US justice department goes after Timeshare "donation" company Donate for a Cause

[Susan2]

I would say that a deed in lieu is always a better option than foreclosure to the HOA. It would be cheaper even in this day of non judicial foreclosures. Viking ship is possibly the worst as there could then be problems with having a clear title which then requires additional work to clear.

I think avoiding deeds falling to viking ships should be the goal of the HOA. My guess is that a lot of people that are transferring to a viking ship are not in default. So they would not fall in to the foreclosure process. They just want to end the yearly MF obligation.

I agree completely, but many resorts refuse to accept the deed in lieu of foreclosure.

And you can't simply prepare and record a deed and say you're done. Some states (like Hawaii) require the buyer/grantee to sign the timeshare deed (because of the covenants). Other states (like New York) require the buyer to sign other paperwork that gets submitted at the same time they accept the deed for recording.

Many resorts require that any paperwork evidencing change of ownership (such as the recorded deed) be submitted to them (with a fee, of course) for review before they will recognize the transfer.

 

[bjones9942]

You people are more fun to watch than my family at Christmas!

 

[TUGBrian]

I agree completely, but many resorts refuse to accept the deed in lieu of foreclosure.

And you can't simply prepare and record a deed and say you're done. Some states (like Hawaii) require the buyer/grantee to sign the timeshare deed (because of the covenants). Other states (like New York) require the buyer to sign other paperwork that gets submitted at the same time they accept the deed for recording.

Many resorts require that any paperwork evidencing change of ownership (such as the recorded deed) be submitted to them (with a fee, of course) for review before they will recognize the transfer.

those resorts are also likely to refuse the transfer to the viking ship phoney LLC as well...

 

[Susan2]

those resorts are also likely to refuse the transfer to the viking ship phoney LLC as well...

Correct. Which leaves the unit in legal limbo, since the deed was recorded. And the divested owners in a nightmare. Especially when they paid to get rid of the timeshare unit, but keep getting billed for maintenance fees -- and can't use the unit even if they wanted to. And they can't sell or transfer to anyone else.

I think these are some of the companies that are being investigated and prosecuted.

 

[taterhed]

To answer your presumably rhetorical question....

There are lots of expensive real estate properties out there which have prohibitively-high HOA/maintenance/usage fees that last forever and increase annually. These properties usually have high-value and do not reach zero-value, but the required income/borrowing qualifications make the properties hard to sell when the income stream is down. It is a parallel dilemma. You can't sell the property fast enough (for enough money) to prevent going broke on the fees. You can't give the property back due to the mortgage (usually) or the economic burden of loosing such a large investment (bankruptcy being the better option). We just don't feel the sympathy when a fatcat can't pay for his Aspen lodge, his Florida beach house and his private plane after his third divorce.

The simple truth is: timeshares are marketed, nay, targeted at a softer and more vulnerable audience. This is, in part, a by-product of the residential mortgage bubble we are all still suffering from, loans they just can't afford; IMHO. The persons we bemoan in this thread are usually our neighbors, their parents or people just-like-us. We feel sorry for them, we want to protect them (from salesmen and themselves) and we are outraged such good customers (who always paid their dues) are being driven to the poorhouse by growing families, job changes, life changes, medical costs (don't get me started) and obligations (timeshares in this case) they cannot fulfill etc...
The bottom line? (again, in my opinion)
Easy-peasy to get into debt, hard to get out. Once we're in trouble, we are all certainly guilty of looking for a convenient (easy) way out.
There is no such thing as a 'free' timeshare.

I will caveat this; I think all HOA's and developers should have a 'life plan' for their properties (which have no end..) and their owners (who must all die someday..). But, can you imagine the complications of administering such a program? And, the lawsuits from family members who claim that the developer 'stole' their inheritance from their dying parents?

As Brian said; this is one big stew of benefits and liabilities. It will leave some full and happy and others sick and tired (and eager to leave the table).
OK, I'm off my soapbox now.

