The Facts Half-Truths About YTB--Part 3

Today, let's take a look at the third tab on the new YTB site called www.TheFactsAboutYTB.com :

Identity:

This is a nice fluff piece and makes for a good brochure, but is once again laden with half truths and misleading statements.

This first paragraph discusses their ethical standards and the experience of their Board and Corporate Executives. Here is what they do not say:

• They are being sued by California for deceptive business practices
• They are being sued in two separate Class Action Suits for in excess of $100M for deceptive business practices.
• That YTB and Coach Tomer is personally being sued for deception when he convinced a gardener working at his mansion to give up and sell his business to join YTB as an employee and was subsequently fired.
• That YTB has been the target of investigations in the past.
• That YTB is currently the subject of statewide investigations in at least three other states other than California.
• That YTB knew about the California problem for 18 months and never disclosed it to the SEC or their field.
• That YTB insiders sold a lot of stock during the California investigation while it was still marketable.
• That YTB was delisted from the OTC markets for irregular accounting practices.
• That YTB filtered $6M or $8M for their Statue of Liberty stage prop to a privately held company owned by Tomer and Sorensen.
• That YTB has made numerous poor business decisions costing the company and mor importantly their shareholders millions--purchasing a jet from a Board member and selling it for a loss. Purchasing real estate from a Board member and selling it for a loss.
  
• The list goes on....

YTB talks about being international. They do not mention that because they did not want to adhere to the TICO regulations for operating in Toronto, that they were almost run out of Canada and only saved themselves by being reactionary and buying a flailing retail location--Sunrise Travel.

YTB discusses the DSA and how YTB is the only travel company that is a member. Well, the DSA has nothing to do with travel. It is a lobbying organization for the MLM businesses. YTB did not mention if they were members of any travel related organizations like IATA, ASTA, ARTA, OSSN, or NACTA. Don't look. They are not. The only industry affiliation they have is with CLIA.

The Affiliate Health Plan is a money maker for YTB. They do not disclose this but according to Thayer Lindauer (their former attorney), YTB is acting as an ILLEGAL insurance agent and subsequently earns commissions on any policy that is purchased by an RTA. It needs to be noted (as it is not stated on the site) that this is a bare bones policy and offers very little coverage and classifies YTB as an illegal insurer in many jurisdictions since they have not received the appropriate licenses.

More Insight On The Attorney Resignation

In reviewing my notes from Ted Lindauer, it seems that John Simmons' firm was also overseeing the legal department and had appointed Andrea Clagg as director:

In the following months my administrative department received additional personnel, including the appointment of CFO John Clagg’s wife, Andrea, a non-attorney, as the Director of Legal Services. My compliance recommendations continued to be ignored.

In early August, 2007 I learned that John Clagg was giving various compliance directives to his wife. Neither John nor his wife were discussing these matters with me before acting on them. I objected noting to Coach that neither John Clagg nor his wife were qualified to make legal compliance decisions and the decisions they had made were wrong ones. Coach refused to stop the Claggs from making compliance decisions and refused to reverse the erroneous compliance decisions they had made....



After the Convention Coach informed me that local attorney John Simmons was being engaged as overall General Counsel for YTB International, Inc. and its subsidiaries. I met with John Simmons on several occasions in August to review my compliance and other recommendations previously provided to Coach in several memos. On September 7, 2007, John Simmons asked me to temporarily vacate my office at YTB so it could be modified to house two attorneys. That evening I received an email from John Simmons welcoming me to his new legal team.

Several days later, while working at home, I received an email from Thad Leach, a local attorney who is part of the new legal team. Mr. Leach’s email contained one sentence and stated that YTB had decided that it was no longer in need of my services.

I wonder if John Simmons had seen some of the same stuff Lindauer had seen. I wonder if it was a resignation or a termination. After all it seems that YTB does not need ANYONE meddling in their business.

