The Lusso Collection, an Eden Prairie-based club that offered unlimited access to dozens of multimillion-dollar getaway homes around the world, promised members a "Lifestyles of the Rich and Famous"-like experience.

An oceanfront villa in the British West Indies! A 500-year-old farmhouse in Tuscany! A Manhattan penthouse!

Unfortunately, the business plan for the heavily promoted venture looks to have been hatched on "Fantasy Island."

It's taken more than three years for attorneys and a U.S. bankruptcy trustee to sort through the mess caused by Lusso's Chapter 11 filing in late 2008. At the time, CEO and founder Stephen Greer blamed shaky consumer confidence and tougher lending standards for the bankruptcy, but promised that Lusso would have a restructuring plan in place within a month.

"I can say with certainty that the strategic future of the club will be based on what is best for members and creditors," he told the Star Tribune in 2009.

But the hoped-for orderly reorganization turned into a liquidation, a process that continues to this day. Last week, the bankruptcy trustee filed an interim final report that proves discouraging reading for investors, who ponied up an estimated $10 million to buy partnership units in Lusso's owner, VREP, as well as the 150 or so members who, collectively, paid somewhere north of $40 million to join the club.

Big losers include Bob Senkler, the chairman of Securian Financial, who owned 5.3 percent of Lusso's parent company, VREP. He filed a claim for $815,518. St. Paul developer Gerry Trooien filed a $250,000 claim, and Star Tribune weatherman and entrepreneur Paul Douglas is owed about $400,000.

Maybe they would have thought twice about putting in money if they knew that Lusso was undercapitalized and, for all practical purposes, insolvent almost from the beginning.

Court documents reveal that Lusso lost $26 million during its first two years of operation, 2006 and 2007. The club's only source of ongoing revenue was deposits from new members, and those sales lagged projections from Day 1, even though Lusso waived annual dues for up to 10 years for the first 30 members.

Lusso finished 2008 with 156 members, or 110 short of projections. The club estimated that it needed between 200 and 400 members to break even.

To be fair, $400,000 memberships aren't an easy sale, especially when the economy, stock market and home values are plunging. Florida-based Ultimate Escapes, whose 1,200 members paid at least $70,000 to join, went bankrupt in 2010.

But Lusso's troubles began before the economy tanked. In an August 2006 e-mail to some of his partners, Greer frets that lenders might pull their credit lines and members could demand refunds of their deposits -- something they were entitled to if they canceled their memberships -- if they became aware of how desperate the company's financial circumstances had become.

He also worried that he and other directors of the company were creating additional liability for themselves by continuing to sell memberships.

"My ability to 'sell' and even day-to-day manage the club is severely impacted by my knowledge of our situation," he said in the e-mail.

Greer could not be reached for comment. The attorney listed as representing him in the company's bankruptcy did not respond to a phone message.

Destination clubs like Lusso are essentially an upscale twist on the timeshare, but without some of the same consumer protections. Instead of locking in a specific amount of time at a specific property, destination club members get the use of many homes without the hassle or cost of owning and maintaining them.

There is also more oversight of timeshares. The Minnesota Department of Commerce regulates and oversees timeshare companies that sell or advertise in Minnesota. Regulators scrutinize property records, the purchase agreement, association bylaws and promised amenities to ensure that they comply with state statutes and are fair to consumers, said a Commerce Department spokesman.

Lusso never registered with the state, probably because it was not selling ownership stakes in the luxury homes, just access to them.

To the chagrin of creditors, it turns out that Lusso wasn't buying real estate either. At the time of its bankruptcy filing the club had an "interest" in 26 properties, but only five were owned. The rest were leased.

The upshot: fewer assets to sell, and less money for creditors, whose claims total more than $53 million.

Trustee Randy Seaver has about $320,000 in hand, and is still trying to sell two oceanfront lots on Red Dog Beach in Panama, initially valued at $500,000.

Just a hunch, but I'm guessing that Lusso overpaid for them. • 612-673-1736