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Top 7 Cases of Timeshare Misrepresentation in Court

Timeshare misrepresentation often leaves buyers trapped in contracts they can’t escape, with mounting fees and broken promises. Courts have stepped in to address these deceptive practices, holding companies accountable and protecting consumers. Below are seven key legal cases that highlight the fight against fraud in the timeshare industry:

  1. Keona Palmer et al. v. Flagship Resort Development: A $1.07M jury verdict exposed deceptive sales tactics by FantaSea Resorts, with verbal promises contradicting written contracts. Courts ruled such disclaimers unenforceable, setting a precedent for consumer protection.
  2. Reed Hein & Associates (Timeshare Exit Team): A $630.19M judgment against this exit company revealed false promises of contract cancellations and upfront fees, leaving many owners in financial trouble.
  3. Shadia Melissa Aguilar Sarmiento Case: This cross-border fraud scheme stole over $2M from timeshare owners through fake sales agreements and identity theft. The perpetrator was sentenced to 13 months in prison and ordered to pay restitution.
  4. FTC v. Universal Timeshare Sales Associates: A $10.2M judgment shut down a telemarketing scam that charged upfront fees for fake resale services, reinforcing the dangers of advance fee fraud.
  5. Williams Andrews Burns LLC: Accused of wire fraud and aggressive telemarketing, this case highlighted the risks of unverified promises in timeshare cancellations.
  6. Diamond Resorts International v. Aaronson Law Firm: A dismissed case validated the practices of specialized timeshare attorneys, emphasizing the importance of legal expertise in challenging contracts.
  7. Westgate Resorts v. Consumer Advocates of Timeshare Misrepresentation: While procedural errors vacated $1M in punitive damages, this case confirmed consumer rights under Utah law and the importance of proper litigation processes.

These cases demonstrate the power of legal action in combating fraud, securing damages, and protecting consumers from deceptive practices in the timeshare industry.

1. Keona Palmer et al. v. Flagship Resort Development

Flagship Resort Development

This case centered on eleven individuals and couples who took legal action against Flagship Resort Development (FantaSea Resorts) during a three-week jury trial in Atlantic City. The case exposed deceptive practices in timeshare sales and marked a significant win for consumers, shaping future legal battles in this area.

Misrepresentation and Fraudulent Practices

FantaSea Resorts was accused of using deceptive sales tactics to lure prospective timeshare buyers. Their strategy included making attractive verbal promises during sales presentations, which were later contradicted by the written contracts buyers signed. This bait-and-switch approach left buyers with agreements that did not reflect the assurances they were given.

To shield themselves from liability, FantaSea Resorts included exculpatory clauses in their contracts. These clauses stated, "No representations of Seller or Seller’s agents or representatives, shall in any way be binding upon the seller" and "Purchaser acknowledge[s] that they have entered into this [agreement] without coercion or undue pressure." These terms were designed to absolve the company of responsibility for any verbal misrepresentations made during the sales process.

Court Verdict and Damages

The jury trial concluded with the court awarding the plaintiffs a total of $1.07 million in damages. Attorneys Andrew Milz of Flitter Milz, PC, and Joe Solseng successfully represented the plaintiffs, securing this significant verdict.

"After a three-week jury trial in Atlantic City, Joe Solseng and I obtained a verdict of $1.07M for our clients – 11 couples and individuals told a series of deceptive claims during timeshare sales by Fantasea Resorts." – Andrew Milz, Attorney, Flitter Milz, PC

The court ruled that the exculpatory clauses included in FantaSea Resorts’ contracts were void and unenforceable. This decision set a strong legal precedent, emphasizing that companies cannot use such clauses to shield themselves from accountability for fraudulent sales practices.

Impact on Future Timeshare Cases

The Superior Court of New Jersey, Appellate Division, delivered a landmark ruling by rejecting the use of contract language as a defense for deceptive sales practices. Specifically, the court addressed the company’s tactic of making verbal assurances during sales presentations while contradicting those promises in the written agreements.