What is interesting is that John Simmons actually owns the River House. According to the St. Louis Post Dispatch, Coach only "owns" it if the YTB stock trades at $2 or more for 90 consecutive days.

And even the local papers are suspicious of this latest development. According to the Alton Telegraph:

Prominent local attorney John Simmons has resigned from the board of YTB, the controversial travel sales firm, but Simmons and the company management are choosing their words carefully.

I am not sure we will hear more on this--attorneys are notoriously tight lipped, but I imagine that this will not be the ;ast "independent" Board member to leave. After all, Bob Dickinson bailed on day one.And as go the RTAs (currently under 120,000 I understand), so go the Board members.  But I am not sure Coach and Scott can effectively say "We don;t need no stinkin' RTAs." After all they are the ones that support the pyramid.

Uhm...Excuse Me Coach? I Have A Few Questions

NOTE: This post was intended to run on Tuesday, August 5, 2008. But now that the Convention is over, it is still appropriate and I wonder if any Reps or RTAs might have had the gumption to ask some hard questions.

To those that are headed to the Convention later this week and are seriously interested in selling travel, I offer these 14 questions for Coach.

1. Are there any plans to have the Certified Referring Travel Agent Training (CRTA) classes taught by anyone with some certifiable travel experience?
2. What is happening to my clients who are traveling August 6-10 since YTB has shut down the home office to allow all employees to come to St. Louis?
3. Do you feel that $8 million was really necessary for a 3 day centerpiece?
4. Why is the donation of Lady Liberty now in the hands of Beryl-Martin? I thought this was great publicity for YTB.
5. How many RTA websites are there right now in YTB? Kim was unable to figure it out with Nadine Godwin, I figured you might know.
6. Will Dr. Bob Seligman be addressing the convention?
   
7. Is it true that you, Kim, and Scott are the owners of Beryl-Martin Printing?
8. Of the reported 22,000 in attendance, how many Reps and RTAs (not spouses, guests, families and friends) are there?
9. When will we be able to concentrate on selling travel and being recognized as a legitimate company? It is tiring having to defend YTB all the time and Kim said he was working on "legitimizing" YTB last year. How is that coming along?
10. What are your plans for credentials now that IATAN has refused to grant us accreditation and it seems like CLIA is upping the requirments significantly?
11. Are there any plans to offer a more competitive commission split to be comparable to the majority of the host travel agencies in operation?
12. When will our finances be up to snuff to be admitted to one of the Big Board exchanges?
13. What really happened with Bob Dickinson?
14. What really happened with Ted Lindauer?
    

While these are somewhat tongue in cheek, each question does indeed pose a legitimate concern--or at least ought to pose a legitimate concern for anyone who is serious about doing business with YTB.

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.

BBB Documents Many Complaints Against YTB

According to the BBB, the number of complaints against YTB has soared in the past year.

The woes of the YTB travel operation widened Thursday when the Better Business Bureau went on record with complaints it says it has received about the company in at least 31 states. "We've been monitoring the company for a little while. In 2008, the complaints really exploded," said Scott C. Thomas, a trade practice consultant with the Better Business Bureau of Eastern Missouri and Southern Illinois.

The BBB complaints are certainly not unfamiliar to YTB. I have a letter dated May 14, 2007 that addresses to the BBB essentially the same issues the Attorney General alleges. What is interesting about this letter is that it is entitled:

BBB LTR St Louis-Director Version.pdf

That begs the question--what was the "version" sent to the BBB in response to their inquiry? Perhaps this version was a little different to give the illusion that all is well in Wood River?

I am not sure we will know, because it was penned by Thayer (Ted) Lindauer who was their attorney at the time. If you are interested in the backstory of Ted, he was fired, contacted YTB and explained what was coming down the pike and how they were operating illegally and threatened a lawsuit on behalf of shareholders. Very quickly he was silenced. You can draw your own conclusions. We posted about Ted here and here. I also have copies of Ted's letters to YTB and their Board.

