Cape Fraud

If you've driven east along Route 132 to Route 28 through Hyannis, you may have noticed a used-car dealership called Carquest. It's on the right side, just past the Cape Cod Mall, on a stretch where fast-food joints, motels, and banks seem to line every inch of the congested road. Carquest may well be the dingiest sight on the strip. There are no more than 20 vehicles crammed onto the tiny asphalt lot, and the weather-worn, dull gray building resembles an abandoned clam shack.

For a while, it was just another used-car dealership. But then, curiously, a few years back, some fresh, hand-painted wording appeared alongside the Carquest sign. It read: “RCI Appraisals.” It's painted over now, and the people who put the words there undoubtedly wish they could erase the whole enterprise just as easily.

Resort Condo International (RCI) Appraisals was a multimillion-dollar international time-share-valuation business, and if that strikes you as odd — a time-share business sharing office space with a used-car dealership — well, you're not alone. Turns out the owners of RCI Appraisals, a Hyannis couple who live less than a mile from Carquest, were raking in upwards of $80,000 a month by providing appraisals of time-share properties around the world, despite having no experience in real estate.

How did they do it? Shrewdly at first, according to the U.S. Attorney's Office, which has put out the word: If you own a time-share, you may well have gotten conned. Many of those who were duped don't even know about it.

“The only thing I'm guilty of is being related to that man!”

That's about all Jill Upton will say before she slams down the phone. “That man,” by the way, is her father, Donald Gonczy.

Jill, 38, and her husband, Michael Upton, 45, live in Hyannis with their four-year-old daughter in a rented three-family yellow house from which they can look out and see the Flying Cloud passenger ferry motoring in and out of the harbor to and from Nantucket. On one side of their house is a glassed-in terrace cluttered with toys. A rusted pickup with dealer plates, one of a rotating series of vehicles from the Carquest lot, can usually be seen at the curb.

The couple inside, Jill and Michael Upton, are either guilty of knowingly participating in a scam that raked in $12 million from as many as 20,000 victims, or they are guilty of no more than being two pathetic simpletons who were duped themselves. According to Michael Upton's lawyer, the couple will say Jill's father convinced them to open RCI Appraisals and they believed it to be an honest business. If it was a scam, they will say, they had no idea.

Sitting in his cluttered office on Boston's waterfront, next to the construction site of the new convention center, Joe Kleinberg says he's convinced the Uptons' participation was no accident. An inspector for the U.S. Postal Inspection Service, Kleinberg has made a career out of tracking down perpetrators of fraud. With his buzzcut gray hair and trim frame, Kleinberg would look at home with the armed-services recruiters who work on the floors beneath him. His persistence interviewing victims and sifting through bank records helped him get the warrant to search the ramshackle Carquest building. Investigators came out with 30 boxes of documents, which led to seizures in Texas and Florida and, ultimately, indictments against 11 people, with more possible.

Kleinberg would certainly agree that Jill and Michael Upton are not the brightest bulbs in Barnstable. Jill couldn't understand why mailmen were raiding the office, according to one authority. Kleinberg shows a disbelieving look as he describes how RCI Appraisals worked: Once a time-share owner was referred to RCI, an employee would charge $399 to the owner's credit card, send a bogus appraisal two months later, and wait for the next referral. And the next one. The referrals kept coming. So did the money.

Mary Graves is a bright and pleasant woman who lives in Indiana and owns several time-share units, including one in Ormond Beach, Florida. One day she got a call from a professional-sounding man who said he represented a large corporate buyer called Swiss American Bank that wanted her Ormond Beach time-share. Conveniently, Graves said she had owned it for 10 years and was ready to sell.

The caller said Swiss American simply needed an assessment of the property's value, which Graves suggested she would get from her local Century 21 office. But the caller told her to pick a company accredited by an independent multi-listing service. Within days, someone from a multi-listing service called Graves and recommended some appraisers, including one in Michigan, which she contacted and paid $399 to appraise her property. Graves got her appraisal, all right, but even though it seemed low, she didn't think much of it because she never heard back from Swiss American Bank.

According to the indictment filed by the U.S. Attorney's Office, every company Graves dealt with — the buyer's representative, the multi-listing service, and the appraisal firm — were part of an octopus-like network headed by Donald Gonczy, and all were scheming to get her $399.

Graves didn't realize that the various people she had been talking to were connected, or that they were now heading to court, and this, Kleinberg says, is what made the alleged scam so beautiful. Most time-share owners, like Graves, are stuck with high maintenance fees on properties they rarely use, so they often are disposed to sell. Losing $399 makes people mad, but not mad enough to bother calling the police. So most people just keep waiting, thinking maybe an offer is still coming.

Those who fell for it received templates from a master database without any visit to their property. Only a handful got an offer, always for substantially less than the appraised value. Only about a dozen actually sold their properties.

No wonder. An instruction sheet for the telemarketers said the only goal was to get the $399 appraisal fee. If the time-share owner already had an appraisal, the caller was instructed to “hang up the phone; you are wasting your time.”

