CORONA — The state Department of Real Estate said Tuesday that it had suspended the real estate license of Glen Ivy Properties--the nation's largest time-share operator--for a range of infractions including incomplete record-keeping on customer accounts.
However, Glen Ivy paid $20,000 in penalties--the maximum fine allowed under state regulations--and agreed to five years of probation in order to have the suspension lifted. Should the company be accused of further infractions of most any kind through mid-1996, its license could be suspended without a court hearing.
"We've never to my knowledge, in the 16 years I've been a regulator, had a five-year stay" of probation, said Robert McCabe, the real estate department's regional manager in Northern California.
Glen Ivy officials said Tuesday that the company agreed to the settlement without admitting any liability.
"Litigating these issues would have been far costlier in terms of management time and legal fees than agreeing to this settlement," Glen Ivy Chairman Ralph Mann said in a written statement. "We have always chosen to cooperate with the Department of Real Estate, even when--as in this matter--we differ with their interpretations of laws or regulations."
In a 25-page complaint filed in May, the Real Estate Department accused Corona-based Glen Ivy of depositing buyer down payments in bank accounts considered unacceptable to the state, permitting non-authorized personnel to make withdrawals from some accounts and failing to keep customer-account records in accordance with state laws.
Nonetheless, the state said it was unaware of any customers losing money because of the infractions.
Glen Ivy's parent corporation--Glen Ivy Financial Group--is still the subject of an inquiry by the California attorney general's office, which is looking into the telephone sales practices of the company and its contractors.
The inquiry began earlier this year after a Culver City man was promised a Cadillac or $25,000 in cash by a telephone solicitor--who was employed by a Glen Ivy contractor--even though he had won neither.
"We are still certainly looking very carefully at the operation," Herschel Elkins, senior assistant attorney general in Los Angeles, said Tuesday.
Glen Ivy has 18 resorts in seven states, including California. The company and its related subsidiaries employ 1,600 people and posted a 1990 profit of $5 million on revenue of $122 million. Glen Ivy is unrelated to Glen Ivy Hot Springs, a Corona-based spa.
Despite its regulatory run-ins, Glen Ivy announced Tuesday that a consortium of companies and individuals--including weight-loss maven Jenny Craig and Los Angeles investment banker Michael E. Tennenbaum--have agreed to invest $15 million in the company.
"We put them through a real series of hoops before we were willing to part with our money," said Tennenbaum, vice chairman of investment banking at Bear, Stearns & Co. Inc. Tennenbaum has invested in Glen Ivy with his own money.
Tennenbaum said a team of fact-finders hired by the three companies that make up the consortium concluded that Glen Ivy's regulatory problems were the fault of a few mid-level executives and not that of top management.
"A number of the (mid-level) executives weren't concerned about the complex regulations they do business under and we are going to change that part of the culture," Tennenbaum said. "The people who are investing are fairly visible and don't want to get involved in controversy and difficulty."
A spokesman for Jenny Craig declined to comment. "It's strictly a private investment," he said.
Glen Ivy--whose California properties are in towns as varied as San Luis Obispo and Laguna Beach--announced Tuesday that it has acquired two new resorts, one in Las Vegas and another in South Lake Tahoe.
Glen Ivy's settlement, reached earlier this month, did not address a series of questionable classes held at its Newport Beach and West Covina sales sites that were supposed to prepare employees for the state real estate exam.
The Times reported in June that some current and former Glen Ivy employees claimed they received completion certificates for a 45-hour course required by the state after attending a two-hour presentation. One employee, who received a grade of A, said all she did was fill out a few forms.
On Tuesday, Glen Ivy officials said a Santa Monica lawyer hired by the company had concluded that the classes "may have violated Department of Real Estate guidelines," but that the classes were held without the knowledge of senior executives. The company said a copy of the lawyer's report was being forwarded to regulators there.
Glen Ivy officials said attorney Frank Vaughan found that the classes were entirely the work of employees, acting without the company's knowledge.