Sandals Resort ‘worked in concert with local Caribbean governments in tax fraud scheme’, claims $5 million lawsuit

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Sandals' Beaches Resort in the TCI

By Caribbean News Now contributor

MIAMI, USA – Sandals Resorts International has been slapped with a huge lawsuit over allegations the all-inclusive resort “worked in concert with local Caribbean governments in a decades-long tax fraud scheme”, according to court papers filed in US federal court, in Florida on Tuesday.

Sandals Resorts International is accused of charging guest’s 12 percent tax rates but instead of paying the funds to local governments, the funds are ‘secretly retained by Sandals for its own profit’, according to the lawsuit filed.

Vitali Feldman, a New Jersey resident, is the only named plaintiff in the suit, hired Lipcon, Margulies, Alsina & Winkleman, a Miami-based law firm to represent him, along with any others who join the lawsuit, which is seeking at least $5 million.

Feldman, along with his wife and two young children vacationed at a Sandals Resorts in 2017, 2018 and 2019.

The New Jersey resident claims he fell victim to the alleged scheme when he was billed with the ‘all inclusive’ tax rate of 12 percent of the total cost of his stay at Sandals.

Attorneys allege current and past customers were ‘deceived into paying such tax [in whole or in part] that was, in fact, being surreptitiously held by Defendants for their own use, benefit and profit’.

“At all times material, it is represented to the public and Plaintiffs and others similarly situated that the ‘all inclusive’ packages include ”all taxes.”

“The way the charges were presented to the guests was described in a deceptive way by labelling the charge(s) as a local government tax, when in fact Sandals was charging more money for the room,” the lawsuit states.

In a statement to media, a representative for Sandals Resorts stated: “Not only do we conduct our business with pricing transparency but we meet all of our tax obligations in each of the islands where we call home.”

In court papers, attorneys claim all guests of Beaches Turks & Caicos, which falls under Sandals Resorts’ ownership, paid a 12 percent accommodation tax.

However, “unknown to Plaintiffs and others similarly situated is the existence of an agreement between Sandals and the Turks and Caicos government permitting Sandals to retain a significant percentage of such taxes for its own use and benefit instead of remitting the monies to the government,” the suit claims.

It adds: “These tax charges are used to generate extra profit at the expense of plaintiff and others similarly situated, who were deceived into believing the fees are legitimate charges directly related to Sandals,” owed and paid taxes to the government.

“In fact, the fees are nothing but profit-enhancers disguised as taxes that have a legitimate purpose, constituting a violation of the Florida Deceptive and Unfair Trade Practices Act.”

As previously reported at some length this legal action inviting former guests at Beaches to reach out to the firm via its website at www.lipcon.com

Caribbean News Now also reported that during a recent interview on local radio, TCI opposition leader, Washington Misick, described as “illegal” a so-called “gentlemen’s agreement” between the TCI government and Sandals, absolving Sandals from payment of the 40 percent of the accommodation tax, a revenue concession that had never been presented to or approved by parliament.

“Technically speaking, they [such gentlemen’s agreements] are totally illegal because only the parliament could make laws relating to taxation,” Misick told listeners.

In the meantime, the TCI government has attempted to extricate itself from this dilemma by passing a so-called “Validation Bill” that purports to validate the unlawful collection of taxes on guests 12 years old and younger from August 1, 1985, to date.

A protester calling on Sandals Resorts’ owner Gordon ‘Butch’ Stewart to repay $24 million in assessed taxes written off by the government

In Saint Lucia last year, protesters called on the owner of Sandals Resorts, Gordon ‘Butch’ Stewart, to pay a disputed tax assessment of $24.4 million dating back to 2001, including interest and penalties, which the government later agreed to write off.

Sandals International is accused of operating the same alleged scheme at its properties in Barbados, namely, the Royal Barbados and Grande Antigua, where guests are charged a 12.5 percent sales tax.

Again, Sandals Resorts allegedly “retained a significant percentage of such taxes for its own use and benefit instead of remitting the monies to the government”, due to “an agreement between Sandals and the Antigua and Barbuda government”.

The suit adds: “By bundling the fees, taxes, and other charges into the all-inclusive package, Sandals is able to conceal the fact that consumers were being vastly overcharged for the all-inclusive resort package due to the agreement to retain a large portion of the taxes.

“In short, Sandals has, through fraud, deception, omission and/or concealment, engaged in a pattern of unlawful profiteering, deceit, and self-dealing with regard to charging a local government tax and retaining a large percentage of such.”

The attorneys claim in court papers that Sandals Resorts settled with the government of Antigua and Barbuda over unpaid sales tax totalling $37.5 million up to late December of 2016.

Sandals agreed to pay $1 East Caribbean Dollar, which is around 37 cents, the government accepted.

According to court papers, “Because the government stipulated to not collect the $37.5 million and Sandals retained such monies, Plaintiffs and other similarly situated are entitled to these monies as it relates to the taxes they were fraudulently and deceptively charged.”

The suit is seeking at least $5 million, exclusive of interest and costs.

An investigation by the Detroit Free Press last year found that Sandals covered up crimes of sexual assault at its Jamaican properties. Two young women from Michigan who say they were assaulted at Sandals resorts sued the company in federal court in Miami in May 2017. That case is still pending.

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1 COMMENT

  1. Soooooo, we are to believe that successive governments made up of different parties and politicians, their auditors and hundreds of public servants, as well as all the international audit firms that review these arrangements were either incompetent or complicit for decades? That is what you’d have us believe?

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