Taipei prosecutors yesterday summoned Candy Tang (
Battered by financial difficulties, the parent company of the nation's leading fitness centers, Alexander Health Clubs, (
"Prosecutors are investigating whether or not Tang's actions constitute fraud under criminal law," Taipei District Prosecutors Office spokesman Lin Ching-tsun (林錦村) told a press conference yesterday.
PHOTO: LEE YING, TAIPEI TIMES
Lin said seven prosecutors led a number of assistants in raids yesterday afternoon on six locations, including the headquarters of Alexander Group, the residence of Candy Tang and her younger sister Tang Hsin-ru (
Prosecutors seized a number of accounting documents and member lists, Lin said.
Lin said Candy Tang, Tang Hsin-ru and shareowner Lee Yung-hua (
The trio entered the Taipei District Prosecutors Office around 7pm, and questioning was going on as of press time.
Lin said that if Alexander Group realized it had financial difficulties and would soon suspend operations, but was still advertising for new members, it may have violated fraud laws.
He added that if Alexander Group lowered its membership fees in order to attract more members before it announced a suspension of operations, that might also constitute fraud.
Lin said prosecutors were also investigating whether or not Tang or other officials of the health club embezzled funds from the company.
At a press conference on Monday, Candy Tang said, "I regretfully announce that all branches have suspended operations."
Candy Tang also accused Lee Yung-hua of defrauding her out of NT$95 million (US$3 million).
Lee held a press conference yesterday evening before visiting prosecutors saying he and Candy Tang's finances were all conducted via contract and he did not steal any money from Candy Tang.
Candy Tang said that the company had experienced plummeting sales over the past two-and-a-half years caused by the poorly performing economy, fallout from the credit crunch and rising inflation.
Despite an estimated NT$2 billion in annual revenues, Tang yesterday claimed that the company's board was recently defrauded out of NT$95 million, which triggered a liquidity problem for her already financially troubled gyms.
The Cabinet's Consumer Protection Commission said yesterday that five domestic banks that provided loans to members of cash-strapped Alexander Group have agreed to help customers seek reimbursements once Alexander confirms closure, upon receipt of relevant documents.
Alexander members, however, need to present related documents to the banks, including contracts, credit card receipts and membership cards.
Other banks have not yet promised to come to consumers' aid despite thousands of angry consumers lodging complaints and accusing banks of being Alexander's accomplices.
One customer surnamed Yang said that his father had been a member of Alexander for three years, with the most recent contract expiring last Thursday. Unfortunately, Yang's father's health had worsened at the end of October after signing another year's contract on Oct. 19.
However, the company said it would require a 30 percent processing fee, which was unreasonable, if he wanted to refund his membership fee. After the Consumers' Foundation got involved, the company finally agreed to return his membership fee on Dec. 12, two days after announcing the closure of all its health centers.
"We believe that Alexander Health Clubs were purposely dishonest," said Cheng Jen-hung (
The Taipei-based Consumers' Foundation urged paid-up members of Alexander to immediately send letters to their banks requesting an end to their monthly payments after the company suspended all its operations yesterday.
"The performance bond (履約保證) passed by the Sports Affairs Council of the Executive Yuan on Aug. 15 this year, only covered prepayments over NT$50,000," said Chien Ching-yen (簡清燕), section chief of the Sports Affairs Council.
Consumers who did not use the service will only get reimbursed for amounts in excess of NT$50,000.
"The Sports Affairs Council needs to protect consumers regardless of the amount of their prepayment," Cheng said.
As for consumers like Chang who paid in cash, Cheng said the Consumers' Foundation would ask Alexander Health Clubs to reimburse payments based on the remaining length of the contract.
"So far we have received 529 phone calls from consumers who have been affected by Alexander Health Clubs' suspension of its operations," Cheng said.
Meanwhile, when approached for comment after a city government administrative meeting, Su Ying-kuei (
Yang Hsiao-tung (
Additional reporting by Flora Wang
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