NOTE: Per request, the BBB letter can be found here. For me to upload it to my server, I need to have single word names and the change of the file name to BBB was mine

Some Outrageous Comments

Earlier this week, there was an article in the Post-Tribune of Northwest Indiana regarding YTB and their Statue of Liberty. I spoke with the author over a month ago between then and now, she did her research and came out with the article that is really pretty much dead on. I only saw the article yesterday, and what really amused me were some of the comments from the pro-YTB crowd. Their reactions, albeit predictable, are certainly eye opening. It is a standard modus operandi for them--attack, deflect, lie, attack again, and if all else fails, lie some more!

In regards to any individual formerly affiliated with YTB who stole money from unsuspecting people; it is true- THEY stole money from those people, but YTB dissolved their affiliation with those people AND refunded all the money to those folks who were taken. Why did you not report that fact?

Oh really? Where was the follow up story on the students from Tennessee? The bus drivers from Houston? Yes, they did reimburse the Baltimore woman, but what about the rest?

I went to the lady who invited me to the meeting via the Statue of Liberty flyer and asked her for other sources of information and she directed me to literature and websites and gave me good info. She even gave me the opportunity to go to the Home Office in Wood River, Illinois to meet the founders of the company and have lunch with them at their expense. Really!

Come on. So now Coach is paying for prospects to come to Wood River? And what references were given? BBB reports? News reports of the scams? Financial reports? Letters from Royal Caribbean? IATAN endorsement? My guess is it was the YTB website and a Success From Home magazine.

She handed me several articles that she authored and asked me to read them along with an article from an entrepreneurs magazine.

Ah yes, that beautiful example of journalism, Success From Home where you too can buy the cover and content for the right price. As to her "authored" articles....I woudl like to see them. I know that the insurance industry is big on this, is YTB trying out that scam too? Having someone ghost write a column and for a price they put your photo and name on the byline?

I researched it and found also that YTB does not hand out Travel Agent credentials, but you must EARN them by selling travel via your own website. That fact sealed the deal. Then I found out that they are a publicly traded company on the stock market and that was all I needed.

They claim to not hand out credentials. BUt they do. Just buy a trip for yourself, deduct it on your taxes and whammo--RTA Credential. BUt let me get this straight, NOT giving out credentials sealed the deal? And then knowing they were publicly traded was all they needed? I have some Enron stock sitting around for you!

It’s very apparent your homework assignment was submitted as incomplete making you a very weak species in your profession…….if you could call your work a profession. Very sad that your job description requires you to attack and place primary focus on being PESSIMISTIC as an angle to get a story printed.

Attack attack attack. What is your suggestion, all sit around in a circle at Coach's Corner and kiss his ass some more?

You attack YTB as being a card mill and not selling travel when MAGICALLY, they sold over $14 million in cruises with Carnival Cruise Lines setting a 1-day record in Cruise history last November 8th. Sure sounds like YTB is packed with slackers….NOT.

Thye did not sell $14 M in cruises in one day. Remember it was 6500 cruises. And most were certificates, and Carnival did most of the selling because RTAs cannot sell their way out of a paper bag!

While attending the same meeting you attended; there were witnesses who saw you picking your nose in the corner because you weren’t paying FULL attention to note ALL of the valid TRUE details that were provided in its entirety and you opted to be deceitful in your story.

Attack attack attack. Glad the nose police are there. I can't blame the reporter, it was probably more entertaining and factual than the presentation. But no doubt she picked the wrong one to attend as well becasue we all know...(all together now) I don't do my presentation that way!

You are the one working in scam land. The man at the top receives a higher pay for all of your deceitful articles and your pay is not enhanced. Hhhhmmmmmm – whats wrong with that picture ???

What IS wrong with that picture? How much is the man at the top of YOUR pyramid making? I am guessing the publisher of the Post-Tribune is not flying all over in a Lear jet.

