UNITED STATES DISTRICT COURT Miami Division CASE NO. 11-21757

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

Miami Division

CASE NO. 11-21757-CIV-MARTINEZ/MCALILEY

FEDERAL TRADE COMMISSION, and STATE OF FLORIDA, OFFICE OF THE ATTORNEY GENERAL, Plaintiffs, v. VGC CORPORATION OF AMERICA, a Florida Corporation, also d/b/a All Dream(s) Vacations, All Dreams Travel, Five Star(s) Vacations, 5 Star(s) Vacations, Total Tours, and Travel & Tours Corp., ALL DREAM VACATIONS CORP., a Florida Corporation, also d/b/a All Dreams Vacations, VIOLETA GONZALEZ, a/k/a Violeta Rojas, individually, and as an officer of VGC Corporation of America, CESAR A. GONZALEZ, individually, and as an officer of VGC Corporation of America, SAMIR JOSE SAER RODRIGUEZ, a/k/a Samir Saer, individually, and as an officer of VGC Corporation of America and All Dream Vacations Corp., Defendants. ______________________________________/

RECEIVER’S FIRST INTERIM REPORT Jonathan E. Perlman, Esq., the receiver appointed by this Court by Order dated May 16,

2011 (the “Order”) [DE 16], files this First Interim Report to describe his investigation thus far

Case 1:11-cv-21757-JEM Document 50 Entered on FLSD Docket 06/07/2011 Page 1 of 34

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and to detail his progress toward completing the tasks assigned by the Court, including

identification of relevant assets and tasks yet to be completed.

I. BACKGROUND

1. On May 16, 2011, the U.S. Federal Trade Commission (“FTC”) and the State of

Florida, Office of the Attorney General, commenced this action by filing a complaint for

permanent injunction (the “Complaint”) and a motion for a temporary restraining order and other

equitable relief alleging that Violeta Gonzalez, Cesar Gonzalez, and Samir Saer Rodriguez

(“Saer Rodriguez”) (collectively the “Individual Defendants”), through VGC Corporation of

America also d/b/a All Dream(s) Vacations, All Dreams Travel, Five Star(s) Vacations, 5 Star(s)

Vacations, Total Tours, and Travel & Tours Corp. (“VGC”) and All Dream Vacations

Corporation also d/b/a All Dreams Vacations (“All Dreams”) (collectively the “Receivership

Entities”) (together the Individual Defendants and Receivership Entities shall be referred to as

the “Defendants”), violated and were likely to violate Section 5(a) of the FTC Act, 15 U.S.C. §

45(a) and the Florida Deceptive and Unfair Trade Practices Act, Chapter 501, Part II, Florida

Statutes (2010). [DE 3, DE 5].

2. The Complaint alleges that since at least 2008, Defendants have been engaging in

deceptive and abusive marketing practices that trick consumers into believing they won a prize,

and further deceiving them into paying money to claim the prize that few consumers ever

receive. Through the use of television and radio advertisements on Spanish-language stations

throughout the country, Defendants promise a fabulous vacation package as a prize to certain

“lucky” callers who are winners. Defendants uniformly tell consumers who call the number

provided in the advertisements that they have won a vacation package, consisting of one or more

trips to popular destinations. Consumers are then told they must immediately pay a fee ranging


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from $200 -$400, in order to claim their prize. Sworn declarations from injured consumers and

former employees who describe Defendants’ wrongful acts, together with hundreds of

complaints against the Defendants, have been provided by the Plaintiffs in support of their

motion for temporary restraining order and other relief. The Plaintiffs allege that the Defendants

wrongful conduct has caused consumers to suffer as much as $12.5 million dollars in a little over

two years.

3. On May 16, this Court granted the Plaintiffs’ application for a temporary

restraining order with asset freeze against VGC, All Dreams and the Individual Defendants and

entered an Order freezing assets belonging to any of the Defendants, including but not limited to:

All Dream Tours, All Dreams Travel, All Dreams Vacations, Casa Vieja Miami, LLC; CFM

Group; Doral Travel Corporation of America; Five Star Corporation; Five Star Corporation of

America; Five Star Travel; Five Star Tours; Five Star Vacations; Globecom

Telecommunications, LLC; GNN Group Corp.; Hablale+; Hablalemas.Com; Hablalemas com;

Ichiban Group; Kool Tours; Leehock Corp.; Magic Tours; N&F Imports, Inc.; Por Fin En Casa,

Inc.; Puerto Rico Multiservices, Inc.; Rumba Tours; Saer Consulting Inc.; Saer Contractor Inc.,

S&F Import Corp.; Solozarno Enterprises; Total Tours; Trato Corp.; Travel and Tours Corp.;

Universal Tours, LLC; USA TV Compras Corp.; VES Consulting Corp.; VGC Natural Products

of America; VGC Restaurants, Inc,; VGC Telecommunications; VMC Corporation of America;

and Woody Wooding, Inc.

4. In that Order, the Court set a Preliminary Injunction hearing for May 20, 2011.

On motion of the Individual Defendants, the Court subsequently continued the hearing until June

6, 2011. [DE 29]. This Court subsequently continued the hearing to June 7, 2011. [DE 41].


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5. Also, in the Order, this Court appointed Jonathan E. Perlman, Esq., a shareholder

in the Genovese, Joblove & Battista law firm, as temporary receiver (”Receiver”), and directed

him to take control of VGC, All Dreams, and their affiliates, subsidiaries, divisions, and sales

operations. The Order further directs the Receiver, among other things, to take custody and

control of all assets and documents of the Receivership Entities, use any means necessary to take

possession of and to secure each and every business premises of the Receivership Entities,

conserve, hold and manage all assets of the Receivership Entities, and perform all acts necessary

to preserve the value of those assets, enter into contracts as necessary on behalf of the

Receivership Entities, prevent the inequitable distribution of assets, protect the interests of

consumers and creditors who have transacted business with the Receivership Entities, continue

to conduct the business of the Receivership Entities as the Receiver deems necessary or

appropriate to operate the business profitably and lawfully, issue subpoenas to obtain documents

and records pertaining to the receivership and conduct discovery on behalf of the receivership

estate, open bank accounts as designated depositories for funds of the Receivership Entities,

maintain accurate records of all expenditures made as Receiver, cooperate with reasonable

requests for information or assistance from any state or federal law enforcement agency,

including Plaintiffs, and file reports with the Court on a timely basis.

