Timeshare News: Personal Finance Guru Dave Ramsey Sentencing to 20 Years in Prison
Timeshare news has been in the headlines more than a few times in recent weeks. A California man is headed to prison for operating a phony timeshare exit company that bilked thousands of people who wanted to get out of their timeshares. Personal finance guru Dave Ramsey is being sued over his endorsement of a timeshare exit company that also allegedly defrauded customers. And travel and hotel prices are on the rise, leading some Americans to rethink their vacation plans.
A former executive of a timeshare resort chain has been sentenced to 20 years in prison for masterminding a fraud scheme that swindled more than $3.5 million from consumers who were trying to avoid foreclosure on their timeshare properties. Michael McDonagh, 42, owned Irvine-based Global Transfer Inc., Costa Mesa-based Global Transfer SoCal Inc., Santa Ana-based Nationwide Transfer Inc. and Signal Hill-based Nationwide Exit Specialist Inc. He was also the founder of Orange and Los Angeles-based companies that were supposed to help timeshare owners cancel their contracts for a fee.
According to authorities, McDonagh’s scam used high-pressure sales tactics to lure unsuspecting consumers with promises of financial relief. Once he ran out of victims, he would start a new business with a different name and continue bilking people out of their timeshares.
One victim was a 73-year-old widower who lost his home, cars and savings because of the timeshare debt he was forced to take on. Another was a retired teacher who had to sell her car and quit her job because of the debts she took on with timeshares and other financial obligations. McDonagh faces a statutory maximum of 20 years in federal prison when he is sentenced Oct. 30.
A lawsuit filed in April by some of Ramsey’s listeners alleges that his endorsement of Timeshare Solutions, a timeshare exit company that helped consumers shed their timeshares, defrauded them. The suit claims that Timeshare Solutions’ promises to help people get out of their timeshares were false and misleading, violating consumer protection laws. The lawsuit asks the court to award $150 million in damages to those who were ripped off by the company.
A new study from the Better Business Bureau found that high-pressure sales tactics and fraudulent exit companies infiltrate the timeshare industry. BBB’s Heart of Texas regional director Devin Benavides says potential buyers should read the fine print and watch out for red flags, such as pressure to buy quickly and referring to ownership as an investment. The Better Business Bureau’s Scam Tracker allows consumers to search reports of timeshare and vacation-related scams by location or type.