Strangely enough, YTB is such a scam ---- there are many celebrities, professional athletes and organizations enjoying the abundance this company offers.

And celebrities are always involved on the up and up. Is Michael Vick a member yet?

YTB is strong and stands by their word. They back you 1 million percent. They treat everyone on their team like family and make all of us very proud to be associated with this escalating dynasty.

Just a point of order here. YTB has proven time and time again to be math challenged. There is no such thing as a million percent. It is 100%. Maybe you are just used to adding all those zeros to inflate your income, but there is no such thing as a million percent.

Bill Gates had a vision that every home would own a computer one day. People laughed at him. Now you access the internet via a cell phone, every home has a computer if not multiple units and they also carry them around.

Uhm. every home has a computer? What dream world are you living in? Or was this somethign you were told at a recruiting meeting along with the "fact" that 300,000 travel agencies are out of business.

The accusation and the fake letter by YTB's attorney surfacing on the net is another ploy to make YTB look bad. The letter was a phony and it was intended to sway people who don't know any better. You believed it, right?

Ted Lindauer's letter was very much a real document. Saying it is not is a lie. Don't make me post the photo of the kid flipping the bird again!

This John Frenaye mentioned in the article- I know well. We have had communications in the past. He does sit on a board but I want to also mention that he is a traditional travel agent and owns a travel agency. He asked me to drop YTB and come to work for him! Interesting. I have the documented proof. Another wash!

I know this John Frenaye well too. Bring it on! So if you know me so well and have corresponded wiht me, please, please post the email (including headers) on here that "proves" I tried to hire you away from YTB. I double dog dare you! (That was my favorite comment)

We NEVER support dropping cards under windshield wipers...how unprofessional is that? Dropping them in a post office to mail - yes, but under windshield wipers? Really.

Yes you do. Read the comments on this blog. Search the terms "soccer + tax" and read the comments!

I would like to leave you with this thought. If YTB is so shady, why have they not been investigated by the FTC? Why is it that they have not been shut down and moved off the Stock Market by the SEC? They have been compliant with everything they do. They follow the laws and run their business right.

Just because they have not been shut down does not mean they are not corrupt. It does not mean they are not under iunvestigation. All it means is that the legitimacy of the company has yet to be proven--or disproven.

The statement about the Ricketts paying anything is not accurate. They were investigated but found to be innocent of the charges. No payout.

Can't say anything about that, but the dates and times are somewhat suspicious. Wasn't that about the time YTB began to court their very own Florida State Senator Burt Sauders?

An RTA Who Is In The Know!

So, a 26 year old RTA (still in college) has the insight on Ted Lindauer. This info is a fabrication. Call YTB and ask for Ted and see what they say. This guy is so in the know, I wonder if it is Ole Scorekeeper?

Doh' Did YTB Just Have an "AHA" Moment?

As I said in yesterday's post, the appointment of Bob Dickinson is a fantastic move for YTB and they are to be congratulated for landing such a big fish! I have to admit, it was puzzling to me for a while and then I began to wonder if YTB may have had an "AHA" moment.

While many people with YTB are crowing about the success of YTB over the past 12 months, I really see it not so much as success, but finally doing the right things to get out of the trouble they placed themselves in in the first place. Here are some of the" accomplishments" I have heard from the YTB crowd:

• Being listed on the OTC stocks and off of the Pink Sheets (you were placed on the Pink Sheets for irregular accounting practices and failure to file SEC paperwork)
• Selling a record number of cruise certificates with Carnival (adfter being summarily fired by Royal Caribbean)
• Purchasing a travel agency in Canada (after realizing that TICO required a physical presence)
• Attempt at a purchase of Hickory Travel Systems (after realizing that IATA endorsement was important)
• Focus on training in travel (only when pressure was felt from the industry that training was essential)
• Partnership with a "big" Chinese Tour Operator (and we all know how that ended)
• Statement that IATA was a card mill and a competitor (resulting in denial of the IATA endorsement--is anyone surprised?)
• $414 Million in sales (or $3160 per RTA)
• Record commissions paid (if you call less than $200 per year a record)
  

So, as I said, I see a lot of the "accomplishments" more as catch ups for YTB in the quest to legitimize the company.