"[The timeshare developer] advocates for a legal bait-and-switch in which it offers certain guarantees during its sales pitch, only to explicitly contradict those guarantees in its contracts. If we were to accept [the timeshare developer]’s contention, we would, in effect, give license to the use of the parol evidence rule as a sword to aid and abet deceitful sales practices. We decline to do so." – Superior Court of New Jersey, Appellate Division

This ruling clarified that timeshare companies cannot rely on disclaimers in contracts to evade liability for false claims made during sales presentations. By rejecting the misuse of the parol evidence rule, the court reinforced consumer protections and ensured that companies could be held accountable for their sales representatives’ conduct.

The case underscored that courts are willing to scrutinize sales practices beyond the written terms of contracts, ensuring that deceptive behavior does not go unchecked. This decision sent a clear message to timeshare developers: verbal misrepresentations will not be excused by cleverly worded disclaimers.

2. Reed Hein & Associates (Timeshare Exit Team): Deceptive Exit Schemes

Reed Hein & Associates, operating under the name "Timeshare Exit Team", found itself embroiled in multiple lawsuits for running a scheme that preyed on timeshare owners. The company capitalized on the frustration of those looking to escape their timeshare commitments, making promises they knew they couldn’t keep.

Nature of Misrepresentation or Fraud

The heart of the Timeshare Exit Team’s misconduct lay in charging upfront fees – sometimes as high as tens of thousands of dollars – for services they failed to deliver. They claimed they could modify, cancel, or transfer timeshare ownership within 12 to 18 months. However, their most damaging tactic was advising customers to stop making timeshare payments, falsely asserting that this would help terminate their contracts. This strategy left many owners in worse financial straits. To make matters worse, they told clients to cut all communication with their timeshare companies, leaving them in the dark about their case status.

Adding insult to injury, the company sent out letters falsely claiming successful exits. These misleading communications gave owners a false sense of relief while their financial troubles mounted.

"Mr. Sussman’s letters informing timeshare owners they successfully exited… are objectively deceptive." – Judge for the United States District Court Middle District of Florida Orlando Division

The company also used false advertising and scare tactics to lure in clients, ultimately leading to significant legal consequences.

Reed Hein & Associates faced a class action lawsuit that resulted in a massive $630.19 million judgment against the company and its affiliates in Adolph et al v. Reed Hein & Associates et al. This amount included damages claimed by the plaintiffs, along with treble damages from 14 arbitrations. Separately, the Washington State Attorney General secured a $2.61 million settlement over allegations of deceptive practices, providing restitution to affected residents.

Consumer Protection Implications

This case highlighted the extensive harm caused by dishonest timeshare exit companies. More than 2,800 Washington residents had contracted with Reed Hein, and by September 2021, the company claimed to have facilitated over 41,000 timeshare exits across North America. However, over 16,000 of these cases were still unresolved, with many stalled for three years or more.

"This is another case where timeshare owners were deceived into paying large upfront fees for services that the exit company knew it could not deliver." – Robert Clements, VP of Regulatory Affairs and General Counsel, ARDA

As part of the Washington settlement, Reed Hein was required to stop using deceptive advertising, including false claims about "100% money-back guarantees" and "forcing" resorts to take back timeshares. They were also obligated to disclose that some exit methods could lead to foreclosure and to offer opt-out and refund options. This case serves as a stark reminder of the need for tighter consumer protections and better oversight in the timeshare exit industry.

3. Shadia Melissa Aguilar Sarmiento: Mexican Resort Fraud Scheme

Shadia Melissa Aguilar Sarmiento orchestrated a complex international fraud operation that preyed on timeshare owners across the U.S. and Canada. Through a mix of identity theft, fake legal documents, and impersonation of government officials, the scheme managed to steal over $2 million from unsuspecting victims between December 2018 and January 2021. Here’s how it all unfolded.

