Anonymous - 5-22-2005 at 11:24 AM
http://www.signonsandiego.com/news/business/20050522-9999-1b...
Time shares' glitter might not be gold
By Penni Crabtree and Sandra Dibble
May 22, 2005
For scale and spectacle, the proposed luxury time share housing development along the Baja California coast would have few rivals.
Thousands of luxury apartments and villas with marble and gold-leaf trimmings, in a resort setting, along with convention facilities and Las
Vegas-style high-rise hotel-casinos.
Promotional materials describe the units as a tremendous investment opportunity, with the potential to generate hundreds of thousands of dollars in
profits quickly.
"Building permits, environmental studies, traffic surveys ? all the dozens of roadblocks standing in the way of developers north of the border are
absent in Baja," read promotional material posted on the company's Web site last week.
The hitch for potential investors tempted to plunk down $13,000 for a time share in the Baja project is that its chief promoter, Vladislav "Steven"
Zubkis, has a history of peddling fraudulent schemes.
State and city officials in Baja California say permits and studies are indeed required. And so far, they have not received any applications, let
alone issued permits, for such a project, which various sales materials refer to as either the Baja Vacation Club or the Baja Las Vegas project.
The first step for any kind of development would involve obtaining a land-use permit from the municipality, but neither Rosarito Beach nor Ensenada
officials know of any such projects. Anything along a beach also would involve a federal environmental review and permit, said Cesar Cuevas, director
of urban development for Ensenada; the municipality has the longest Pacific coastline in the state.
The Baja California Tourism Secretariat keeps track of tourism-oriented investments statewide, offering guidance to buyers and builders. But Pedro
Delgado, director of planning and investment promotions, said his office had no formal knowledge of the project.
Potential investors in any proposed project "should go visit the property and make sure that they have construction permits," Delgado said.
Zubkis, reached by e-mail at San Diego Properties LP, a company in which he is listed as general partner and that is soliciting investors for the
development, declined to be interviewed for this story.
But the company promoted the project as recently as last week on its Web site, saying that each $13,000 time share in the Baja development should reap
an investor a profit of $286,000 to $715,000.
"Your purchase of a limited partnership in one of our Baja California Coastal timeshares means that the land for that timeshare will be secured
immediately and that construction will begin within weeks," according to the Internet sales material. "Nothing, absolutely nothing will be contingent
on acquiring additional funds or partners.
"The Baja Coast is a solid gold timeshare location," according to the Internet sales pitch. "It is also a pure platinum opportunity to invest one
time, in one piece of property, and cash out in less than 18 months with a potential profit of over 1,000 percent."
Best of all, according to the San Diego Properties Web site, investors will receive a partnership interest in the venture that will be converted to
stock.
"You will be in a position to cash out for a return on investment greater than your most vivid dreams," according to the Web site.
It's a promise all too familiar to angry investors duped out of their money in Zubkis' stock schemes, according to court documents filed by the
Securities and Exchange Commission.
Zubkis, a Ukrainian immigrant who until April lived in a sprawling mansion in Bonita, has a history of promoting dubious projects, according to the
SEC. Beginning in 1993, he orchestrated a massive fraud to sell millions of shares of penny stock in a company called Stella Bella Corp.
In 2001, after legal maneuvering by Zubkis that included filing countersuits against federal regulators and law enforcement agencies, and blanketing
the court with rambling motions, a federal judge imposed a $21.5 million judgment against Zubkis and banned him from being an executive or officer in
a public company.
Since then, the SEC has been trying to collect on the judgement. But most of Zubkis' alleged assets, including a $450,000 yacht sized by federal
officials in 2003, are tied up in a web of limited partnerships, offshore companies and shifting bank accounts controlled by Zubkis to thwart
creditors, according to court filings by the SEC and others.
Meanwhile, and despite the court ban from serving at a public company, Zubkis continued to peddle stock in and control the workings of International
Brands Inc., or IBI, the publicly traded successor company of Stella Bella, according to court documents filed by the SEC.
Zubkis says in his court documents that he resigned as an officer of IBI and is only a consultant who receives expenses but no salary.
But according to the International Brands Web site, which lists San Diego Properties among the subsidiaries that it either wholly or partially owns,
IBI is "headed by well-known entrepreneur Steven Vladislav Zubkis, who serves as CEO and president and is also IBI's largest shareholder."
In the past year, Zubkis has tried to lure investors into several purported ventures, including a chain of self-storage facilities and a Las Vegas
casino. None of the projects materialized, according to court documents and some angry investors.
