PORT ST. LUCIE – As part of the ongoing effort to crack down on timeshare resale fraud, a Port St. Lucie business owner has been sentenced to spend more than a decade in prison for his role in a fraudulent timeshare business in Palm Beach County.
On Friday – the same day that Gov. Rick Scott signed into law a bill that increases penalties for timeshare fraud — Michael Franzenburg, 48, was sentenced by U.S. District Judge Kenneth A. Marra to 10 ½ years in prison for his role in the company International Resort Solutions LLC.
The U.S. Attorney’s Office for the Southern District of Florida noted that Franzenburg was the owner of IRS, and responsible for its day-to-day activities and finances. The firm is accused of bilking thousands of victims out of more than $3 million in advance fees for resale services they never got.
In a release issued on Friday, the day of Franzenburg’s sentencing, the Attorney’s Office noted that “Franzenburg and his co-conspirators engaged in a scheme to defraud timeshare owners throughout the United States and Canada. From July 2009 through February 2010, telemarketers contacted more than 2,000 victims and collected more than $3.3 million in advance fees for timeshare marketing and sales services, which were never provided.”
Operating under the name International Resort Solutions, the telemarketers were accused of soliciting clients through at least six “boiler rooms” in Palm Beach County.
The boiler room managers were accused of instructing telemarketers to call timeshare owners who had a unit on the market, and convince them to pay up-front fees for sales services.
“The telemarketers would make false and misleading representations to the timeshare owners regarding IRS’s services,” the U.S. Attorney’s Office noted. “Among the false representations, the telemarketers claimed that IRS had buyers for their timeshares, that IRS had closings scheduled for their timeshares, and that IRS would actively market their timeshares to potential buyers.”
Following complaints from the victims, the case was investigated by Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and John V. Gillies, special agent in charge of the Federal Bureau of Investigation’s Miami Field Office, and is being prosecuted by Assistant U.S. Attorney Adrienne Rabinowitz.
So far, 10 people, including Franzenburg, have been charged in connection with the criminal activities being investigated at IRS. The others are Jeffrey Fields, Thomas Ford, Bryan Bergeron, Joshua Holmes, Colin Van Nest Talmage, Joseph Eichenlaub, Michael Ferrari, Kenneth Foote, Jr., and Joseph Grizzanti.
Grizzanti and Foote recently got sentenced to five years’ imprisonment and six years’ imprisonment. The other defendants have pled guilty and are awaiting sentencing.
Timeshare fraud is a major concern in Florida with its tourism-driven economy. That’s one of the reasons why Scott signed into law the Timeshare Accountability Act, which takes direct aim at fake resale firms that prey on timeshare owners desperate to sell their unit.
The new law, which goes into effect on July 1, is designed to crack down on deceptive marketing practices by timeshare resale companies offering to help people sell their timeshare – for an up-front fee. The new law requires full disclosure of the terms and conditions of the services being offered by the resale firm, establishes a period of time for consumers to cancel their contract, and increases penalties for anyone who engages in misleading or fraudulent telemarketing and sales practices.
On Friday, one of Orlando’s largest and oldest vacation ownership companies, Wyndham Vacation Ownership, applauded the enactment of this law.
“We remain committed to protecting our owners and the integrity of our industry at large,” said Franz Hanning, president and CEO of Wyndham. “This new law will help to ensure deceptive companies can no longer take advantage of timeshare owners.”
Hanning praised the bill’s sponsors for “aggressively pursuing action against the fraudulent and deceptive practices that have become commonplace among many timeshare resale companies.”
To learn more about the investigation into IRS, log on to the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls.
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