As John Wayne might have said, “the hell it is”. Recently we were privy to sight of public court records relating to a case presented in 2018 in Las Vegas. Without going into the reasons for the law suit except to say it revolved around unfair dismissal, the information contained in the document made a few eyes pop here at TCA. Below we will point out a particular section of great interest. For anonymity we have removed the plaintiffs’ name, we will refer to him only as Mr X, however the defendant being Diamond Resorts will be cited.
Mr X v Diamond Resorts
According to the statement by Mr X the case does not involve a work related matter but something that occurred at a social event, a celebration for the Diamond sales team top producers. Mr X stated that certain inappropriate behaviour took place involving another employee. Mr X felt that the Diamond Human Resources team should be made aware and subsequently made a formal complaint. What happened after is not of any real relevance to this article but suffice to say ended up with Mr X being dismissed.
To defend the fact that Mr X was not dismissed for a lack of performance, his prosecution team disclosed his earnings details which we shall look at in a moment. Mr X was employed by Diamond to be, what is known as, an “In House” Vacation Consultant, for Vacation Consultant read salesman. There are two types of sales lines in any timeshare resort, cold line and in house. Cold line reps sell to those who have been cajoled into sitting through a sales presentation normally because they have been offered some form of prize or other inducement to attend a “quick” tour of the resort.
In house are those reps who try to sell to existing owners. More often than not the in house rep has a much better chance of a sale because the “prospect” is already an owner and is used to both the developer/resort and more often than not they like the product they own, or did until the in house rep got hold of them.
We mentioned above that Mr X felt his performance was more than acceptable and there could be no reason for the action taken by Diamond for under performance. He justified this position by declaring his earnings. Below we reproduce the section of the court evidence that verifies this fact:
“Plaintiff Mr X became one of Defendant DIAMOND RESORTS top sales producers,
generating and earning individual earnings from sales commissions of approximately $450,000.00 in 2014 (an eight (8) month period of employment); in 2015, approximately $1.5 million and, in 2016 and 2017, approximately $2.4 million dollars each year.”
Sorry, did we just read that correct; $2,400,000 approx per annum in 2016 and again in 2017! According to research, the annual average salary in the USA in 2017 was $62,626; it would take an “average” worker 38 years to earn what Mr X earned in a single year. How can this be right?
Timeshare sales and the license to lie.
In this case, Mr X is no saint, we used his real name and searched Mr Google and we found he has a reputation that is far from savoury. Below is just one of dozens of unfavourable testimonials left by those who dealt with him:
“I am asking for our loan to be cancelled for our last purchase of 107,500 points from Mr X at Polo Towers. We previously purchased 50,000 Hawaii points in November 2016 and had no complaints with Diamond. Having bought points three times we did not expect a Diamond sales agent would outright lie.
In Las Vegas at Polo Towers we met with Mr X and told him we were afraid of passing our points on to our children. Mr X said there was a meeting and the new people that bought Diamond (Apollo Global Management ) said since there were so many members wanting to sell back points, Diamond was now allowing this, but in order for us to sell our points back to DRI we would need to buy more points. He said we would have to pay off the loan before Diamond would buy our points back. He said he had to transfer our Hawaii points to the US Collection points.
Mr. Mr X said to put down that our income was $120,000 each on the loan application. I said that was not true. Mr X said to put it down anyway. I asked Mr. Mr X if I would need to pay the maintenance fees. He said we would not have to worry about that. After we got home we received a bill for $17,500 for maintenance fees. He did not explain that the $15,000 deposit would be placed on the Barclaycard which was put on my wife Delores (age 81) card.
- November 2015 50,000 points purchased for $121,650 in Hawaii
- 10/21/2016 $163,525 for 107,500 points purchased from Mr X
- Down Payment $15,000 Amount financed $151,078.93
- Equity from 65,000 points transferred from US $128,196
- Loan Balance: $143,931.27 as of October 2017
- The new payment is $2,276.05 and almost equals our net income
- The old payment on the Hawaii points was $413
The above is a clear example of how the timeshare industry, in this case Diamond Resorts don’t police or care what their reps say as long as they get the deal. How much commission did Mr X earn on this case alone? Don’t get us started on conning an 81 year old.
Even at State level there seems to be a tacit agreement that the licence to lie is ok because of the warnings offered but no action taken. Below is a statement from the first page of the Florida timeshare Public Offering Statement (POS). The POS is a document that must be issued before the conclusion of a timeshare purchase, there is also an expectation that this should be read and understood before signing. The statement below would imply that no matter what you’ve been told verbally its ok, just don’t rely on there being an ounce of truth.
“THE PROSPECTIVE PURCHASER SHOULD NOT RELY UPON ORAL REPRESENTATIONS AS BEING CORRECT AND SHOULD REFER TO THIS DOCUMENT AND ACCOMPANYING EXHIBITS FOR CORRECT REPRESENTATIONS. (Florida Public Offering Statement, dated 3/8/2018)”
We understand that the average commission rate for Diamond Resorts reps is about 15%. On this basis, Mr X would have sold $16,000,000 of timeshare points to obtain a salary of $2,400,000.
Time for change?
Do we honestly care how much people earn? Not really if they put in the hours, are honest, ethical and hard working, good luck to them, but when those earnings are created by actions closely bordering on fraud, then that becomes a different matter. According to our research Mr X spent nearly four years in the employ of Diamond Resorts during which time the company received numerous complaints about his sales methods, or should we say lies. Given this fact, why was he not reprimanded or dismissed, why was he allowed to hoodwink and defraud those who were already Diamond owners? The answer is in the numbers above. In just under four years, Mr X earned a total of $5,750,000 by his own admission, which could mean as much as $38,000,000 new business for Diamond, perhaps therein lays (or Lies!)the answer.
Rumour has it that Diamond Resorts premiere Florida resort has a separate car park, sorry, parking lot, for sales reps cars, this is because the sight of all the Ferraris, Lamborghinis etc was putting prospects off. Given that Mr X earned multi millions, in 2017 a Ferrari 488 GTB was $256,550 a small expenditure against a salary of $2.4m, from this you can see that the rumour above is probably true.
Is it any wonder that timeshare USA has such a bad reputation? If you have sanction from “head office” to lie, as long as you get a sale, then sharp practices and ridiculously high salaries will be the order of the day. If legislators effectively turn a blind eye then nothing will ever change. Is it time for change? Of course it is, will it happen? We doubt it.
Final comment
Although this court case was in 2018 as is usual the final outcome has not been published, did Mr X win or lose, we don’t know. What we do know is that this all took place long before Hilton acquired Diamond. We believe the driving force behind Diamonds exponential growth, Mike Flaskey is no longer CEO. This we think is confirmed by Mike’s own LinkedIn page which states:
“Former CEO at Diamond Resorts International, Founder & CEO at Mike Flaskey Entertainment, Founder of the ClubCorp Golf Classic and the Hilton Grand Vacations Tournament of Champions.”
We know Mr Flaskey was extremely close to the sales side of Diamond so maybe his departure will allow changes in the way sales are transacted at Diamond/Hilton. Just maybe the old style “features & benefits” method of selling will return, with the licence to lie being a thing of the past. Unfortunately we smelled the coffee and woke up.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk