Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—E.D. Mo.: Operator of timeshare exit services ordered to pay $140 million, (Apr 21, 2026)

By Justin Marcus Smith, J.D.

The court found the defendant jointly and severally liable for enterprise conduct because the uncontroverted evidence showed he was personally involved and the “mastermind” of its unfair and deceptive business practices.

The federal district court in St. Louis, Missouri, granted summary judgment to the Department of Justice and the State of Wisconsin against the last remaining defendant in a 2022 case related to the alleged false promises and unfair practices in the sale of timeshare exit services, the FTC announced. Overwhelming evidence showed the individual defendant masterminded and personally profited from an enterprise that bilked consumers of more than $95 million. The court held there was no material dispute that the defendant violated the FTC Act, the federal Cooling-Off Rule, and equivalent Wisconsin laws. There appeared to be no dispute that the government could authenticate everything at trial. The court drew an adverse inference about the defendant’s refusal to testify based on independent and sufficient evidence of culpability. In addition to the $140 million judgment, the court ordered the defendant permanently banned from marketing any timeshare exit services and from engaging in the deceptive and misleading conduct detailed in the government complaint (U.S. v. Carroll, No. 4:22-cv-01243-JMB (E.D. Mo. Mar. 30, 2026)).

Background. In 2022, the Department of Justice, on behalf of the FTC, and the State of Wisconsin (collectively, the government) filed a complaint alleging that a number of individuals, trusts, corporations, and sham companies were part of a common enterprise that bilked consumers out of more than $95 million in connection with largely bogus time-share relief services.

At length, only one natural person defendant remained, and the court granted the government’s motion for summary judgment on all seven counts of the complaint, including: violation of Section 5 of the FTC Act, the federal Cooling-Off Rule, the Wisconsin’s Administrative Code for the Department of Agriculture, Trade and Consumer Protection, and Wisconsin’s Fraudulent Representations Law.

Authentication. The court overruled essentially all of the defendant’s authenticity and admissibility arguments. Objections to the authenticity or admissibility of a variety of documents, including some the defendant produced, were unhelpful because they did not show that the documents could not be authenticated. The defendant appeared to conflate authenticity with relevance. The pertinent rule, Fed. R. Civ. P. 56(c)(2), presupposes that not all evidence presented at summary judgment is contemporaneously authenticated. There also appeared to be no serious dispute that the government, which presented an affidavit attesting to authenticity, could appropriately authenticate all documents at trial.

Fifth Amendment. The defendant asserted his rights under the Fifth Amendment. He provided no meaningful testimony about his role in the timeshare exit businesses, how the businesses were conducted, or his participation. Even so, he could not have it both ways, he could not refuse to answer relevant questions and then produce an affidavit to broadly discredit the government’s evidence. The court accordingly disregarded the defendant’s affidavit in opposition to summary judgment and drew an adverse inference on his refusal to testify based on independent and sufficient evidence of culpability.

The court noted that even if it had considered the defendant’s affidavit, it did not refute most of the government’s statement of undisputed facts. Broad statements about the veracity of evidence did not seriously contest the substance of the government’s statement of facts.

The court footnoted the defendant did not explicitly waive invocation of his Fifth Amendment rights at his deposition, nor did he agree to be subject to cross-examination. The court accordingly could not find that he withdrew his Fifth Amendment privilege to make himself subject to cross-examination. In any event, discovery had closed. The court otherwise footnoted that the defendant received reasonable notice of his deposition and waived any objection by failing to raise it timely.

Facts. The court found the evidence showed the defendant and another natural person agreed to create a timeshare exit business in 2018. To do that, they created closely-held companies and trusts, including former defendants Consumer Law Protection, LLC; Farmington Allegiance, LLC; Mainline Partners, LLC; Premier Reservations Group, LLC; Resort Transfer Group, LLC; Square One Group, LLC; and The Jake and Avery Irrevocable Trust and The Maggie and Lucy Irrevocable Trust, both dated September 11, 2019. The defendant managed the enterprise and controlled the enterprise bank accounts as a signatory. He was also at least a part-owner at all times.

Under the name Square One, the defendants began marketing and holding themselves out nationwide as a timeshare exit services business. However, direct mail the defendant created inviting consumers to a free dinner presentation about how to exit a timeshare commitment did not inform consumers that the defendants were attempting to sell timeshare exit services. The defendant organized, ran, and attended the presentations.