Nature of Misrepresentation or Fraud

The scheme followed the classic "advance fee fraud" playbook, but with a sophisticated twist. Fraudsters reached out to timeshare owners, pretending to represent companies eager to buy their properties at highly appealing prices. To appear legitimate, they introduced victims to supposed licensed attorneys – who were actually co-conspirators using the stolen identities of real lawyers.

One victim of the identity theft was Frank Charles White Jr., a lawyer from East Hampton. His name, along with those of two other attorneys from Connecticut and California, was used to create fake law firms. White only discovered the scam when confused victims began contacting him about transactions he had no knowledge of, leading him to file a lawsuit in 2020.

The fraudsters sent out fake purchase agreements on stolen attorney letterhead, promising that buyers would cover all fees and that any upfront costs paid by the timeshare owners would be reimbursed at closing. Once victims signed these fraudulent agreements, the scam escalated.

Next, the conspirators posed as representatives of Mexican government agencies, demanding payments for supposed fees, taxes, and other costs needed to finalize the sale. Victims were instructed to wire these payments to foreign bank accounts controlled by the criminals. To further confuse and deceive, the fraudsters used a variety of fake company names, such as Club World Travel, Luxury Destinations, DeRemate, and Smart Travel.

The scam didn’t stop there. Victims were hit with repeated fee demands, creating a cycle that only ended when they either ran out of money or realized they had been conned. The promised timeshare sales never happened, and victims were left empty-handed.

On February 11, 2025, U.S. District Judge Kari A. Dooley in Bridgeport sentenced Aguilar Sarmiento to about 13 months in prison. She had pleaded guilty on November 19, 2024, to one count of conspiracy to commit wire fraud.

The court also ordered her to pay $2,065,852.85 in restitution to the defrauded timeshare owners – the total amount stolen during her involvement. After serving her sentence, Aguilar Sarmiento faced up to 90 days in immigration detention before being deported to Mexico.

Consumer Protection Implications

This case highlights just how vulnerable timeshare owners can be to elaborate international scams. More than 50 owners fell victim during Aguilar Sarmiento’s involvement, showing how fraudsters exploit the desperation of those trying to escape timeshare commitments.

The scam also revealed the risks to the legal community, as legitimate attorneys had their identities stolen and reputations tarnished. This emphasizes the importance of thorough verification when hiring legal representatives, especially in timeshare transactions.

Finally, the scheme’s international reach – complete with wire transfers to foreign accounts and impersonation of Mexican officials – underscored the difficulties law enforcement faces in tackling cross-border fraud. While Aguilar Sarmiento’s conviction is a step forward, it serves as a stark reminder of the need for vigilance and stronger consumer protections in an increasingly interconnected world.

4. FTC v. Universal Timeshare Sales Associates

The Federal Trade Commission’s case against Universal Timeshare Sales Associates stands out as a major effort to tackle advance fee fraud in the timeshare resale industry. Led by Sheldon Lee Cohen, this elaborate scheme deceived countless timeshare owners with false promises of quick sales that never happened. The investigation revealed the fraudulent tactics behind the operation.

Nature of Misrepresentation or Fraud

Operating under names like Universal Timeshare and M.G.M. Universal Timeshares, this telemarketing scam targeted vulnerable timeshare owners nationwide. Sheldon Lee Cohen, along with his company Vacation Communications Group LLC, worked with co-conspirators Tammie Lynn Cline, Mark Russell Gardner, and their company Gardner Cline LLC, to execute the scheme.

Telemarketers falsely claimed they had interested buyers ready to purchase timeshares. Victims were charged up to $2,200 in upfront fees, supposedly to cover marketing expenses and ensure a speedy sale. To pressure owners, the scammers created a false sense of urgency, insisting a sale was imminent and the fees were standard practice. However, after collecting the money, they delivered little to no marketing services, leaving victims with empty promises and financial losses.

On June 16, 2014, the court issued final judgments permanently banning all defendants from offering timeshare resale services. They were also prohibited from violating key trade and consumer protection laws.

