FOR IMMEDIATE RELEASE:

September 19, 2002

FOR FURTHER INFORMATION CONTACT:

Genene Morris (973)504-6327

NEWARK - New Jersey has filed suit against the principal of four North Jersey health clubs, three of which closed suddenly this year and one which never opened, leaving hundreds of consumers with worthless gym memberships, Attorney General David Samson and Consumer Affairs Director Reni Erdos announced today.

The lawsuit, filed in Bergen County Superior Court, alleges the gyms and their president, Steven Winters, violated the State's Consumer Fraud Act by making false promises and misrepresentations to consumers in connection with the sale of long-term gym memberships. The suit names as defendants:

• Health Concepts Health and Fitness Centers, Inc. ("Health Concepts - Fairview"), 323 Bergen Blvd., Fairview. Closed July 4, 2002.
  
  
• Health Concepts Health and Fitness Centers II, Inc. ("Health Concepts - Secaucus"), 600 Plaza Drive, Secaucus. Closed July 4, 2002.
  
  
• Health Concepts Health and Fitness Centers III, Inc. ("Health Concepts - Hoboken"), 210 14th St., Hoboken. Never opened.
  
  
• Steven J. Winters Enterprises, Inc., d/b/a/ Health Concepts Health and Fitness Centers IV, Inc. ("Health Concepts - West Orange"), 200 Pleasant Valley Way, West Orange. Closed February 22, 2002.
  
  
• New Jersey Sports Clubs, Inc.. 323 Bergen Blvd., Fairview. Upon information and belief, New Jersey Sports Club operated the Health Concepts clubs.

"This case involves outrageous conduct," Attorney General Samson said. "We believe Mr. Winters and the other defendants knew that the gyms were on the brink of closing and, in the case of the Hoboken facility, that the gym would never open, yet improperly persisted in collecting payments for long-term memberships. We are going to get back deposits and other losses for the innocent persons. We will continue to investigate, and if we determine that the fraudulent conduct of these defendants rises to the level of criminal behavior, we will prosecute them."

The State's six-count lawsuit alleges the defendants:

• Made false promises that Health Concepts - Hoboken would open and failed to open it.
  
  
• Made false promises to members of Health Concepts - Hoboken that they would receive refunds due to the failure to open the club.
  
  
• Failed to refund consumers who paid the full contract price for memberships at Health Concepts - Hoboken.
  
  
• Represented to Health Concepts - Hoboken members that they could transfer their members to Health Concepts - Fairview or Health Concepts - Secaucus for a five-year period in lieu of receiving refunds for the club that never opened, even though the Fairview and Secaucus facilities were on the verge on closing.
  
  
• Pre-sold memberships in full for the Health Concepts - Hoboken facility when they were prohibited by law from charging and accepting down payments greater than 25 percent of the total contract price prior to the club's opening.
  
  
• Failed to refund the balance of membership fees for deceased consumers according to the terms provided in the membership contracts.
  
  
• Sold long-term membership contracts to consumers just days prior to the planned closing of the clubs.
  
  
• Failed to notify current members of the planned closing of the clubs.

In addition, the complaint alleges, the defendants failed to renew the registration for the clubs during the last renewal period in February and allowed each of the $50,000 bonds posted for the Fairview and Secaucus locations to expire. Despite these violations, the complaint alleges, the defendants continued to sell long-term memberships for the Fairview and Secaucus locations up until their closings in July.

"Since the closing of the health clubs, the Consumer Affairs' Regulated Business Section has been fielding complaints from affected consumers and working with the bonding company in an attempt to assist consumers," Erdos said. "The lawsuit that we're announcing today is part of our ongoing efforts to see to it that all consumers are satisfied and that Mr. Winters and the health clubs do not profit from their unlawful activities."

To date, more than 1,000 consumers have complained to the Consumer Affairs' Regulated Business Section.

The State's suit seeks to require the defendants to pay restitution for affected consumers and maximum monetary penalties for each violation of the Consumer Fraud Act, as well as costs and attorneys fees. The suit also seeks to bar Winters from owning, operating, or managing any health club in the State of New Jersey unless and until full restitution is made to all consumers injured by the alleged conduct of the defendants.

"When we issue regulations, we expect compliance," said Attorney General Samson.

Deputy Attorney General Melissa Liebermann of the Division of Law is handling this matter for the State.