A Ponzi Scheme Defined

This was originally in a MSN article, but I could not copy and paste the slide show into this blog, so I have recreated it. It highlights many salient points that are appropriate with the travel MLM/Card Mills that are operating today.  As you read through this, most likely you will be nodding your head in agreement. Is it no wonder that Jerry Brown and Lisa Madigan have taken notice and taken action? With the California and Illinois Attorneys General either prosecuting or investigating, are others far behind?

How Ponzi Schemes work

Since Charles Ponzi defrauded thousands in the 1920s, investors have continued to fall prey to such schemes. Here's why.  --Source: The North American Securities Administrators Association

# 1 Ponzi's allure

• Ponzi schemes work by paying old investors "dividends" from new investors' principal.(YTB pays the lion's share of bonuses from money received by new RTAs. This is substantiated by their SEC filings)
  

# 2 Variety and confusion

• A flood of new investment vehicles has made it difficult to identify frauds. (While not dealing with investments, yet, YTB is adding all sorts of ancillary products. In addition, with the other MLM outfits like Traverus and GTI, it does become confusing to determine legitimacy. YTB counts on this.)
  

# 3 Greed

• High rates of return and "guaranteed" low-risk strategies lure even conservative investors. (If anyone has attended a YTB "Opportunity Meeting" they flash the success stories like Julliet St. John and Ron head, but neglect to mention that their own income disclosure indicates that the vast majority of participants earn nothing. The low risk is the minimal investment and no investment programs.)
  

# 4 The appearance of success

• Early investors receive "proof" through high initial returns. (Undoubtedly the top people in any pyramid scheme will receive the high initial returns. Look at Ron Head, Rick Ricketts, Andy Lakey, Bill Hoffmann and others who are always highlighted and paraded as "proof" of success.)
  

# 5 The herd instinct

• Those investors then promote the scheme to friends and others. (When you have tens of thousands of people all led by financial earners, they will take that success as an indicator of theirs and promote it to anyone and everyone. As a matter of fact, one of the key "tools" in MLM is to promote the opportunity to everyone within a three foot radius of you. It is called the Three Foot Rule.)
  

# 6 Fear

• As the scheme unravels, some still promote it for fear of losing out amid mass withdrawals. (YTB is currently experiencing this right now. In March of 2008, they had 138,000 RTAs and right now they are just about to go under 90,000 and are losing about 300 RTAs per day. Yet there are many, the majority, who do not see the warning signs--IATAN, RCCL, dropping RTAs, lawsuits, falling stock prices, and most recently the decision by NCL to terminate them. These people will continue to believe and promote hoping for success that is out of reach and they will continue to do so until the company eventually collapses. One onlly needs to look at the loyalty some of the Joystar agents exhibited who are now in dire straits.)
  

# 7 The Tooth Fairy syndrome

• Some refuse to relinquish their faith in the business acumen of the alleged mastermind. (Well, I am not sure there is ANY business acumen in ANY of the alleged masterminds. None of them have ANY experience in travel and they all have experience in questionable MLM outfits. AL Williams, selling fuel additives, etc. Their acumen is suspect when they deal only with Board insiders and make sweetheart deals with privatelyheld sister companies. However, they ALL talk a great talk and have amassed a large loyal following. The followers of YTB management are quite literally zombie-like.)
  

Even More Blah Blah Blah From A YTB Supporter

And the drivel continues from Endless Drivel Travel......

It isn’t just about where I can get the best percentage commission.   If all I wanted to do was book cruises…I would just go get a job doing that.  Chasing a higher commission split is not unique to those in the travel industry, and though some will do just that…I am not one of them.

Plenty of business to go around my friend…and yes…the high I experience being my own boss is incredible with no employees and with no overhead is awesome.  As an independent contractor, I gladly pay a monthly service fee, which is in fact reimbursed, for YTB to handle my licensing fees, E&O and all the paperwork.  

And now I see that a new twist lie has been tossed into the mix. YTB now handles all licensing fees, E&O, and all the paperwork. Are you sure about that? I Have a source that says otherwise!