As he approached retirement age, Donald Gonczy was driving a Bentley around Florida, well tanned, with his beautiful wife beside him — exactly what he wanted when he left his first wife.

Gonczy ran his appraisal scheme from offices in Florida. The problem was convincing people the appraisal company worked separately from the buyer when they shared the same office. Nevertheless, business grew, and Gonczy looked for ways to expand. He wanted to open offices in more states, and turned to some manpower he knew he could trust.

Gonczy's children are from his first marriage, to Joanne Gonczy, who also now lives on the Cape, in Orleans. On March 30, 1998, Jill Gonczy gave birth to Donald's first grandchild by her then-boyfriend Michael Upton, and that summer, Donald rented a house in Provincetown to spend time with his daughter's family. It was likely there that Donald lined up his new partners for his time-share business because on September 10, 1998, Michael incorporated RCI Appraisals at the used-car lot in Hyannis. A few months later, Jill's older brother, Scott Gonczy, opened Interval International Appraisals in Providence, while another sibling, Todd Gonczy, opened an appraisal business in New Orleans.

The only Gonczy sibling who didn't join the family business, Gregg, lives in Bradenton, Florida. He actually denies being related to any of them.

Business took off. For two and a half years, things were humming — aside from the occasional snag, like settling on a company name. Turns out the government won't let you use the word “bank” for your business if it's not actually a bank — thus, Swiss American Bank had to be renamed. Then the well-regarded time-share-exchange company RCI (Resort Condominiums International) took issue with the name RCI Appraisals and sued to make the Uptons drop it. Then Interval International, another established property-exchange business, challenged Scott Gonczy for naming his Providence company Interval International Appraisals. (The Providence business took another jolt when Scott was nabbed for soliciting minors over the Internet and jailed for two years.) As all this was happening, Michael and Jill Upton faced complaints from their credit card processing companies, which revoked their merchant accounts.

Somehow, business still flourished. Unfortunately for Jill and Michael, it was flourishing for only one person — Jill's father. Donald was driving his Bentley, splurging on lingerie for his second wife, and buying vacation property. Jill and Michael were stuck in the same rented house in Hyannis. Michael, a big-bellied redhead, declines to comment on the case against him, while his wife, a harried-looking blonde, says over her dog's yapping that she simply played homemaker, implying it was her husband who ran the appraisal business. “I'm just a housewife who stays home with my baby and isn't involved in anything,” she says.

The unraveling began in mid 2000 with Kleinberg's raids. He assumed raiding one shop would tip off the others to close and run, but was amazed to learn that despite an earlier raid in Hyannis and a police visit to Providence, authorities busted the Florida business and found it buzzing like any workday. “The boiler room [of telemarketers] was operating when we went in there,” he says.

The raids hardly disrupted business at all. In September 2000, just after their Carquest business was raided, Jill and Michael Upton wed in Hyannis, officially uniting the Gonczy and Upton families. After the ceremony, as Kleinberg's people raided the Florida offices, the couple flew to Pompano Beach to help Donald and Pam pack and flee the country.

They weren't very good at that, either. When Donald traded in his Bentley for a BMW, he asked the dealer to deliver it to the Caribbean island of St. Maarten. Pam, meantime, leased a post office box in Pompano Beach and had their mail forwarded to High View, 54 Guana Bay Road, St. Maarten, Netherlands Antilles.

Experienced fugitives would have settled on the French side, St. Martin, since the French are more hesitant than the Dutch to extradite people to the United States. But Donald and Pam were right there on Guana Bay Road on January 30, 2001, when authorities arrived. Jill and Michael were also there, and after learning they, too, were facing indictments, they returned home to surrender.

Today, they all say they're broke, $12 million gone. Todd Gonczy pleaded guilty and agreed to testify in a trial that will see 11 Gonczys, Uptons, and their cohorts facing charges.

On his affidavit filed to obtain a court-appointed lawyer, Donald Gonczy claimed to have just $1,000 cash and no other holdings or property. He had been living, he said, on Social Security payments and dividends from an investment in the Bahamas — an offshore company authorities say he created to hide his money. At the deposition, the government claimed Gonczy moved $1.1 million to the Bahamas and at least $200,000 to a bank in Austria. Strangely, Donald lists his marital status on the affidavit as “widowed,” which would be news to both his current and former wives. At a recent court appearance, Donald looked like a man whose world had collapsed, his mustache and wavy hair completely white, deep wrinkles around his eyes, his right arm in a sling — an injury he says he suffered during his stay in a Caribbean jail.

As for his daughter, she claims to have been unemployed since 1998, when her daughter was born, with no income (aside from her husband's salary) and just $300 cash, plus a $2,000 mutual fund.

For Kleinberg, their cries of bankruptcy ring as hollow as their pleas of ignorance. He vows to find the missing millions and return it to the victims — even those who who don't know they've been victimized.