6. The Receiver immediately mobilized professionals to enforce and comply with

the terms of the Order. The following is a summary of the Receiver’s efforts since the inception

of the Receivership. This report contains preliminary assessments and findings which might be

subject to change as the Receiver and his professionals conduct discovery and continue to

investigate and analyze the financial and operational affairs of the Receivership Entities.


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II. IMPLEMENTATION OF THE RECEIVERSHIP ORDER

A. Execution of the Receivership Order and Layout of Doral Office

7. The Receivership Entities were believed to be located in three corporate offices

located in an office park in Doral, Florida. To effectuate this procedure as effectively and

efficiently as possible, it became apparent that this matter would require a staff of professionals.

The Receiver retained the services of Genovese Joblove & Battista, P.A. (“GJB”) as his legal

advisors. GJB has agreed to provide a 10% discount on its standard rates to the receivership

estate in addition to waiving certain usual and customary expenses. The Receiver utilized the

professionals contracted by the FTC to provide forensic computer services, including extracting

data from computer hard drive servers and work stations located on the premises. The Receiver

also obtained assistance from City of Doral police officers to enforce the peace and provide

security during the immediate access to the premises.

8. On the morning of May 17, 2011, the Receiver and his team of professionals

accompanied by the City of Doral police officers and representatives from the FTC and the State

of Florida, Office of the Attorney General, took possession of the shared offices of VGC and All

Dreams. The Receiver found that only a single suite, Suite 210 of the office building located at

3403 NW 82nd Avenue, Doral, Florida, was being actively used for business. The other two

suites appeared to be vacant.

9. The first room in the suite, prior to the sales offices, was an office with three

desks. From employee interviews and a review of documents there, the Receiver confirmed that

one desk was used by the employee who coordinates media purchasers. That desk contained lists

of media contacts including various local radio stations as well as invoices for advertising. Next

to this desk was a desk for the mail clerk. That desk contained stacks of newly stuffed envelopes


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with certified mail receipts affixed, containing brochures with the All Dreams logo and

describing a variety of vacation destinations.

10. Next to these two desks is a large reception desk. Through employee interviews,

the Receiver confirmed that this desk was used by one employee, Lorena Lopez, who handled all

consumer complaints. Stacks of consumer complaints were found on her desk, stacked 2-3 feet

high on the floor around her desk. The Receiver also found on Ms. Lopez’s desk stacks of

correspondence from merchant processors regarding credit card chargeback disputes.

11. The suite has two large open sales rooms, each containing approximately 20

cubicles with telephones and headsets, and various papers. The papers found in the typical

cubicle included a listing of zip codes identifying the location of incoming calls, company

memos from All Dreams listing commission schedules, sales scripts, and internal telephone

directory. The Receiver later confirmed through employee interviews that Defendants’ sales

agents used the cubicles to take incoming consumer calls in response to radio and television

advertisements.

12. Each of the large sales rooms contained, in addition to sales person stations, 1 - 2

large desks with their own telephones and computers. The Receiver confirmed from employee

interviews that these were the manager/verification desks.

13. At the end of the hall past the two sales offices is an administrative assistant’s

desk. Located at this desk was payroll and other employee information as well as some financial

records. A fax machine was also located here. The most recent fax received was a consumer

complaint in which the consumer lists 15 reasons why they cannot use their vacation package.

(Attached as Exhibit A). The fax machine contained numerous other freshly received complaints

as well. Through employee interviews, the Receiver confirmed that this desk belonged to


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employee Silvana Rossi. Ms. Rossi was contacted by telephone and asked to the office to

cooperate with the Receiver. Ms. Rossi refused to do so.

14. Immediately behind the sales offices there are three private offices, side by side,

belonging to each of the Individual Defendants, first Violeta Gonzalez’ office, then the office of

Samir Saer Rodriguez, then the office belonging to Cesar Gonzalez, the largest of the three

offices. The contents of these offices are discussed, infra.

15. The Receiver immediately changed the locks on the office suite. Since then,

access has been limited to the Receiver and his professionals. The Receiver, his team, and

representatives of the FTC and State Attorney General’s Office spent nearly two days reviewing

documents on the premises and securing all computers. The Receiver’s team also interviewed

employees and spoke to consumers who have showed up regularly at the Defendants’ offices

complaining about the Defendants and seeking assistance. Since the third day of the

receivership, a member of the Receiver’s team has accessed the premises daily to pick up mail,

assist consumers who arrive at the office, and aid in analysis of the Receivership Entities’ assets.

16. The Receiver ensured that forensic computer experts acted as quickly as possible

to shut down outside access to computer systems for each of the entities and the web sites for

VGC and All Dreams, including email access. The computer experts have created mirror images

of the hard drives and servers. In total, the Receiver is in possession of sixteen computers.

17. The morning the Receiver obtained immediate access to the premises of the

Receivership Entities, Yanira Saer (“Yanira”), sister of Defendant Saer Rodriguez, opened the

office as she typically did every morning along with either the media assistant, Dorys Rojas

(“Rojas”), or the Sales Manager, Rafael Garcia (“Garcia”). Yanira was very cooperative and


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called her brother, Saer Rodriguez, encouraging him to come to the office and meet with the

Receiver.

18. Within minutes of the Receiver’s arrival at the premises, Yanira began receiving

phone calls from sale agents and Garcia with concerns about there being police activity at the

office. The Receiver’s team learned that the building maintenance person had contacted the

Individual Defendants alerting them to the arrival of the Receiver and the police officers. One of

the Individual Defendants, in turn, must have then contacted Garcia.

19. The Receiver learned from Yanira that Garcia was contacting Defendants’

employees and instructing them not to go the office or otherwise cooperate with the Receiver.

Yanira confirmed this information by calling a number of employees. She called Garcia who did

not answer but eventually called her back. Counsel for the Receiver spoke to Garcia on the

phone and asked him to stop interfering as it was a violation of the Order and he could be held in

contempt. Counsel also asked him to come into the office and cooperate with the Receiver.