More Blah Blah Blah From A YTB Supporter

Round two from Bob Cushman from Endless Journey Drivel Travel.

 

As you are probably aware, many network marketing companies have tried to do what YTB is actually doing, and none have succeeded.  Our travel sales are proof of our success and impact.  YTB didn’t cause the paradigm shift, the internet did.  All we did was recognize an opportunity to capitalize on the consumer fulfilling their travel needs on the internet instead of calling a travel agent.  The only thing Barry Dillar (Expedia) got wrong was the power of word of mouth vs. advertizing.  Simple as that.  What YTB has done is take that model and put the relationship back into the transaction.

Sure it was disheartening to see the California AG filed a lawsuit, (key word ‘accusing’ ) but YTB wasn’t surprised it happened…they were only surprised it took them so long.  Who do you think put pressure on the AG to do so?  It will be amicably settled, just like the one before it and the one previously filed in Florida and the one in Rhode Island.   Just like Art Williams took on the entire insurance industry, as Primerica Financial Services and refused to give in to those who vigorously opposed them…YTB too will ultimately prevail.  If you were to read Art Williams’ latest book, “Coach, the A.L. Williams Story…you would see the parallels.

Sure sales are down…as they are across the entire economy and just like other companies; YTB has taken appropriate measures to compensate.  I served our great country for 22 yrs, and have learned the meaning of loyalty, commitment and the values that determine a great leader.  What I believe is not important; I look to a person’s actions which reveal true intention.  Yes, there are those like yourself who believe YTB is a cult and/or some illegal pyramid scheme.  Professional Network marketers are a rare entrepreneurial breed, and the ones who have chosen to build the foundation of YTB will be justly and richly rewarded.  Controversy is just part of what our CEO calls Success Tax.

I am right here; aware, informed, educated and taking action.  I will continue to build relationships with my clientele who will book with me.  I will also continue to share the YTB opportunity with others who seek a genuine home based business opportunity.  YTB isn’t for everyone…but many do want to learn how to: earn commission on their own personal travel and that of their friends, family and co-workers - save money on their travel - and take advantage of the legal tax benefits that are available to those that work their business with a clear intention to earn a profit.  Our Founders along with our legal department will continue to vigorously defend our rights to do so.

Who needs IATA or even IATAN?  RCCL "DEMOTED" Lisa Bauer for the decision to not do business with us because we did $13 Million in business with them before they made one of the biggest mistakes EVER!  In response, we sold more cruises in ONE DAY with Carnival, setting the record for the ENTIRE INDUSTRY (not just MLM) for the most cruises EVER sold by one agency in a single day. 

If I were you, I would be careful of what you say because you might have to eat your words later. 

More Trouble For YTB's Board of Directors

2008 did not seem to be the best year for YTB's Board of Directors. Bob Dickinson was in, and then out. Burt Saunders was in, and then out so he could "consult" with YTB. John Simmons was just plain out.

This Board has a record of approving all sorts of shady inside deals. YTB bought a plane from a Board member, their land is secured by notes from a bank formerly owned by a Board member (that was seized by the Feds last year), and the actual land they own was purchased form a Board member.  Then there is the whole deal with Beryl Martin being owned by Lloyd "Coach" Tomer, Scott Tomer and J. Kim Sorensen. You remember that company, the privately held one that built a $6 million dollar styrofoam statue for YTB--the publicly traded company (YTBLA).

It seems missteps are all over the place and 2009 does not look to be any different. Apparently the land company owned by two of their Board members is being foreclosed upon. Yes, it seems that Clay Winfield and Tim Kaiser (who have mysteriously dropped out of contact) are in a bit of trouble. I wonder if any of the YTB properties are affected?

But if this is the type of leadership and direction that YTB attracts to their Board of Directors, one has to wonder about the company as a whole. I have not counted but I have to guess that 90% of anything YTB touches ends up in some sort of controversy. Pink sheets, Dickinson, statue, earnings, Olympics., California's Attorney General, Class Action lawsuits. When will it end?

