Royal Links Golf Course Scandal Up-date

Lord, Bissell & Brook LLP, the Chicago based law firm representing members of the National Golf Course Owners Association states there is a possibility of taking legal action against entities and individuals related to Royal Links in the Bankruptcy Court proceedings. On Friday August 19, 2005, Royal Links USA filed a Voluntary Petition for Chapter 7 Bankruptcy with the United States Bankruptcy Court for the Northern District of Ohio.

Royal Links USA Inc., in Springfield Township, reportedly made deals with golf course operators across the country from Jan. 1, 2002, through the end of last year to provide beverage caddies from third-party leasing companies, usually for a 60-month term, according to the suit in U.S. District Court in Toledo.

Under the arrangement, the golf course operators could sell beverages and keep the proceeds and would allow Royal Links to display advertising panels from the national sponsors on the carts. Royal Links also was to reimburse the course operators monthly for the lease costs.

The carts, however, were being provided by a third party, and when the local firm told the golf operators in October that it no longer would pay the reimbursements, the operators were still responsible for the cart leases, the lawsuit states.

Some operators said they were unaware the carts were being provided by another party and would not have signed the deal had they known the lease and the reimbursement weren't linked.

Lord, Bissell & Brook LLP is currently evaluating the possibility of taking such action in the Bankruptcy Court case, particularly with respect to funds that may have been transferred from Royal Links to other entities or individuals, according to the National Golf Course Owners Association:

""With respect to the leasing companies, LB&B previously served subpoenas requesting the production of documents relating to the various leasing companies' relationship with Royal Links. However, the filing of Royal Links's Bankruptcy Petition prevents the enforcement of these subpoenas at this time. Lord, Bissell & Brook will, therefore, initiate another round of communications with the leasing companies in hopes of furthering the possibilities of reaching settlements on the lease obligations.

Class members should be aware of the ramifications of ceasing lease payments; such action is still precipitating lawsuits against these courses. Some lease companies appear to be unwilling to settle, while others have settled in court. One example is with Junction City Country Club (Junction City, KS) and Landmark Financial. Junction City was responsible for a $7,700 balance under their lease obligation and settled with Landmark for $3,800, although legal fees and other costs added up to more than the savings of the settlement. The attorney who represented Junction City is Ryan Williams, and he can be reached at 303-623-1800. Harold Johnson with Junction City Country Club can be reached at 785-238-1161."

These are the eleven leasing companies involved in the alleged fraud with Royal Links.

C&J Leasing
CFC Investment
Dollar Bank Leasing
Excel Financial
Frontier Leasing
IFC Credit
Key Equipment
Landmark Financial
Pawnee Leasing
Preferred Capital
Susquehanna Patriot

“Royal Links USA had salesmen call on golf courses to offer free beverage carts. (cold beer, wine, soda's, snacks.) The courses would use them and allow advertising panels to be displayed by Royal Links. Various national merchandisers would pay Royal Links for ads. Royal Links supplied products for free with delivery, and also paid the courses a lump sum (normally $1000) to initially stock the cart with startup merchandise.

“Courses entered into an agreement whereby Royal Links paid the course about $300 per month in sponsorship money, which was then sent back to their leasing arm as a lease payment. This arrangement was simply explained as their accounting procedure.

“We became concerned initially when it was requested the cart be insured for $12,500. The cost of the cart is most likely less then $1000.

“In October 2004, all courses were notified that Royal Links would no longer pay the $300 per month in sponsorship money. Our cart had been delivered about 60 days prior to this notice. The leasing company insisted they were independent and demanded the $300 monthly payment (for 5 years). Preferred Capital quoted a payoff of approximately $15,900.”

(name with held)