 

[onenotesamba]

I'm in the process of closing on one of their units. What to do?

Yikes. Just now seeing this thread.

So, the week before this lawsuit was filed, I won one of their eBay auctions, and two days before the suit was filed, I signed the papers and put the money into escrow. I'm now waiting to see whether Hilton will exercise ROFR on the transaction. I'm within the 10 day period to rescind the transaction, if I send notice.

Before I placed a bid, I did a search on this BBS, and while I found other threads that were critical of the "donate for a tax deduction" or "pay to donate" aspect of their business, I also saw lots of threads from buyers, that spoke highly of the company, and in particular, John Kushman, who is the person I'd been interacting with.

Resort Closings is handling the closing, at this point, and they've also gotten high marks, from people around here who've bought resale. So far, my transaction has been smooth, and the communication has been good. I wouldn't have placed a bid, had I not seen regular posters who vouched for them. (Do a search on "Kushman," and you'll see them.)

I've read the entire complaint, which is available online, here: http://www.justice.gov/opa/file/795811/download

It's pretty clear that the only part of their business that's subject to this complaint is the appraisals for tax purposes, and the injunctions they seek don't seem to be trying to shut down their entire operation. Had I not stumbled across this thread, I'd likely be none-the-wiser, since my google searches prior to signing wouldn't have turned any of this up, either.

That having been said, this is my very first resale purchase, which I'm only making after spending months on this board, seeking your sage advice, learning as much as I can about the HGVC system, researching what's out there, and finding what I thought was a good deal--but not too-good-to-be-true.

I'm feeling like I should rescind, at this point, but part of me is hesitating, and probably a little bit because I've become somewhat emotionally invested in getting into HGVC with a good deal, and all I'm waiting for is the word on ROFR, at this point...

...or am I?

Any thoughts or advice would be greatly appreciated.

 

[dioxide45]

The fact that they were able to bamboozle someone in to donating their HGVC unit seems wrong. Perhaps HGVC has some properties with zero or negative value, but given that you were able to win it on Ebay would lead me to believe you are paying some cash for it. This would lead me to believe that the seller took no action to figure out what their timeshare was worth. If they had, they would have found other, better options to divest their timeshare.

They likely paid a hefty fee to be able to donate it. Though I have heard that DFC does take some pure donation timeshares without a "donation fee" attached. In either case, they are probably relying on that appraisal to get the tax write off. Thinking that the tax deduction is worth more than they could sell the timeshare for.

As to your question as to if you should move forward or not. Only you can determine that. I think at this point as a buyer, you would be fine. It seems the only issues with the company is as a seller. However, if the DOJ issues a cease and desist. You might have issues as I believe they obtain a POA from the seller to actually sign the deed. So if an injunction is issued, there may not be anyone there to sign that deed over to you.

 

[comicbookman]

Okay, so the salesperson sits down with the mark -- oops, sorry! I mean the "potential buyer" -- and starts the high-pressure sales pitch. (Don't pretend it doesn't happen.)

If that buyer knew anything about the industry, chances are very slim that s/he would ever buy from the developer. Yet that's the way most timeshares are sold. (Virtually all of them, in fact, are sold at least once this way.)

In your scenario, it is "illogical" for the buyer not only not to read the fine print, but also not to extrapolate from there to the future, asking him/herself "what happens if other owners want "out" some day, and no one wants to take their week because they consider it valueless?" Seriously? Who would think of that? And who would buy if they did?

And you also consider it poor practice for the buyer not to do "due diligence."
FORGET IT! Virtually every timeshare sales pitch (Disney being a notable exception) offers "first day incentives" to buy. And many pump oxygen into the sales room, just like the casinos do, to elevate the buyer's mood and excitement.

"Buyer Beware" is an ancient concept, but it's not the way our society works. Consumer protection laws are in place because buyers are not wary enough. Are you old enough to remember encyclopedia salesmen? Their practices (along with the practices of other door-to-door salespeople) resulted in a federal law requiring a three-day right of rescission on contracts.