Garcia denied interfering and said he was going to speak with his lawyer. Garcia never called

back or came to the office. In fact, only 6 other employees showed up to work that first day of

the receivership, rather than the thirty (30) expected.

20. The Receiver’s team interviewed Yanira to gain an understanding of her job

function -- she was the mail clerk -- and that of the other employees in the office. She identified

each of the work areas and then identified by name the employee assigned to each desk or office.

During her interview, Yanira also provided an overview of the Defendants’ business model.

21. Through the interview with Yanira and upon examining the internal telephone

directory, the Receiver came to learn that an additional call center for the Receivership Entities is

located in Bogota, Colombia. The call center does business under the name Mega Call SAS


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(“Mega Call”). The registration records of the Bogota Chamber of Commerce reflect that Mega

Call is a duly authorized company formed in September 2010 in Bogota, Colombia by Defendant

Cesar Gonzalez.

22. The Receiver immediately advised the Mega Call center both by telephone and by

email -- using the direct dial telephone extensions and internal email addresses listed on the

company directory -- of the entry of this Court’s Order relating to the Receivership Entities and

specifically the directive to cease and desist contained therein.

23. The Receiver has retained the services of Esguerra Barrera Arriaga, as his legal

advisors in Colombia to, among other things, assist with confirming that the Bogota call center

remains closed, contacting the manager, Angel Saenz (“Saenz”) and securing relevant documents

and computer hard drives relating to the Receivership Entities. As of the date of this report, the

Receiver’s local counsel has secured the call center in Bogota. The Receiver learned that

telephone communications to Colombia under a 786 Florida area code number were

accomplished through the use of an offsite Voice Over Internet Provider (“VOIP”) company

which served the Receivership Entities. The Receiver ultimately stopped such calls, and has

demanded that the provider preserve all records relating to Defendants and Mega Call. The

VOIP provider reportedly maintains voice recordings of all telephone calls including, sales,

verification of sales, reservations and consumer service calls.

24. The Receiver also attempted to contact Defendants Violeta and Cesar Gonzalez

the morning he assumed control of the Receivership Entities. Yanira assisted by attempting to

reach Defendant Violeta Gonzalez by telephone, but the Defendant did not answer her calls.

Eventually, the Defendant called Yanira and spoke to the Receiver’s counsel. She was advised

of the Order and confirmed that she had been served with process earlier that morning. She


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further indicated, however, that she would not be coming to the office to cooperate with the

Receiver. In addition, she advised that her husband, Defendant Cesar Gonzalez was traveling

abroad and would also not be coming to the office to cooperate with the Receiver.1

25. Saer Rodriguez arrived at the offices later that morning. While there, Saer

Rodriguez received a phone call from Defendant Violeta Gonzalez, who, in the presence of the

Receiver and his counsel, emphatically demanded that Saer Rodriguez NOT cooperate with the

Receiver. Saer Rodriguez told Yanira he would be cooperating nonetheless. Saer Rodriguez

thereupon provided a lengthy interview to the Receiver and his team. A discussion of his

interview can be found in section III, infra.

III. The VGC/All Dreams Business Model

26. As part of his investigation into the business of the Receivership entities,

including whether he could continue their operations lawfully, the Receiver has familiarized

himself with company documents, including telephone and television advertisements, sales

scripts and voice recordings of sales calls. The Receiver also reviewed documents he obtained

from various desks in the shared offices of VGC and All Dreams and interviewed employees.

A. Defendants’ Advertisements

27. The Receiver viewed the Defendants Spanish language television advertisements

attached as Exhibit 1B in Volume I of the FTC’s Rule 65 Declaration of Counsel In Support of

Plaintiffs’ Ex Parte Motion For Temporary Restraining Order (the “Rule 65 Declaration”) [DE

7], listened to the recorded radio advertisement and translation attached as Exhibit 1C to the Rule

1 Later that day, Defendant Violeta Gonzalez called back and advised that she had contacted the “company’s attorney” and that he would speak with the Receiver. The Defendants attorney she was referring to is Miguel Armenteros, Esq. who is currently serving as counsel to Defendants Violeta and Cesar Gonzalez. The Receiver spoke to Mr. Armenteros that afternoon and the following morning, and scheduled an interview with his clients for the following day.


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65 Declaration, and listened to the sales manager, James Tahhan (“Tahhan”), perform the radio

announcements as he often did live on the air for the Defendants.

28. The Receiver confirmed that during the 60 second television advertisement, only

4 seconds are allotted for the presentation of a lengthy statement relating to timeshares sales that

likely could not be fully read and understood by the consumers watching the advertisement. The

Receiver also listened to the Spanish language radio advertisement and found that the timeshare

statement that is read by the announcer at the end of the advertisement is completely inaudible

and unintelligible.

29. Both the television and radio advertisements feature fast-talking announcers that

promise consumers fabulous vacations worth thousands of dollars as a “prize” if they are one of

the first callers to guess a simple trivia question correctly.

B. The Pitch to Call in Consumers Who Think They Might Have Won a Free Vacation

30. The Receiver has confirmed from the documents found in Defendant Cesar

Gonzalez’ office, including written sales scripts and audiotapes, that the Defendants were

advertising nationwide “contests” on Spanish language television and radio stations offering a

vacation package as a “prize” to “winning” callers purportedly limited to the first few callers

who correctly answer a specified question.

31. One sales script (attached as Exhibit B) guides sales agents in how to

misrepresent that consumers are participating in a contest and that they are “winners”.

32. At the bottom of the document is a notation that it was “revised 4/07/10”

suggesting that the sales script was regularly updated for distribution to the sales agents. Several

employees and Defendant Saer Rodriguez corroborated this. Several scripts reviewed by the


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Receiver’s team, directs sales agents to tell consumers that they are caller number 4 of 3,257 or

one of the first 30 callers to call with the correct answer to the trivia question.

33. The employees interviewed, also stated that all consumers that call in get the

correct answer to the trivia question as it is always obvious. But, even if the person gets the

answer wrong, they win.

