Sat | Sep 24, 2022

Sandals fights back - Denies claim it operates decades-long tax fraud scheme

Published:Friday | May 24, 2019 | 12:30 AMLivern Barrett/Senior Staff Reporter
Adam Stewart is deputy chairman of Sandals Resorts International.
Adam Stewart is deputy chairman of Sandals Resorts International.

Jamaican hotel chain Sandals has dismissed as “downright false” allegations raised in a lawsuit filed in the United States (US) that for decades, it “secretly” pocketed fees collected from guests as “local government taxes”.

Lawyers for Vitali Feldman, the American man who filed the lawsuit, claim that current and past customers who stayed at Sandals properties in several Caribbean countries were “deceived” into paying ‘local government taxes’ that were quietly retained by the all-inclusive chain for its “own use, benefit, and profit”.

The lawsuit, which seeks at least US$5 million in damages, was filed in the Florida Federal Court on Tuesday by the Miami-based law firm Lipcon, Margulies, Alsina & Winkleman.

The allegations have been reported in a number of international publications.

“Deceptive charges are used to generate extra profit at the expense of [guests], who are deceived into believing the fees are legitimate charges directly related to Sandals’ taxes to the government,” one newspaper reported, citing court documents.

But Sandals has signalled that it will vigorously defend “these baseless allegations”.

“Our valued guests have never been unlawfully charged for taxes, and allegations to the contrary are downright false. Our customers are our top priority, and under no circumstances would we exploit their faith in us,” Sandals Resort International (SRI) said in a statement.

“Not only do we conduct our business with pricing transparency, we meet all of our tax obligations in each of the islands where we call home,” SRI said.

“We take great pride in being the gold standard in the islands where we operate and have spent close to four decades providing guests with the most comprehensive vacation experience bar none,” the hotel chain added.

SRI is chaired by mogul Gordon ‘Butch’ Stewart, with his son, Adam Stewart, as deputy.

But according to the lawsuit, the hotel chain represented to the public and Feldman that the ‘all-inclusive’ packages include ‘’all taxes’.’

“The way the charges were presented to the guests was described in a deceptive way by labelling the charge(s) as a local government tax, when, in fact, Sandals was charging more money for the room,” the British-based newspaper reported.

Feldman, a resident of New Jersey, claimed that he vacationed at Sandals Resorts’ properties with his wife and two young children in 2017, 2018, and 2019.

He claims that he fell victim to the alleged overcharge when he was billed the ‘all-inclusive’ tax rate of 12 per cent of the total cost of his stay.

The lawsuit highlighted, in particular, a 12 per cent accommodation tax it said is currently collected at Sandals’ Beaches Turks & Caicos resort. It alleged that a majority of those fees are being retained by Sandals as part of an agreement with the Turks & Caicos government.

Further, Beaches Turks & Caicos has been accused of collecting the accommodation tax on guests under 12 years old, which is said to be illegal under Turks and Caicos law.

The suit also cited a 12.5 per cent sales tax that was collected by Sandals Grande Antigua, Sandals Barbados, and Sandals Royal Barbados resorts prior to 2017 and allegedly retained, in part, by Sandals.