It’s time for one hotel to share the wealth.
A midtown hotel is being forced to sell its business and pay back $6.5 million to time-share owners scammed for nearly 20 years, state Attorney General Eric Schneiderman said on Tuesday.
The Manhattan Club, which sits at 200 W. 56th St., bills itself as a residential-style boutique hotel, and is accused of selling thousands of time shares, jacking up yearly fees, then making excuses for why the rooms are booked.
The settlement, the largest in recent history for the AG’s Real Estate Finance Bureau, will go to restitution for owners who were allegedly tricked out of their money.
“The owners of the Manhattan Club lured thousands of time-share buyers with false promises and shady sales tactics that violated New York law,” Schneiderman said in a statement. “While time shares can be legitimate enterprises, scams like this one are common. To avoid becoming a victim, always be wary of high pressure sales tactics.”
The club, which started selling the time shares in 1996, allegedly told prospective buyers that it didn’t rent to non-time-share owners. But this was simply not true, according to the AG’s office, and those who bought in were often told rooms were not available.
Customers spent up to $40,000, depending on how often they wanted to rent a room and for how long. But that price tag did not include maintenance fees and taxes, which slowly rose until they hit about $2,000 annually per owner, according to the AG’s office.
This went on until 2014, when undercover investigators discovered the alleged bait-and-switch scheme, according to Schneiderman’s office. In July of that year, the AG’s office obtained a court order that barred the Manhattan Club from selling time shares.
But early this week, Schneiderman said a settlement had been reached. And in addition to the millions of dollars, the owners of the Manhattan Club will be forced to sell their stakes to a third party, give up management control, and be barred from the timeshare industry.
A representative for the Manhattan Club did not immediately respond to a request for comment.