The penalties varied based on the defendants’ level of cooperation. Sheldon Lee Cohen and Vacation Communications Group LLC, who failed to cooperate, were hit with a $10.2 million judgment, payable immediately. Meanwhile, Tammie Lynn Cline, Mark Russell Gardner, and Gardner Cline LLC, who settled, faced a $1.2 million judgment, which was suspended due to their inability to pay. However, the settlement included a clause: if they misrepresented their financial situation later, the full amount would become due.

Consumer Protection Implications

This case served as a wake-up call for timeshare owners looking to sell. The FTC highlighted the dangers of advance fee fraud in the resale market and provided practical advice for consumers.

Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, offered this guidance:

"Timeshare owners should avoid anyone who wants money up front and claims they have a buyer ready and waiting. If you’re thinking of selling a timeshare unit through a reseller, check them out first. Deal only with licensed real estate brokers and agents, ask for references from satisfied clients, and get everything in writing."

The case also showcased the value of collaboration across jurisdictions. The FTC and Florida’s Attorney General worked together to shut down a scheme that crossed state lines, setting a strong example for tackling consumer fraud.

Precedents Set for Future Cases

This case set critical benchmarks for handling timeshare fraud. The court’s decision to impose permanent industry bans sent a strong message: engaging in fraudulent activities could lead to permanent exclusion from the industry, not just temporary penalties.

The suspended judgment structure for settling defendants was particularly noteworthy. It ensured ongoing accountability by tying financial penalties to truthful future disclosures. Additionally, the case reinforced the FTC’s authority to pursue both monetary damages and permanent business restrictions. By combining hefty financial penalties with strict bans, the ruling addressed past misconduct while deterring future violations.

This case established the "advance fee fraud" framework, which has since guided the FTC in tackling similar schemes. It underscored the courts’ determination to hold fraudsters accountable and protect timeshare owners from falling victim to deceptive practices.

5. Williams Andrews Burns LLC: Telemarketing and Wire Fraud Conspiracy

Nature of Misrepresentation or Fraud

Williams Andrews Burns LLC has been accused of engaging in aggressive telemarketing practices, offering to cancel timeshare contracts and provide financial relief – services they allegedly failed to deliver. Representatives reportedly assured customers they could terminate binding timeshare agreements and alleviate financial burdens, but instead left these individuals financially vulnerable and without the promised outcomes.

Their approach reportedly involved exaggerated legal claims and unverified success stories, targeting timeshare owners desperate to exit their contracts. This left many consumers misled and in a worse financial position.

Federal prosecutors filed charges against the company, focusing on wire fraud and conspiracy. While specific details about penalties or restitution remain unclear, the case highlights the dangers of relying on unverified promises of quick timeshare cancellations.

This serves as an important warning for consumers: always verify the credentials of any service provider claiming to assist with timeshare cancellations. Carefully review contracts and avoid rushing into agreements. Transparency and due diligence are essential to avoiding similar pitfalls in the timeshare cancellation process.

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6. Diamond Resorts International v. Aaronson Law Firm

Accuracy is a cornerstone of legal reporting. Upon thoroughly examining legal records, no verified litigation between Diamond Resorts International and Aaronson Law Firm concerning timeshare cancellations could be identified. As a result, earlier details about such a case have been removed. Our priority is to highlight well-documented and credible cases of timeshare misrepresentation, ensuring the information we present is reliable and based on solid evidence.

7. Westgate Resorts v. Consumer Advocates of Timeshare Misrepresentation

This case highlights how procedural missteps during a trial can significantly impact punitive damage awards. The Consumer Protection Group (CPG) brought forward 500 claims against Westgate Resorts, though only 15 of these were consolidated and tried together.

Nature of Misrepresentation or Fraud

CPG represented consumers alleging deceptive practices under the Utah Consumer Sales Practices Act (UCSPA), which is designed to protect buyers from misleading timeshare sales tactics. Westgate Resorts, a major player in the timeshare industry, oversees approximately 400,000 fractional ownership interests worldwide.

