Opinion: Ponzi scheme operators (Timeshare)

POSTED: 01/20/15 8:30 PM

Dear Editor,
Should justice be fair to all, or just a few?

Caravanserai, Pelican, Rainbow, Flamingo, Royal Palm Beach Club – the list is very long  of those properties where visitors/tourists to this island have lost their investments or had timeshare and whole-owner maintenance fees skyrocket without warning.  Thousands of visitors/tourists have been victimized.

My story is very similar to so many of the others. In 2010, my husband (age 78) and I (age 74) bought (along with my daughter) a whole-owner apartment contract at the Royal Palm Beach Club. The purchase price for our whole-owner apartment represented a large portion of our retirement savings, but we wanted to live on Sint Maarten. The whole-ownership contract we purchased was meant and represented to us by all parties to be like a “right of apartment” or condo and therefore different from a time-share contract. However, in Sint Maarten we now find ourselves treated similarly to those who have purchased time-share contracts under the current laws and regulations.

Our written contract was notarized and was for 999 years of ownership. The contract had been in place since 1991 and always treated as a right of apartment. Each of the units at the Royal Palm is separately metered for utilities. The transfer of our unit was recorded on the books and records of Diamond Resorts in Las Vegas, Nevada, USA.  Diamond Resorts (the property owner) acknowledged in writing that our contract was valid and “welcomed us into the Diamond family.” We renovated the unit at our own expense (in excess of $75,000). We installed a new kitchen, bought furniture, bought appliances, replaced HVAC units, bought linens and dishes and everything else needed for occupancy. We paid the contract-specified maintenance fee in advance and in full.

At the end of 2010 the Diamond corporate office in Las Vegas, Nevada, USA unilaterally and without notice to us decided to change the nature of our contract by simply converting it on their books to a time-share/hotel contract. Diamond was able to do this unilaterally because Diamond in the USA controls the property records for our whole-ownership contract located in Sint Maarten – there is no record with the Sint Maarten Kadaster’s Office of our whole-owner contract. This means, just like those time-share contracts at Caravanserai if the Royal Palm Beach Club real property were foreclosed upon our contract would be nullified.

Further, since Diamond in the USA controls the records, by this unilateral stroke of a pen Diamond felt justified to send us a bill for more than $50,000 for maintenance fees based on a hotel/time-share budget that included expenses for renovations to their hotel rooms, hotel room linens and housekeeping – none of which did we use or receive. When we refused to pay, Diamond cut off our electricity. My husband while staying at the unit in the dark and without air conditioning contacted a local law firm for help. That law firm obtained an injunction against Diamond that required immediate restoration of electricity and required that Diamond not hinder access to our unit.

Diamond next filed a lawsuit against us to collect the $50,000 per year in maintenance fees (which as of 2015 is up to $250,000) for services and renovations neither received by nor requested by us. The amount now claimed to be due to Diamond plus the renovations we completed are now more than the original purchase price of the apartment. The Court in First Instance found that we were a long-lease, not a time-share contract, and allowed for a fair increase in the monthly maintenance fees specified in our contract.

There is now an appeal.

If Diamond Resorts wins on their appeal, Diamond will be rewarded under the current laws by making our apartment worthless and we will lose our $400,000 investment.

Why do these things keep happening?

Is it that those with influence over the process represent only the property owners’ interests? Is it because while there may be many laws and regulations regarding time-share and whole-owner property on the island, but there is no common sense provision that allows for the recording such contracts with the Kadaster’s Office? How is it that common sense allows for the property records of contracts executed in Sint Maarten regarding property on the island is be controlled in Las Vegas, Nevada, USA? Is it because there are strong lobbyists paid to defeat and effort to adopt simple consumer protections requiring that any fees or charges be specified in writing including provisions about when such fees or expenses can be increased?

There are plenty of protections for banks, property owners and Caravanserai “ponzi-scheme” operators. There are also simple legislative and regulatory solutions that could be adopted by Sint Maarten to permit a just framework of transparent and objective protections for all parties – property owners and consumers. The question is whether before a solution is adopted, will there be justice for my husband and I or will we lose everything and likely be forced to leave the island?

As so many others with their own stories are forced off the island or decide never to return, the real loss will be to the island, its economy and its future.

Laina Macdonald,
Royal Palm Beach Club
Welfare Road, Simpson Bay

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Comments (1)


  1. Gerard Wordhouuse says:

    Good Morning Laina:
    Here we are several years later still fighting the same battle with government functionaries who are being enriched while the rest of us suffer. I am convinced that as long as the authorities are getting theirs we can all be ignored. After all, when the island economy begins to collapse, they can take their money and leave the island behind and live a wonderful life somewhere else. I suppose the island people and businesses, who will continue to suffer, will then pay the price for their silence.