When health-happy Carmen Graham heard that her club, Fitness for America, closed here without warning last month, she was more disappointed than surprised.
It had been the fifth club that the 39-year-old welfare worker had belonged to in five years, and each had offered convenience, state-of-the-art equipment and a smiling staff at a bargain price. What each delivered was a string of broken promises, and, in the end, Fitness for America was no different.
"Sure, I'm out $50. But it's not the money that really gets me," said Graham, a Cerritos resident who takes aerobics classes three or four times a week. "It's the fact you bounce from club to club because they keep closing. Can't anyone run a clean, stable operation?"
Hundreds of Fitness for America members probably have pondered the same question since owner Billy Wong shut down the popular health club on Father's Day.
The club's aerobics coordinator, Mary Lou Wollum, estimates that 2,500 people paid a minimum of $50 to join the Artesia club. Spread across 18,000 square feet in the warehouse-like gym were racquetball courts, weight rooms, Jacuzzis, locker rooms and a juice bar that served citrus quenchers as well as beer and wine.
"It had all the amenities a health-conscious person needed," Wollum said.
But on June 17, the doors to Fitness for America (along with two other clubs Wong operated in south Orange County) were locked for good. Police and club employees estimate 13,000 people were left holding worthless memberships to the clubs.
Complaints from steamed customers and unpaid staff members soon followed, prompting at least one agency, the Irvine Police Department, to launch an investigation. No charges have been filed.
"If Mr. Wong knew his businesses were about to close, but continued to solicit memberships and collect fees, that would be fraud, and then we could go to the (district attorney's office) and seek a complaint," said Irvine police Sgt. Leo Jones, adding that his department is looking primarily at the closure of Wong's Irvine Nautilus and Aerobic Center, a 10,000-square-foot gym on Irvine Boulevard with 8,500 members.
"We don't know if Mr. Wong was a victim of poor business practices or a victim of the economic times," Jones said. " . . . at this point, it's very muddy."
A similar facility in El Toro and the Artesia spa are under the jurisdiction of sheriff's departments in Orange and Los Angeles counties, and neither agency has begun a formal investigation. A spokesman for the Los Angeles Sheriff's Department said the agency has received complaints but has not decided whether to pursue an investigation.
Despite repeated attempts, neither Wong nor his Los Angeles attorney, Tom Kontos, could be reached for comment.
The Los Angeles County Department of Consumer Affairs as well as Better Business Bureau offices in both counties have received numerous complaints about Wong's clubs.
Orange County resident Steve Best, who was only about eight months into a $170, two-year membership with the Irvine club, said he and and about 50 other members are considering a class-action suit against Wong.
"It's extremely difficult once a club closes to prosecute because usually the owner disappears," said Diane Kadletz of the consumer-protection unit in the Orange County District Attorney's office. "And even if they file bankruptcy, it's difficult to recover any money, because the guy is out of money. Restitution in these cases is rare."
To protect consumers in an industry that is one of the least regulated in the state, the state Legislature is considering two bills. One bill, authored by Cathie Wright (R-Simi Valley) would require owners of unopened clubs to place any advance memberships into trust or escrow accounts.
The second bill, sponsored by Sen. Joseph Montoya (D-Los Angeles), would require spa operators to deposit a portion of all fees into a statewide pool that would be used to reimburse members of clubs that close.
Consumer and police fraud experts say Wong's clubs fit a troubling pattern in the health club industry. Eager entrepreneurs, moving to capitalize on the nation's health craze, have saturated the marketplace, leading to a price war and eventually the demise of many neighborhood gyms.
"It doesn't take much to open a club--buy a few gym mats, lease a few weight machines and string a banner across the storefront that reads: '3 years for $85,' " said Timothy Bissell, chief investigator for the Los Angeles County Consumer Affairs Department.
"The problem is you can't run a business on $85 every three years," he said. "Or $100, or even $150 every three years. At first there's all kinds of money. But sooner or later there is a cash-flow problem, and finally the owner goes broke and the spa goes under or it changes hands. The loser is the member, who has little or no recourse."
