California Attorney General Edmund G. Brown Jr. today sued YourTravelBiz.com for operating a gigantic pyramid scheme

Embargoed Until 10:00 p.m. Pacific Time on August 4, 2008
Contact: California Attorney General's Press Office 916-324-5500

Ca. Atty. Gen. Brown Sues To Topple Online Pyramid Scheme

LOS ANGELES--California Attorney General Edmund G. Brown Jr. today sued YourTravelBiz.com for operating a gigantic pyramid scheme that recruited tens of thousands of members with deceptive claims that members could earn huge sums of money through its online travel agencies.

“YourTravelBiz.com operates a gigantic pyramid scheme that is immensely profitable to a few individuals on top and a complete rip-off for most everyone else,” Attorney General Brown said. “Today’s lawsuit seeks to shut down the company’s unlawful operation before more people are exploited by the scam.”

YourTravelBiz.com and its affiliates operate an illegal pyramid scheme that only benefits members if and when they find enough new members to join the scam. Once enrolled, members who join the pyramid scheme earn compensation for each new person they enlist, regardless of whether they sell any travel. The company lures new members by offering huge income opportunities through online travel agencies yet the typical person actually makes nothing selling travel.

According to company records there were over 200,000 members in 2007 who typically pay more than $1,000 per year--$449.95 to set up an “online travel agency” with a monthly fee of $49.95. In 2007, only 38 percent of the company’s members made any travel commissions. For the minority of members who made any travel commission in 2007, the median income was $39.00--less than one month’s cost to keep the Website. There are at least 139,000 of the company’s travel Websites, all virtually identical, on the Internet.

YourTravelBiz’s extensive marketing materials include videos of people driving Porsches and other luxury cars, holding ten-thousand dollar checks, and claiming to be raking in millions of dollars in profits. The company advertises through its Website www.ytb.com, and at conventions, workshops and nationwide sales meetings which have been held in California locations such as Los Angeles, Sacramento, San Francisco and San Diego.

Brown charges the company, its affiliates, and the company’s founders J. Lloyd Tomer, J. Scott Tomer, J. Kim Sorensen and Andrew Cauthen with operating an “endless chain scheme,” an unlawful pyramid in which a person pays money for the chance to receive money by recruiting new members to join the pyramid. Brown also charges the company with unfair business practices and false advertising practices including:

* Deceptive claims that members can earn millions of dollars with the company
* Operating without filing legally mandated documents with the attorney general and the Department of Corporations
* Selling an illegal travel discount program Under California’s unfair business practices statute, the company is liable for $2,500 per violation of law. Attorney General Brown is suing YourTravelBiz.com to get a court order that:

* Bars the company from making false or misleading statements
* Assesses a civil penalty of at least $15,000,000 and at least $10,000,000 in restitution for Californians who were ripped off by the company. From August 6 through 10, thousands of members are preparing to travel to St. Louis for a national convention to learn new techniques to recruit more victims into the illegal pyramid scheme. Last year at least 10,000 people attended a similar national conference. For more details on the company’s plan to perpetuate its scheme visit:
http://www.yourtravelbiz.com/bizRep/BizReports/BIZREPORT_07-18-08.htm

For more information on pyramid schemes visit:
http://ag.ca.gov/consumers/general/pyramid_schemes.php

Any consumers who believe they have been bilked by YTB should send a written complaint with copies of any supporting documentation to:

Office of the Attorney General
Public Inquiry Unit, P.O. Box 944255
Sacramento, CA 94244-2550

Florida Imposes Restrictions on Sellers of Travel

The American Society of Travel Agents (ASTA) has advised members that Florida Governor Charlie Crist has signed into law SB 1310 which, effective July 1, significantly increases registration fees, security bonds and potential fines for firms selling trips to any nation that has been designated by the State Department as a state sponsor of terrorism.

Under the new law, if an agent located anywhere in the country sells travel to a Florida resident with any one of the five designated countries as a destination, he/she must certify in advance of the sale and pay an increased registration fee ranging from $1,000 and $2,500.

Presently, Iran, Syria, Cuba, Sudan and North Korea are the only countries designated by the State Department as terrorism sponsors. Today, ASTA noted, President Bush announced his intention to remove North Korea from the terrorism sponsor list within 45 days.

The agent must also post a security bond ranging from $100,000 and $250,000. Agents who fail to comply could face a $10,000 fine and a third-degree felony conviction. A single transaction involving travel to Iran, Syria, Cuba, Sudan or North Korea can constitute a violation.

In the past, agencies have been generally exempt from Florida's registration requirements if they have been ARC accredited for the past three consecutive years. But under the new amendments to Florida's Seller of Travel law, agents lose that exemption if they sell travel to at least one of the countries on the State Department's list.

ASTA has strongly objected to SB 1310 as an unfair restraint on citizens' freedom to travel. ASTA also believes that it is in direct conflict with federal law. When the legislation becomes effective next week, it will restrict travel which the federal government deems as authorized and perfectly legal. ASTA had urged Governor Crist to veto SB 1310, pointing out that it violates a total of four provisions of the U.S. Constitution.