Texas Attorney General Seeks to Freeze Extreme Fitness Assets - KCBD NewsChannel 11 Lubbock

10/7/08

Texas Attorney General Seeks to Freeze Extreme Fitness Assets

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The owners of a Lubbock fitness club and health spa agreed to an injunction and asset freeze sought by Texas Attorney General Greg Abbott earlier this year.

Last August, the state charged Extreme Fitness and Wellness Inc., and its owners, Shon and Desiree Perez, with defrauding its customers. According to the Attorney General's enforcement action, the defendants accepted pre-paid membership dues from about 800 Lubbock-area residents, but never actually ordered any fitness equipment. Tuesday's agreed injunction extends a temporary restraining order that the court granted in August.

Court documents indicate that the defendants collected approximately $40,000 in advance membership dues but failed to actually provide promised services and did not issue refunds. The company also has not obtained a health spa operator's certificate, which is required under Texas law.

In late 2007, long before the fitness club was scheduled to open, the defendants launched an advertising campaign promoting the facility. They solicited members with a "no money down - no contract - $9.95 a month" promise. To encourage customers to join early and pre-pay their membership dues, the defendants' marketing materials claimed that the offer would be valid for only a "limited" time. Extreme Fitness charged a $25 sign-up "fee" for customers who signed-up early. At the time, the defendants claimed the fee would later increase to $100.

Members were told exercise equipment was "delayed," "on the way" or "would be here within the next week." Despite these claims, state investigators learned that the fitness center's owners never ordered exercise equipment. Additionally, the investigation revealed that the defendants fell behind on their facility's real estate lease payments. Investigators discovered that the defendants spent the pre-paid membership dues on personal entertainment, food and clothing, as well as on automotive, boat and motorcycle loan payments. According to the enforcement action, the Perezes also used customer funds to purchase a country club membership.

The Attorney General's enforcement action, which also charges the defendants with Texas Deceptive Trade Practices Act (DTPA) violations, seeks refunds for all prepaid members who did not receive refunds and civil penalties of up to $20,000 per DTPA violation. Customers who believe they have been defrauded by this or similar practices may call the Attorney General's toll-free complaint hotline at (800) 252-8011 or file a complaint online (click here).

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