It's a scenario that has been been played out in Artesia, where in less than a year three different owners have leased the gym at 11428 E. Artesia Blvd., according to Torrance businessman Sydney Eby, who owns the property.
In May, 1980, Eby and two partners opened the Artesia Racquetball and Fitness Club, which they operated until last summer when they decided to lease the business to a La Habra businessman, Chinyol Yi. During the Summer Olympics, Yi opened a new spa, calling it the Rainbow Fitness Club, Eby said. But in April, 1985, Yi pulled out, subleasing the facility to Wong.
Eby said that as part of the five-year deal, Yi agreed to make Wong's April lease payment to Eby. "That was the last rent check we received," said Eby, who in early June received a court order to evict Wong. Eby estimates that Wong, who leased a home in Newport Beach until moving out last month, owes $20,000 to $30,000 in back rent.
At Fitness for America, Wong made a strong first impression. When he opened the club he told his staff he had successfully operated his two Orange County clubs for more than a year, building a healthy membership and bank account to expand and upgrade equipment at the Artesia outlet. He talked of adding a swimming pool and running track to the Artesia spa, and even though Wong asked employees to accept an initial pay cut as a show of loyalty, he promised steady raises in the first months of operation.
"We left that first meeting feeling like this time it was going to work," said Wollum, a Cerritos resident who has taught aerobics for six years in Southeast Los Angeles County clubs, including Super Fitness, another Artesia spa on Pioneer Boulevard that closed last year and is now being converted into a small shopping mall.
But within days of the ownership change, Wong's new policies upset some members, Wollum said. He required anyone who belonged to the Rainbow Club to pay a $50 roll-over fee for a new Fitness for America photo ID card or begin paying $25 a month.
Members opting not to pay the roll-over fee were then required to show three forms of identification to enter the club. Some members refused, and Wong called sheriff's deputies on several occasions to remove dissenting patrons, said Julie Lawrence, an aerobics instructor and day manager at Fitness for America.
"As the days passed, there was a growing concern about the future of the club," Lawrence said. "Promises were not being kept."
Nonetheless, Wong won points among staff members with a lavish party he hosted at the Velvet Turtle in El Toro just two weeks before the clubs closed. "It was incredible. Everyone from the three clubs was there--dressed to a T," said Lawrence. "There was champagne on every table, prime rib, swordfish and dancing. And he paid for everything. Morale was high."
The manager of the restaurant declined to answer questions about how or if Wong had paid the bill.
Then on June 15, Wong told Wollum he was closing the gym, although she said he never explained why or for how long.
Two days later, a sign was on the window saying that Fitness for America memberships would be honored at the El Toro or Irvine spas until the Artesia gym reopened. But the Irvine and El Toro facilities had also been closed.
"It's not the money so much as the aggravation of having to find a new club," said Carol Smith, standing in her black and red leotard in the empty Fitness for America parking lot. Smith said she spent $120 last September to join the Rainbow Club for three years, and then paid another $50 for Wong's club.
"I could go to one of those big chain places and work out, but they're 25 minutes from my house," she said. "This club is a block from where I live, and it's hard enough to get motivated to come here and work out, much less drive for miles in traffic to sweat."
Consumer investigator Bissell said the safest clubs are those that have been around for years, usually part of a chain. He added clubs that charge monthly dues, while more expensive, are more likely to avoid the cash-flow problems that undermine smaller, neighborhood clubs that offer long-term memberships at a single price.
While authorities try to sort out the Wong case, a new operator has already acquired the Artesia lease and plans to reopen the facility on Aug. 1. Steve Davis, a world body building champion who owns two clubs in the San Fernando Valley, said he believes a spa can make it in Artesia.
"Some guys are in this to make a fast buck," Davis said. "They pinch pennies and lose dollars. The only way to make it in this business is to treat people right. A lot of people at the club have been burned, and they may never be back. I've got a lot of fences to mend."