Now that Lisa Madigan, Attorney General of Illinois is done with the Rod Blagojevich scandal, maybe she can turn her attention this. Remember YTB claims to have upwards of 112,000 paying RTAs and over 300,000 Reps. Now they have just added a new MLM to their line with Aisle 19! Lisa Madigan--are you listening?

Hey Compliance Department....

Here's another one for your random checks. And as an added bonus, it appears this blogger might be in the running for John Doe #87 as he (or she) appears to be based in the San Diego area judging from a recent post and the fact he reads the Union-Tribune. I am sure that claims like these will support YTB's defense come September!

If you are a baby boomer about to retire, already retired and doing nothing with your retirement time then come travel, have fun that's what I like about it, I don't have to do any hard work, it works for me, and having my money work for me, is better than getting another job after retirement to pay the bills. The Travel Industry is a $7 Trillion Dollar industry right now, and $3 Trillion was made by this company alone YTB (Your Travel Business) who by 2019 intends to be number one in this industry, you even get a written guarantee from the owner about being a home based business referral travel agent, I thought is there more I need to learn, but it came with video's, dvd's great I use my time as I please and make money. Have fun and travel is a great idea not for all but for the few that it could be there is not another opportunity that has as many benefits, life insurance, travel discounts for you, that's not demanding.

But I see a member of YTB has already commented on the blog, so if you want to see it, act fast.

See You In September

10% Owner of YTB To Sell 4 Million Shares Of Stock

Michael Brent, a 10%+ owner of YTB has apparently seen the writing on the wall and is looking to sell up to 4 million shares of YTB.

According to an 8K filed this morning,

On September 30, 2008, Michael Brent and Beth Brent entered into a Rule 10b5-1 Sales Plan ("Sales Plan") to be administered by Gilford Securities, Incorporated. Michael Brent is a ten percent shareholder of YTB International, Inc. (the "Company") and is the Chief Executive Officer of REZconnect Technologies, Inc., a wholly owned subsidiary of the Company. 

During the one year term of the Sales Plan, the Sales Plan provides that Gilford Securities, Incorporated will sell under Rule 144 up to a maximum of four million shares of Class A Common Stock of the Company held by Mr. and Mrs. Brent, subject to the price and volume restrictions stated in the Sales Plan.

Apparently, according to Rule 10b5-1 of the SEC, people that are privy to non public insider information are prohibited from selling stock. This likely will prove to be a problem for Cauthen, Clagg, Scott Tomer, Coach Tomer and Kim Sorensen as they all had sold securities when the California Attorney General Investigation was ongoing and not disclosed.  It may also be a problem for Brent, depending if that information was disclosed to him as well.

But there is a way out when someone is looking to minimize the risk. Essentially, a trustee handles the sales of securities at a predetermined schedule or per a predetermined formula. You can read about the details of the plan here.

According to Canaccord-Adams:

More corporate executives are using 10b5-1 plans to turn their risks into rewards with respect to trading company stock. Rule 10b5-1 plans allow corporate insiders to preclude trading liability and more easily access their personal wealth held in stock.

It seems that Michael Brent (who incidentally has already sold over a million shares in the last year) ,ay be concerned that because of what he knows as an insider, he may be guilty of violating insider trading rules. Essentially, he must feel that selling YTB stock is a personal risk.

What does this say?

Just An Opinion From An Average Joe

Here is an opinion from an average Joe who was solicited to join YTB and his analysis of the pyramid scheme. He is pretty right on. Some of the comments from his blog, Your Daily Remedy:

First of all, let's think about the presentation. Why is she doing a FREE presentation? Well, it's because anyone who signs up under Heather, is money in the bank for both of them!


Well, if I made a Peach Pie with Nectarines instead, sure it wouldn't be a peach pie, but it sure would taste, smell, and do everything pretty close to what a normal peach pie would do. It may not be "technically" a pyramid scheme, but it damn sure acts like one.


In the presentation, it sounds like you'll be making EASY money for the rest of your life! Well if it was so easy, then why is it that something like 94% of YTB agents make less than $90 per year?


