that the board "did not and would not have authorized" the transaction. Worse, Fong said, "the transaction is fundamentally wrong" because Diamond knew, ahead of the sale, that the board was opposed to bulk transfers that could give corporate entities an undue influence over the board, and resort, programs. Fong offered to work with Diamond to resolve the dispute and put the issue to arbitration, plus refund Diamond's $228,200 purchase.

Instead, one week later, Diamond's lead litigation attorney, Florida lawyer Robert Webb, who also serves as treasurer of the American Resort Development Association (ARDA), sent Fong a stinging rebuke, demanding immediate recognition of Diamond's grant-deed as well as its right to use and reserve the units for members of Diamond's travel club.

"The association and its officers and directors will be liable to Diamond--for any and all loss or damage suffered --arising as a result of the Association's disavowal and repudiation of the grant deed," Webb wrote. Moreover, Webb scolded Fong for beaching his fiduciary responsibilities, stating that the Association had "inexplicably turned its nose up at approximately $365,000 of Diamond Tahoe's money for the purchase of the 287 timeshare interests (241.1 Vacation Plans) and the related 2015 common expense assessments. This is money that the Association has no immediate prospects of collecting from another source, resulting in assessments toAssociation members that are higher than they would otherwise be if Diamond Tahoe's funds were accepted."

The TBSC board refused to budge. So on Feb. 6, Diamond made good on Webb's threats, filing a lawsuit for damages and requesting an injunction that would force the board to immediately recognize Diamond's ownership of the disputed timeshares. Since then, despite many motions and several hearings, Diamond has lost every round in court. In July, Superior Court Judge Steven C. Bailey denied Diamond's bid for an injunction and opined that Diamond would eventually lose the case at trial. "There is nothing in the governing documents to indicate Mrs. Krutz had authority to sign that affidavit (authorizing the sale to Diamond)," Bailey said in his ruling. "There is no evidence that, at the time of the sale, VRI had the authority to sell over 200 Vacation Plans to Diamond Resorts. Additionally, based upon the evidence before the court at this time, it does not appear likely that (Diamond) will prevail on the merits (of the lawsuit)."

Unfazed by the judge's rebuke, Diamond filed motions for a second injunction attacking the upcoming election process. Diamond asked Judge Bailey to bring in an independent trustee to monitor the election alleging, in effect, that Fong and Bercu board would otherwise rig the election process on their behalf. The board fired back in kind, accusing Diamond of trying to manipulate the election process to guarantee Goeckel's victory on Sept. 26. The board also filed a counter-suit against VRI for processing the disputed sale.

Last Friday, Sept. 4, Bailey denied Diamond's motions. The judge authorized Grand Pacific Resorts, the new management company for TBSC, to oversee the board election and ensure a fair counting of the proxies.

Timeshare Election Day 2015 Straight Ahead

Barring another challenge of the election process, the stage is set for election day Sept. 26. Bercu, Fong and Ketchum plan to turn the vote-counting event into an owners' party on the beach.

Here's what some of the participants say about it:

"You can either work with Diamond or fight them, but you are not going to win against a big conglomerate," said Cathy Ryan, a former board member now seeking a comeback as a Diamond electoral ally. "I want to work with them to come up with the best solution for our resort."

"Jake and Al feel the board should primarily represent deeded owners and that corporate entities are second-class citizens. But I think the board has a fiduciary duty to represent all owners," said Steve Willams, a longtime board member and presumed Diamond sympathizer. Williams says he's neutral on the election, but his wife, Mary Kay, is the campaign manager for Cathy Ryan, so his loyalties are pretty clear.

Shannon Krutz, the board secretary who signed the November affidavit authorizing the sale to Diamond last fall, did not return repeated calls for comment. The board has asked her to resign.

"Things didn't have to get this crazy," said Ketchum, a 21-year TBSC owner and former Diamond owner who was narrowly elected to the board last year (despite Diamond's opposition). "I never had anything against Diamond or Goeckel when I joined the board. I was fresh, neutral. But on the day of the vote, he gave his votes to another candidate who was running against me. If Diamond would open their eyes, they'd replace the guy, and I guarantee they'd have a better outcome."

Last edit by jeff_reports on Sep 13, 2015 01:45 PM.

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RedWeek.com Team

1 year ago
Sep 13, 2015

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