The presentations stated the defendants had been providing solutions since 2005, made other false representations, and promised timeshare exits within 12-24 months. Most consumers were not able to exit within the 12-24 month period promised, whereas consumers would have been able to exit their timeshares without the defendants’ help by working directly with their resort or by selling them on the open market. The court found the defendants did not refund fees to consumers who were not exited from their timeshares within the promised 12-24 month period.

The court found the defendants used various high-pressure sales tactics. Consumers would sign an agreement called the Timeshare Termination Agreement (TTA), but the 2018-2021 version did not indicate the required cancellation clause in 3,662 instances, and the defendants did not otherwise inform consumers of their right to cancel. Even after 2021, the defendants did not provide required cooling-off rule notices or comply with Wisconsin’s Direct Marketing Rule.

The government provided substantially similar supporting declarations of a variety of consumers throughout the country. The declarations established the defendants’ high-pressure sales tactics; the lack of notice about the right to cancel; no meaningful action taken to exit them out of their timeshares; and denial of refunds.

The court concluded the defendants knowingly enrolled 11,044 consumers in its exit services programs despite knowing they would be unsuccessful in exiting most from their timeshares for understaffing and a variety of other circumstantial reasons, including the policy of some resorts to work only directly with timeshare owners. The defendants only managed to exit about 19% of the consumers who signed up for their services and did not even attempt to exit about 40% of the consumers.

Alaska and Missouri took action, and two timeshare companies sued the defendants for making false or misleading statements and for unfair and deceptive trade practices. The defendants engaged in some rebranding to mitigate the effect of consumer complaints. The defendants were aware of at least 732 complaints. The instant defendant was particularly aware of consumers who referenced the cooling-off period and of employees who told him that the defendants’ contracts did not comport with federal and state law. He refused to make the contracts compliant and refused to provide refunds.

Of the more than $95 million in revenue collected this way, the average consumer paid around $13,000. According to the court’ summary of the undisputed facts, the defendants only refunded 0.1% of the consumers. The defendant was solely responsible for approving refunds. By 2022, the defendant made owner draws totaling more than $2.3 million and used the funds to start a trucking business and to buy real property.

Judgment. The court held the government was entitled to judgment as a matter of law. The defendant’s actions violated Section 5 of the FTCA the federal Cooling-Off Rule. The government did not need to prove the defendant acted with intent to defraud or deceive. The defendants made a number of material misrepresentations about timeshare exit, and consumers relied on them, according to numerous consumer affidavits. Among other things, representations about timeshare exit within 12-24 months could not be substantiated because each claim would have depended on each individual timeshare agreement.

The defendants also engaged in unfair acts and practices by bilking consumers out of money without exiting them form their timeshares and without providing the promised refund. The court found the injuries were not wholly avoidable in light of the high-pressure sales tactics. The defendants were not successful in exiting a majority of consumers from their timeshares.

The practices were demonstrably unfair, entitling the government to judgment under the FTCA. Failure to provide the required cooling-off entitled the government to judgment for violation of the federal Cooling-Off Rule. Wisconsin law mirrored the FTCA and the federal cooling off rule. The court accordingly found the government was entitled to judgment on the state law counts for the same reasons.

The court found the defendant jointly and severally liable for the defendants’ conduct because the uncontroverted evidence showed he was personally involved and the “mastermind” of the defendants’ unfair and deceptive business practices.

The court rejected the arguments the defendant made in opposition to summary judgment as being “wholly without merit.” The defendant reiterated many arguments the court had already specifically rejected in prior memoranda and orders. Even if the court had considered the defendant’s affidavit, it only offered vague statements about a leave of absence and involvement of third parties. The defendant’s arguments about the government’s experts were untimely and unsupported. Even if the defendants succeeded in exiting some consumers from their timeshares, that did not get any trier of fact closer to the truth of the unfair and deceptive sales tactics.

The Case is No. 4:22-cv-01243-JMB.

Judge: Bodenhausen, J.

Attorneys: Sarah B. Williams, U.S. Department of Justice, for the U.S. Edward F. Luby (Luby Law Firm P.C.) for Christopher Carroll.

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