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Consumer News Release

For immediate release -- August 1, 2001.
Contact Bob Brammer, 515-281-6699

State Obtains Judgments Against Fort Dodge Health Club Operators Defendants ordered to make refunds.

Defendants ordered to make refunds.

DES MOINES-- Iowa Attorney General Tom Miller announced today that his Consumer Protection Division has obtained judgments against the two owners of Central Avenue Gym in Fort Dodge, Iowa. On Monday, July 30, Webster County District Court Judge Kurt L. Wilke issued a Consent Judgment against one defendant, Ritalee Shapiro, and a Default Judgment against the other defendant, Andrea Lynn Lewis.

The state's lawsuit was filed on March 16, and alleged, among other things, that Shapiro and Lewis took in excess of $12,000 from Iowa consumers as prepayment for use of the "Central Avenue Gym" before the gym was open to the public and failed to either escrow the money or obtain a bond to protect consumer payments as required by Iowa law. The State's lawsuit also alleged violations of the physical exercise club law and the Consumer Fraud Act when some of the funds were applied for personal use and the gym was not opened on the dates promised when the memberships were sold. On the date the suit was filed, Judge Wilke granted the Attorney General's request for a Temporary Restraining Order preventing Shapiro and Lewis from accepting payment from consumers for the prepayment of physical exercise club contracts, and from spending any more of the money they had previously collected. At that time, the Judge also granted the Attorney General's request to freeze the bank account and other assets of the defendants in order to preserve resources necessary to restore consumers' money, if appropriate.

Under the Consent Judgment entered on Monday, Shapiro agreed to cancel all exercise club contracts and give refunds to all consumers who paid money for use on Central Avenue Gym. In addition, the Court permanently enjoined her from accepting any payments from consumers in the future regarding Central Avenue Gym, or any other facility before it opens, without complying with the escrow or bond requirement. In addition, she may not disperse any funds or other types of payment received from consumers without prior approval from the court or the Attorney General.

Shapiro also was enjoined from misrepresenting the availability, quality, or extent of facilities or services of a physical exercise club, and from accepting any money from consumers without either providing the service within the time frame she represented it would be provided, or promptly refunding that advance payment. The court imposed a civil penalty of $5000 on Shapiro, but provided that she is not required to pay the civil penalty so long as she complies with the court order.

Also on Monday, the court found Lewis in default for failing to file a response to the state's lawsuit. In his order, Judge Wilke issued a permanent injunction against Lewis under the same terms as the permanent injunction which applies to Shapiro. In addition, he also ordered that she be subject to a civil penalty of $5000 if she violates the court order and ordered her to pay the state's investigative costs and attorney fees, which totaled $6586.

Miller said that his office is continuing in its efforts to work with Shapiro as she cooperates in efforts to get refunds to consumers who paid Shapiro or Lewis any money in connection with Central Avenue Gym. Miller thanked Webster County Attorney Ron Robertson for his assistance in bringing the matter to the attention of Miller's Consumer Protection Division and assisting his staff with the prosecution of the case .