I love my timeshares. And I believe in the concept of timeshares. But I am not blind to the fact that the industry is DIRTY in many facets. The industry needs cleaning up. Badly. And one of the worst features of timeshare after the initial purchase is the way many resorts attempt to hold owners hostage forever. (Not all resorts do this, of course.)

i challenge you to name me at least one other type of purchase that has a "forever" commitment (rather than a specific term) that I can't get out of by surrendering my ownership -- and for which I'm not allowed to freely surrender my ownership. I doubt you can, but if I'm wrong, let's compare disclosure. And the pressure sales tactics.

sorry, yes timeshare salesman lie, so do car salesman, realtors and sales clerks. Anyone spending that much money without understanding that the written contract is all, is at least partially to blame. Ignorance is not a free pass. Besides, one of the few things timeshare salesman rarely lie about is that you are getting a real estate DEED, just like your house. In fact they often make a big deal of this fact. So for people to expect to not be on the hook at some point simply because they don't want it anymore is not reasonable. This is not excuse the scummy salespeople, but no free pass, on my dime as a fellow owner, is warranted.

 

[SueDonJ]

Okay, so the salesperson sits down with the mark -- oops, sorry! I mean the "potential buyer" -- and starts the high-pressure sales pitch. (Don't pretend it doesn't happen.)

If that buyer knew anything about the industry, chances are very slim that s/he would ever buy from the developer. Yet that's the way most timeshares are sold. (Virtually all of them, in fact, are sold at least once this way.)

In your scenario, it is "illogical" for the buyer not only not to read the fine print, but also not to extrapolate from there to the future, asking him/herself "what happens if other owners want "out" some day, and no one wants to take their week because they consider it valueless?" Seriously? Who would think of that? And who would buy if they did?

And you also consider it poor practice for the buyer not to do "due diligence."
FORGET IT! Virtually every timeshare sales pitch (Disney being a notable exception) offers "first day incentives" to buy. And many pump oxygen into the sales room, just like the casinos do, to elevate the buyer's mood and excitement.

"Buyer Beware" is an ancient concept, but it's not the way our society works. Consumer protection laws are in place because buyers are not wary enough. Are you old enough to remember encyclopedia salesmen? Their practices (along with the practices of other door-to-door salespeople) resulted in a federal law requiring a three-day right of rescission on contracts.

I love my timeshares. And I believe in the concept of timeshares. But I am not blind to the fact that the industry is DIRTY in many facets. The industry needs cleaning up. Badly. And one of the worst features of timeshare after the initial purchase is the way many resorts attempt to hold owners hostage forever. (Not all resorts do this, of course.)

i challenge you to name me at least one other type of purchase that has a "forever" commitment (rather than a specific term) that I can't get out of by surrendering my ownership -- and for which I'm not allowed to freely surrender my ownership. I doubt you can, but if I'm wrong, let's compare disclosure. And the pressure sales tactics.

Okay I'll play, but this is it for me because any pretense at all of TUGgers reaching a reasonable solution to the myriad problems inherent in timeshares (as if anyone is asking ) is completely obliterated by the notion that "Buyer Beware" is an outdated concept. Do you really mean to be saying that timeshare buyers/owners should be completely absolved of any contractual responsibility because "society" dictates it? That's a preposterous cop-out apparently generated by those members of society who don't take their responsibilities seriously.

Any other real estate purchase that requires ongoing membership in an HOA is an example of what you're looking for, something "that has a 'forever' commitment (rather than a specific term) that I can't get out of by surrendering my ownership -- and for which I'm not allowed to freely surrender my ownership." Gated communities are very similar to timeshares as far as dues, maintenance fees, membership fees, etc. In fact that's a purchase that most closely resembles a timeshare except that in a gated community you generally buy an entire parcel while in a timeshare you buy an interest in a single parcel. Unless the gated community allows "surrender" (which most wouldn't because it's not a financially prudent option if the health of the entire community is considered) then you're on the hook for the HOA fees until you dispose of it legally or the HOA forecloses on it for nonperformance.