34. The sales script directs the sales people to advise consumers that they have “won”

multiple vacations and to congratulate them with enthusiasm. Then the consumer is told that all

they need to do is pay a “registration” and/or “administrative” fee (“cargo administrativo”).

35. Based upon the Receiver’s interview with one of the sales managers/verifiers and

a review of the sales script and the various memos found throughout the Defendants’ office, the

Receiver learned that the sales agents are trained to extract as much as possible from the

consumer, typically $399. But if he cannot, then it is lowered, to $299. In addition, the sales

manager/verifier sales scripts encourage the sales persons to seek an additional fee of $89.99 for

the “shipping and handling” (“manejo y envio”) of their package of materials. Attached as

Exhibit C is a one of many consumer invoices reviewed by the Receiver’s team and reflecting

the “shipping and handling” charge.

36. If the consumer declines because the cost is more than they can afford, the sales

agent has been trained to call them back a while later and tell them that they have been able to

“work something out” because the Defendants want the consumer to “win” and “take this

vacation.” The fee is then reduced to $199, a “special discounted rate.”

37. Thereafter, the Receivership Defendants immediately charged $399, $299, or

$199 (or other amounts) to the consumer’s credit card.


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38. The Receiver has learned from interviews and documents that, to the extent some

consumers may even have received the hotel stay they thought they had “won,” their stay was at

a timeshare property that offered free stays to any eligible member of the public, conditioned

upon sitting through a lengthy presentation. Consumers who did not call Defendants to “win” a

“free” stay, were apparently able to stay at these properties without paying the charges

Defendants imposed upon their “winners.”

39. After listening to advertisements, reviewing sales scripts, and interviewing several

sales agents and sales managers, the Receiver is of the opinion that most consumers did not

knowingly consent to payment for the opportunity to participate in a timeshare presentation.

C. The Verification

40. Once the sales agent obtains the consumer’s permission to charge their credit card

for registration or administrative fees, the call is transferred to a sales manager who purports to

verify the terms and conditions of the offer with the consumer in a “verification” process.

41. The verification is supposed to be an unambiguous consent by the consumer to

pay the administrative fee relating to their vacation package and to having their credit card

charged the fees discussed in the sales portion of the call.

42. A review of the verification script obtained on the premises evidences that there is

no complete disclosure to consumers relating to the fees charged or the requirement to attend a

timeshare presentation. In fact, during the verification process, consumers are merely advised

that they may enjoy a 90 minute breakfast during which they will get to know the Defendants

and that they will be shown the hotel amenities (“vas a disfrutar de nuestro desayuno de 90

minutos [e]n el cual nos vas a conocer a nosotros y te vamos a presentar todas las instalaciones

del hotel”).


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43. After reviewing the verification transcript and also listening to the verification

audio recordings discussed infra, and taking into account other evidence described in this report,

the Receiver is of the opinion that consumers were not knowingly authorizing a charge to their

credit card for the opportunity to participate in a required timeshare presentation.

D. The Arduous Road to a Hotel Reservation

44. The Receiver has reviewed the various materials located throughout the shared

offices of VGC and All Dreams in order to gain an understanding of the process required of

consumers before they could receive a hotel room. The evidence suggests that the Defendants

made it extremely difficult for consumers to ever obtain an actual stay at a timeshare property.

1. The Reservation Voucher

45. First, before a winning consumer who has paid the various fees charged can claim

his/her free vacation, the consumer must receive their vacation package voucher (attached as

Exhibit D), referencing their “voucher number”. Defendants made this difficult by sending the

package by certified mail. This meant that consumers may have to pick up their package at their

local post office. The consumers targeted by Defendants in their Spanish language

advertisements are Spanish-speakers. In this demographic, it is the Receiver’s experience that

many people will not go to the post office, or appear at any other government office, to retrieve a

package, much less a “prize.”

46. This is evidenced by the fact that on a daily basis anywhere from 40 to 50

packages containing the voucher packages are received at the offices of the Receivership Entities

marked “unclaimed” by the U.S. post office. Significantly, none of the hundreds of voucher

packages that have arrived in the mail since the inception of the receivership have been returned

for having an incorrect address.


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2. The Activation

47. Next, the package requires the consumer to contact a toll free number for

“activation” of the “vacational program” by calling the consumer service department. It is not

until the consumer has activated the package that a confirmation may be obtained which is

necessary to make travel reservations.

48. Part of the activation process is to complete an activation form which is included

in the voucher package (attached as Exhibit E). The activation form requires consumers to return

the form in an enclosed self-addressed and pre-paid envelope. However, no such return envelope

is included in the voucher package. The Receiver instructed his team to review the stacks of

voucher packages ready to be mailed out on the day of the immediate access to the premises.

None of the 75 envelopes contained a return envelope. The Receiver’s team found only 3 return

envelopes in the entire suite. Further evidence of the lack of pre-paid envelopes being enclosed

in the voucher package are the 5-10 hand-written envelopes that arrive daily in the mail at the

offices of the Receivership Entities containing consumer activation forms.

E. Making a Reservation Through the Bogota Call Center

49. If a consumer successfully obtains a confirmation number, they can attempt to

make a reservation by contacting the reservations desk.

50. Through interviews of employees, documents reviewed at the Defendants’ office

and the interviews of the Individual Defendants, the Receiver learned that the reservations

department is located at a call center in Bogota, Colombia.


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51. As confirmed by interviews with employees and, including with the sales

manager for the Bogota call center, Angel Saenz, Defendant Cesar Gonzalez was responsible for

the Bogota operations center.2 The voice recording logs reviewed by the Receiver reflect typical

call volume at the Bogota call center was anywhere between 1300 and 1800 calls a day.

52. The Receiver has learned that the Bogota call center has approximately 40 regular

employees. Of those, only four reportedly take reservation calls, two during a day shift and two

during a late afternoon/evening shift. One sales manager interviewed, James Tahhan,

(“Tahhan”), acknowledged that the Receivership Entities receive many complaints from

consumers about reservations and that he has called the reservations department multiple times

without ever being able to speak to a reservations agent. Tahhan was not surprised when told

that there have been hundreds of complaints regarding the inability to reach someone in the

reservations department.

