Glen Ivy, Titan of Time Sharing, Is Under Siege : Real estate: The Corona-based firm is coping with regulatory problems, the effects of an ill-fated merger and some major competition, but it is going ahead with new resorts.
One night last November, Lila Kiepe answered the phone and was told that she could win a fabulous prize--perhaps a free vacation in Las Vegas or $25,000--just by showing up at a sales presentation for Glen Ivy Financial Group.
So Kiepe and her husband went to Glen Ivy’s sales site in Newport Beach. They stepped into a partylike atmosphere where they saw a slick slide show and listened to an enthusiastic sales pitch. Soon, champagne corks started popping, and Kiepe said she and her husband had a bit too much bubbly.
“Everything sounded great; everything sounded wonderful,” Kiepe said recently. “We were pretty drunk when we were doing this.”
What the Laguna Hills couple did was sign up--with only $87 down--to become another of Glen Ivy’s 53,000 time-share owners. But the thought of the remaining $9,000 mortgage on an Arizona property proved rather sobering.
The Kiepes--who notified Glen Ivy a month later that they could not afford the payments--wanted out of the agreement that gave them part ownership in a resort condominium, and they complained to state officials. Last week, their money was returned.
Complaints against Glen Ivy--the nation’s largest time-share company--are not new. State officials are examining the possibility of telemarketing abuses and allegations of irregularities with its real estate records. Two years ago, a federal grand jury investigated allegations of deed forgeries and overselling of some resorts, but no charges were filed.
The company denies any wrongdoing. It says most of its customers are happy with their time-share contracts, which give them the right to spend a specific period--usually a week--every year at a group of resort properties.
Still, the recent regulatory problems come as Glen Ivy is at a crossroad. The company is undergoing changes stemming from an ill-fated merger and is facing some major competition as the time-share industry matures.
“I recently described our company as a gangly teen-ager,” said Glen Ivy founder and Chairman Ralph Mann in a statement last month. “We’re right at that stage where we are either going to grow up into a mature, adult company or we could become a juvenile delinquent.”
Mann transformed Glen Ivy from a single RV park in Corona in 1975 to a time-share titan with 1,600 employees and a 1990 profit of $5 million on revenue of $122 million. The company has 16 resorts in six states--California, Hawaii, Texas, Utah, Arizona and Colorado. In Southern California, the company has one resort in Laguna Beach and four in Palm Springs.
In 1989, Mann sold the company to General Development Corp., a giant Florida real estate firm. Mann, who travels by Learjet and limousine, reacquired Glen Ivy in February after General Development was convicted of real estate fraud and filed for bankruptcy.
Although it was not implicated in General Development’s problems, Glen Ivy found financial institutions reluctant to do business with it. Now independent again, Glen Ivy is trying to raise funds to acquire new properties. With 10 of the company’s resorts sold out, Glen Ivy needs to grow to maintain its profit levels.
At the same time, Glen Ivy is facing increasing competition from several aggressive rivals in the time-share business, including Marriott Ownership Resorts and possibly the Walt Disney Co., which recently said it will enter the business.
As the industry leader, Glen Ivy--unrelated to Corona-based Glen Ivy Hot Springs--says its customers, by and large, are satisfied. Company spokesman Alexander Auerbach cites as evidence a December company survey indicating that 94% of its customers believe that the time shares offer an excellent or good vacation.
“We just relax for the week, and it’s wonderful,” said Marie Fields, a customer whose name was provided by Glen Ivy. Fields, who purchased a time share at Laguna Surf in 1984, gives the company a near-perfect rating, although she has a few minor complaints.
“I’d give it a 9 or 10,” she said of Glen Ivy. “Probably a 10.”
But others aren’t so happy. The Kiepes said they signed on the dotted line only because of high-pressure salesmanship, aided by a few free drinks. They complained both to the company and to the California attorney general’s office.
Glen Ivy responded that the couple’s accusation that they were intentionally intoxicated is “ridiculous.” In a letter to the Kiepes, the company said that in its “16-year history, we have earned the highest respect and regard of the very agencies to which you have sent this letter. Our company is regarded as a model of ethics and consumerism.”
