FOR IMMEDIATE RELEASE
November 25, 2008
Martial Arts Club Faces Second Lawsuit for Leaving Families out Tens of Thousands of Dollars
Attorney General Steve Carter sues after company closes its doors on consumers
(INDIANAPOLIS, IN) – Champion Martial Arts (Champion) and its owner Jonathan Stowe are the subjects of a civil lawsuit by the attorney general’s office alleging the company deceived and misled customers into long-term memberships, knowing the agreements could not be fulfilled.
Nineteen customers are named in the lawsuit that states Champion solicited and contracted with Indiana consumers for multi-year contracts of martial arts training knowing the obligations would never be met due to impending evictions from its operating locations in Hamilton County.
Champion Martial Arts entered into leases to conduct business out of locations in Carmel, Zionsville and Noblesville providing martial arts training to children and adults. The Carmel location opened in July 2006, Noblesville in November of 2007 and Zionsville in March of 2008. During the course of its operations, Stowe often failed to pay rent on his leases and salaries owed to his employees.
Champion solicited and received substantial funds from Indiana consumers. Stowe allegedly instructed his employees to entice consumers into paying for a membership agreement of a typical three-year term 100 percent up front. As an incentive, Champion represented a 20 percent discount plus free equipment. It also used 30 day “free” trial memberships as means to lure families into long-term contracts. Employees were also directed to tell consumers that the credit card processing equipment was broken to force them to pay via personal check.
Stowe misappropriated the money he received by paying personal and past business debts with no regard to the long term obligations owed to consumers. Additionally, Stowe used the funds for personal expenses such as the leasing a new vehicle and taking an extended Caribbean vacation, among other things.
As debts mounted, Stowe ignored the inevitable closure of the Champion locations and continued soliciting and contracting with new consumers. Formal eviction letters were issued to Stowe by the Noblesville landlord in March 2008. Stowe also received warning letters from the Carmel landlord. The Zionsville location was closed by the landlord in August 2008, the Noblesville location was closed by the landlord in September 2008 and Stowe personally closed the Carmel location the following month.
An attorney general investigation into the 19 complaints received by the office revealed that contract amounts ranged from $2,900 to as much as $5,760. Many consumers also paid additional fees to upgrade their packages ranging anywhere from $443 to $2,210.
“These families were enticed and lured into thinking they would have a chance to learn more about martial arts before making a longer commitment to program fees,” Carter added. “It is unfortunate for the people involved that their efforts to engage in a healthy and constructive extracurricular activity and learning experience ended up in conflict leaving them without the services they paid for in full.”
In 2006, the Indiana Attorney General’s Office accused Stowe of deceiving and misleading customers in northern Indiana. Stowe agreed to a court order and made $20,000 in refunds in that incident.
The state is alleging Champion and its owner committed violations of the Health Spa Services Act, violations of the Deceptive Consumer Sales Act, knowing and intentional violations of the Deceptive Consumer Sales Act, and violation of injunction.
The attorney general’s office is asking the court to declare all membership agreements with the 19 consumers void, as well as to order the defendants to pay consumer restitution to be determined at trial. The lawsuit also seeks costs, civil penalties, and an injunction barring Champion and Stowe from entering into illegal contracts in the future.
The lawsuit has been filed in the Hamilton Circuit/Superior Court.
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