|
Article
Courtesy of The News Press
By DICK HOGAN
Published June
6, 2009
That's what some Bonita Bay Group club members and their attorneys are saying about the estimated $225 million in club deposits they made to the financially troubled company, which is refusing to honor its former 30-day refund policy.
Three club members have filed lawsuits demanding their deposits back, and one of their attorneys says Bonita Bay's actions are nothing more than a Ponzi scheme.
Bonita Bay isn't saying where the money went, however, and is making some demands - and threats - of its own.
If club members don't pay their quarterly dues at the end of this month, they could be kicked out of the clubs, chief restructuring officer Tim Boates told them.
And, unless everybody pays, Boates warned in an e-mail to all members last week, Bonita Bay might shut down the clubs altogether.
"If that were to happen, it would make the transition of club ownership to club members extremely difficult, if not impossible," the e-mail states.
Boates - of RAS Management Group LLC, a crisis management and turnaround firm - was brought in two weeks ago by the company to deal with its financial woes.
He declined to comment Tuesday, saying, "I don't speak to the press," and that nobody else with the company is authorized to comment.
David Lucas, chairman of the board of Bonita Bay, did not return phone calls to his office during the past two weeks.
But as they saw their club facilities closed down or their operations sharply cut back this week, residents were looking for answers from the company and from Lucas, whose family founded Bonita Bay in 1981.
Effective Sunday, "They closed our beach club," said Michael Lissack, a homeowner at the Bonita Bay community Mediterra who's an entrepreneur and director of Knowledge Ventures (Florida) in Naples. "They closed the fitness center except for mornings, they cut back to four days a week on golf."
Lissack said the company's financial condition is so bad that he doesn't see the point in residents' continuing to pay their assessments despite Boates' threats. "I certainly don't have any intention of paying mine," Lissack said.
He listed the debts Bonita Bay has incurred: $225 million in deposits from residents who were promised they could resign and get their money back in 30 days; $120 million owed to a coalition of banks, led by KeyBank; more than $100 million loaned to the company by the Lucas family; and $17 million owed to the bondholders for a community development district that built much of the sewers and other infrastructure in the area.
According to a report by Mediterra's Advisory Board members, Boates told them Bonita Bay expects "to assign that obligation to the new owners if turnover occurs."
As a result, Lissack said, even if Bonita Bay sells the club to members for the $50 million in deposits they've already made, "The price is too high."
For years, Bonita Bay has sold memberships to residents with contracts that promise them the right to resign and get their money back within 30 days.
But, in November, the company told members that the rules had been changed.
For example, in a lawsuit filed by Bonita Bay members Jerome Evans and Anne Fair, company attorney G. Donald Thomson said "the marina club has the right, in its sole discretion, to modify the deposit refund policy" to eliminate the right to an early refund.
That leaves the club owners with the right to get their money back - but not for 30 years after they signed up, company lawyers argue in court papers.
Attorneys for the members say the contracts they signed clearly show they have a right to resign and get their money back in 30 days.
The 30-year requirement, members say, isn't what they signed up for.
Evans and Fair, for example, "are in doubt about Bonita Bay's right to retroactively change the terms of the Promissory Note," said Howard Freidin, their Fort Myers-based attorney, in their lawsuit asking for the money back.
Bill Hazzard, the Naples-based attorney who represents two Mediterra club members who want their money back, said the company has, for years, aggressively marketed its clubs using the 30-day refund policy as a selling point.
But now the money's gone and what the company did is no better than the tactics used by investment manager Bernie Madoff, who pleaded guilty in March to committing fraud on a massive scale.
"It turns out they were using the new money coming in to pay the old money going out," Hazzard said. "What's abundantly clear is that the promise to pay it back in 30 days was only as good as when they were getting new money in the door. Frankly, I don't know how that distinguishes them from Mr.
Madoff."
'Cash clock ticking,'
Bonita Bay members slow to bargain
Residents
face difficult decisions on Bonita Bay clubs' fate
Bonita
Bay must unload its clubs
|