International Reaches Agreement on Payout/with Tax Commission

Article excerpt

International Spa Inc. of Oklahoma City reached an agreement Tuesday with the Oklahoma Tax Commission for a payout of delinquent sales taxes and penalties totaling $115,099, according to Robert Struble, attorney with the commission.

International, also known as United Spas Inc. and operating as International Fitness Center, agreed to pay $20,000 a month to the tax commission starting March 1. The taxes owed are for the period between Feb. 1, 1986, and Sept. 30, 1986.

International posted a $70,000 bond to cover the actual taxes due, Struble said. The remainder is interest and penalty against the taxes.

The tax commission filed a lawsuit in Oklahoma District Court in December which sought to shut down the centers until the tax claim was paid. The motion for injunctive relied was denied and International Fitness attorneys indicated at that time the taxes would be paid.

Although the state tax claim is being worked out, International still faces violations in Missouri for continuing to sell memberships while a Kansas City club was being foreclosed. In addition, at least 30 lawsuits have been filed in Oklahoma County District Court against the fitness centers. The lawsuits involve non-payment on accounts from $80 to over $6,000, non-payment of leases, and also personal injury cases.

International reportedly owns fitness centers in the Kansas City area, Tulsa, Oklahoma City and Albuquerque, N.M. Each center is held under a separate corporation with its own name, such as International Fitness Center of Quail Creek Inc. in Oklahoma City.

Missouri's attorney general filed a petition last Friday alleging International Fitness Centers of Kansas City violated Missouri's Merchandising Practices Act, encompassing truth in advertising, by concealing its financial problems from the consumers who purchased memberships.

Although the company knew the center was facing the threat of foreclosure, it continued to sell memberships until the doors were closed, said John Baker, spokesman for the Missouri attorney general's office. Baker said the center made no provisions for the sale of memberships to a new buyer. The center is one of six located in Kansas City, Mo., and Kansas City, Kan.

Anchor Savings Association of Kansas City, Kan., began foreclosure proceedings against the center in January. This month, Boatman's First National Bank of Kansas City, Mo., bought the first, second and third mortgage on the property for $1.7 million. There are no current liens on the building.

Boatman's then leased the facility to Health & Tennis Corp. of America, a subsidiary of Chicago-based Bally Manufacturing Corp.

International Fitness Center of Kansas City leases its buildings and property, according to a spokesman for Boatman's First National Bank. The owner of the foreclosed property was Hilltop Associates Ltd. The general partners of Hilltop are William McDonald, president of International, and Edward Shelby, an officer of the company.

Baker said financial problems of the International Fitness Center of Kansas City were brought to the attention of the Missouri attorney general about one month ago with word of the foreclosure action.

"Yet, as far as we knew they were still selling memberships," he said.

Baker said Health & Tennis Corp. will "probably honor those memberships to a point."

On the day the facility was foreclosed upon, individuals who had purchased memberships over the previous 30 days were requested to notify the attorney general's office, Baker said.

The petition filed by the attorney general demanded injunctive relief, restitution and civil penalties against International Fitness Centers of Kansas City and McDonald.

The court has been asked to prohibit all Missouri International Fitness Centers from selling memberships without first telling consumers of their "financial straits," Baker said. …