State Puts Glen Ivy Resort on Probation
The state Department of Real Estate said Tuesday that it had suspended the real estate license of Glen Ivy Properties--the nation’s largest time-share operator--for a range of infractions including incomplete record-keeping on customer accounts.
However, Glen Ivy paid $20,000 in penalties--the maximum fine allowed under state regulations--and agreed to a five-year probation in order to have the suspension immediately lifted.
Should the company be accused of further infractions of almost any kind through mid-1996, its license could be suspended without a court hearing.
Robert McCabe, the real estate department’s regional manager in Northern California, said the five-year probation was the longest he knew of in his 16 years as a regulator.
Glen Ivy said Tuesday that it agreed to the settlement without admitting any liability.
“Litigating these issues would have been far costlier in terms of management time and legal fees than agreeing to this settlement,” Glen Ivy Chairman Ralph Mann said in a written statement. “We have always chosen to cooperate with the Department of Real Estate, even when--as in this matter--we differ with their interpretations of laws or regulations.”
In a 25-page complaint filed in May, the Department of Real Estate accused Glen Ivy of depositing buyer down payments in bank accounts considered unacceptable to the state, permitting non-authorized personnel to make withdrawals from some accounts and failing to keep customer account records in accordance with state laws.
Nonetheless, the state said it was unaware of any customers losing money because of the infractions.
Glen Ivy’s parent corporation, Glen Ivy Financial Group, is still the subject of an inquiry by the California attorney general’s office, which is looking into the telephone sales practices of the company and its contractors.
The inquiry began earlier this year after a Culver City man was promised a Cadillac or $25,000 in cash by a telephone solicitor employed by a Glen Ivy contractor. In fact, the man had won neither.
“We are still certainly looking very carefully at the operation,” Herschel Elkins, senior assistant attorney general, said Tuesday.
Glen Ivy has 18 resorts in seven states, including California. The company and its related subsidiaries employ 1,600 people and posted a 1990 profit of $5 million on revenue of $122 million. Glen Ivy is unrelated to Glen Ivy Hot Springs, a Corona-based spa.
Despite its regulatory run-ins, Glen Ivy announced Tuesday that a consortium of companies and individuals--including weight loss entrepreneur Jenny Craig and Los Angeles investment banker Michael E. Tennenbaum--have agreed to invest $15 million in the company.
“We put them through a real series of hoops before we were willing to part with our money,” said Tennenbaum, vice chairman of investment banking at Bear, Stearns & Co. Tennenbaum has invested his own money in Glen Ivy.
Tennenbaum said a team of fact-finders hired by the three companies participating in the consortium concluded that Glen Ivy’s regulatory problems were the fault of a few mid-level executives and not that of top management.
Glen Ivy’s settlement with the real estate department, which was reached earlier this month, did not address a series of questionable classes held at its Newport Beach and West Covina sales sites that were supposed to prepare employees for the state real estate exam.
On Tuesday, Glen Ivy said a Santa Monica lawyer hired by the company had concluded that the classes “may have violated Department of Real Estate guidelines,” but that they were held without the knowledge of senior executives. The company said a copy of the lawyer’s report was being forwarded to regulators.