So where does YTB go from here? I think nthat finally, YTB may be seeing the light-MLM and Travel is a Bad Mix. How ironic. Back on October 12, Kim Sorensen said the following in Travel Weekly:

Sorensen said that YTB was a "networking company, but we also put major emphasis on the travel side. ...We want to legitimize the concept with our production." On the other hand, he said, YTB makes no pretense of competing with "high-touch, high-service" travel agents; it is after the consumer who is comfortable booking on the Internet.

Well, since October, it seems that a lot of his "legitimizing has not panned out as well as he would have liked. Even their own counsel quit or was fired, blew a whistle, was re-hired, and then disappeared again. So obviously there was work to be done.

Back on November 5th, Arnie Weissmann said in Travel Weekly:

Whether or not the debate on both sides is ever stripped of its good-vs.-evil trappings, it may, if history is an indicator, play out something like this: Since successful MLMs don't remain MLMs forever (adding a new foundation level to the pyramid becomes increasingly difficult), they very often continue in their industry but drop the pyramid model.

Have we reached that point? I believe we may be very close. For the first time in the history of YTB, they have brought someone with travel industry experience into the ranks of their management and Board. There have been a number of relatively high profile scams perpetuated by the untrained RTAs most recently in Tennessee a few days ago. Just maybe there is something about being legitimate and selling travel, rather than renting websites. Maybe with each new scam that YTB needs to deal with, they are taking those two steps backward on the road to legitimacy.

Maybe Arnie Weissmann is correct. Is YTB dropping the pyramid model? If they do, it will be a brilliant move on their part and will almost garner them industry-wide respect and that elusive terms--legitimacy!

As I think about this, they have had a pyramid structure for years and made a very few people very wealthy. The lion's share of their income comes from the people paying $49 a month. This is a $6.9 million dollar income stream per month! Granted, most of that goes out to the pyramid, but if that pyramid is halted, that is a tremendous income for a legitimate host agency. And we are not even talking commissions and overrides.

So now if YTB halts the pyramid, what happens? Well, there are 131,000 people paying YTB a lot of money. As has been proven time and time again, most of these folks are not serious and are not earning any money, but there is a very small faction that are serious. Let's say that faction is 10%. Well, if YTB eliminates the pyramid, the Reps fall away--they were not paying anything so nothing lost. And eventually, after some serious capitalization benefiting YTB, 117,000 RTAs will also quit the program--how many months they will continue to pay on the hopes of riches is undetermined. That leaves YTB with a 13,000 RTAs that are serious about selling travel. Are they producing like a TTA? Probably not, but that at least know they can. Notch up the training a little bit and VOILA--the largest host agency in the nation earning top tier commissions. Legitimacy=MISSION ACCOMPLISHED.

Some may say this is totally improbable, but remember, YTB's Board answers to shareholders--period. They have no loyalty or allegiance to any Rep or RTA. They need to provide results for their shareholders. How did YTB get to the travel numbers they claim to have? On the backs of the 10% of the RTAs that are producing. The remainder are dead weight in terms of travel commissions, but a cash cow in terms of revenue. Reps? Biggest liability out there in terms of financials.

Finally, if you look at the number of MLMs that are popping up these days./ There is not a day that goes by (it seems) when there is not a new "get rich in travel" scheme in my email box. This only erodes the allure of YTB as a MLM company, so it might make sense to get out of that market right now. The reps that made money will be happy and can move onto the next industry, those that did not, may not have paid anything so no loss there. YTB can claim that the RTAs that made no money failed themselves (and they will claim that), and the ones that did, (small by a percentage and large by numbers) will continue on selling travel (not recruiting) in a large host agency model.

