Leader Health and Fitness fined, restitution expected
State Attorney General Tom Corbett announced Thursday he has reached an agreement with owners of Leader Health and Fitness. The owners face fines and restitution under the Unfair Trade Practices and Consumer Protection Law.
Corbett is ordering "BBMJ, LLC," doing business as Leader Health and Fitness, 2500 S. George St., to pay $45,000 in restitution to nearly 150 people who pre-purchased memberships to the health club, along with about 300 people who purchased summer memberships to the club's swimming pool. Leader Health and Fitness has also agreed to pay $10,000 in costs and civil penalties as a result of its abrupt closing June 9.
The popular York Township center left at least 20 people without jobs and angered many of the hundreds of people who bought summer pool or gym memberships. The facility owners wrote a letter to members saying they planned to leave the business and sell the property.
Corbett's legal "assurance of voluntary compliance," or settlement, against the business owners said he has received at least 215 complaints as a result of the closure.
The settlement said Leader owners -- Stephen Menges, Bryant Ferris and Robert Balasavage-- violated the Consumer Protection Law by continuing to sell long-term memberships to the gym up until the day before it closed. Selling the memberships was "fraudulent or deceptive conduct which creates a likelihood of confusion or misunderstanding," the settlement said.
As part of the settlement, the owners agreed to never own or operate a health club in Pennsylvania again.
A "Letter of Credit" was filed with Susquehanna Bank should be used to give customers refunds, with the amount, timing and manner of the distribution decided by the state.
The owners must also pay a $5,000 fine to the state, and an additional $5,000 that will be used for future public protection and education.
The owners have 90 days to get the Susquehanna Bank money or to pay the restitution to gym and pool members.
The $10,000 in fines is due in 120 days.
Relieved: Red Lion resident Natasha Bucalo, who spent about $600 for pool membership and a personal trainer days before the club closed, said she's glad to hear she'll be getting her money back.
"I just hope it doesn't take too long," she said. "That's $600, so I want that back, you know."
Attorney General spokesman Nils Frederiksen said gym and pool members will get a letter and a check from the Attorney General by the end of the summer.
Leader owners have paid about $78,000 in refunds to customers who paid in advance for summer camps to be held at the center, but pool and gym members haven't gotten refunds, Frederiksen said.
Corbett's office is working to cross-index its list of complainants with a list of Leader payment records, Frederiksen said.
Members of the pool or gym who have not yet filed a complaint should call the Attorney General's office to ensure they get money due to them, Frederiksen said.
"Its unfortunate the way this situation was handled...and we're happy to get this resolved as quickly as possible," he said. "People were paying a large sum of money up front and didn't get anything for it."
Property selling: Members of Leader's gym were originally directed to the Athletic Club of York in West Manchester Township, but that agreement fell through.
Leader owners, who could not be reached for comment, have announced that they have agreed to sell the 9.8-acre site to WellSpan Health.
WellSpan doesn't plan to buy the property until fall and wasn't involved in any decision to close the center before the sale, said spokesman Barry Sparks.
The healthcare group is planning to purchase the property for $3.25 million. York Township, which formerly operated the facility, sold the property to "2500 S. George St. Partners" for $1.1 million in 2004. Corbett's office also reached a settlement with Planet Fitness, 1319 Millersville Pike in Lancaster, formerly known as Lancaster County Racquetball & Health Club.
Where to call:
Corbett also announced actions Thursday against fitness centers in Harrisburg, Lancaster, and Allegheny County.
Gym or pool members of the former Leader Health & Fitness who have not yet done so should call contact the Attorney General's Consumer Protection Hotline, at 1-800-441-2555, or file an online complaint using the Attorney General's website: www.attorneygeneral.gov. Click on "consumer complaints."
Reach Christina Kauffman at 505-5436 or ckauffman@yorkdispatch.com.
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