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The Ventura County district attorney has secured a $6 million judgment against Gold's Gym of Oxnard in connection with a civil action alleging the gym had illegally profited off members for years by making it nearly impossible to get out of gym contracts.
In addition to imposing monetary penalties, Judge Vincent O'Neill on Tuesday issued a permanent injunction prohibiting the defendants - the gym, its owner, Noel Thompson, and his company, Body Shaping Investments LLC - from further violating health studio services laws.
In court filings, the District Attorney's Office compared Gold's Gym of Oxnard to the Eagles song "Hotel California," which warns, "You can check out any time you like, but you can never leave."
The case accused Thompson and his business of engaging in anti-competitive, unfair and unlawful business practices, citing 30,000 violations, each carrying a potential civil penalty of up to $2,500 for a possible total of $75 million.
The complaint was filed in October after the District Attorney's Office conducted a four-year investigation. Investigators collected at least 19 statements from people who accused Gold's of unlawful activity, and they recorded exchanges when people tried to cancel memberships.
In one instance cited in court documents, a veteran who was permanently disabled after an accident and a stroke could no longer exercise at the gym. He went there in his wheelchair and handed over a letter from the Department of Veterans Affairs indicating he was disabled.
"The Gold's Gym employees told me that letter from the VA was not a 'doctor's note' and would not suffice to cancel my membership," the veteran said in a declaration attached to the district attorney's court filing.
The man agreed to wear surveillance equipment and went to the gym accompanied by an investigator posing as his assistant. His cancellation attempts were documented by the investigator, and he eventually managed to cancel his membership.
Senior Deputy District Attorney Karen Wold called the gym's business practices disturbing.
"We're happy with this result," she said Tuesday.
Thompson's company, Body Shaping Gyms Inc., filed in December for Chapter 11 bankruptcy protection from its creditors. The U.S. Bankruptcy Court for the Central District of California ordered a trustee be appointed to oversee its business operations.
The trustee could not be reached to discuss the gym's future.
Thompson's attorney, Ron Bamieh, said the bankruptcy court is going to reduce the award to pennies on the dollar.
"The trustee is never going to give them $6 million," he said. "It's just never going to happen. So what exactly that accomplished I'm not really sure."
Bamieh represents The Star on First Amendment issues.
Gold's Gym Oxnard operated as an independent franchise at 2251 E. Gonzales Road. The 10,000-square-foot facility sits on property Thompson owns, court records state.
Gold's Gym International is a separate entity that had "marginal oversight" of Thompson and leaves customer complaints to him, according to court records. Soon after the District Attorney's Office filed its complaint, Gold's Gym International severed its relationship with Thompson, court records show.
Thompson has entered a new franchise agreement with Powerhouse Gyms International, but the bankruptcy court must authorize the deal. Court records indicate no hearing has been set on that matter.