The beginning to the end is near and as I believe that YTB is beginning to see that indeed, MLM and Travel is A Bad Mix!

What Are People Looking For?

When someone wants information on a topic these days, they usually utilize the Internet and a search engine. Google is a popular one. Yahoo is another one used by many as well.

While many people have subscribed to this blog and many more are just bookmarking it and checking back, we do get a ton of traffic from the search engines. Last week, I was watching the search terms used to find this blog and I thought it was interesting.

For the most part, they are negative terms. People are actually looking for specific bad things, like "is this a pyramid scheme". They are not looking for "is MLM a great opportunity". Both search terms likely would have eventually brought you here, but the list below shows the search terms people used to get here--so there is no influence of the blog. At least at this point.

Take a look at some of the top phrases entered into search engines last week:

• FTC YTB
• Dr. Bob Seligman
• Is Mike The Travel Guy RTA a pyramid scheme
• Ted Lindauer
• Travel MLM
• Fired YTB Lawyer
• CLIA and YTB
• MLM cult
• Opinion about MLM
• YTB and TICO standards

Wow, Seligman is apparently still trying to be verified. People are still very curious about Ted Lindauer and his firing and I suppose his subsequent reconciliation. But a lot of people are wondering if MLM is a pyramid scheme or a cult.

How does this happen? I am unaware of any traditional business model in any industry that garners those terms in their searches. "Is GE a cult?" got one return on Google. YTB got 4,630. "Is the IBM salesperson a pyramid scheme?" got one. YTB got 6,780. "Fired American Express Lawyer" got no responses. YTB got 1.

Very interesting. It seems that it is not only the folks on here that are questioning the validity of MLM in travel. It seems to me that there might be more of a pervasive attitude out there as well. I have said it before, but if I were involved with a travel MLM and had to spend most of my time and effort defending the shady business practices, I would move on. Well, maybe I would put some pressure on management to do something first--one would think that if they were truly vested and interested in the business they would welcome the opportunity to "legitimize".

More "Old News" The Final Chapter

After two recent posts, it has been said (ad nauseum) that YTB has resolved the issued in Lindauer's letter. As it pertains to YTB (not their other ventures), there were four major points which were not in compliance with "State and Federal Marketing Laws and Regulations". While one of the issues may have been addressed after the fact, the rest remain unresolved to my knowldge. The following is an excerpt from Ted Lindauer's letter of January 3, 2008 which was sent via UPS Overnight to Scott Tomer and the Board of Directors of YTB International, Inc.

A. Compliance with State and, Federal Marketing Laws and Requlations. (The matters described in this Section A have been learned from the public websites of the various YTB International, Inc. subsidiaries in use on December 15, 2007).

1. YTB Reps are required to purchase CRTA Training in order to participate in multilevel commissions in several sales programs including, but not limited to, commissions on the sale of travel, commissions in the Car Referral Program and commissions on the purchase of travel by members and affiliates of non-profit RTAs. These required purchases in each instance violate the civil and criminal provisions of multiple states' antipyramid laws and lottery laws, constitute deceptive trade practices under Section 5 of the Federal Trade Commission Act, violate the U. S. Postal Service Lottery regulations and constitute the unlawful offer and sale of unregistered investment securities under state and federal securities laws.

Travelpro has provided a document that says the Reps are not required to pay for the travel agent training to receive the payment in this program. That is true, but the document was produced after receipt of this letter. The problem may indeed be resolved, but it was solved out of reaction. Travelpro has also said it was resolved before this blog posted about the Lindauer letter in mid January. That has no bearing.

2. The description of the Car Referral Program is such as to require that the participating RTAs and YTB Travel Network of Illinois, Inc. register as automobile salespersons and/or automobile dealers in various states. No such registrations have been made.