But the attorney general’s office did not agree. “Several of the complaints and supporting evidence (against Glen Ivy) point to possible violations of our state laws,” the attorney general’s office warned in February after the Kiepes made their complaint. “Your firm has not ‘earned the highest respect and regard’ from this agency. Please discontinue your assertion that this office looks upon Glen Ivy favorably.”
Countless Southern Californians have encountered Glen Ivy sales representatives. The company sets up shop in all kinds of places--Angels baseball games, air shows, supermarkets--and has prospective customers fill out entry blanks for prize drawings.
Those contest forms are then turned over to telemarketing employees or outside contractors who call about 100,000 people a month, encouraging people to pick up prizes after hearing a 90-minute sales pitch. Between 6,000 and 8,000 people a month attend sales meetings.
The state attorney general’s office has said that it is reviewing the telemarketing procedures of Glen Ivy and its hired representative after a Culver City man was promised a Cadillac or $25,000 in cash even though he had won neither.
The telephone solicitor--employed by one of Glen Ivy’s contractors--left a message on the answering machine of R. Scott Penza, who notified authorities.
“I’m calling from Glen Ivy Sweepstakes for R. Scott (Penza),” the solicitor said. “This is in regards to an entry form you filled out for a 1991 Cadillac Eldorado or $25,000 in cash. You have won one of these prizes. Get in contact with me please. Very important.”
Glen Ivy said the solicitor was “a loose cannon.” But state officials say they have received other complaints about Glen Ivy’s telemarketing. Auerbach said the company and its contractors strictly adhere to telemarketing scripts approved by regulators.
Meanwhile, the state Department of Real Estate has filed an action to suspend or revoke the company’s license for allegations of infractions ranging from shoddy record-keeping to selling time shares without proper permits and disclosure forms. The department also claims that Glen Ivy deposited buyers’ down payments in bank accounts considered unacceptable to the state, permitted non-authorized personnel to make withdrawals, and failed to keep customer accounts in accordance with state laws. But the state said it is unaware of any customers losing money.
The company has contested some of the accusations--such as poor record-keeping--and says its practices met state requirements. Nonetheless, the company said it has revised some programs to satisfy the state’s concerns.
Glen Ivy was also the subject of an 11-month federal grand jury investigation in late 1988 and mid-1989. The investigation began after a former company consultant alleged that the company had oversold a few resorts and that some employees--using a photographer’s light table--had traced over the signatures of deceased or inactive customers to unlawfully return ownership of those time shares to Glen Ivy for later resale.
The grand jury concluded its investigation of Glen Ivy in the summer of 1989 and did not issue an indictment. Auerbach said there was “no evidence” that any records had been changed or of any other alleged misconduct.
The U.S. attorney’s office refused to comment on the case, but in a letter to Glen Ivy officials dated June 28, 1989, said: “It is important to note that the scope of the investigation conducted by the grand jury was limited and that a decision not to file criminal charges is not an endorsement of the business practices of Glen Ivy.”
Some of Glen Ivy’s former and current employees have also raised questions about a class held at some of the company’s sales sites this spring that was supposed to prepare them for the California real estate licensing exam. State law requires that anyone seeking a real estate license complete 45 hours of a state-approved class covering subjects such as real estate law, ethics and financing.
But some employees claim that they were hurried through the course in about two hours, after which they received certificates indicating that they had fulfilled the state requirements. “It was done very quickly,” one student said.
Glen Ivy said the course--offered on company property in Newport Beach and West Covina--was the work of individual employees acting without company approval. Mann recently issued a statement saying a preliminary inquiry indicated that “it is possible that students in the class did not fulfill the state-mandated number of hours of home study.”
Glen Ivy’s sales force is made up of trained real estate agents and unlicensed “tour guides” who by law cannot quote prices to prospective customers. There is frequent turnover among tour guides, company officials said. Some of the enrollees in the real estate preparatory class were tour guides hoping to move up.