I have no problem conceding that timeshare purchases are sometimes very shady business, although that hasn't been my personal experience. But TUGgers whom I have no reason to question have related that it's been theirs so why would I not take their word for it? What I don't understand is that as many times as I relate that my timeshare purchases were not underhanded or shady or disingenuous or based on misinformation or outright lies, the point I'm making that not ALL timeshare deals are shady is NEVER conceded by some. Oh I understand why they need to think that way, because it doesn't suit their purpose of putting 100% of the blame for uninformed buyers/owners squarely on the timeshare developers/managers, but what I don't understand is who they think they're fooling. I guess they think that if they ignore the reality that some people really do go into timeshare purchases with their eyes wide open, then the reality doesn't exist?

I'm happy to scan the Contracts for Purchase and the checklist worksheets that I had to review and sign when purchasing if you really want to get into that pissing match. The t&c's to which owners are committing themselves are clearly stated in those and in the other governing docs that were furnished after signing, with the advice that they should be reviewed prior to the rescission period expiration. Also made clear was that the t&c's followed with each successive transfer should I sell the timeshare. (Beside the point, I always wonder why the developers are said to be shady when it happens far more often that the governing docs aren't passed along from seller to buyer in an external resale nearly as often as the developers pass them along in a direct purchase?)

Anyway, like I said, I just can't accept that developers/managers are always The Second Coming of the Devil and buyers/owners are Blameless Victims. There are problems in the industry, no doubt - but they're not completely caused by and they can't be completely solved by only one interested party. And they definitely can't be solved by making it easy (or easier, if you think like Ron does that going through foreclosure is easy) for owners to walk away unencumbered. So until they are solved with rationality exhibited by both sides, I don't want my fellow owners to be able to easily walk away and shift their responsibility on to me.

 

[dioxide45]

I think the difference between a timeshare and a condo is the end result. With a timeshare the HOA is going to end up the owner, the lien will not be fulfilled and they will need to sell or rent the week. With a condo, if the HOA forecloses the property will likely find a buyer and the lien is paid in full.

So if the guaranteed end result of a timeshare foreclosure is that it will be in the hands of the HOA, why not just go the cheaper route? Taking a deed back or even deed in lieu? It is the cheaper option if the end result is the same.

If there are no other avenues for an owner to sell a week, and there are enough of those owners that want out, the HOA should be disoved and the property sold. Those owners that don't want their weeks shouldn't continue to subidize those that do.

 

[Susan2]

Okay I'll play, but this is it for me because any pretense at all of TUGgers reaching a reasonable solution to the myriad problems inherent in timeshares (as if anyone is asking ) is completely obliterated by the notion that "Buyer Beware" is an outdated concept. Do you really mean to be saying that timeshare buyers/owners should be completely absolved of any contractual responsibility because "society" dictates it? That's a preposterous cop-out apparently generated by those members of society who don't take their responsibilities seriously.

Any other real estate purchase that requires ongoing membership in an HOA is an example of what you're looking for, something "that has a 'forever' commitment (rather than a specific term) that I can't get out of by surrendering my ownership -- and for which I'm not allowed to freely surrender my ownership." Gated communities are very similar to timeshares as far as dues, maintenance fees, membership fees, etc. In fact that's a purchase that most closely resembles a timeshare except that in a gated community you generally buy an entire parcel while in a timeshare you buy an interest in a single parcel. Unless the gated community allows "surrender" (which most wouldn't because it's not a financially prudent option if the health of the entire community is considered) then you're on the hook for the HOA fees until you dispose of it legally or the HOA forecloses on it for nonperformance.

