Eichner’s Manhattan Club timeshare a “bait and switch” scheme: Schneiderman

AG's office gains court order banning sales at hotel amid ongoing probe
By David Jones | July 25, 2014 04:17PM

New York state Attorney General Eric Schneiderman announced today that his office obtained a court order barring sales at the Manhattan Club, a 286-unit luxury timeshare hotel in midtown from billionaire investor Ian Bruce Eichner.

Schneiderman launched an investigation into the 200 West 56th Street time share property in April, amid complaints from consumers who paid tens of thousands of dollars to become “owners” at the club, but have been unable to book a reservation, according to the attorney general. The AG’s office says that members of the general public were allowed to book rooms, despite promises to the contrary.

On Thursday, Manhattan Supreme Court Justice Arthur Engoron ordered the club’s principals, including Eichner, his wife Leslie and his brother Stuart, to hand over documents and testify in court about the club’s sales tactics and other practices, according to the AG.

The club is also banned from taking money from company bank accounts and from foreclosing on timeshare owners while the AG’s investigation is ongoing.

“When sellers use high pressure tactics to sell timeshares, consumers should be wary that they may not be getting what they were promised,” Schneiderman said in a statement. “We allege that the Manhattan Club, near New York City’s iconic Carnegie Hall, is a particularly stark example of such a bait and switch timeshare scheme.”

Club officials said they plan to work with the AG to resolve the matter.

“We intend to fully cooperate with the attorney general’s investigation and look forward to bringing clarity to the entire issue,” said Eric Yaverbaum, a spokesperson for Eichner.

Eichner originally was sued in 2013 by timeshare owners at the Manhattan Club, who said they were consistently denied rooms because the organization sold 18,000 ownerships for the 286 rooms.

According to the AG, timeshare owners at the Manhattan Club are provided a copy of the offering plan after they buy an ownership piece, which in and of itself is illegal, according to the office.

The offering plan does state that reservations are subject to availability after public reservations are made. The AG’s office says this is the opposite of what had been promised to consumers.

The AG alleges also that common charges have risen 200 percent in the last 10 years, leading some owners to have to pay $2,000 per ownership interest, per year. He claims in court filings that some owners have sold their ownership interest in the club for only $1 to get out from under the burdensome expenses. According to the AG’s office, about 14,000 members are still remaining.

The court hearing is scheduled for Aug. 10.