ARTESIA — When health-happy Carmen Graham heard that her club, Fitness for America, closed here without warning last month, she was more disappointed than surprised.
It had been the fifth club that the 39-year-old welfare worker had belonged to in five years, and each had offered convenience, state-of-the-art equipment and a smiling staff at a bargain price. What each delivered was a string of broken promises, and, in the end, Fitness for America was no different.
"Sure, I'm out $50. But it's not the money that really gets me," said Graham, a Cerritos resident who takes aerobics classes three or four times a week. "It's the fact you bounce from club to club because they keep closing. Can't anyone run a clean, stable operation?"
Hundreds of Fitness for America members probably have pondered the same question since owner Billy Wong shut down the popular health club on Father's Day.
For the Record
Los Angeles Times Thursday August 15, 1985 Home Edition Long Beach Part 9 Page 4 Column 2 Zones Desk 2 inches; 71 words Type of Material: Correction
In a July 11 story about the closure of the Fitness For America Club in Artesia, The Times reported that the owner of the club was Billy Wong. He was also identified as the owner of two health clubs in Orange County that were closed in mid-June. In fact, the clubs were owned by a corporation, Irvine-based Fitness For America Inc. Wong is identified as president of the company, according to the state Department of Corporations. Wong does not have an ownership interest in the company, according to his lawyer.
The club's aerobics coordinator, Mary Lou Wollum, estimates that 2,500 people paid a minimum of $50 to join the Artesia club. Spread across 18,000 square feet in the warehouse-like gym were racquetball courts, weight rooms, Jacuzzis, locker rooms and a juice bar that served citrus quenchers as well as beer and wine.
"It had all the amenities a health-conscious person needed," Wollum said.
But on June 17, the doors to Fitness for America (along with two other clubs Wong operated in south Orange County) were locked for good. Police and club employees estimate 13,000 people were left holding worthless memberships to the clubs.
Complaints from steamed customers and unpaid staff members soon followed, prompting at least one agency, the Irvine Police Department, to launch an investigation. No charges have been filed.
"If Mr. Wong knew his businesses were about to close, but continued to solicit memberships and collect fees, that would be fraud, and then we could go to the (district attorney's office) and seek a complaint," said Irvine police Sgt. Leo Jones, adding that his department is looking primarily at the closure of Wong's Irvine Nautilus and Aerobic Center, a 10,000-square-foot gym on Irvine Boulevard with 8,500 members.
"We don't know if Mr. Wong was a victim of poor business practices or a victim of the economic times," Jones said. " . . . at this point, it's very muddy."
A similar facility in El Toro and the Artesia spa are under the jurisdiction of sheriff's departments in Orange and Los Angeles counties, and neither agency has begun a formal investigation. A spokesman for the Los Angeles Sheriff's Department said the agency has received complaints but has not decided whether to pursue an investigation.
Despite repeated attempts, neither Wong nor his Los Angeles attorney, Tom Kontos, could be reached for comment.
The Los Angeles County Department of Consumer Affairs as well as Better Business Bureau offices in both counties have received numerous complaints about Wong's clubs.
Orange County resident Steve Best, who was only about eight months into a $170, two-year membership with the Irvine club, said he and and about 50 other members are considering a class-action suit against Wong.
"It's extremely difficult once a club closes to prosecute because usually the owner disappears," said Diane Kadletz of the consumer-protection unit in the Orange County District Attorney's office. "And even if they file bankruptcy, it's difficult to recover any money, because the guy is out of money. Restitution in these cases is rare."
To protect consumers in an industry that is one of the least regulated in the state, the state Legislature is considering two bills. One bill, authored by Cathie Wright (R-Simi Valley) would require owners of unopened clubs to place any advance memberships into trust or escrow accounts.
The second bill, sponsored by Sen. Joseph Montoya (D-Los Angeles), would require spa operators to deposit a portion of all fees into a statewide pool that would be used to reimburse members of clubs that close.
Consumer and police fraud experts say Wong's clubs fit a troubling pattern in the health club industry. Eager entrepreneurs, moving to capitalize on the nation's health craze, have saturated the marketplace, leading to a price war and eventually the demise of many neighborhood gyms.
"It doesn't take much to open a club--buy a few gym mats, lease a few weight machines and string a banner across the storefront that reads: '3 years for $85,' " said Timothy Bissell, chief investigator for the Los Angeles County Consumer Affairs Department.
"The problem is you can't run a business on $85 every three years," he said. "Or $100, or even $150 every three years. At first there's all kinds of money. But sooner or later there is a cash-flow problem, and finally the owner goes broke and the spa goes under or it changes hands. The loser is the member, who has little or no recourse."