Brown Sues to Topple YTB
Brown Sues To Topple Online Pyramid Scheme
LOS ANGELES--California Attorney General Edmund G. Brown Jr. today announced a lawsuit against 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 statue, 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.
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