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Windjammer Barefoot Cruises -- The End of an Empire - Part 2

| Tuesday, 05 Mar. 2013

Part 2 of a 4-Part Series

11-18-07

Note: as more information seems to be coming in daily I am publishing all of these articles now. Some areas of parts one and two have been updated. If you would like to comment, please go to our message boards here: Windjammer Message Boards

The Beginning of the Storm At the peak in 1998, the line's flagship was the Fantome, a beautiful 282-foot tall schooner. Windjammer acquired the ship at a bargain price and it soon became their biggest earner. She was beautiful inside and out and extremely popular, but "floated like a pig," according Captain Guyan March, the Fantome commodore whom had spent most of his entire career working for Windjammer.

In their daredevil pirate way, they took the unusual step of choosing not to insure the ship. Once again, it appears the Burkes simply hated to part with money. The ships were risky insurance investments, (as are all cruise vessels, typically only Lloyd's of London will take them on) thus the premiums would be extremely high to say the least, but in retrospect, it sure would have been worth it, as the Burkes soon found out.

Fantome was cruising in the Western Caribbean when tropical depression system #46 appeared in the southern Atlantic. All ships use avoidance tactics for hurricanes. Even though hurricane winds can reach 150 mph., the storms themselves actually progress forward very slowly, typically at 10 mph, less than half the average speed of cruise ships. Storms almost always move northwest from near the coast of Africa to the Northern Atlantic or towards the Gulf of Mexico following a northwesterly arc, which aids the National Hurricane Center in predicting their course.

Windjammer was understandably not yet concerned since Mitch was at least two days away and Fantome could sail nearly twice as fast as the storm was progressing forward.

But, as told in stark detail in the book "The Ship and the Storm," Hurricane Mitch presented a surprisingly quick escalation from tropical depression to hurricane. Then Mitch made another unexpected move, changing from the usual northwesterly arc straight west towards Cuba and the Cayman Islands.

In port in Omoa, Honduras, locals urged the captain to drop anchor and ride the storm out there, but the captain consulting with the Windjammer head office in Miami was instructed to take the passengers to a port with transfer facilities, Belize City, to let off the passengers. In Belize, some non-essential crewmembers left with the passengers. The number of staff and crew who remained aboard is undetermined, but estimated to be 31.

The storm was still two days away, but the question of where to go was now critical, and they only had one chance to get it right. Predicting a hurricane's projected path is an inexact science. Mitch had already deviated once, and Windjammer was running out of time to find a safe haven. One sure alternative for the sake of saving lives would be to get everyone off the ship while in Belize and anchor it in port, hoping it would not be pounded to pieces, though it likely would be very badly damaged and was not insured.

The other alternative was to keep a small crew on board and sail it to a safe haven, but deciding where to take Fantome was an educated guess at best. They consulted the National Hurricane Service predictions and discussed options.

Hurricane Mitch was heading toward Swan Island as the National Hurricane Centers computer models again predicted that the storm would turn to the northwest. The safest refuge was up and around the tip of Yucatan, but that would have involved stopping in Mexico for fuel. Unfortunately, (according to my source who worked in the office at the time) the company owed the national Mexican Oil Company an outstanding unpaid bill for fuel from the previous year. That route was not an option.

Expecting Mitch to pass to the north, Fantome headed southeast from Belize and hoped to take refuge in a small channel on the leeward side of the Bay Islands north of Honduras. Had the storm continued as expected there would have been a relatively safe distance between the ship and the storm, though high seas and heavy winds were likely, at least there was a reasonable chance of full survival.

But Mitch, now hovering between a category 4 or 5 storm, again defied convention and turned directly toward the Bay Islands, destroying everything in its path, as if it had a vendetta against the Fantome. Winds and waves extended out some 200 miles from the center of the storm. Caught in a narrow channel with no place to run, trying to stay within the lee area but facing waves that wanted to push him out of the safe zone, Captain Guyan March had no choice but to try to weather the storm aboard the Fantome - heading into the waves to avoid broadsides. An email report I received from a lone eyewitness in the room with Captain Burke during these last hours of the Fantome says Burke asked Guyan to keep the satellite phone open, even though Guyan could not do a lot of talking. The conversation was on speakerphone.

