The NY State Attorney General bars the developers of the 286-suite Manhattan Club from selling more interests in their condos and/or from foreclosing on current owners.
The Attorney General’s Office is looking into whether the developers, Ian Bruce Eichner and his partners, made false promises to buyers of shares in the high-end condos. It is suspected that buyers were paying tens of thousands of dollars, but were unable to reserve rooms because the developers had overbooked them. According to officials, 14,000 people own a timeshare at the 286-suite Manhattan Club.
“When sellers use high-pressure tactics to sell timeshares, consumers should be wary that they may not be getting what they were promised,” said state Attorney General Eric Schneiderman, in a statement. “We allege that the Manhattan Club is a particularly stark example of such a bait-and-switch timeshare scheme.”
The investigation began in April after a barrage of over 100 complaints from disgruntled owners. Over the past few years owners have become so displeased with the Manhattan Club that they decided to unload their shares almost no money just to avoid the poor investment.
The attorney general’s office sent undercover investigators to attend a sales presentation for the Manhattan Club and confirmed claims of misleading promises to buyers. Buyers were told that the club does not rent rooms to the general public and that few restrictions apply to owners of the timeshare when they want to reserve a room. The attorney general’s office found that the developers withheld an offering plan for the Manhattan Club from potential buyers until a purchase agreement was signed. Additionally, that offering plan differs from what was described to owners in the sales presentation. For instance, the offering plan stated that timeshare owners’ reservations are subject to room availability and that rooms are rented to the general public.
Additionally, the office said owners’ common charges for the timeshare condos have tripled in the past decade. Currently those fees are nearly $2,000 per ownership interest per year in the club.
When the Manhattan Club opened at 200 W. 56th St. in 1997, it was touted as the first major timeshare condo in the city. The property had been a bankrupt hotel that Mr. Eichner reportedly spent $141 million converting into the Manhattan Club.
The court order issued by the attorney general’s office also bars the developers from using funds from bank accounts connected to the Manhattan Club. Mr. Eichner and others named in the filing are required to appear in court Aug. 1 to testify about the club’s practices.