53. Tahhan suggested that the Defendants were understaffing the reservations

department, noting that if you have thousands of people purchasing vacations, but only four to

take the reservation calls, only a small percentage of callers will get through.

54. Amongst the many hundreds of consumer complaints found throughout the

Defendants’ offices, the majority relate to consumers’ inability to reach a reservations agent.

Many consumers indicated that they had called multiple times having repeatedly been placed on

hold for extended periods of time.

55. The consumers who were able to speak to a reservations agent were routinely

given a variety of reasons why they could not take their “free vacation”. Many consumer

2 At his interview with the Receiver, Defendant Cesar Gonzalez admitted that he traveled regularly to Colombia to oversee the call center. (See Section IV infra)


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complaints discuss the various restrictions that they say the Defendants failed to disclose up

front.

F. Consumer Complaints & Chargebacks

56. The Receiver and his team have reviewed consumer complaints to help the

Receiver make a decision as to whether the Receivership Entities can be operated profitably

within the law.

57. The Receiver’s team located dozens of three inch binders throughout the

Defendants’ office containing consumer complaints. In addition, the Receiver’s team identified

the location of a nearby storage facility for the Receivership Entities which was found to contain

dozens more binders of consumer complaints dating as far back as 2006 and several boxes of

credit card chargeback records.

58. A large number of the complaints reviewed were related to reservations, including

the inability to reach a reservations agent, the inability to make a reservation because of

restrictions later imposed, and additional charges Defendants’ imposed at the time the consumer

attempted to make a reservation.

59. A consumer complaint dated May 10, 2011 (attached as Exhibit F) is from an

irate consumer who did not feel she had truly won a prize and that the time share component was

not fully disclosed to her at the time of her purchase discusses how she personally spoke with

Defendant Violeta Gonzalez about her complaint to no avail.

60. Moreover, the Individual Defendants were well aware of the magnitude of

consumer complaints as evidences by the stacks of complaints located in the Defendants’ office

from the Better Business Bureau (“BBB”), Attorneys General from various states across the


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country, and several law firms. The complaints were found on top of and surrounding the

reception desk as well as on the floor by the various fax machines.

61. In addition, the documents reviewed by the Receiver and his team suggest that

Defendants routinely denied consumer requests for refunds or cancellations. A customer service

department e-mail dated April 5, 2011, that the Receiver found at the reception desk lists

consumer names, a narrative of the consumer’s cancellation request, and the reason for denying

each request. Cancellation requests numbered over 50 per day each day during the week of April

4, 2011.

62. Finally, consumers regularly challenged the fees charged to their credit card.

Consequently, the Receiver assigned his team to review “chargeback” notices, which are the

notices from credit card companies that a consumer has demanded to have the charges to their

credit card reversed.

63. In a memo written by Defendant Violeta Gonzalez, she acknowledges that the

Defendants were receiving up to 10% of sales in chargebacks, which the Receiver understands to

be an exceedingly high percentage for a legitimate business.

64. The magnitude of the chargeback issue is evident by the number of charge back

notices from the various credit card processors found by the Receiver’s team at 1) the reception

desk, 2) in multiple file cabinets and 3) in multiple binders located in Defendant Violeta

Gonzalez’ office. Further, the sales agents interviewed conceded that chargebacks were a daily

occurrence. Sales agents were particularly sensitive to this issue because chargebacks result in a

reversal of their commissions.


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65. Based on employee interviews, a review of the many binders, and as Defendant

Violeta Gonzalez admitted during her interview with the Receiver, she was responsible for

responding to all chargebacks.

66. The Receiver’s team located a binder containing recent chargebacks to which

Defendant Violeta Gonzalez responded and ultimately obtained a result in favor of the

Defendants. The jacket to the binder depicts happy faces all around.

G. The Voice Recordings of Consumer Calls

67. The Receiver listened to a random sampling of recordings to familiarize himself

with the database of voice recordings maintained by the VOIP company. The database

recordings include recordings of the sales calls, including the purported consumer’s verification

of the terms and conditions of the charge, consumer service calls and reservation calls.

68. Significantly, the recordings of the sales calls to which the Receiver listened

uniformly contained misstatements and omissions regarding the fees to be paid for the vacation

packages and the requirements to attend a timeshare presentation as a prequisite for the “free

vacation”. Employees interviewed corroborated their systemic nature.

69. In listening to the recordings of the verification process, the Receiver uniformly

found that consumers were not knowingly authorizing a charge to their credit card for the

opportunity to participate in a required timeshare presentation.

70. Further, the Receiver has concluded that consumers routinely complained about

the reservation department, including the inability to reach a reservations agent, the inability to

make a reservation because of restrictions later imposed, and additional charges Defendants’

imposed at the time the consumer attempted to make a reservation.

III. INDIVIDUAL DEFENDANT INVOLVEMENT


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A. Samir Saer Rodriguez

71. On the day of the Receiver’s immediate access to the Defendants’ premises, Saer

Rodriguez agreed to an interview with the Receiver and his team. Saer Rodriguez indicated that

some time in 2008 he left his sales position at Broadcast Link to form his own business, Saer

Consulting, Inc. He later came to lease one of the suites at the Doral office building from

Defendants Cesar and Violeta Gonzalez. Saer Rodriguez states that the Individual Defendants

then decided to work together. As a result, he changed his company’s name to All Dreams.

72. Saer Rodriguez said that due to his experience at Broadcast Link, he became

responsible for negotiating and obtaining radio and television advertising that solicited

consumers to call, and his company All Dreams would provide sales agents to answer consumer

calls. VGC became responsible for providing vacation vouchers to consumers and to staff the

foreign call center, first in Argentina and later in Colombia, to handle consumer service and

reservations.

73. Also, Saer Rodriguez stated that even though they were separate companies on

paper, the Defendants operated as one company. Saer Rodriguez further stated that an important

reason the principals chose to maintain the two companies, even after joining together in 2008,

was to minimize the risk of losing accounts with existing merchant processors. He stated that

their business was considered extremely high risk and therefore any change in corporate identity

or ownership would raise red flags with the card processors.