The documentation provided by Travelpro and anyone else simply does not address this. I do know for a fact that in Maryland and in Pennsylvania, one must have an individual license to sell cars. Has YTB acquired the proper licenses for their 140,000 RTAs that are offering cars for sale on their sites?

3. The Two Fly Free program offered to the public by RTAs of YTB Travel Network of Illinois, Inc. constitutes the offer and sale of Travel Club Memberships and/or Club Memberships and/or Discount Buying Service Organization Memberships requiring the obtaining of licenses and the posting of surety bonds in various states prior to their offer and sale. These licenses have not been obtained to date in all of the states which require such licenses.

This program is still being heavily promoted on all RTA sites. Have the required bonds and licenses been acquired for the 140,000 RTAs that are promoting this product?

4. The disclosures provided in connection with the promotion of the RTA medical/dental/prescription program are insufficient and result in YTB Travel Network of Illinois, Inc being an unlicensed insurance provider (PPO) in various states. In addition, any direct or indirect monetary benefit received by a YTB company or anyone affiliated therewith in connection with the purchase of these plans by RTAs must be adequately disclosed. Further, California law prohibits the offer and sale of the prescription plan until the plan provider has registered with the appropriate state agency.

I am not sure how many RTAs have opted to purchase this insurance, but I wonder if the issues have been resolved. Have the disclosures been corrected? Have the disclosures been made? Has YTB applied, been approved and complied with the California regulations?

YTB may have addressed one of these four issues and everyone on the YTB front seems content with that. AS Mark Ewing has asked, why is there not even some minimal questioning. If you are serious about your business, Your Travel Biz, why are you not concerned?

More "Old News" Part 2

Well, it is Saturday and I suspect that the RTAs and Reps are continuing to contradict themselves about Ted Lindauer. All of them have the inside track at YTB. Some insist he is working at YTB, others have spotted him in Memphis getting off a plane with Coach for a Founder's Tour event, others have seen him working in his office at the Red Carpet Day, and others say he is not working there. The guy seems to be the Elvis of YTB. But I have sent Ted an email (so far unanswered) and I did make two calls to YTB headquarters yesterday asking for him only to be directed to a generic voicemail one time, and being told that he does not work there any longer. So, maybe the folks that saw him at the various events saw an apparition, or maybe he was just picking up some personal stuff. The reality is that he is no longer employed there, no matter the insinuation on his site.

In the meantime as the YTBers were debating the status of Ted, Mark Ewing posted an outstanding comment on yesterday's blog entry. I think it is important to bring this out of the comment section and offer his opinion for everyone to see--YTB folks, suppliers, interested parties, traditional travel agents, and even any regulators that may be reading.

Blind faith and ignorance are just that: Blind and ignorant. And... Ignorance is not bliss.

The fact is, that this information came from one of YTB's own legal staff. A major insider.

It can be assumed that his legal understanding of YTB is far greater than the people on this blog.

It can also be assumed that he would not have posted the demand for resolutions letter without a lot of thought.

Regardless of his intentions, my intentions... or anyone else's intentions.... the letter states clearly that YTB is in violation of civil and criminal laws.

The direct quote is "These required purchases in each instance violate the civil and criminal provisions of multiple states' anti-pyramid laws and lottery laws, constitute deceptive trade practices under Section 5 of the Federal Trade Commission Act, violate the U.S. Postal Service Lottery regulations and constitute the unlawful offer and sale of unregistered investment securities under state and federal securities laws."

Regardless of your personal beliefs, this is a very serious statement.

Remember, this is coming from an MLM attorney, who was direct council for YTB, who states that he is a very close friend to Coach Tomer, and is a shareholder in YTB International, Inc.. This is not some misguided RTA, or someone that is out to get YTB. The letter is addressed directly to the board of directors, with an immediate demand for resolution.

What everyone here needs to be concerned with, is what has happened to these issues. Why did Mr.. Lindauer post this message to the general public. Why did he take it down so fast, without clarification on the demand for resolutions? Why hasn't YTB given the proper S.E.C. required public notice of these resolutions? What is really going on here?!

