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The Gym Membership Scam Company
In the late 2000-oughts my boss and I moved our then-tiny software development company out of a paint shop's closet in the industrial area and into a shiny, two-story office building. The building was owned by a fitness club collections agency, let's call it GymCo, which occupied the back half of the ground floor and the entire upper floor. We took up residence in one of the ground floor suits and quickly begin to grow. After a few years I ended up leaving to work with one of our business partners. A few years later GymCo went bankrupt, and this is its crazy tale which I just recently found out about.
Somewhere around the same time we moved our business into GymCo's building, GymCo and its building had been bought by a man we'll call Brandon. Brandon was a silver-tongued sociopath who didn't pay cash when he bought the business but rather got the previous owner to agree to periodic installments. However, he never paid the previous owner.
At the time I didn't know about the non-payments but I was vaguely aware of some “feud between the owners,” and at one point the previous owner's son had even gotten into the building and tried to tear through a wall to get to GymCo's server room. One of the following nights I was working late (so late that I was planning on sleeping at the office), and Brandon came into our suite, handed me a hundred-dollar-bill, and asked me to walk the building every 20 minutes to make sure nobody had broken in. Sweet! I got an easy hundred bucks and there was no incident that night.
The previous owner tried to take Brandon to court, of course, but there are ways to delay these kinds of legal proceedings for ages. Meanwhile, Brandon had a profitable and potentially sustainable business on his hands, but instead he leached off it and drove it into the ground. GymCo's purported business model was that it would manage membership data and collect fees on behalf of gyms and fitness clubs across the country, then these funds would be forwarded to the gyms minus a small processing fee. GymCo's compaign boasted daily deposits to the gyms, but they were more like weekly, then bi-weekly, then monthly, then bi-monthly, etc., until the deposits just completely stopped. As a resut, several gyms couldn't pay their employees, their rent, or their property taxes, and ended up going out of business. A few ended up half a million dollars in debt!
That didn't stop GymCo from continuing to collect membership fees, as people continued to be billed after several attempts to cancel their memberships through GymCo. If you look up GymCo on Google Maps, not only will you find it listed as “permanently closed,” but you'll find about a hundred one-star reviews from people who got ripped off by GymCo. Many reviewers tried canceling after moving to areas without any participating gyms, but GymCo refused their proofs of address—even when it came from an attorney! One reviewer stated that he was a club owner and after using GymCo's program for nearly a year, deposits stopped but GymCo continued to collect fees from his members, and at the time he was owed nearly $7,000.
GymCo even stiffed its own employees. There were people who hadn't been paid in six months but were still showing up for work!
As if all that wasn't enough, Brandon wasn't even paying the building's utility expenses. After a period of non-payment, a utility would get shut off and the provider would blacklist him, so then Brandon switched to another provider and didn't pay, until that provider shut off its service and blacklisted him, and so on.
There came a day when the internet was shut off, which of course affected my boss's business. When my boss called the internet service provider to get the service turned back on, they refused and said, “Not until full back payment has been made!” Well, my boss wasn't responsible for that financial burdon, but luckily he managed to work something out and got internet restored within two days.
The building eventually came under new ownership, but the new owner found it difficult to acquire any services as the building had been blacklisted by several businesses.
After destroying several businesses, GymCo also went bankrupt. Brandon filed for Chapter 13 bankrupcy in July of 2016, but then his filing was rejected a month later because—unsurprisingly—he did not pay the filing fees!
As far as we know, Brandon never went to prison like he ought to have. There are still business profiles like LinkedIn that list him as “President/CEO at GymCo.”