The book, the Ship and the Strorm*, says that March reported waves of 30 to 35 feet and indicated conditions were getting worse. Burke said he fully realized where the ship was heading for the next few hours, out of the lee and into very confused seas. Visibility was almost zero as the sea and spray combined with the wind and rain to make it a veritable soup. Every time the ship got battered, which was by now every few seconds, March had to try to re-orient himself. Knowing the ship would be facing the worst, Burke told March not to worry about the ship, losing a mast or the lifeboats didn't matter. Just save himself. Burke kept asking if the decks were clearing water, and March replied that they were, so the ship was not filling with water, but wind and waves had it limited to moving at just 7 knots.

Some of the Fantome captain's last words were, "confused," along with audible groans and sounds of exertion. Burke was mostly concerned about the seaworthiness of the ship, as long as it wasn't filling with water and the decks cleared everytime the ship righted itself they had a chance. "That was a big one," March said into the satelite phone, refering to a roll the ship just took. "Is it falling off, is it shedding?" Burke asked March. "Yes, that's not a prob..." and the line went dead.

According to my source, he and Burke were the only ones in the room at that time, and both of them heard March say "that was a big one." By the next day, the fate of the Fantome was apparent, once again alone with Captain Burke, the Captain said to him, "I'm going to prison for this." Obviously, that did not happen, and I am not sure it would have, but it was a rare moment when Burke showed he knew his life of living fast & loose with the rules could catch up with him someday.

By Thursday morning there were extensive reports of damages in Honduras, but Windjammer had still made no official announcement about the missing ship.

Another source for this article was married to an officer who was on the Fantome at this time. She had been working in the Windjammer Miami office daily up until the previous Friday. Naturally, one would assume the Windjammer office staff knew one of their regular workers had a husband on their flagship, the Fantome.

However, she says that during that entire week the Fantome was missing the Burke family did not contact her to notify her that the ship was even in trouble, let alone missing. Sometime Thursday morning she heard news reports that the Fantome had disappeared. Frantically calling the head office she reached Susan Burke and asked, "why didn't you call me to tell me my husband is missing?" Susan replied that since he usually used a nickname she "didn't recognize his name on the manifest."

The Fantome, Captain Guyan March and the other 31 (probable) crewmembers onboard were never seen again. The loss of Fantome plagued Captain Burke for years. He had nightmares and often said he wished he had gone down with the vessel. There were lawsuits from crewmember's families, and the loss of the uninsured flagship put a serious dent in the company's bottom line. But as devastating as the loss of the Fantome was, Hurricane Mitch killed over 9000 people in Central America.

Windjammer Cruises -- the Family In the late 90s, just as lawsuits for the Fantome started pouring in, the IRS cracked down on Captain Burke, saying he owed an extraordinary $30,000,000 to the U.S. treasury. Although he thought all of his tangible assets were safely hidden in foreign corporations, the IRS was able to trace at least partial ownership of each ship to the Captain himself. Eventually, he was forced to make a settlement with the IRS.

These brushes with reality caused the family to raise the drawbridge and close in the castle walls. Here the story gets more mysterious as the company became more guarded. The popular message board, Coconut Telegraph, was closed, presumably because the topic of Fantome lawsuits became overwhelming.

Steps were now taken to change the company's liability exposure. It appears that a convoluted plan was made where each child became responsible for different aspects of the family business. As a cruise line, Windjammer needed sales, marketing, provisioning of the ships, interfacing with outside travel agents, onboard ship operations and regular maintenance. As far as we can tell, it appears most of these duties were contracted out to newly formed foreign companies with various Burke children at the helm of each.

One company already registered in the U.S. remained as Windjammer Barefoot Cruise Limited, presided over by daughter Susan Burke. This company does not owns the ships, it is merely a sales and marketing company to sell cruises called on certain ships owned by other companies. Its address is 1759 Bay Rd in Miami, for which a public record search just a few days ago (November 5, 2007) showed an overdue property tax bill over $100,000.

The company that was actually responsible for managing the ships was International Maritime Resources in Miami. Though a different company owned each ship, IMR apparently managed operations for all ships (hiring crew, receiving passengers, etc). After the Fantome lawsuits and IRS debacle, this company was shut down and a newly formed company registered in Trinidad, "Maritime Preservation" was created. This company also ran a shipyard in Trinidad (a small island close to South America). Son Michael D Burke (MDB) headed up this company.

Son Danny was already working as a deck hand by the age of 13 and by 18 he had circumnavigated the world aboard the Yankee Trader. Eventually, he worked coordinating provisions for the Windjammer ships; sending food and other goods from the mainland USA to the fleet in the islands.