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74. Saer Rodriguez brought to the relationship his existing merchant processing

accounts and also established another merchant processing account with a Venezuelan

company.3

75. Saer Rodriguez admitted that he supervised the sales agents including oversight of

their sales commissions. This was confirmed by several memos on All Dreams Vacations

letterhead (attached as Composite Exhibit G) the Receiver and his team found throughout the

two sales areas. These include, for example, a memo dated January 12, 2011, in which Saer

Rodriguez advises sales agents of a new pay structure, a memo dated March 16, 2011, describing

a new pay structure requiring a minimum number of sales on a weekly basis, a memo dated April

27, 201,1 in which Saer Rodriguez states that the Receivership Entities will assume 50% of all

consumer credit card chargebacks, and a memo dated May 3, 2011, in which Saer Rodriguez

informs sales agents of yet another change in the commission payments relative to credit card

chargebacks and cancellations. All of the memos are signed by Saer Rodriguez as General

Manager.

76. Saer Rodriguez told the Receiver that Defendant Cesar Gonzalez was responsible

for all computer related issues and concerns and that Defendant Violeta Gonzalez was

responsible for all legal and compliance issues, all banking and payroll, as well as overseeing

consumer complaints and credit card chargebacks.

3 The Receiver’s team investigated the relationship with this foreign merchant processor and learned that All Dreams had an account with the merchant for a little over 6 months. The account was closed by the merchant in February 2011 due to the high volume of chargebacks that had resulted in nearly $40,000 of charges above the amount set aside as a reserve for chargebacks. Further, the Venezuelan company is considering the filing of a lawsuit against All Dreams to collect the amounts owed on the merchant account.


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77. Saer Rodriguez admitted knowing of the consumer complaints to the BBB and

explained that Defendant Violeta Gonzalez was responsible for handling all issues related to the

BBB’s dropping the Receivership Entities from its ratings.

78. Saer Rodriguez acknowledges that he is a signatory on all bank accounts, both for

VGC and All Dreams.

B. Cesar & Violeta Gonzalez

79. On Wednesday, May 18, 2011, the Defendants, Cesar and Violeta Gonzalez, with

counsel present, provided a brief, one hour interview to the Receiver and their counsel.

80. Cesar Gonzalez acknowledges he was responsible for consumer service and

supervision of the sales staff. In addition, he was primarily responsible for all IT issues and

concerns. Cesar Gonzalez was also responsible for the Bogota call center, and he had just

returned from Bogota one day earlier.

81. The Bogota call center did business as Mega Call. The internet and telephone

access for Bogota were provided by the Receivership Entities through the use of a VOIP

company located in Miramar, Florida.

82. The Bogota call center is comprised of approximately 40 employees. The

majority of the employees, approximately 30, are sales/consumer service agents, four are sales

managers/verifiers, and four are reservations agents, one is a welcome/new customer agent and

one employee assists with shipping.

83. The Receiver’s team located documents in Cesar Gonzalez’ office which

corroborated his statement that he was in charge of sales agents. The memos focus on

maximizing sales including memos advising sales agents that 1) sales is priority number one,

2) consumers need to be told that the “vacation” they have “won” is worth thousands of dollars,


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3) encouraging sales by having the Receivership Entities be partially responsible for credit card

chargebacks.

84. Cesar Gonzalez also prepared several memos regarding consumer complaints and

chargebacks. Despite his awareness of increasing consumer complaints, Cesar Gonzalez issued a

memo dated April 27, 2010 (attached as Exhibit H), in which he pushes an upcoming sales rally

wherein the Receivership Entities will “absorb 50% of all chargebacks” in return for sales agents

increases their sales.

85. Other evidence located by the Receiver’s team in Cesar Gonzalez’ office includes

several versions of the sales scripts (attached as Composite Exhibit I) and Betamax tapes of the

television advertisements.

86. The Receiver demanded turnover of the laptop computer belonging to Cesar

Gonzalez which was used as his primary computer at the office and which he admitted contained

all of the Mega Call information. In response, Cesar Gonzalez stated that his laptop had been

stolen within the last few days or week. Cesar Gonzalez turned over his company Blackberry to

the Receiver.

87. The Receiver, through Defendants’ counsel, has requested examination of the

laptop belonging to Defendant Violeta Gonzalez as well as the home desktop computer of Cesar

and Violeta Gonzalez. To date, counsel has refused to allow the examination claiming that

neither computer contains any information relating to any of the Receivership Entities.

88. Defendant Violeta Gonzalez stated that she handles all financial matters for the

Receivership Entities – she is a signatory on all of the bank accounts – as well as consumer

complaints and chargebacks. Indeed, she answered a consumer complaint on her company


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Blackberry at the conclusion of the interview with the Receiver. Her company Blackberry was

later turned over to the Receiver.

89. The Receiver’s team located documents and computers in Violeta Gonzalez’

office which corroborated her statement that she was in charge of all financial matters for the

Receivership Entities. The computer containing the Defendants’ QuickBooks files was found in

her office. In addition, a file cabinet in her office contains financial and corporate records

relating to the Defendants.

90. Violeta Gonzalez admitted that she also supervised the sales agents including

oversight of their sales commissions. This is confirmed by a memo found by the Receiver’s team

dated March 16, 2011 (attached as Exhibit J) which describes a new pay structure for sales

agents requiring a minimum number of sales on a weekly basis.

91. Also, Violeta Gonzalez admitted during her interview with the Receiver, she was

responsible for responding to all chargebacks as more fully discussed in section IIIF infra.

C. Angel Saenz

92. The general manager of Mega Call as indicated in the corporate documents and

on the internal telephone directory is Angel Saenz. In an interview with the Receiver’s counsel,

Saenz indicated that all persons working at Mega Call are employees of an employment agency

called Empleamos, a duly authorized company that provides temporary labor to companies.4

Saenz has worked for the Defendants Cesar and Violeta Gonzalez for seven years, having first

worked in the Doral, Florida office then managing the call center operations in Argentina and

now managing the Colombia call center since August 2010.

4 The Receiver, however, has obtained information indicating that Saenz is an employee of VGC and All Dreams.


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93. Saenz indicated that all directives regarding Mega Call come from Defendant

Cesar Gonzalez. In addition, Mega Call employees receive the same training materials as the

employees at the Doral office and utilize the same webhost to access company email and the

consumer database.

