State Acts to Rein In Glen Ivy Time-Shares
The state Department of Real Estate has filed an action to suspend or revoke the license of the nation’s largest time-share company--Glen Ivy Properties--and accused the Corona firm of numerous infractions ranging from shoddy record-keeping on customer accounts to making real estate sales without proper permits and disclosure reports, it was learned Thursday.
The 25-page complaint claims Glen Ivy deposited buyer down payments in bank accounts considered unacceptable to the state, permitted non-authorized personnel to make withdrawals and failed to keep customer account records in accordance with state laws.
Deputy Real Estate Commissioner Jerry E. Fiscus claims in the action--which was filed May 6--that Glen Ivy sold time-shares in Texas and in San Luis Obispo without permits and failed to give some buyers of their resort properties state-required disclosure forms. Some available disclosure forms, which give time-share details from parking to property taxes, were no longer valid, the complaint claimed.
“It’s (the accusation) obviously serious,” said Robert McCabe, the real estate department’s regional manager for Northern California. “If they are not handling trust funds in compliance with the real estate law, we consider it very serious.”
Glen Ivy spokesman Alexander Auerbach said the department’s accusations caught company officials by surprise because they believed the complaints had been largely resolved in past negotiations. The company, which did not receive the complaint until Wednesday, denied the charges.
“The company feels that its record of selling 53,000 time-share units to purchasers who are happy . . . and having received less than a dozen complaints over the last three years, all of which were resolved . . . speaks for itself,” said Auerbach.
The department’s action comes just a week after it was revealed that Glen Ivy’s parent corporation--Glen Ivy Financial Group--was under investigation by the California attorney general’s office for possible violations of state telemarketing laws.
Glen Ivy--with sales sites scattered around Southern California, including Newport Beach--attracts prospective clients to 90-minute sales presentations by promising gifts ranging from a new car to a trip to Las Vegas.
The company hands out contest forms at major sporting and cultural events around the area and calls more than 100,000 people a month.
Resort Development & Operation, a trade publication, lists Glen Ivy as the nation’s largest time-share company with $122 million in sales in 1990 and about 1,600 employees.
The attorney general’s office began investigating Glen Ivy and an Anaheim telemarketing company after a Culver City man complained last February that he didn’t receive the Cadillac or $25,000 in cash he was allegedly guaranteed by a telephone solicitor. Glen Ivy has said it is cooperating with the investigation and deemed the solicitor “a loose cannon.”
“Most of these are people who were promised a TV and somehow it didn’t get delivered (quickly) and there was a vacation offered in Las Vegas and they didn’t realize they had to go between Monday and Thursday,” Auerbach explained.
Owners of Glen Ivy time-shares hold a grant deed and title insurance to one of the company’s 16 resorts for a limited period of time every year--usually a week. These can be passed from generation to generation. Typically, 50 different families own the condominium because the company reserves two weeks a year for maintenance and repairs.
The average Glen Ivy time-share--with one bedroom and one bath--retails for about $10,000 and owners can trade weeks and spend their vacations at different resorts every year if they want. Because of the demand for prime locations, however, reservations sometimes must be placed more than nine months in advance.
The department’s accusation could now go to an administrative hearing, but Glen Ivy said it will try to resolve the agency’s concerns before they’re heard by a judge.
“The company’s policy in the past has always been to attempt to cooperate with the DRE rather than to fight it because it agrees with the DRE’s fundamental goal of protecting the public,” Auerbach said.
McCabe said the real estate department began investigating Glen Ivy in 1989 after it received complaints from purchasers. He refused to disclose just how many consumer complaints have been filed against Glen Ivy.
“We had enough to trigger an investigation and then the investigation discovered things other than what people were complaining about,” McCabe said.
One of the department’s principal accusations is that Glen Ivy deposited customer funds into one large bank account--a procedure not approved by the agency--and didn’t keep separate records for each customer or transaction.
“How do you tell how much money of whose is in that account?” McCabe asked, adding that Glen Ivy’s record-keeping “did not conform to the real estate law . . . (but) that doesn’t mean they were robbing or stealing people’s money.”
Glen Ivy spokesman Auerbach denied the charge, saying that the company kept “extremely detailed records.”
Auerbach said Glen Ivy sometimes consolidates deposits into one of its bank accounts rather than immediately putting them into an escrow account, which by law is administered by a third party. Glen Ivy said it puts the money into its account because customers sometimes change their minds and want their money back. He said the company had department approval to do this.
McCabe said he wasn’t aware of any such approval. “They didn’t get that from me,” he said.
The department also claims Glen Ivy sold property without proper state sales permits or disclosure forms.
For instance, the department alleges Glen Ivy sold 329 interests, or time-share weeks, in late 1989 and early 1990 in the San Luis Bay Inn Timeshare Resort even though a final public disclosure report--as required by law--had not been approved and the agency had “prohibited the negotiation, sale or lease of timeshare interests in said subdivision” without the document, according to the complaint.
Glen Ivy said it simply took reservations and small deposits on the time-share units and had interested buyers sign purchase documents, but that they were put into escrow pending state approval.
“The company thought at that time and still thinks there was nothing wrong with that procedure,” Auerbach said. “No consumer lost a dime and everyone who filed a complaint got their money back.”
Glen Ivy, founded in 1975 as a recreational vehicle park near Corona, was purchased in May, 1989, by General Development Corp. of Miami. GDC filed for Chapter 11 bankruptcy protection after it was indicted for real estate fraud by Florida officials in 1990. The GDC indictment did not contain any accusation of wrongdoing at Glen Ivy.
Glen Ivy’s founder and chairman Ralph Mann--who continued to run Glen Ivy after GDC bought it--regained control of the company in March. The company’s financing dried up once GDC ran into financial problems, so it is selling a 40% stake in the company to three private investors for about $15 million.
Mann claims in public relations materials that Glen Ivy is at a crossroads of sorts.
“I recently described our company as a gangly teen-ager,” he said. “We’re right at that state where we are either going to grow up into a mature, adult company or we could become a juvenile delinquent.”
COMPANY PROFILE
Company: Glen Ivy Financial Group
Headquarters: Corona
Sales sites: Newport Beach, San Diego, West Covina, Woodland Hills
Operations: Arizona, California, Colorado, Hawaii, Utah, Texas
Chairman: Ralph Mann
Number of employees: 1,600
1990 sales: $122 million
1990 profit: $5 million
Glen Ivy’s Resorts 1) LAGONITA LODGE-- Big Bear Lake 2) THE VILLAS OF PALM SPRINGS-- Palm Springs 3) THE PLAZA RESORT & SPA-- Palm Springs 4) VISTA MIRAGE-- Palm Desert 5) DESERT BREEZE-- Palm Desert 6) THE INN AT SILVER LAKES-- north of Victorville 7) LAGUNA SURF-- Laguna Beach 8) SAN LUIS BAY INN-- south of San Luis Obispo Other Glen Ivy resorts are in June Lake, Calif.; Tahoe Vista, Calif.; Lake Havasu City, Ariz.; Aspen, Colo.; (two) Park City, Utah; Kauai, Hawaii; Austin, Tex.
