Defunct Fitness Center Sued For Refunds

Attorney General Spitzer today announced a lawsuit against a defunct Erie County health club to obtain refunds for consumers who paid in advance for memberships.

Niagara Fitness Lancaster, Inc. and its operators Walter Mikowski, David Willard, Laura Willard and Christopher Buchnowski were served with a lawsuit alleging they engaged in deceptive business practices and fraud, and failed to comply with the state's Health Club Services Act.

"My office will continue to take aggressive action against operators of health clubs that do not protect their members' advance payments when they fail to post the legally-required performance bond," Spitzer said.

After opening in the autumn of 2000, Niagara Fitness Lancaster abruptly closed in January 2004 following a dispute among its operators.

After receiving numerous complaints from members who had prepaid annual membership dues, Spitzer's office commenced an investigation. This probe revealed that the operators of Niagara Fitness Lancaster falsely represented to consumers that it was properly bonded as required by law.

In fact, the operators of Niagara Fitness Lancaster had posted a separate performance bond for a similarly named, but legally independent fitness center operated on Military Road in Niagara Falls. It was this performance bond that they falsely represented as covering membership dues paid by consumers for their health club in Lancaster.

When it closed without notice Niagara Fitness Lancaster left as many as 1,400 members without health club services, without refunds and without a performance bond from which they could obtain monetary relief.

In filing the lawsuit, Spitzer's office is seeking consumer restitution, civil penalties and costs.

New York State law requires that most health clubs post a performance bond to protect their members against breaches of contract. Specifically, the law requires bonds in the following denominations: $50,000 for health clubs that sell contracts for no more than 12 months; $75,000 for health clubs that sell contracts of one to two years; and $150,000 for health clubs that sell contracts of two to three years. Health clubs with multiple locations are required to post additional amounts up to $200,000.

Since 1999, the Attorney General's office has intervened in twelve instances when a health club failed to post a bond and then abruptly closed or a facility accepted advance deposits prior to opening to the public and then failed to open. Through enforcement actions, the office has obtained nearly $255,000 for more than 3,000 consumers who otherwise would have been left empty-handed due to their health club's failure to protect their customers' advance payments.

Individuals wishing to file a complaint against Niagara Fitness Lancaster are encouraged to visit the Attorney General's website at www.ag.ny.gov for a complaint form or contact the consumer help line at (800) 771-7755.

This case is being handled by Assistant Attorney General James Morrissey of the Buffalo Regional Office.

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