So in order to make any serious money (or even semi-serious money) you can't really rely on booking travel, unless you book a TON of it. People aren't going to find your webpage on google since there's about 200,000 other YTB travel pages (unless you get tons of people to shamelessly link to you). You might be able to convince your family or friends to book through you, but if you're like me, you like to check a few different websites to get the best deal. I usually check a few (including a friends YTB page), and although they're competitive, I can usually find cheaper rates elsewhere.


At the end of Sabrina's presentation, I remember she said something like, "you have an option now to change your life. In one year, you can be in the same place you are now, or you can make a change that will affect the rest of your life." Convincing indeed. But you have to keep in mind that 94% of us are not going to be any different except maybe a few hundred bucks in the hole, but we WILL be contributing to her retirement fund! That's not a knock on her, but she's not doing this presentation to change YOUR life...she's doing it to enhance hers.

In his blog, he discusses a Director from California (Jane Doe #45?) Sabrina Dagostino. This young lady is remarkable in all that she has accomplished in a few short years. From her site she lays claim to:

• Owning and operating a helicopter transportation system
• Owning and operating a full service real estate and mortgage office
• Co-owned and operated The OC Cruiser (a bus transportation company)
• Owned and operated a a waterfront Martini Lounge
• Holding an Engineering Degree
• Holding a Real Estate Brokers license
• Possessing a Law Degree and being registered to practice law in the state of California

All this at age 28. Not saying it is not true, just that it is remarkable. Maybe she knows Dr. Seligman. He exaggerates as well!

Bermuda Investigating YTB

Bermuda appears to be investigating but their laws have no teeth.  I wonder if this may have been a reason for the expansion into Bermuda in the first place?

From the Bermuda Sun, they know YTB is a pyramid, but the antiquated laws make it difficult to prosecute.

One legal source, who has links to the DPP said: "A file has been on the fraud unit's desk twice. We know they've looked at it, and continue to look at it, but it's a question of getting a prosecution. There's no doubt that this is a pyramid scheme, but the chances of getting a prosecution here are close to nil. In California, and elsewhere in the States, they tailor legislation for exactly this kind of situation. In Bermuda, our laws are more broad-ranging, so not much can be done."

And the Authorities appear to be cooperating with the Cal;ifornia Attorney General as well:

In a separate development, the Office of the Attorney General in California warned Bermudians not to get involved in YTB. A spokesman said: "This office does not undertake lawsuits lightly. Every action follows a thorough and complete investigation of the evidence. We hope that Bermudians will take note of what is happening here and will protect themselves from this kind of aggressive marketing."

The Dark Clouds Roll In

Well, the Coach talks a good talk, but he seems to have difficulty on the walk. I listened to a conference call a few weeks ago and he was whooping it up about the 2nd Quarter Results. He was so excited because they were "so good" that he was going to release them early and just before the convention. Well, Jerry Brown stole his thunder there I suppose.

Well, they are out and it appears, either he can't walk the walk, or does not realize that parentheses on a balance sheet are not good. Dashes mean negative, and red is not a good color!  Here are some initial highlights and key figures:

• The bottom line is YTB lost $199,577 in the 2nd quarter which increased its year to date loss to just shy of $4 million. It is interesting to note that this time last year, the report showed an income of $1.6 million for the quarter and only a $505K loss for the year to date.  Seems like YTB is sliding to me.
• Travel sales are WAY off.  Year to date they have paid out $14.1M in commissions. That will put them near $28.2M for the year.   At an overall 10% commission that places sales in the neighborhood of $282M.  Seems a long shot from the $411M they claimed to Travel Weekly. ANd certainly not on the way to a BILLION dollars for 2006 2007 2008.  $282M puts them in the mid 30s spot on Travel Weekly, but my guess is that they slide much further (while others grow) if they make it at all.
  
• This year they have cash on hand of $632K and last year there was over $1 million.
• They disclosed that an acquisition did not go through. This is apparently the highly touted American Destinations Inc. acquisition--could I have been correct? (Caution, this is THE post, hide your children and protect their eyes the photo is still there!)
  
