Most golf course owners who were a part of the Royal Links, USA hospitality cart advertising program lost a lot of money. Advertising that was supposed to pay for lease payments never materialized and the program eventually collapsed leaving the owners with making monthly lease payments amounting to over $20,000. It would not have been so bad if the owners hadn't paid $12,500 for what amounts to a Styrofoam cup with wheels and a canopy. It wouldn't cool if you didn't add ice and couldn't keep anything warm unless it was made warm. You could pull it behind a golf cart but it wouldn't move on its own. For $12,500 you could have purchased a fancy riding mower and pulled a $200 cart behind it with coolers filled with ice and at least you would have a useful piece of equipment.  Many of the leases required venue in Polk County, Iowa, which is why I became involved with representing golf course owners who were sued by the leasing companies after they refused to make the agreed monthly payment. And that's where we all learned about the hell-or-high-water clause.

Royal Links USA - Claim Form – Victim Impact Statement

If what I’ve been told is true over 2,500 hospitality carts were sold to golf course owners at a price tag of $12,500 each. The $12,500 was what the leasing companies paid to Royal Links, USA. The golf course owners then received shipment of the cart and started making lease payments to the leasing companies. Minus the advertising dollars being paid to the golf course owners this is simply an equipment leasing program. The number of carts paid for by the leasing companies adds up quickly. Add it up; it’s not chicken feed. It’s over $31 million.

How was this program sold?

The golf course owners were told by a man now deceased, but working on behalf of the Royal Links, USA program, that this program was a no-brainer. If the owners signed up for the advertising program and agreed to lease the cart, RL would pay them from advertising revenues generated from ads placed on the carts. When no advertising revenue was being generated the program collapsed because the golf course professionals and course owners refused to make payment on the monthly lease payment. They refused because this no-brainer turned into a no-advertising-revenue generator and was simply a way to get thousands of dollars in initial payments to Royal Links, USA and then lease payments to leasing companies. Said another way they were paying out money with none coming in to cover the no-brainer lease payment. And that is where the hell-or-high-water clause proved so important. That clause says come hell or high water you will make the lease payment; even if the program collapses, even if the way the program was sold to you proves to be false you will make that lease payment. The leasing company doesn't guarantee the program dollars or even care about what you've bought; they just care that you make a monthly payment on the lease. What you need to appreciate is that the hospitality program and the lease aren't linked together. And that's where this hell-or-high-water clause proved to be a royal pain. There is no guarantee in an equipment lease that what you are buying will work. But there remain serious questions that have never been answered, and that's because it appears no one has ever asked the right questions. Remember, advertising dollars were promised and each cart cost $12,500 to purchase (plus interest payments). Two questions still need answers.

One, what advertisers were signed up when the program was first sold to golf course owners?

But the advertising dollars never did materialize which raises a question as to what third-party advertising was in place when the program was first being sold. If there were no advertisers in place before the hospitality cart program started, then where did the few dollars paid to the first few owners come from? Were those owners who promoted the program as being a no-brainer being paid from the money other owners were paying Royal Links to buy into the program? If so isn’t that a classic strategy of the Ponzi schemer?

Steve's Litmus Test: If you admit it’s your signature on the lease then for sure you didn’t read the lease.

Number two: And another question looms large about the money taken in from sales by Royal Links, USA. What happened to the millions paid for these carts?  Where did it go and is there any left and sitting in some bank account? I never could understand why no one filed an objection in the Royal Links USA bankruptcy proceedings asserting this was one giant Ponzi scheme; then doing the necessary discovery and tracking the cash? That seemed to me to be the correct way to go about finding justice by locating any money remaining. Find the cash stash and you just hit a hole-in-one. But that lawsuit never was filed and none of my clients had the money to hire counsel and pursue it.  So if there is any cash left it’s probably long gone and sitting in Switzerland or perhaps a Bahamian bank. Perhaps that is what the U.S. Attorney’s office in Ohio needs to pursue before the sentencing hearing. As Judge Fitz would say, "follow the money".

So if you were one of the unlucky ones that signed up for the Royal Links, USA hospitality cart advertising program you may still find some justice, but only if you fill out a DOJ Victim Impact Statement. For the many clients we’ve represented here is the DOJ Victim Impact Statement (financial claim form) that you should fill out and file.

Royal Links USA

Victim Impact Statement 

The US District Court for the Northern District of Ohio has postponed the August 23 sentencing hearing for the defendants in the Royal Links Case. The judge has not set a new date for the hearing.

This delay gives golf course owners who had contracts with Royal Links additional time to complete the Victim Impact Statement and provide it to the court. These statements will be considered by the judge in the sentencing process. In addition to possible restitution to victims, we understand the maximum penalty is five years imprisonment.

Please download the Victim Impact Statement and return it via fax to:

Terri Greene
Victim/Witness Coordinator
US Attorney’s Office, Northern Ohio
Fax: 216-685-2378

The National Golf Court Owners Association has tried to keep its members up to date on announcements and the efforts by the Department of Justice in the Northern District of Ohio to bring some justice to the table. Indictments were brought and plea agreements worked out but one question still not answered is what happened to the money? NGCOA

And good luck with that golf swing. One of these days I'll get some time off to learn the game that everyone talks so much about. But right now I'm too busy dealing with hell-or-high-water clauses. Those my friends are sort of like sand traps.

For Additional Information

• Dept. of Justice Indictment
  Dept. of Justice Press Release 
• Victim Impact Statement
• NGCOA – National Golf Course Owners Association Royal Links USA page

Questions to ask and answer before signing equipment leases:

• What is a hell or high water clause?
• Have you read the lease?
• Do you understand the terms?
• What happens if the product you’re financing the purchase of stops working?
• Do you still have to make lease payments if the product being financed doesn’t live up to your expectations?
• What difference does it make that the manufacturer of the goods isn’t financing the purchase or lease?
• Would you be better off paying an attorney to review the lease and advise you as to what your liability may be?
• Have I considered all other avenues for financing the product?
• Am I better off having the product manufacturer finance the purchase of lease?
• If the manufacturer isn’t willing to finance it should that tell me something about this program?

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Iowa Supreme Court on the hell-or-high-water clause wherein the Court discussed the clause and describes the cart in a lower court opinion as follows:

Footnote 2, One district court judge has referred to the carts as “an ice chest on wheels.” See C and J Leasing Corp. v. Hendren Golf Mgmt., Inc., No. 06–0429, 2007 WL 257955, at *1 n.3 (Iowa Ct. App. Jan. 31, 2007). The carts have no mechanized features of any kind for transportation, refrigeration, or a cash register.