Take the case of Marion Anderson, a 67-year-old Colorado woman who invested in several of Zubkis' schemes, the first a purported complex of storage
units that was being built by International Brands. She paid $5,000 in August 2003 to obtain shares and a limited partnership interest in IBI,
according to an affidavit filed in federal court.
IBI employees contacted her again in November 2003 to solicit an investment in a Las Vegas casino that the company claimed it was buying and
renovating. Anderson wrote a check for $3,281.
By March 2004, Steven Zubkis was calling Anderson, soliciting money for yet another investment ? this time a project to build hotels in Baja
California.
Anderson demanded to know what had become of her other investments, the storage units and the Las Vegas casino. Zubkis told her the company wasn't
able to obtain building permits for the storage units and that the casino project had fallen through.
Zubkis told her that the money from her previous investments was "gone," but urged her to invest in "oceanfront property down in Baja where they
didn't have to have building permits," said Anderson.
"I kept saying why would I invest in something again with the same people that I had invested with before and I lost all my money?" said Anderson, in
her affidavit. "He (Zubkis) said 'I can't afford to not have a profitable business.' "
Last summer, Zubkis telephoned Anderson again to solicit an investment, which she again refused to make. Anderson tried later to reach the company,
but none of her telephone calls was returned.
During the same period that investors were directed to write checks to various escrow funds for the purchase of IBI stock, the investor money was
being paid out to cover Zubkis' personal expenses, including rent, utility bills, payments on a Bentley automobile, and private jet travel, according
to court documents filed by the SEC.
SEC officials declined to comment on Zubkis' latest activities with the Baja California time hare venture, or whether Zubkis is in violation of
various court bans. In December, the SEC suspended trading in IBI's over-the-counter stock because of the company's failure to file periodic reports.
In April, in response to a motion by the SEC, Administrative Law Judge Lillian McEwen ruled that Zubkis be barred from participating in an offering of
any penny stock or from association with any broker or dealer.
McEwen noted that in Zubkis' previous dealings in Stella Bella, the "several fraudulent statements and misrepresentations . . . were nothing short of
egregious."
"At no time has Zubkis shown recognition of the wrongful nature of his conduct, or made any assurances that there would be no future violations of
federal securities laws," said McEwen in her ruling. "To the contrary, Zubkis has repeatedly taken the position that he is not bound by the federal
securities law and . . . indicated that he continues to raise funds from investors."
Last week, a sales office for Zubkis' Baja time share venture was under construction in Rosarito.
The office's intricate decor stands in stark contrast to the modest shops on Rosarito's major thoroughfare, Boulevard Benito Juarez. Located at the
southern part of the city, across the street from from the Rosarito Beach Hotel, the exterior boasts ornate columns and a canopy whose ceiling is made
to look like a sky; the entrance features a stone mosaic walkway.
Asked about the project, a man on the construction site last week referred questions to Zubkis' Web site, www.sandiegopropertieslp.com.
A source at Rosarito Beach City Hall said a local resident was leasing out the site, but did not know to whom. He said that the city had not issued a
construction permit, because necessary paperwork had not been submitted.
Gustavo Torres, whose real estate office is across the street, said he discussed plans about three months ago with a man who said he was
Italian-American and associated with the project. "He told me he was going to open a real estate company to offer mostly time shares. He said we would
work together, but he hasn't come back."
In affidavits, Zubkis and his employees said his Bonita property, which was also home to Zubkis, his wife and five children, was used as a "showroom
to attract investors for our mega project in Baja California."
"Thanks to home I am able to show investors not only a perception but a reality," said Zubkis in his affidavit.
Zubkis was evicted in April from the three-story home he leased from his brother, Grigory Zubkis.
The sprawling complex, complete with two swimming pools, fountains and pet peac-cks, was seized by the Department of Transportation under its power of
eminent domain as part of a planned expansion of Highway 125.
In court documents related to the Bonita property, Zubkis demanded compensation and relocation expenses from the state for the disruption to his San
Diego Properties business.
Zubkis told the court that without significant compensation he might have to close the business.
"Due to the scope of these investments, we are currently, to put it bluntly, in a severe cash crunch," Zubkis wrote in an affidavit. "We respectfully
ask the court to grant us relief from a government octopus . . . unless justice is served an extreme form of highway robbery will be taking place."
In March, San Diego Superior Court Judge Patricia Cowett overruled Zubkis' objections as not relevant.