• Also as expected, the RTAs are leaving at a record pace. This quarter, they sold 23,296 sites (last year they sold 34, 309 so recruiting is off 32%). But 30,638 quit. So for every new site sold, 3/4 of a site left.  And on a six month basis, they are still losing more than they are selling. But, this was already predicted and expected back in May.
  
• Canada appears to be a complete bust and represents only 3% of their income and interestingly enough, Bermuda and the Bahamas are not reported at all. I wonder if they produced ANY revenue?
• The number of RTAs has only increased 30% year over year, yet the administrative expenses (salaries, etc.) have increased  100% from $13M to $26M. Seems the overhead may end up killing them.
• And of course, there is absolutely no surprise where YTB makes their money. For the quarter, in first place is website rental and sign up fees at 74.5%, in a very distant second place is income from travel at 19.7%, and bringing up the rear is training materials at 5.1%. I will say that it is slightly better than last quarter as their 6 month picture is 76.9%, 16.2%, and 6.9% respectively. Not sure those numbers will be enough to convince Jerry Brown et al, but it may be worth a try.
  

And let's keep in mind that these reflect only through June 30, 2008. They do not take into account any of the issues surrounding the recent events from California, Illinois and the Class Action suit. Nor does it include the expense of the foam prop. Speaking of which, it is strange how it has all of a sudden been devalued from $8M to $1.8M. Some things make you go "Hmmmm."

I did notice that YTB included some deferred revenue in the filing to indicate sales made that have not been paid commission. If they are accurate in this number and it is only for unpaid commissions, the sales are even further off the mark. On Page 6 it shows the "Deferred Revenue" as defined on Page 9 to be $2.6 Million. This does not seem to be a large number. That shows that each RTA has commissions owed (at some point) of about $12.

I imagine that the steady decline of RTAs in the last three quarters will only increase exponentially in the 3rd quarter. I cannot imagine how people can sell the program with the black cloud of $125M in lawsuits hanging overhead and the probability of several more.

All in all, seems like the ship is sinking and I wonder what this dismal report will do the the stock that has already taken a HUGE hit over the last week.

False Claims Abound

Please pay attention around minute mark 2:00. You can earn 60% of of everything that is booked on your website!  Not misleading at all huh?

And I also believe this is the same guy that was talking about his boogers before! What was his name...Rufus!

Revisiting Ted Lindauer And His Threatened Suit

Ted Lindauer and his warnings have been a topic of interest this week as well. Many people have asked me about the letter to the Board of YTB.

Read the documents from Ted Lindauer and make your own decision if YTB had been warned to clean up their act or not. Remember, this is a man who was loved by YTB and when the issues were brought to light, he mysteriously fell from grace. When he went public with his accusations and threatened a lawsuit, all of a sudden he disappeared again. For a period, he had a statement on his website that he and Coach spoke and worked things out. There was no detail to clarify that statement, but now all that is there is a copy of his resume.

Calls to YTB at the time indicated that he did not work for the company any longer, yet many Reps have indicated that he does indeed still work for the company. Please look at this post and you can see and hear it from someone that apparently (in his mind) knows!

My guess: Ted got a big check and a thick agreement to never talk about YTB again.

The letter that appeared on his site and the subsequent letter to the Board of Directors of YTB can be found here.

Live From St. Louis

The spin continues and it is amusing.

It seems the YTB defense will be that the Attorney General does not understand network marketing. Perhaps the Attorney General feels that YTB does not understand the concept of the law. But Doug said that all will be well so we need to take him at his word and sleep soundly. Especially the California Directors...aka Does 1 to 100. If anyone has a direct line to Jerry Brown, please let him know that Doug has handled this and there is no reason to go forward. It is a simple misunderstanding!

To those that do not understand satire...that was an example. But Doug did make a few points that should be pointed out.

In YTB there are two separate companies. Yet the Directors (one of the companies) are the ones instructing the travel(the other company) training classes. This seems like they may not be so separate at all.

The last two days have been spent in training classes from some of our Directors that have been exceptional to say the least.