Son Joey was previously an outside sales manager coordinating with travel agents and other sales channels, until Windjammer dropped that sales channel. He then started a company that also provisions islands and ships in the Caribbean with goods from America - the Antilles Wholesale Company Ltd. It owns a cargo vessel called the "June B" (his mother's namesake). Though he lives in North Carolina, the company was registered in the Grenadines.

Daughter Polly ran the Seachest, also a U.S. company which sells Windjammer memorabilia such as the "This ain't no foo-foo cruise ship" T-shirts. Only one daughter, Janeen, chose a different career when she developed a ceramics company.

As for the ships, each was registered to different companies with varying boards of directors and flagged in different nations providing flags of convenience including Panama, Honduras and Equatorial Guinea. In a sense, they all operated as separate businesses with the common elements being that Marine Preservation managed them and WBCL was their primary customer. It is said the registered "owners" of each ship were Caribbean locals with no real personal assets.

This arrangement safely secularized each Windjammer-related business and gave autonomy and a mission to each child. The original idea was to make it extremely difficult to trace the company, but as time went on it only added to the family confusion about who was entitled to what.

End of One Era -- Start of a New One Although the line continued to operate its other vessels in the accustomed manner, the IRS and loss of Fantome put Windjammer into a cash crunch. So, continuing with the pattern of offshore and separate financial entities, the Captain decided to establish a trust in the Isle of Man (U.K.) where corporate tax is 0% and trust law will overcome any forced heir provisions from outside civil law jurisdictions. There are no restrictions on the accumulation of income during the perpetuity period, nor are there any statutory accounting or auditing requirements or a need to file tax returns.

By Y2K, the cruise industry was already consolidating. Inexpensive cruises from Carnival, NCL and Royal Caribbean had run marginal players out of business. But Windjammer had built up a small but incredibly loyal following, despite the Fantome and travel concerns immediately after the 9/11 disaster that put at least two other cruise lines out of business, (American Classic Cruise Lines and Renaissance).

In early 2003 competition in the cruise industry was fierce. Fares for Windjammer's Bahamas cruises were bargains in comparison to other mainstream lines, and they came with onboard accommodations, all meals, entertainment, and select drinks including early-morning Bloody Marys, rum swizzles at cocktail hour, and cheap wine, coffee or tea with dinner.

Windjammer gave away a lot of booze and had little else for onboard revenue. Other cruise lines used alcohol, shore excursions, photography and casinos to make up for the cheap cruise fares. Windjammer offered a few shore excursions in each port, and passengers were able to buy drinks during non-cocktail hours by purchasing "dubloons" onboard, which were used as the official ship currency. But since most of the booze consumed was supplied for free, obviously, T-shirt sales and crab races are not big money makers.

At one point in this time, it is rumored that Jimmy Buffett came close to buying into the company but the transaction was never completed. The thorn in the deal was who would get the controlling interest in a 49/51% share allocation. As badly as the company needed money, this theme of the family not being able to agree to do anything of benefit to the company is a recurring one.

Nevertheless, an idea was born at this time that would have worked beautifully but for one problem, it depended on the fleet growing over the years, which meant reinvesting the company revenue back into Windjammer instead of taking it out for personal use.

The LaMer: Cruise Timeshares In August of 2003, Windjammer announced they were buying a beautiful research vessel, the MV Discoverer, with plans to convert it into a time-share cruise ship to be named the S.V. LaMer. Sales of the timeshares plans were started immediately, although the ship was not scheduled to be refit as a Windjammer cruise ship for at least a year.

The Windjammer timeshares were sold exclusively by a company called Cruiseshares300 Inc. The company was based in Texas, presumably because the state has no laws governing the sale of timeshares. According to sources, Michael D. Burke Jr. was at the helm with an associate named Barry Jones who is a Texas resident. Jones was a friend/admirer of the Captain who described him to me as "a trustworthy, well-intended man who was a business genius." Barry went on to say, however, that the problem was the kids who simply did not know how to restrain themselves.

Since the ship was not yet converted to a cruise ship when the timeshare sales started, the LaMer program of prepaid cruises for timeshare buyers was extended to all of the Windjammer ships until the ship could be refitted. Customers who bought a timeshare bought specific weeks and cabins on the LaMer, but until LaMer was built they could use their time on any Windjammer ship. The finished conversion was supposed to include their name on a brass plaque affiliated with their cabin. The sales presentation implied partial ownership in the new ship, which is common for legal timeshare contracts.

Although the LaMer plan was just on paper, it made an impressive presentation and many Windjammer faithful bought into it. In some cases Jammers put money down for several future cruises. The Flotilla web site is full of people who claim figures of $15,000 to $18,000 invested in LaMer. There was also a yearly maintenance fee originally set at $330 to $450 per couple, but scheduled to increase annually.

