A Poconos-area resort misled property buyers about the land’s potential value, Pa. AG says
The attorney general of Pennsylvania filed a lawsuit against Eagle Rock Resort in Hazle Township on Thursday. Lots were sold between $30,000 and $100,000 but had little value on the resale market.
At a private community in the Pocono Mountains area, the sales pitch was simple: a limited-time deal on undeveloped property in an amenities-rich resort community, with a potentially lucrative return on investment. But the pitch, Pennsylvania’s top prosecutor alleges, was misleading.
Pennsylvania Attorney General Michelle A. Henry has sued Eagle Rock Resort Co. LLC, alleging that the resort development company misrepresented the value of the undeveloped lots it sold.
“I thought I had a decent investment,” said an unnamed alleged victim cited in the lawsuit. “Then I decided to sell. [It seemed] odd that the first two Realtors I contacted refused to list my lot at all.”
The lawsuit, which Henry’s office filed Thursday in the U.S. District Court for the Middle District of Pennsylvania, is on behalf of consumers who “bought overpriced properties with very little resale value,” Henry said in a statement.
“The accusations presented in the suit are both false and misleading,” R. Mike Ward, president and CEO of Double Diamond Resorts, the parent company of Eagle Rock Resort, said in an email Monday. “Eagle Rock Resort will prevail.”
The over-5,000-acre private resort community in Hazle Township advertises homes, condos, and lots for sale, with amenities including golf, dining, swimming pools, a spa, and an equestrian center.
Eagle Rock typically sells undeveloped lots for $30,000 to $100,000, the complaint alleges, and contends that lots could increase in value. Yet the value of those lots is only around $5,000 to $20,000 on the resale market, the complaint says.
Misleading comparisons are also used in the sale process, the attorney general said. Instead of offering examples from the open market to potential buyers, salespeople were instructed to provide them with comparisons of other properties in the development that were on the market or sold by Eagle Rock.
In some instances, a resale market didn’t exist for these properties, the complaint alleges.
Dallas-headquartered Double Diamond Resorts operates and develops resort communities in Pennsylvania and Texas. The company says it serves over 35,000 members and has communities on more than 16,000 acres, according to its website.
According to the complaint, staff were instructed to tell potential buyers that the undeveloped properties were listed at or below resale value and that a limited-time promotion was going on — when neither was true.
The team was also trained to offer a $15,000 discount by waiving the membership fee — a fake fee, the complaint alleges, as no actual community member has ever paid it.
International customers and new immigrants were particularly targeted by Eagle Rock salespeople, who visited Kenya and the Philippines to sell lots, the complaint alleges.
The company also told potential buyers, misleadingly, that the resort company would buy properties back or help them resell later on, the complaint alleges.
The attorney general is urging those who believe they may have been victims to reach out. Customers can file a complaint with the Bureau of Consumer Protection online, by phone at 1-800-441-2555, or by email to scams@attorneygeneral.gov.
“This civil action seeks restitution for consumers who were duped and to prevent Eagle Rock from selling any more properties based on lies,” said Henry.