He also talks about a smirk

I’ve seen more of a steely eyed smirk on most of the faces here.

Well, if anyone has met Scott Tomer, you know that look. It is nothing new and it is the same look he has when heading to the bank depositing all the RTA monthly fees.

And finally in another attempt at deflection we have this:

YTB is on the map folks and if by chance, you are not here in St. Louis today, head on over to any newsstand and book store and take a gander at who is on the front cover of the Saturday Evening Post this month.

Well, I am not sure they are "on the map" but they certainly "in the scope". It is a nice fluff piece in the Saturday Evening Post (although the link points to a Tony Bennett cover) and I can assure you that some columnist (anyone know what Dan Rather is doing these days) is getting some heat for not fact checking as well as he should have. What an embarrassment for the Saturday Evening Post to print a piece like that and have Coach be the target of the largest suite ever filed in the US against a MLM company/ Maybe they can do a "Fall from grace" piece in s little bit.

Bermuda Takes An Interest

According to the Royal Gazette, Bermuda is interested following the charges as well. I know when YTB launched in Bermuda, they were questioned for being a pyramid scheme (here and here)  as well, but apparently their argument was persuasive enough to allow them to go forward and recruit 700 Bermudian citizens into the program.

A recognized authority on MLMs has told me that in the MLM business, international expansion can lead to federal inquiries. Foreign governments can see that the US is sending their "trash" to operate in their country, and now the Stste departments begin to talk. Before long, State asks the FTC to find out what is going on and then the FTC brings out the hammer.

So Bermuda and Canada might be worth watching in the coming months.

Info From California Attorney General

The Attorney General has a web page set up for people to make a specific complaint or to tell their story directly to an investigator. If you feel you were misled by YourTravelBiz.com you can enter your complaint and one of the investigators will respond to it.

Access the online page here

News From The Convention Floor

Fighting for truth, justice, and the YTB way! Our very own Clark Kent Travel-Pro is reporting from the convention floor. The report was extensive, so we are including only excerpts.

I would urge anyone who is not here in St. Louis to get yourself to the Opening of our Convention at the Edward R. Jones Dome, Friday morning at 9:00am Central Standard time. The company has decided to postpone the unveiling of our Lady Liberty and dedicate the first 15 minutes of our opening specifically addressing this issue before we move into the Second Phase of YTB.

How un American. How can Liberty be put on hold? Oh wait, this "Liberty" is a fraud. Must be the theme of the convention.

We can not express how important it will be for you and your YTB business to see first hand what our Founders and our Legal Team have to say. We want to give you ample opportunity to hear first hand just how we will vigorously fight this personal attack" and why we believe we have a very solid shot at prevailing and inning the frivolous lawsuit.

Recruit to the death! Must recruit! What is Coach gonna say that he already has not? If he talks about it to 20,000 people his ego has finally been eclipsed by his stupidity!

Make no mistake, this suit was a personal attack towards YTB and the Traditional Travel Agents are behind what is going on. The timing of this suit was far too orchestrated and calculating for it not to be, as an embargo was put on the release of this suit until 10:00 PM Pacific Time on August 4th. Just 1 day before the opening of our National Convention.

The TTAs are flattered that you feel we orchestrated this. I am pretty sure the attorney general might feel otherwise. And just how is it that YTB has been negotiating this for 18 months and the TTAs have been actively campaigning for only 12? Travel-Pro...make sure you attend a math class at the University!

In addition, California has also filed suites this year with Heinz, Frito-Lay, Kettle Foods, McDonald's, Wendy's, Burger King, KFC, Pepsi, Proctor and Gamble, AOL, and Country Wide Home Loans just to name a few.

Travel-Pro---take spelling as well. Those "suites" they filed. Can you show shere they were intended to topple McDonalds, Burger King, Et Al? Most likely it was for something less than scamming hundreds of thousands of people out of money. I mean McDonalds has screwed up my order on occasion, but to my knowldge they never scammed me. And to boot they don't use styrofoam! And it seems like all of those companies actually pay people to work for them. Not ask people to pay to work for them.