No one will disclose the actual number of timeshares sold, but estimates start at 600 investors, at a total investment of six to twelve million dollars, though none of this will be verified by the principle players.

As of now, the actual ship LaMer is still the Discoverer (a ship apparently built as a marine research vessel for the 1976 bicentennial) and is in the Trinidad shipyard with none of the transition work completed. With Michael D. Burke near the top of Cruiseshares300, Barry Jones told me that much of the money generated from sales was advanced to the Windjammer Company against the better judgement of Barry. At the time, the money was considered to be a temporary reallocation of funds to Windjammer for operating expenses. Not technically a loan, (no papers signed) it was always meant to be returned to Cruiseshares300 -- someday.

I have received emails that say the LeMer timeshare sales were extremely hard sell. Once on the list you would be contacted repeatedly, even after asking to be removed. One person reported they talked him into a meeting with a dozen other potential buyers with the promise a cruise would be raffled off at the end of the meeting. Later, it was announced that was a mistake, the raffle would include all potential buyers. Another potential said he was asked out to dinner, after already saying no previously, and he was dined and heavily wined, all at their expense, and he subsequently signed up for a contract, spending over $10,000.

Interestingly enough, while no one commented on this for years, just last Tuesday Joey Burke "dropped" some information on the Flotilla message board that the ship Discoverer might be sold in order to settle an outstanding lawsuit and raise some operating money to rescue the other ships. What the note didn't say, but Jammer's filled in the blanks, was that the lawsuit being settled was actually between the Burke trust and Michael D. Burke who is the one who most likely benefitted from the original sales of the leMar timeshares. More on this later.

Sail 5, Sail 10 Windjammer headquarters also had another idea to pre-sell cruises at a discount. The Sail 5 and Sail 10 programs were simple in concept. Pre-pay for five cruises over five years and get them at a significant discount. For an even better deal you could pre-pay for 10 cruises in 10 years. The only problem, according to Jones, is that the concept has questionable legality. A ship is not tangible real estate property, especially when registered in a foreign country. A cruise line cannot guarantee the ship will exist in 10 years, and in fact, it appears the LaMer does not actually exist to this day, and neither are any of the original Windjammer ships sailing.

In 2003 when these plans were announced the line was operating six vessels, but in 2005 Amazing Grace and Flying Cloud were sidelined. The 72-passenger Mandalay, the 64-passenger Yankee Clipper, the 126-passenger Polynesia and the 122-passenger Legacy were left to handle all the existing pre-paid cruises and future cruise sales. Three of those ships, all but Legacy, were eventually "arrested" or otherwise taken out of service.

As of today (November 18, 2007), Windjammer has no ships in service. The Legacy is said to be seaworthy but financially entangled. Five sailings (Nov 3 through Dec. 1st) were scheduled and cruises were sold, only to be subsequently canceled. The frustrated passengers on the Nov 3 aand 10 cruises were asked to rebook their cruises on November 17th or later. Windjammer said they would be responsible for airfare changes.

A person booked on the November 10 cruise informed me that as of November 9 he still had not received notification that the November 10 cruise had been cancelled. If not for the Flotilla message board, he would have known nothing.

Once the Nov. 17, 24 and December 3 cruises on Legacy were cancelled, Windjammer had an even bigger backlog of cruises they they could not provide. They say the Legacy will sail on December 8th, but they have said much the same before and canceled repeatedly. Promises of future cruises have become virtually meaningless.

Most credit card companies put a 60 day limit on your right to request a refund. Credit card chargebacks are now coming in to Windjammer at such a rate that the Miami Herald reports at least one credit card company has filed suit with the cruise line. Unfortunately, those who paid for cruises with PayPal or cash face a much rougher time getting reimbursed. Those who prepaid with LaMer, Cruise 5 or Cruise 10 several years ago have other issues.

If you have paid for a Windjammer cruise recently and want a refund, be sure to check to chargeback policy of the method you used to make the payment. In its latest cancellation notice Windjammer referred to processing refunds, but if you ask them first and they delay too long, it may then be too late to go to the company you paid through.

* The Ship and the Storm - author Jim Carrier, pub: Harcourt ©2001 Jim Carrier

Link to: Windjammer Barefoot Cruises - Part 1 Link to: Windjammer Barefoot Cruises - Part 3 Link to: Windjammer Barefoot Cruises - Part 4

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