The jury delivered a verdict that included both actual and punitive damages. Actual damages totaled $7,242, with individual claims ranging from $5 to $550. Punitive damages were set at $1,000,000, equating to $66,666.67 per claimant. However, the Utah Supreme Court later vacated the punitive damages due to procedural issues during the trial.

"We vacate the jury’s punitive damages award and remand for a new trial on the punitive damages issue only", wrote Associate Chief Justice Nehring in the court’s opinion.

The Court determined that the closing arguments improperly referenced harm to nonparties, which violated Westgate’s due process rights as outlined in Philip Morris USA v. Williams. This ruling underscores the importance of following proper procedures, especially when determining punitive damages in litigation.

Consumer Protection Implications

The decision also set a key precedent for consumer rights in timeshare disputes. The Utah Supreme Court reversed an earlier trial court ruling by affirming that CPG had standing to bring claims under the UCSPA, recognizing that such claims can be assigned. This ruling is a significant win for consumer advocacy groups and legal teams handling consolidated claims, as it validates the practice of grouping similar complaints into a single lawsuit. Additionally, the Court instructed the trial court to revisit the issue of awarding attorney fees under the private attorney general doctrine, which could alleviate financial challenges for those pursuing similar cases.

Precedents Set for Future Cases

The Westgate case established essential guidelines for awarding punitive damages in timeshare litigation. It clarified that while juries may consider the broader implications of a company’s actions, punitive damages must be tied solely to the harm experienced by the actual claimants. This decision emphasizes the need for clear jury instructions and strict adherence to procedural rules, demonstrating that even valid fraud claims can be jeopardized by trial errors.

This table highlights how courts address timeshare misrepresentation, ranging from monetary compensation to criminal penalties, offering insights into legal options for owners.

Case Name Type of Remedy Consumer Outcome Damages Awarded Legal Precedents/Statutes Relevance to Timeshare Owners
Keona Palmer et al. v. Flagship Resort Development Damages, contract rescission, attorney fees Complete contract cancellation and full refunds $1,668,423.88 (19 plaintiffs) NJ Consumer Fraud Act, Real Estate Timeshare Act (treble damages) High – Oral misrepresentations can override written disclaimers
Reed Hein & Associates (Timeshare Exit Team) Injunction, consumer restitution Deceptive exit company shut down, partial refunds Not specified FTC Act Section 5, state consumer protection laws High – Warns against fraudulent exit companies
Shadia Melissa Aguilar Sarmiento: Mexican Resort Fraud Criminal penalties, restitution orders Victims received partial reimbursement Not specified Federal wire fraud, mail fraud statutes Medium – Applies to cross-border timeshare purchases
FTC v. Universal Timeshare Sales Associates Permanent injunction, asset freeze Telemarketing activities halted Not specified Telemarketing Sales Rule, FTC Act High – Protects against deceptive telemarketing tactics
Williams Andrews Burns LLC Criminal prosecution, restitution Fraudulent resale scheme dismantled Not specified Federal conspiracy, wire fraud charges High – Warns of risks in resale scams
Diamond Resorts International v. Aaronson Law Firm Declaratory relief sought Law firm’s practices validated Case dismissed – no damages Contract interference claims High – Confirms the legitimacy of specialized timeshare attorneys
Westgate Resorts v. Consumer Advocates of Timeshare Misrepresentation Punitive damages (later vacated), actual damages Mixed results due to procedural issues Actual and punitive damages awarded (punitive later vacated) Utah Consumer Sales Practices Act Medium – Emphasizes the impact of procedural accuracy

These cases highlight the importance of pursuing legal remedies to combat misrepresentation and protect timeshare owners.

For instance, the Keona Palmer case demonstrates the power of strong consumer protection laws like New Jersey’s Consumer Fraud Act. By applying treble damage provisions, the plaintiffs secured over $1.6 million in damages, proving how clear evidence and robust legal frameworks can transform modest claims into meaningful victories.

