3-Year Cruise Passengers Seek Fraud Charges Over Cancellation

By now, they were supposed to be well into the first leg of the three-year Life at Sea cruise, sailing from Ushuaia, Argentina, to Punta Arenas in Chilean Patagonia.

Instead, more than a month after the cruise was abruptly canceled, one couple is stranded in an Istanbul hotel and on the verge of becoming homeless; another woman has moved to Ecuador because she can’t afford to pay her mortgage; and a man, recently diagnosed with cancer, has delayed his treatment because he doesn’t have the money to pay for it.

On Tuesday, 78 would-be Life at Sea passengers sent a letter to Markenzy Lapointe, the U.S. attorney for the Southern District of Florida, asking him to investigate whether Miray, a Turkish cruise company, defrauded them out of millions of dollars. They claim that the company collected an estimated $16 million and used it toward a deposit to acquire a new ship that it did not end up purchasing. It is unclear if Mr. Lapointe will take action.

Dozens of passengers quit their jobs, sold their homes and withdrew their life savings to pay for what promised to be the adventure of a lifetime: a cruise with 382 ports of call over 1,095 days. But in late November, just days before the cruise was scheduled to depart, the voyage was canceled because Miray had failed to acquire a suitable ship.

Most of the passengers paid Miray tens of thousands of dollars to secure their cabins, which ranged from $90,000 to $975,000 for a suite. Some passengers paid the full fare upfront to qualify for a discount. After canceling, Miray said it would offer full refunds to all passengers, but two of the repayment deadlines passed and only four of more than 100 passengers have received partial refunds.

If the passengers had known how their money was being used, they “could have made informed decisions about parting with their $16 million,” the passengers said in the complaint, adding that they had been explicitly told by the company that their payments were not being used for upfront funding.

Last May, Miray’s owner, Vedat Ugurlu, sent a WhatsApp message to Mikael Petterson, the former managing director of Life at Sea, telling him that he had $5 million for the deposit toward the purchase of the AIDAaura, a larger vessel that was more suitable for the journey than the originally proposed MV Gemini. He said that they needed to put down $10 million in total because of a bank guarantee and asked Mr. Petterson to stick to a May 31 deadline to collect passenger payments.

Mr. Petterson, who was in charge of sales and marketing at the time, said he did not feel comfortable collecting large sums of money when the company did not have a U.S. bank account or the infrastructure to securely collect payments. Miray refused to set up an escrow account as is common in the United States and wasn’t required to place a bond with the Federal Maritime Commission to protect customer deposits because it was not embarking from U.S. ports.

Miray has denied using the passengers’ money toward the new ship and has blamed the refund delay on the high number of credit card chargeback disputes that it said had caused banks to block their funds. Most passengers said they only started to request chargebacks last week, after the company kept failing to meet its promised repayment deadlines.

“We are working tirelessly to get our banks the documentation they require to release our funds, and all our passengers can be assured that they will be repaid in full by Feb. 15,” Ethem Bayramoglu, Miray’s chief operating officer, said in an interview on Jan. 12.

Many passengers aren’t buying it. “I will not believe anything until I have my money in hand,” said Kara Youssef, a 36-year-old former humanitarian worker from Ohio who sold her apartments to pay for the cruise and has been living in an Istanbul hotel with her husband for more than two months as she awaits her refund of $80,000. On Dec. 29, she received a bank receipt indicating that the first installment of her repayment had been sent, but she never received the funds.

After several attempts to reach Mr. Bayramoglu (who, at one point, told her he was at a soccer game and couldn’t talk), Ms. Youssef finally spoke to him on Jan. 14. He offered to pay her part of the sum in person, in cash, but has yet to set up a time and place to meet.

The too-good-to-be-true allure of a world cruise

The Life at Sea passengers are primarily U.S. citizens. Many of them learned about the cruise on CNN and “Good Morning America.” One of the biggest draws, they said, was the price, which for many would have been less expensive than living in a city for three years. That, combined with the opportunity to explore the world, led them to leap at the opportunity.

“I always wanted to go on a world cruise, but they were all out of my budget,” said Jenny Phenix, 67, who gave up two small businesses, rented her condo in Florida and paid $70,000 to go on the cruise.

The sales team, mostly Americans, was very convincing, she said. Even when an internal dispute between company executives went public, causing the sales team to resign in May, the passengers were led to believe that the cruise would go on.

Now Ms. Phenix is sharing a house in Ecuador with another stranded passenger because she had to rent out her Florida condo in order to pay the mortgage.

Ms. Phenix and many other passengers are in limbo, struggling to get by. “Some people put in everything they had and now they are broke or homeless or wandering from cruise to cruise like tumbleweeds because they have no other place to go,” said David Purcell, a 78-year-old retired lawyer from St. Louis, who sold his house and car after his wife died and booked the cruise, hoping it would help him heal from his loss.

“I believe we have a strong case to warrant a criminal investigation,” Mr. Purcell said.

‘Enough is enough’

Shirene Thomas, 58, a retired actress and social worker from Wilmington, N.C., is one of several passengers who are essentially homeless. She spent a third of her retirement savings and gave up her rental in order to put down $156,000 for the cruise. Now, with limited credit, she has been unable to secure a new lease.

“I am about to go on my fifth back-to-back cruise,” she said, speaking from a friend’s house in North Carolina. “I literally went from Rome to Manhattan on a trans-Atlantic cruise and four days later flew back to Rome to do the same cruise again.”

Ms. Thomas has been paying for the cruises by credit card, hoping that her refund from Miray will be processed in time to pay off her balances.

Another passenger, Adam Pers, a retired engineer in his 60s from Bristol, England, was diagnosed with cancer after the cruise was canceled and is now looking for work to cover his mortgage and cancer treatment, which he has had to delay. He said he paid six figures for the entire cruise fare upfront so that he could get a discount.

“Instead of focusing on my treatment, I’m having to go through the stress of chasing my money and looking for work,” Mr. Pers said.

Mr. Pers has explained his situation to Miray many times. Each week, Mr. Bayramoglu sends him emails, writing that he will get his money “by Friday.” But Mr. Pers has still not received any money, and Miray has stopped responding to his messages.

“Enough is enough,” Mr. Pers said. “I’m resigned to the fact that I’m not going to get my money back, but even if I get nothing, at least if the U.S. attorney opens an investigation and these people go to prison, that’s something.”

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