I have no problem conceding that timeshare purchases are sometimes very shady business, although that hasn't been my personal experience. But TUGgers whom I have no reason to question have related that it's been theirs so why would I not take their word for it? What I don't understand is that as many times as I relate that my timeshare purchases were not underhanded or shady or disingenuous or based on misinformation or outright lies, the point I'm making that not ALL timeshare deals are shady is NEVER conceded by some. Oh I understand why they need to think that way, because it doesn't suit their purpose of putting 100% of the blame for uninformed buyers/owners squarely on the timeshare developers/managers, but what I don't understand is who they think they're fooling. I guess they think that if they ignore the reality that some people really do go into timeshare purchases with their eyes wide open, then the reality doesn't exist?

I'm happy to scan the Contracts for Purchase and the checklist worksheets that I had to review and sign when purchasing if you really want to get into that pissing match. The t&c's to which owners are committing themselves are clearly stated in those and in the other governing docs that were furnished after signing, with the advice that they should be reviewed prior to the rescission period expiration. Also made clear was that the t&c's followed with each successive transfer should I sell the timeshare. (Beside the point, I always wonder why the developers are said to be shady when it happens far more often that the governing docs aren't passed along from seller to buyer in an external resale nearly as often as the developers pass them along in a direct purchase?)

Anyway, like I said, I just can't accept that developers/managers are always The Second Coming of the Devil and buyers/owners are Blameless Victims. There are problems in the industry, no doubt - but they're not completely caused by and they can't be completely solved by only one interested party. And they definitely can't be solved by making it easy (or easier, if you think like Ron does that going through foreclosure is easy) for owners to walk away unencumbered. So until they are solved with rationality exhibited by both sides, I don't want my fellow owners to be able to easily walk away and shift their responsibility on to me.

First of all I didn't say that buyers don't have to beware. I just said that there are regulations to protect the consumer. Society used to be a lot more brutal all around.

Second, you can't get a mortgage on a home (in a gated community or elsewhere), without getting an appraiser to certify the value.

That's a BIG difference.

Okay, so the purchase price of a timeshare is a lot less. But there are many more protections in place. Lenders don't give mortgages without evidence that the buyer can actually afford the mortgage.

Okay, so even 15 years ago, lending rules were a lot looser. But then we had the downturn in the economy and all those foreclosures, and the rules tightened up. Considerably. So now we have closer scrutiny.

We don't have that for timeshares. That's what I'm saying.

 

[ronparise]

Okay I'll play, but this is it for me because any pretense at all of TUGgers reaching a reasonable solution to the myriad problems inherent in timeshares (as if anyone is asking ) is completely obliterated by the notion that "Buyer Beware" is an outdated concept. Do you really mean to be saying that timeshare buyers/owners should be completely absolved of any contractual responsibility because "society" dictates it? That's a preposterous cop-out apparently generated by those members of society who don't take their responsibilities seriously.

Any other real estate purchase that requires ongoing membership in an HOA is an example of what you're looking for, something "that has a 'forever' commitment (rather than a specific term) that I can't get out of by surrendering my ownership -- and for which I'm not allowed to freely surrender my ownership." Gated communities are very similar to timeshares as far as dues, maintenance fees, membership fees, etc. In fact that's a purchase that most closely resembles a timeshare except that in a gated community you generally buy an entire parcel while in a timeshare you buy an interest in a single parcel. Unless the gated community allows "surrender" (which most wouldn't because it's not a financially prudent option if the health of the entire community is considered) then you're on the hook for the HOA fees until you dispose of it legally or the HOA forecloses on it for nonperformance.

I have no problem conceding that timeshare purchases are sometimes very shady business, although that hasn't been my personal experience. But TUGgers whom I have no reason to question have related that it's been theirs so why would I not take their word for it? What I don't understand is that as many times as I relate that my timeshare purchases were not underhanded or shady or disingenuous or based on misinformation or outright lies, the point I'm making that not ALL timeshare deals are shady is NEVER conceded by some. Oh I understand why they need to think that way, because it doesn't suit their purpose of putting 100% of the blame for uninformed buyers/owners squarely on the timeshare developers/managers, but what I don't understand is who they think they're fooling. I guess they think that if they ignore the reality that some people really do go into timeshare purchases with their eyes wide open, then the reality doesn't exist?

