Jeff Stec, who at one time owned more than 20 Peak Fitness clubs in North Carolina, has been banned from operating health clubs in that state for 12 years.
The announcement came Tuesday from the office of North Carolina Attorney General Roy Cooper. If Stec violates the ban, he will have to pay the state a $2 million penalty.
A consent judgment was approved on Monday by North Carolina Superior Court Judge Robert H. Hobgood. The ban, which involves Stec and his former Peak Fitness associates, stems from Stec’s repeated violations of a state law that requires health clubs to maintain sufficient bonds, which are used to pay refunds to members who purchased pre-paid memberships for clubs that either closed or did not open.
Since 2006, Cooper’s office has received more than 700 complaints regarding Peak Fitness-related health clubs. Cooper filed a lawsuit against Stec in 2007 alleging that he failed to get proper bonds and committed other unfair and deceptive practices when operating Peak Fitness clubs.
Stec agreed to resolve the lawsuit in January 2009. Later that year, Peak Fitness filed for Chapter 11 bankruptcy, and its bonding company cancelled all of the clubs’ bonds. Around that time, Cooper’s office received sworn statements from Stec regarding health club bonds that understated the outstanding liabilities of several Peak Fitness clubs.
Cooper’s office filed another lawsuit against Stec in May 2009, alleging he violated North Carolina’s health club statute by failing to maintain proper bonds. The consent judgment resolves the second lawsuit against Stec and bans him from the health club business.
The remaining Peak Fitness clubs became ZX Fitness in 2010.