Indian Falls Lake Campground closed in May because raw sewage contaminated the area, and state authorities started an investigation in July.
The owners of the Genesee County site, nevertheless, continued to hawk memberships to unsuspecting consumers until Friday, when they were slapped with a court order ending their telemarketing operation, state Attorney General Dennis C. Vacco charged Monday.
"They were making calls as the papers were served. The manager just sent everybody home and locked the door," said Mike Zabel, a Vacco spokesman.
The order, signed by State Supreme Court Frank A. Sedita Jr., not only prohibits the sale of additional memberships in Indian Falls, near Corfu, but also stops the owner, Thousand Adventures of Blair, Neb., from reporting members to collection agencies for refusing to make payments.
A lawsuit was filed seeking restitution and penalties for people who have paid $3,490 to $6,990 for memberships without being told the facility had been closed indefinitely.
The suit also aims to force Thousand Adventures to repair the sewage system and bring the property into compliance with health codes.
The suit also will pursue a permanent injunction against the company's "deceptive and illegal" sales practices.
Vacco decided to act after the three-month probe by his Consumer Frauds Bureau revealed the owners were continuing to "aggressively market memberships in the campground, promising consumers full use of the facilities," although the Genesee County Health Department had closed the site after raw sewage was observed bubbling up from the ground.
In the interim, Thousand Adventures has failed to submit repair plans to the county while continuing to sell memberships and collect dues.
It also has threatened members with collection proceedings and negative credit reports if they withhold their annual maintenance fees, Vacco said.
Thousand Adventures, which operates 55 other campgrounds nationwide, has insisted it did nothing illegal and is the target of a smear campaign engineered by disgruntled customers.
But the investigation indicated that Indian Falls Lake "went into a tailspin" soon after the Nebraska company purchased it in 1994 from the former operator, Mark Equity Resorts, Zabel said.
The recreation lodge was turned into a sales office; restrooms were closed; and the baseball diamond was used for storage. Then sewage started bubbling up, he said.