Legal Ethics

Timeshare operator's suit claims company acts as illegal referral service for law firms

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Brian Kinney/

A time-share operator contends in a federal lawsuit that two law firms and a company called Timeshare Exit Team are interfering with its contractual relationships with vacation owners.

The suit (PDF) filed Tuesday by Welk Resort Group claims the Timeshare Exit Team tries to induce vacation owners to breach their contracts and payment obligations to Welk while steering the owners to pay $5,000 or more to the exit team and the law firms. A press release is here.

The suit says the Timeshare Exit Team markets itself through radio and internet ads as a consumer protection firm that will dissolve consumers’ timeshare contracts safely, legally and forever.

According to the suit, the Timeshare Exit Team uses the ads to develop leads that it sells to lawyers and law firms in violation of California laws barring nonlawyers from obtaining business for compensation and without registering as a lawyer referral service.

“Timeshare Exit Team and their cadre of attorneys then conspire to send bare-bones, generic, one-page attorney demand letters to Welk,” the suit says.

“Welk is further informed and believes that the owners are often not even aware that they are ‘represented’ by these law firms, and that they are not even aware of, much less consent to, the trivial, one-size-fits-all letters being sent,” the suit adds.

“On information and belief,” the suit also says, “the law firms conduct little to no investigation of any Welk owner’s purported dispute; they have little to no direct contact with most of the Welk owners that they purport to represent; and instead they are simply acting at Timeshare Exit Team’s direction in return for a slice of the fee.”

The suit claims the Timeshare Exit Team passes its leads to “a rotating band of attorneys and/or law firms,” but names only two law firms as defendants: The Ken B. Privett firm of Pawnee, Oklahoma, and Schroeter Goldmark & Bender of Seattle.

The suit alleges intentional interference with contractual relations, civil RICO violations, unfair competition, violation of California referral service laws, and violation of California’s “running and capping” law that bars the solicitation of business for law firms by nonlawyer agents. The suit also alleges false advertising and violation of California’s timeshare law by the Timeshare Exit Team.

The Ken B. Privett firm didn’t immediately respond to messages requesting comment. Brandon Reed, founder and CEO of Timeshare Exit Team, issued a statement saying he first heard about the lawsuit through a Welk press release. “We would also like to inform consumers that the meritless lawsuit and inaccurate accusations therein will not dissuade our team from continuing to advocate for consumers,” Reed said.

“Timeshare Exit Team has built an unparalleled in-house team, leveraging effective outside resources as needed, to assess each customer’s unique situation and to provide them with qualified, thorough, and trusted management of their issues.”

Schroeter Goldmark & Bender issued this statement: “Welk’s lawsuit against our firm is completely without merit and appears designed to scare consumers and their lawyers from standing up for what is right. We will not be so dissuaded. For decades, our firm has represented individuals against powerful companies who take advantage of consumers and the public at large. Contrary to the allegations of this lawsuit, we are actively litigating a number of matters against Welk. In fact, together with our California co-counsel, we filed three cases against Welk on behalf of consumers in San Diego County for misrepresentations we allege the company made in timeshare presentations. These lawsuits were filed last Friday; Welk filed its frivolous lawsuit against SGB three business days later. We will continue to fight for consumers and will not be distracted by baseless accusations.”

A lawyer for Welk Resort Group, James Godes, said through a spokesperson that Welk “has not been served with these supposed lawsuits from SGB, and therefore cannot comment on them.”

“If these purported lawsuits originate from Timeshare Exit Team and their alleged fee-splitting arrangement with different law firms, we can only assume they are part of the same alleged nationwide racketeering scheme,” the Godes statement said. “We will soon learn the full extent of TET’s reach, and will likely be adding any and all willful co-conspirators we find in discovery.”

Hat tip to Law360.

Updated at 1 p.m. to include the response by a representative for the Timeshare Exit Team. Updated at 1:55 p.m. to include response by a lawyer for Welk Resort Group.

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