IV. THE RECEIVRSHIP ENTITIES

94. The Receiver’s investigation thus far has confirmed that there are at least four

companies that can be characterized as Receivership Defendants as defined by this Court’s

Order.

A. VGC Corporation of America

95. The records on file with the Florida Secretary of State, Department of

Corporations (“Sunbiz”), reflect that Defendant Violeta Gonzalez organized VGC in July 2004.

Defendant Violeta Gonzalez is also the sole officer, director and registered agent for VGC.

96. On July 28, 2004, VGC filed documents with Sunbiz registering the name “5

Stars Vacations” as a trade name of VGC. 5 Star Vacations is one of the domain names

registered with the webhost provider. Further, this domain name contains the database of

consumer accounts.

97. The Receiver has found evidence that Saer Rodriguez received payments from

VGC directly and through his company All Dreams, although neither Saer Rodriguez nor All

Dreams has any legal ownership interest in VGC.

98. The principal business address of VGC is 3403 NW 82nd Avenue, Doral, Florida

33122.

B. Five Star Corporation of America


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99. The records on file with Sunbiz reflect that Five Star Corporation of America

(“Five Star”) was organized by Defendant Cesar Gonzalez in November 2004. Defendant Cesar

Gonzalez is also the sole officer, director and registered agent of the Defendants.

100. On October 11, 2007, Five Star filed documents with Sunbiz registering the name

“Total Tours Group” as a trade name of Five Star.

101. The records produced to the Receiver by the former accountant for the

Receivership Entities reflect a consolidated financial statement by VGC identifying Five Star as

a wholly-owned subsidiary of VGC.

102. The Receiver has not found separate office space or a separate payroll account for

Five Star.

103. The principal business address of Five Star is 3403 NW 82nd Avenue, Doral,

Florida 33122.

C. All Dream Vacations Corporation

104. The records on file with Sunbiz reflect that All Dream Vacations Corporation was

organized by Saer Rodriguez in February 2007 under the name Saer Consulting Inc. Saer

Rodriguez is also the sole officer, director and registered agent of the Defendants.

105. On July 17, 2008, Saer Rodriguez filed documents with Sunbiz changing the

name to All Dream Vacations Corporation and using the same business address as VGC

corporation.

106. The principal business address of All Dreams is 3403 NW 82nd Avenue, Doral,

Florida 33122.

D. All Dream Tours, LLC


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107. The Sunbiz records reflect All Dream Tours, LLC is a member managed limited

liability company organized by Saer Rodriguez and his girlfriend, Fiorella Vila (“Vila”) in

August 2009. Saer Rodriguez is the managing member and Vila is a member. Vila is also the

registered agent of the Defendants.

108. The records provided by the accountant for the Receivership Entities reflect

ownership of All Tours as belonging to Saer Rodriguez and Vila, each owning 50% of the

Defendants.

109. The sole source of income to All Tours as reflected on both the 2009 and 2010

returns prepared by the accountant for the Receivership Entities is All Dreams, a Receivership

Defendant. Further, the evidence reflects that payments to All Tours are categorized as

“consulting fees” by All Dreams. All Dreams appears to be the sole client of All Tours.

110. The Receiver has not found separate office space or a separate payroll account for

All Tours.

111. The principal business address of All Tours is 3403 NW 82nd Avenue, Doral,

Florida 33122.

112. The Receiver contemplates filing a motion to expand the Receivership to include

All Tours as a Receivership.

V. ASSETS

A. Bank Accounts

113. To date, the Receiver has identified 16 bank accounts belonging to VGC,

containing a total of $53,230, and 5 bank accounts belonging to All Dream containing a total of

$10,583. The Receiver has also identified one account belonging to All Dream Tours, LLC,

containing a total of $59,501. The grand total of bank deposits is $117,043.


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114. The Receiver has identified and made contact with five credit card processing

companies with which VGC and All Dream currently have a relationship and requested

information pertaining to their respective relationships with the Receivership Entities. The

Receiver has received information from some of those companies, but is awaiting information

from others. As of the date of this report, the card processing companies have confirmed reserves

on deposit totaling $387,353.

B. Additional Assets

115. The Receiver and his team have reviewed thousands of pages of documents. At

this state of the investigation, each day of investigation brings to light new leads to potential

assets.

116. The Receiver has taken possession of a 2011 Lexus, titled in the name of VGC.

However, the vehicle appears to be collateral for a lease agreement. The Receiver has issued a

subpoena to the dealership where the vehicle was purchased to determine whether there is any

value in the vehicle.

117. The Receiver has also identified two Harley-Davidson motorcycles which the

Receiver has reason to believe were purchased by the Receivership Defendants with consumer

funds with at least some payments being made by a Receivership Entity directly. The

motorcycles are in the possession of Defendant Cesar Gonzalez. The Receiver has demanded

turnover of the motorcycles from the Defendant, however, counsel for the Defendant has refused

to deliver these to the Receiver claiming that these are personal vehicles.


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118. The Receiver learned from the Individual Defendants that they are holding

receivership assets in foreign bank accounts. The Receiver does not yet know the balance of

those accounts. If the Defendants do not voluntarily repatriate those monies as ordered by this

Court, and the amount to be recovered justifies the pursuit, the Receiver will pursue recovery of

those balances.

119. The Receiver has begun identifying (and will continue to identify) individuals and

entities who received substantial consumer funds from the Receivership Defendants.

VI. LIABILITIES

120. The Receivership Entities’ employees were due a paycheck on the Friday

following the Receiver’s immediate access to the business. The Receiver will await this Court’s

ruling at the preliminary injunction hearing before making a decision on the pending payroll.

121. Due to the temporary nature of the Order, the Receiver continues to occupy Suite

210 at the Doral office park. Defendants recently renewed the lease for the premises for a term

of one year at a rent of $4112 per month.

122. A credit card processor is claiming an amount due of approximately $40,000. The

Receiver has notified the card processor that settlement of its claim will take time, and that the

Receiver will not be satisfying those demands in the short term.