I'm happy to scan the Contracts for Purchase and the checklist worksheets that I had to review and sign when purchasing if you really want to get into that pissing match. The t&c's to which owners are committing themselves are clearly stated in those and in the other governing docs that were furnished after signing, with the advice that they should be reviewed prior to the rescission period expiration. Also made clear was that the t&c's followed with each successive transfer should I sell the timeshare. (Beside the point, I always wonder why the developers are said to be shady when it happens far more often that the governing docs aren't passed along from seller to buyer in an external resale nearly as often as the developers pass them along in a direct purchase?)

Anyway, like I said, I just can't accept that developers/managers are always The Second Coming of the Devil and buyers/owners are Blameless Victims. There are problems in the industry, no doubt - but they're not completely caused by and they can't be completely solved by only one interested party. And they definitely can't be solved by making it easy (or easier, if you think like Ron does that going through foreclosure is easy) for owners to walk away unencumbered. So until they are solved with rationality exhibited by both sides, I don't want my fellow owners to be able to easily walk away and shift their responsibility on to me.

No one is suggesting that anyone should be able to easily walk away dom their obligations much less shift expenses to you

I dohave the right (and obligation) to die and when I do my obligation to pay maintenance fees dies with me

And as long as we are talking about obligations, one you accepted is to pay your fair share of expenses and if 50% of the owners die you are obligated to pay a 100% increase in your fees

Given the certainty of death it seems to me that every hoa ought to have a program in place to "recycle" their weeks. And maybe develop a program to establish themselves as the buyer of last resort. I mean why wait for your owners to die

The big problems for the legacy resorts are the age of the resorts and their ageing owner base. If they can't make their resort a desirable place to own and therefore sale-able they ought to figure out how to close it down

 

[LannyPC]

What you most likely have are a lot of people desperate to get rid of their timeshare and think this is a way to do it and almost break even. ($2k - tax savings)

That's why, according to the article linked in the OP, so many people went the DFC route even though DFC has a steep "service charge" (about $3000). DFC would say something along the lines of "Yeah, we charge you $xxxx but you will be eligible for a significant tax deduction that will offset our service charge thereby making this route your best and cheapest way of getting rid of your timeshare."

I guess some of the big questions to be answered now are:

1) What will happen to owners who made these tax claims? Audited? Fined and required to refile and repay?

2) Now that the IRS has had its eyes opened to such a scheme, will it start making more strict and clearly-defined guidelines how to appraise non-cash contributions?

3) If the DOJ does indeed succeed in shutting down DFC's operations, what will happen with all the TSs DFC currently possesses (ones that were "donated")?

 

[ronparise]

So back to the donate for a cause

I just read the complaint (quickly and on this phone so I may have missed something)

This action is being taken at the request of the irs and the irs says that they had to disallow a lot of the deductions taken by individual taxpayers. I'm guessing that this thing started with audits of individual taxpayers and that's what pointed them to donate for a cause

All the government is asking here is that donate for a cause stop doing phony appraisals for tax purposes and never do it again. No fines, no penalty at all as near as I can see. They are not seeking to stop the timeshare transfer business. They havent even spoken to the charity operation where only a very small fraction of the proceeds actually go to a charity

I wouldn't worry about any deals in process closing. I have a few myself. And I'm not worried any more than usual

 

[glmyers]

I agree 100%.. A cash settlement, consent decree, and press release are the likely outcome of this..

Over the years, I have been asked for broker price opinions of timeshare interests from elderly people and their families who were denied health care assistance due to their "timeshare assets". They had timeshares that they could not sell or give away, and had to fight in court for the government to accept that their timeshare ownership actually had little to no resale value in the current market. If nothing else, hopefully this case will make it easier for people in that situation to get help if there is a precedent where the government is arguing that timeshares have little cash value.

