On Monday 22nd January a court case in Los Angeles came to its conclusion. On trial was Michael McDonagh, 43 and four co conspirators’. The evidence presented was that McDonagh was the brains behind multiple cold calling timeshare scam boiler rooms. At his summing up, United States District Judge David O. Carter sentenced McDonagh to a 10 year prison sentence. He also ordered him to pay $5,469,271 in restitution. The four other defendants are yet to be sentenced.
The history
From 2015 to May 2019, “openers” who worked for the McDonagh controlled telemarketing companies contacted timeshare owners and offered to help them terminate their timeshare ownership, for a fixed fee. If the timeshare owner expressed interest in the telemarketing companies’ services, the call was transferred to a “closer” who convinced victims to sign contracts with the telemarketing companies to get them out of their timeshare for a “one-time fee.”
Within weeks of paying the fee, the victims were contacted and told a series of lies to induce them to pay more money. For example, some victims were falsely told that they would obtain, for an additional fee, a large settlement payment based on purported litigation against the victim’s timeshare company.
McDonagh and his co-schemers also made false promises of securing, again for an additional fee, a large “compensation” payment from the victim’s timeshare company because the timeshare company had purportedly rented out the victim’s timeshare property without the victim’s permission.
More than $5 million in actual losses were caused by McDonagh or his co-schemers whom he employed at his telemarketing companies.
The double dip scam
From the above we can conclude that a fairly normal pattern emerges in this scam. The double dip scam is quite common, not only in the States but also Europe too. In essence, once the victim is on the hook and has paid an initial sum, in this case for a timeshare exit, the scammers go back with other spurious reasons why the victim should pay more money.
Psychologically, as the victim has already placed trust in the scammers, they are more likely to be susceptible to pay more, as the saying goes “in for a penny, in for a pound”.
TCA comment
This criminal case’s lead defendant, McDonagh founded and/or controlled several telemarketing companies:
- Global Transfer Inc.
- Global Transfer SoCal Inc.
- Nationwide Transfer Inc.
- Nationwide Exit Specialist Inc.
These so called companies purported to offer timeshare exit services, but of course didn’t.
Once one telemarketing company became inundated with consumer complaints, McDonagh would form a new telemarketing company to perpetuate the fraud. This is exactly the same as scam companies operating in Europe. Once discovered or exposed they simply change name, address, phone number etc and carry on as if nothing has happened.
TCA have discovered numerous such court cases taking place across the States, some driven by developers, some, like the above case, driven by consumers taking action. Isn’t it a pity that the authorities in Europe aren’t more proactive in hunting down and prosecuting offenders?
In total it’s believed that McDonagh and his gang stole over $5m, and as per usual the scam started with a cold call. If you are cold called regarding your timeshare, make sure you carry out your own research and due diligence because taking everything that’s said at face value is a sure fire way to lose money. If you do fall for the story then it’s likely to end up with you being yet another victim of fraud.
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