Two former officers and a former employe of Seatime Associates, a time-sharing condominium firm in Ocean City, were indicted today on charges of defrauding nearly 1,000 customers of nearly $1.4 million. Most of the customers were from the Washington and Baltimore area.
Indicted by a Worcester County Grand Jury were Kenneth F. Puckett, 49, Seatime's former president; Warren J. Rowe Sr., 59, its former secretary-treasurer, and Peggy J. Kelly, a former employe.
Puckett and Rowe were accused of misappropriating money paid by purchasers for time-share intervals in Seatime's two buildings in Ocean City. Puckett also was accused of counterfeiting deeds that purported to transfer title to six time-share units to Seatime. Kelly was accused of filing the phony deeds in the office of the clerk of the Worcester County Circuit Court.
In the type of time sharing sold by Seatime, a customer buys a fractional interest--usually a week or two--in a resort condominium on a long-term basis. For the investment, the buyer then receives a deed for his or her share of the property.
Seatime marketed vacation time in 54 of the 100 condominium units in the two buildings for prices ranging from $2,000 to $8,000 a week, depending on the location of the unit in the building and the time of year the consumer wanted to occupy it. But Seatime actually had purchased only 29 of those units.
Maryland Attorney General Stephen H. Sachs said the money collected from the investors in Seatime was supposed to be held in an escrow account until the deed was delivered, and was to be returned if the deed wasn't forthcoming. However, no money ever was put into an escrow account. And instead of using the funds to acquire the units they had sold, Puckett and Rowe used them for "elaborate" marketing expenses, Sachs said.
The indictments were announced by Sachs and Worcester County State's Attorney B. Randall Coates. Sachs said that Puckett and Kelly were arrested today in St. Petersburg, Fla., and would be returned to Maryland within a week. Bond will be set at $100,000 each. Rowe, who stayed in Maryland and who has cooperated with the investigation, surrendered today. The state will recommend that he be released on his own recognizance.
The investments of most of the 1,200 to 1,500 purchasers of Seatime time-share intervals were saved last December when the state Real Estate Commission approved a $900,000 payment from its $1.25 million Real Estate Guaranty Fund to obtain clear title to the condominium units they invested in. The money was used to acquire ownership of condominium units and retire mortgages that were close to foreclosure. According to state officials, this allowed buyers who hadn't received recorded deeds to obtain clear title to their time-share intervals.
That left 200 remaining consumers whose time-share investments were endangered. These were consumers who bought time-share intervals that were sold two or more times, who bought into units that Seatime didn't even have a contract to buy, or who purchased share of units in the neighboring Oceantime condominium, which was not owned by Seatime.
Sachs announced today that Worcester County Circuit Court Judge Dale Cathell had approved a final plan designed to resolve their outstanding claims. Under the plan, the owners of the Oceantime condominium have agreed to try to accommodate the purchasers who unwittingly bought intervals in Oceantime units that Seatime didn't own or the intervals in Seatime already sold to another buyer. If they can't be accommodated, their purchase money will be refunded, Sachs said.
According to the attorney general, the owners of Oceantime, Morton Owrutsky and E. Dean French, agreed to buy the unsold inventory of intervals, or weeks, in the Seatime buildings for up to $250,000 to provide partial restitution to the Real Estate Guaranty Fund. The fund, supported by fees collected from real estate brokers, is used to compensate consumers victimized by fraudulent real estate practices.