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Executives of a Sanford, Fla., motorcoach manufacturer are being sued after allegedly setting up a new company and selling $8 million worth of time shares before the whole thing collapsed two years ago, leaving buyers with $7 million in losses, according to court documents.
The Orlando Sentinel reported that the company, Universal Luxury Coaches LLC, is now in the hands of a court-appointed receiver, who is suing the founders and managers to recover money for investors. The receiver contends the company was a pyramid scheme that paid early investors with money from newer ones.
Two executives are awaiting trial on charges of fraud and racketeering: Universal Luxury Coaches’ former president, Scott Spor, 49, of Altamonte Springs, and James P. Hollis, 65, of Satellite Beach, its vice president of marketing.
Both men contend they are innocent, victims of good intentions gone bust. Investors, though, say someone should go to prison.
“They hooked me,” said Joe Bussert, 84, of Winter Haven, who lost $12,000. He is one of 172 buyers – average age 72 – who lost money in the venture, according to the Florida Office of Financial Regulation.
According to the Sentinel, people who bought in were offered far more than a week’s vacation in a fancy motorcoach. They would get a 10% return on their investment every year, and at the end of three years, a full refund on request, according to the sales materials.
Dexter Busching, 86, of Hernando cashed out a certificate of deposit to plow $65,000 into the deal. That’s because CDs don’t pay anything close to 10% interest, he said.
“This is my life savings, practically,” he said.
At first, everything worked the way it was supposed to, Busching said. He received several monthly checks, but then they stopped coming.
“That’s been over three years ago,” Busching said. When the checks stopped, state regulators sent an investigator to the company’s office in Sanford. When she visited in September 2004, the office was empty and closed.
Company officials later told the investigator that Universal no longer had any employees and had just $89 in the bank, according to court records.
The company receiver, Gary Lipson, contends the time-share plan started as an idea to relieve a business bind at Featherlite Inc., a manufacturer of trailers and motorcoaches. In 2001, Featherlite’s stock price was languishing. It also had too many unsold luxury coaches and looming credit problems, according to court pleadings.
Spor, the only company executive who commented directly to the Orlando Sentinel, was a business consultant at the time. He said he advised Featherlite president Conrad Clement, an Iowa businessman, that he could boost sales by creating a time-share program. No one had done such a thing before.
Featherlite’s board of directors rejected the idea. But Clement, Spor and other Featherlite insiders moved ahead, according to court pleadings. They launched Universal from space Featherlite was leasing in Sanford. Clement was chairman and put up the seed money, $257,000, according to court records. Spor was president.
Two of Clement’s sons, Tracy Clement, 40, and Eric Clement, 37, already executives of Featherlite, also were officers of Universal.
Those people and other Featherlite insiders made money from Universal, according to the receiver. Conrad Clement, 62, got back his initial investment plus $132,000 in consulting fees, according to court records.
Spor said he made less than $100,000.
Lipson filed suit in July against each of them and Featherlite, accusing them of defrauding time-share investors to prop up Featherlite and its stock price.
Lawyers for Featherlite, in their court pleadings, say the company was not responsible for what went on at Universal.
According to Spor, the company plan was to sell time shares until it had money to buy a coach from Featherlite. The coach then would be leased to a corporation or another third party, earning money to pay investors their 10% return.
Universal set out to buy 20 coaches. It wound up buying six, and its rental program never produced enough revenue. The company’s total rental income, in two years of operation, was $400,000, according to court records.
At the same time, sales agents and managers would pocket 25 cents of every dollar in sales commissions, according to the receiver. In the case of Busching, the investor who wrote a $65,000 check, commissions ate up $16,250.
Hollis, Universal’s former vice president of marketing, earned an estimated $149,000 in commissions during one six-month period, according to court records.
Now awaiting trial on the criminal charges, Hollis would not be interviewed by the Sentinel. His attorney, Harrison “Butch” Slaughter, said his client thought he was involved in a legitimate business.
Spor, who also is awaiting trial on criminal charges, said he defrauded no one. His business plan was valid, he said. If state regulators had left him alone, he says, Universal would have worked through its early cash-lean months.
“Because of all of this, I’ve lost everything,” Spor said. “I can’t get a decent job. We’re living in an apartment.”
Both Slaughter and Spor said it was Conrad Clement who, behind the scenes, ran Universal. Reached by phone at his office in Cresco, Iowa, Clement would not comment.
Clement’s sons were not available for comment, but in court pleadings they said they were not involved in Universal’s time-share sales.
Three months after Universal’s receiver sued on behalf of time-share buyers, Conrad Clement sold Featherlite to a Cincinnati corporation for $109 million. He opted to keep the Sanford operation that manufactures luxury coaches.
He, son Tracy Clement and another investor are now its owners. The operation employs 300 people, according to a company press release.
“Tracy and I are very excited to be heading up this new company,” Conrad Clement said in a statement. “We look forward to continue to offer luxury coach customers all across North America the same superior products and services that are synonymous with the Featherlite name.”