A court case arguing appraisals based on developer sales are grossly inflated would be very helpful to people. My belief is the best appraisal technique for timeshare "assets" is to ignore sales data and simply value the right to occupy in conjunction with the cost of ownership. The hardest part of appraising a timeshare would easily be the work required to justify the techniques and data used.

When I lived in the Orlando area I regularly received calls asking for appraisals of timeshares. Once I explained the amount of work required and quoted my fee of $1,200 to $1,600 for the job, I never had anyone sign the contract engaging my services. If I realized how frequent the calls would come, I could have developed a template for them and been able profitably to drop my fee to around $500.

 

[onenotesamba]

I wouldn't worry about any deals in process closing. I have a few myself. And I'm not worried any more than usual

Thanks, Ron. I don't want to presume that your post is a reply to mine, that got buried, but your reassurance really helps alleviate my anxiety.

 

[ronparise]

Thanks, Ron. I don't want to presume that your post is a reply to mine, that got buried, but your reassurance really helps alleviate my anxiety.

That's the conclusion I come to after reading the complaint. It may just be wishful thinking but I don't think so

 

[TUGBrian]

this article mentions items in more detail, and adds that the DOJ and IRS also claim that the clients were told they could deduct the "processing fee" on top of the inflated appraisal amount.

http://missoulian.com/news/state-an...cle_7194f787-cbdb-5663-b704-0fe36da006e0.html

everything I read in this article leads me to believe they are focusing on both sides of the coin....the entity itself for the false tax information...as well as going thru past returns to reconcile incorrectly filed tax deductions based on the faulty information. I suppose perhaps they could use the total amount as a basis for a financial settlement with the company, but the IRS strikes me as the sort of entity that would squeeze blood from a stone if they felt it would yield a drop. I would imagine once the DOJ is finished with the company, the IRS might do its own work on the tax returns themselves.

I cant see any reason for them to continue to request client records if they were not going to do an extensive search on tax returns to find these deductions, especially if they clearly have already done some of this investigative work sofar...as it clearly states they have done this specific review of tax returns for a large number of customers sofar.

Going off my own experience in past cases involving the Florida state attorneys office, the level of research and evidence gathered before making charges like these is absolutely staggering. One would imagine at the federal level its likely an order of magnitude higher.

 

[Jason245]

this article mentions items in more detail, and adds that the DOJ and IRS also claim that the clients were told they could deduct the "processing fee" on top of the inflated appraisal amount.

http://missoulian.com/news/state-an...cle_7194f787-cbdb-5663-b704-0fe36da006e0.html

everything I read in this article leads me to believe they are focusing on both sides of the coin....the entity itself for the false tax information...as well as going thru past returns to reconcile incorrectly filed tax deductions based on the faulty information. I suppose perhaps they could use the total amount as a basis for a financial settlement with the company, but the IRS strikes me as the sort of entity that would squeeze blood from a stone if they felt it would yield a drop. I would imagine once the DOJ is finished with the company, the IRS might do its own work on the tax returns themselves.

I cant see any reason for them to continue to request client records if they were not going to do an extensive search on tax returns to find these deductions, especially if they clearly have already done some of this investigative work sofar...as it clearly states they have done this specific review of tax returns for a large number of customers sofar.

Going off my own experience in past cases involving the Florida state attorneys office, the level of research and evidence gathered before making charges like these is absolutely staggering. One would imagine at the federal level its likely an order of magnitude higher.

Here is the quotes from the article that supports what I have been saying all Along

"Defendants' customers are also harmed because they are liable for any unpaid tax, plus interest and penalties, after having paid to participate in the timeshare donation scheme that failed to deliver the promised tax benefits,"

"The complaint also asks the court to order Tarpey and his businesses to turn over the names, addresses, email addresses, phone numbers and Social Security or tax ID numbers of all customers for whom they have provided a timeshare appraisal since 2010."

The IRS is going after these people as I previously stated they would. If anyone who reading this was a victim and claimed a false deduction, I highly recommend you contact your CPA and try to get ahead of the curb on this and try to self report in return for avoiding penalties.