If however you want to be part of the battle with another State just like Florida in 2006 and Rhode Island in 2007, both of which YTB prevailed, I urge you to be in the Dome Friday morning. Our National Convention has more than 20,000 Reps and RTA getting the same play at the same time from Founders and Leaders and we have plenty of room for you.

Wait a minute, for the past year you have said YTB has never been investigated. Please decide which side of your mouth you want to speak from.

Coach, Scott and Kim know how to handle this, they are handling this, and we are not going to hide. We recommend that you stand tall with us on Friday, August 8th at 9:00am when the play is called.

So Coach is calling another play? We saw how well the play turned out when you sold the Carnival certificates in November. The Olympic play was also a good one. Heck, it seems that his play on the two cruises did not work out too well. If the lemmings will not get behind him during good times, what are they gonna do now? And what is he? A coach, pastor or what? Or does it depend on the audience? And what team does he coach? And why does he have only a corner when most coaches have fields or courts? But I am sure he is pleased that you got one more recruiting pitch in!

It should also be noted that if anyone tries to contact you about this suit, please forward any questions and comments to media@ytb.com, and let our Company handle this battle. This is their responsibility, not yours.

Oops, you maybe should tell that to the people at the convention that are talking to the media out front. When you have 438,000 people in a scam one never knows what they will say. And to be honest, the ones that are quoted so far, have not really shed any type of intelligent light on YTB. Note to those that do talk to the media...calling the Attorney General an idiot doe NOT help the case.

See you at the Convention!!
Doug & Ronda BauknightAKA:
TravelProTravel Agents / Network MarketersYTB Travel NetworkPhone:
678.458.5812

OK, one last pitch!

Well there it is, live from St. Louis! All is well and the Coach is going to address the 3,600 Reps and RTAs that are in attendance on Friday. Wait...3,600 you say? Well, yes, 1,600 is the number of people that are Reps and RTAs. The remainder of the reported 22,000 are family and friends. The attendance figures do include friends, neighbors, children, aunts, uncles, and anyone else that wants to attend. You see, even the play called for the convention was a disappointment and they (like the cruise) decided to give it away. After all, it is all about recruiting.

Don't expect too much on Friday other than a round of Kool-Aid and soothing music assuring you that it is all a misunderstanding. Have we heard that before?

--Kate Holmes

PS: Tell Candi May that all of her travel agent friends say hello. And please tell Dr. Bob Seligman we are thinking of him!

The YTB Response

YTB has responded to the suit:

On August 4, 2008, a civil action was filed against three subsidiaries of YTB International, Inc. (the "Company") and certain executive officers of the Company in the Superior Court of California, County of Los Angeles, by the California Attorney General. The complaint alleges that the defendants violated California's unfair competition and advertising laws. The Company believes it has operated in full compliance with California law and intends to vigorously defend the case.

The complaint was filed after eighteen (18) months of dialogue, initiated by the Company with the Attorney General to discuss the implementation of a new California law's potential effect on the Company's business model. Throughout these discussions, which broadened over time, the Company has consistently cooperated with the state's information requests and provided detailed evidence in face-to-face meetings explaining how and why the Company's business model is in full compliance with California law. The parties recently came to a standstill and the August 4, 2008 complaint is a result of this standstill. The Company believes it has meritorious defenses to the claims, intends to advocate its position aggressively, and believes it will ultimately prevail in the case.

Scott Tomer, CEO of the Company, stated "we are disappointed that the state has decided to take this action. We firmly believe that the facts in this matter support our position and our legal counsel has advised us that our position is strong. The Company will vigorously defend this matter and we look forward to having the courts decide the merits of our case".

The Actual Suit

If you are interested in reviewing the actual suit which was filed in The Superior Court of the State of California, I have made it available for download.

It is a PDF file and it appears that in addition to the four named individuals they will be pursuing up to 100 other individuals to be named at a later date. I have been told by a local attorney, that the phrase "Does 1-100" typically does not indicate a specific number, but rather that there will be additional people enjoined in the suit.

It appears that at this time, this is only a civil matter.