Glen Ivy sells most of its time shares at sites far removed from its resorts, with the consumer never seeing any of the properties. Instead, they are shown photographs, written disclosures and a model of a typical condominium unit.
Once inside the sales site, visitors go with a tour guide who spends about 90 minutes with them. They are reminded of the company’s slogan--”We’re Good Company”--and are then treated to a slide show depicting skiing, windsurfing, swimming, tennis--all at Glen Ivy resorts. Then the tour guides turn up the pressure.
“You can tell me ‘yes’ or ‘no,’ but don’t say, ‘I’ll think about it,’ ” one tour guide told a visitor. “We all know that means ‘no.’ ”
As customers decide to buy, their names are called out and champagne is opened in celebration. The pitch is then increased on other potential buyers.
Glen Ivy reports that about 15% of those who do sign agreements during the sales presentation cancel within three days--as they are legally entitled to do.
Regardless of whether he or she buys, everyone gets a gift--the reason many people showed up in the first place. This year, according to a list of winners furnished by Glen Ivy, one person got a $1,500 travel voucher. But by mid-May, no one had won the top draw--$25,000 or a Cadillac Eldorado.
But some gifts are not what they seem. Gilbert Velilla of Manhattan Beach said he won a trip to Hawaii. Velilla said he offered the company four different dates on which he could leave--none of them around holidays--but was told that nothing was available.
“I was going to use it as my honeymoon,” said Velilla, a quality assurance manager. “Finally I just gave up. It’s just a game.”
Glen Ivy’s Pitch
Glen Ivy makes sales pitches at one of four sites around Southern California--Newport Beach, San Diego, West Covina and Woodland Hills. Critics of the company say its 2-hour presentations are filled with hard-sell tactics, including giving customers who buy the same day a far better deal than those who want more time to think about the purchase. Below is a chart showing what Glen Ivy offers those who buy immediately after the presentation versus what they receive a day or more later.
Turning Up the Pressure VIP Plan (immediate purchase) Deed and Title Insurance (timeshare) EXCHANGE: Can exchange Glen Ivy weeks for use at non-Glen Ivy resorts worldwide, including Europe and Asia. FREE STANDARD (later purchase) Deed and Title Insurance (timeshare) $200 inititiation, plus $59 annual dues. VIP Plan (immediate purchase) Deed and Title Insurance (timeshare) DAY USE: Can use Glen Ivy facilities, such as jacuzzis and swimming pools, during the day, 365 days a year. STANDARD (later purchase) Deed and Title Insurance (timeshare) Not Available VIP Plan (immediate purchase) Deed and Title Insurance (timeshare) BONUS TIME: Can spend more than the allowed 7 days a year at a Glen Ivy resort for $20 to $50 per day. STANDARD (later purchase) Deed and Title Insurance (timeshare) Not Available VIP Plan (immediate purchase) Deed and Title Insurance (timeshare) SPLIT WEEKS: Can split the 7 timeshare days between different Glen Ivy resorts. For instance, a VIP can spend three days in Laguna Beach and four days in Palm Springs. STANDARD (later purchase) Deed and Title Insurance (timeshare) Not Available VIP Plan (immediate purchase) Deed and Title Insurance (timeshare) PREFERRED STATUS: Can save 30% to 70% on travel arrangements such as airline reservations made through Glen Ivy’s travel agency. STANDARD (later purchase) Deed and Title Insurance (timeshare) Not Available VIP Plan (immediate purchase) Deed and Title Insurance (timeshare) CLOSING: Escrow closing costs paid in full. STANDARD (later purchase) Deed and Title Insurance (timeshare) Standard owners pay $690 in escrow closing VIP Plan (immediate purchase) Deed and Title Insurance (timeshare) REFERRAL: Get $50 for every friend who attends a Glen Ivy sales presentation. STANDARD (later purchase) Deed and Title Insurance (timeshare) Not applicable Source: Glen Ivy Resorts
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 Springs
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.