In response to your question Brian, look up CID as they were probably the ones who performed this investigation.

CID has a very high, if not the highest conviction rate for cases they bring up for prosecution.

https://en.wikipedia.org/wiki/IRS_Criminal_Investigation_Division

 

[Ty1on]

And many pump oxygen into the sales room, just like the casinos do, to elevate the buyer's mood and excitement.

Since you mentioned it, casinos do not pump oxygen. The newer higher scale ones pump scent into the air to make it more pleasant and assist the intensive smoke removal systems in keeping the air from smelling like a smoky downtown Las Vegas casino, but it is an untrue urban legend that they pump extra oxygen into the space.

I sincerely doubt that timeshare sales offices do it, too. The kind of volume it would take to appreciably raise the O2 level would be very expensive, and for a questionable benefit.

 

[ronparise]

So it seems the intent is to collect the taxes owed from the individuals that took deductions based on bogus appraisals, and to make sure Donate for a Cause stops providing these bogus appraisals

Where are the penalties for Donate for a Cause??

There is nothing here to stop them and their various affiliated business from continuing a timeshare relief service, charging high fees, selling on ebay and transferring the un-sale-able stuff to a Viking Ship, if they so desire.

and nothing to stop anyone else from providing "good" appraisals based on the prices developers are getting (and recording)

my point is that as long as owners want to sell, and as long as there is no market for this stuff, someone will be there to fill the need. and viking ships will continue to sail

 

[TUGBrian]

while im not a tax expert, one would imagine there is a stiff penalty for providing fraudulent tax advice on such a grand scheme.

im sure a CPA would know what the civil and criminal(if any) would be for such a large number of cases.

 

[Jason245]

while im not a tax expert, one would imagine there is a stiff penalty for providing fraudulent tax advice on such a grand scheme.

im sure a CPA would know what the civil and criminal(if any) would be for such a large number of cases.

Everything depends on a number of factors.

Criminal prosecutions generally require the proof of intent, while There is no requirement of intent when it comes to civil charges.

I would imagine that this company is not being prosecuted for tax related charges, but being prosecuted and/or sued for consumer fraud related charges as well as the standard mail/wire fraud stuff.

They were licensed professionals who did not adhear to the appropriate standards.

Standard White collar stuff....

*The above should not be construed as tax advise*

 

[TUGBrian]

straight from the DOJ website

According to the complaint, the appraisals fail to comply with regulations governing appraisals submitted with federal tax returns, contain substantive errors and omissions, fail to comply with generally accepted appraisal standards and grossly overvalue the timeshares. In addition, Tarpey, Broyles, Thor and Crowson are legally prohibited from appraising the timeshares for which their customers claimed federal tax deductions because they are too closely affiliated with Donate for a Cause, the complaint alleges.

Finally, as stated in the complaint, Tarpey’s customers then claim improper and grossly inflated charitable contribution deductions on their tax returns for both the overvalued timeshares and the processing fees paid to Resort Closings, Inc. The complaint alleges that Donate for a Cause is simply used as a conduit to briefly hold title to timeshares before they are sold for a fraction of the appraised amount. For example, the complaint alleges that one customer transferred a timeshare to Donate for a Cause that had originally been purchased for $10,597.50. Donate for a Cause used eBay’s charity platform to sell that timeshare to a third party for only $81, yet Tarpey appraised that timeshare for $8,740, the complaint states.

http://www.justice.gov/opa/pr/justi...scheme-involving-improper-deductions-donating

 

[David M]

I wonder if there will be any splashback on customers who had Resort Closings handle their transfers?

Our Bay Club ownership came to us through them.

Not by choice ... the seller started dealing with Resort Closings, before approaching Seth Nock's crew. Resort Closings was stuck to the deal, like chewing gum off a hot sidewalk.

Lots of balls were dropped by Resort Closings during the process, but in the end, the deed was transferred successfully, confirmed by the Bay Club, and points were enrolled in HGVC.

Just hope the other shoe isn't about to drop.