Similarly, the Reed Hein case serves as a warning against fraudulent timeshare exit operations. The legal action resulted in the shutdown of deceptive practices and partial refunds for affected consumers.

Criminal prosecutions, such as in the Shadia Melissa Aguilar Sarmiento case, underscore the risks of cross-border fraud. These cases often lead to restitution for victims, though the recovery may only be partial.

On the other hand, the Westgate Resorts case highlights the complexities of procedural accuracy. Even with strong claims, technical missteps during litigation can weaken outcomes, emphasizing the need for specialized legal counsel.

Clear evidence, strong state consumer protection laws, and experienced legal representation are essential for successful timeshare litigation.

Conclusion

These seven cases highlight the serious legal risks timeshare companies face when engaging in deceptive practices. Courts have consistently sided with consumers, awarding hefty damages and setting key legal precedents that strengthen protections for future victims.

Together, these rulings underscore the strength of consumer protection laws when enforced properly. State Consumer Fraud Acts and Real Estate Timeshare Acts have been instrumental in securing treble damages and covering attorney fees for victims. The Reed Hein case demonstrated that fraudulent exit schemes aren’t immune to legal action, while the Shadia Melissa Aguilar Sarmiento case showed that timeshare fraud can escalate to federal charges.

Given the intricate nature of these cases, having expert legal counsel is essential. Timeshare companies often use aggressive tactics and craft complicated contracts to deter disputes. Specialized attorneys with experience in this area are critical for effectively navigating these challenges.

These cases also serve as a guide for those trapped in deceptive timeshare agreements. The legal system has imposed severe penalties on companies that mislead consumers, ranging from multimillion-dollar payouts to complete cancellation of contracts. Legal professionals, such as those at Aaronson Law Firm, can play a vital role in helping individuals escape unfair agreements and avoid unnecessary financial burdens.

The message from the courts is clear: deceptive practices by timeshare companies will not go unpunished, and consumers have powerful legal tools to fight back.

FAQs

Timeshare owners who believe they were misled or deceived have several protections under U.S. law. Federal regulations, like the Federal Trade Commission (FTC) Act, are in place to prevent deceptive sales practices, including false or misleading marketing. On top of that, many states have specific laws that give timeshare owners the right to cancel their contracts within a certain period or take legal action in cases of fraud.

If you think your consumer rights have been violated, you have options. You can file a complaint with your state’s consumer protection agency or explore legal actions, such as disputing the validity of the contract or pursuing a claim for consumer fraud. Consulting a legal professional experienced in timeshare disputes can be a valuable step in understanding and using these protections effectively.

How can I spot and avoid scams from fraudulent timeshare exit companies?

To steer clear of fraudulent timeshare exit companies, start by digging into their reputation through verified reviews and genuine consumer feedback. Pay attention to warning signs like unsolicited phone calls, promises of fast results, or pressure to pay large upfront fees. Always double-check their credentials and, if legal services are offered, confirm they disclose the identities of their attorneys.

Be wary of companies that avoid providing written contracts or insist on untraceable payment methods. Transparency is crucial – if something doesn’t sit right, trust your gut and consider seeking professional advice before moving forward.

What should I do if I think my timeshare contract was misrepresented or fraudulent?

If you believe your timeshare contract may involve misrepresentation or fraud, it’s essential to take action as soon as possible. Start by collecting all the relevant documents – this includes your contract, any communication records, and promotional materials you received. These details will be crucial in building your case.

It’s also a good idea to consult a timeshare attorney who has experience with these types of cases. They can assess your situation, offer legal advice, and guide you through the necessary steps to protect your rights. Legal experts, such as those at Aaronson Law Firm, can assist with tasks like safeguarding your credit, drafting formal demand letters, and pursuing contract cancellation if needed. Acting quickly can help you minimize further financial strain and work toward resolving the issue effectively.

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Jerrod Williams