123. The Receiver and his team are working quickly and efficiently, applying a strict

cost/benefit analysis to each project in order to preserve Receivership assets. Accordingly, the


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Receiver will be utilizing the FTC’s forensic accountants to perform the accounting,

bookkeeping and investigative work necessary to the Receiver’s completion of his tasks.

124. The Receiver cannot yet estimate the total cost of the work required of the

Receiver and his team. The Receiver plans to submit his detailed invoice, and those of the

professionals retained, every thirty days.

VII. PRELIMINARY FINDINGS

125. The evidence reviewed by the Receiver thus far indicates that since 2008 the

Receivership Defendants have acquired all of their revenues by marketing a prize promotion

touting vacation packages to consumers, most all of whom are Spanish-speaking.

126. There is no prize. Rather, consumers are being sold, if anything at all, the

opportunity to attend a time share presentation, which they could call themselves, and make

reservations directly to stay for free, assuming they qualify and attend a required sales

presentation.

127. From the information referenced above including employee interviews, consumer

complaints and third party witness interviews, and documents located at the shared offices of

VGC and All Dreams, the Receiver believes that the sales practice abuses identified in the

Complaint are confirmed by the record evidence.

128. Through an analysis of a sampling of consumer complaints, the Receiver’s team

determined that the volume of complaints was as high as 780 complaints in a three month period.

Extrapolating from that number and based upon the other record evidence found at the

Defendants’ office, there are likely thousands of consumer complaints regarding the

Receivership Entities.


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129. Each of the Individual Defendants admitted that their companies, VGC and All

Dreams, were one and the same company. VGC and All Dreams merely represent the fact that

Saer Rodriguez came from having his own company, All Dreams, and Defendants Violeta and

Cesar Gonzalez had been doing business as VGC.

130. Despite having gross sales of $12.9 million for the period 2008 through 2010 as

confirmed by the Receivership Entities’ tax returns, to date the Receiver has identified as

covered by the asset freeze only $504,396 in liquid assets potentially available to the

receivership estate. At the same time, the Receiver has identified over $1.8 million in liabilities,

nearly $1.7 of which is related to potential chargebacks from the various credit card processors.

Under this scenario the Receivership Entities cannot survive as an ongoing business.

131. Further, in light of the facts set forth above and additional evidence gathered thus

far by the Receiver too voluminous to detail in this report, the Receiver concludes that the

Receivership Entities cannot be operated profitably within the law.

VIII. CONTINUING WORK

132. The Receiver and his team continue to search for and secure assets of the

Receivership, as well as to identify any claims the Receiver may have against third parties.

133. The Receiver and his team continue gathering relevant information on the income

and expenses of the Receivership Entities.

134. The Receiver and his team continue to quantify the scope of the misleading sales

efforts, to determine the likely universe of claims and the amount of any such claims.

135. The Receiver expects to file his next interim report in approximately 30 days.


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Date: June 7, 2011 Respectfully submitted,

s/________________________ Jonathan E. Perlman, Esq. Receiver for the Corporate Defendants -and-

GENOVESE JOBLOVE & BATTISTA, P.A. Attorneys for Jonathan E. Perlman, Esq., Receiver for the Corporate Defendants 100 Southeast 2nd Street, 44th Floor Miami, FL 33131 Tel: (305) 349-2300 Fax: (305) 349-2310

CERTIFICATE OF SERVICE

I HEREBY certify that on June 7, 2011, I electronically filed the foregoing document

with the Clerk of the Court using CM/ECF. I also certify that the foregoing document is being

served this day on all counsel of record or pro se parties identified on the attached Service List in

the manner specified, either via transmission of Notices of Electronic Filing generated by

CM/ECF or in some other authorized manner for those counsel or parties who are not authorized

to receive electronically Notices of Electronic Filing.

___s/Carmen Contreras-Martinez________ Carmen Contreras-Martinez


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SERVICE LIST Federal Trade Commission et al. v. VGC Corporation of America et al.

Case No. 11-21757-CIV-MARTINEZ/MCALILEY United States District Court, Southern District of Florida

Carmen Contreras-Martinez, Esq. [email protected] Genovese Joblove & Battista, P.A. Miami Tower, 44th Floor 100 Southeast 2nd Street Miami, FL 33131 Telephone: (305) 349-2300 Facsmile: (305) 349-2310 Attorneys for Jonathan E. Perlman, Esq. as Court Appointed Receiver for the Corporate Defendants Served via CM/ECF

Willard K. Tom General Counsel Valerie M. Verduce, Esq. [email protected] Ambar J. Carvalho, Esq. [email protected] Federal Trade Commission 225 Peachtree Street, suite 1500 Atlanta, GA 30303 Telephone: (404) 656-1354 (Verduce) (404) 656-1355 (Carvalho Facsimile: (404) 656-1379 Attorneys for Plaintiff Federal Trade Commission Served via CM/ECF Pamela Jo Bondi Attorney General Allison Finn [email protected] Office of the Attorney General Economic Crimes Division The Capitol, PL-01 Tallahassee, FL 32399 Telephone: (850) 414-3600 Facsimile: (850) 488-4483 Attorneys for Plaintiff State of Florida, Office of the Attorney General Served via CM/ECF


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Miguel Armenteros [email protected] Miguel Armenteros, P.A. 1000 Brickell Avenue, Suite 600 Miami, FL 33131 Telephone: (305) 377-0086 Facsimile: (305) 397-1136 Attorney for Defendants VGC Corporation of America, Violeta Gonzalez, Cesar Gonzalez Served via CM/ECF Tony A. Haber [email protected] 901 Ponce de Leon Boulevard, Suite 303 Coral Gables, FL 33134 Telephone: (305)442-7443 Facsimile: (305) 441-9218 Attorneys for Defendants Samir Jose Saer Rodriguez, All Dream Vacations Corp. Served via CM/ECF Jonathan E. Perlman [email protected] Genovese Joblove & Battista, P.A. Miami Tower, 44th Floor 100 Southeast 2nd Street Miami, FL 33131 Telephone: (305) 349-2300 Facsmile: (305) 349-2310 Receiver for the Corporate Defendants Served via CM/ECF

10675-001/138


Documents

UNITED STATES DISTRICT COURT Miami Division CASE NO. 11-21757