Just because Ted took down his letter, does not mean that the problems just went away. GET REAL FOLKS! If anything, this raises a MAJOR RED FLAG with YTB, YTB Leadership, and YTB's legality. WHAT IS GOING ON HERE?!

As an RTA, a YTB rep, an outsider, an insider.... You should be demanding to know what is happening with the resolutions disclosed in this document!

The fact is, that this effects current and past RTA's a lot more than it effects non ytb'ers.

Before you spend a lot of time and energy trying to put a positive spin on this.... or trying to argue this issue away.... Stop and ask yourself who and why you are trying to protect here? Aren't YOU more important than YTB?!

As an RTA, aren't you worried about yourself, and your investment in your business?

Who comes first? You....or YTB?! If you are going to represent YTB, don't you have a right and an obligation to make sure that YTB is operating legally? Your pride and loyalty in YTB should be backed by a legal business. You should be demanding that YTB takes every measure and precaution to insure that it is legal!

You shouldn't have to be trying to put a positive spin on this.

You shouldn't have to be arguing this.

That is not part of your job description. It is unfair of YTB to put this burden on you.

You paid your money on the premise that you were buying a legal business. You deserve answers.

So, for all of you RTA's on this blog, you can continue to blindly defend and protect your company.... but that is not going to change anything. It is not going to protect you from the issues that have been disclosed. Ignorance is not bliss. And covering up a crime is in itself a crime.

The fact is, that each and every you should all be angry and upset with this information. You should be demanding clarification on all these issues, as you have invested your time, money, and energy into this business. You have a right to know the facts! Make them answer to these issues...not you. You shouldn't have to feel that you need to make it right. THEY SHOULD MAKE IT RIGHT!

You, as RTA's are ignorant and stupid if you turn a blind eye to this.

It should really piss you off that this issue has just been swept under the rug. You should demand that YTB's board of directors should account for each and every issue brought forth in this demand for resolution letter. THIS IS VERY SERIOUS. Your businesses are on the line here!

This is not about RTA's vs.. Traditional Travel Agents. This is about YTB's legality.

You should demand that YTB fixes all of these issues. to insure that your business is going to be strong in the future. Doesn't that make sense? (Unfortunately, logic may be to much to ask for here on this blog.)

I really question the ethics of someone that continues to promote and sell a business after information like this has surfaced concerning the legality of the business.

If I were in YTB (which I am not) I would make damn sure that these issues were corrected to the satisfaction of the law, before I would involve anyone else in the business. I would be worried about my risk of being sued, or worst, charged with a crime. I would be concerned for the well being of others...and my own well being.

Remember, ignorance is not bliss.

WARNING: As an RTA, you might want to seek out legal council before you continue to promote and sell YTB. You may want to find out the legal implications selling a business with the disclosed issues. You need to find out what are your legal responsibilities here. Can you be held personally accountable and responsible for these issues when you sell this to someone else? Can you personally be sued or charged with a crime? Are you putting your future, and your family's future in harms way?

Like I said, like it or not, this is very serious.

More "Old News"

I know this is "old news" so please save the bandwidth and just don't say it! As many know, YTB's attorney was fired and he posted a very disturbing letter on his website. Less than two weeks later, the letter was removed and it seemed that he had made amends with YTB. But the whole thing does not sit right with me. Ted Lindauer and I exchanged emails and in one he said, "Hello John. A great blog." So I wonder what has changed?

A licensed attorney does not make those types of allegations if they were false--calling YTB's bluff in a sense. I just do not see how YTB could have corrected them all in a matter of weeks--particularly when they were dealing with several programs that YTB is currently promoting. Well, I am not the only one that noticed. Mark Ewing has posted this commentary on YouTube and I feel that Mark makes some very strong points. The biggest one is that every Rep and RTA ought to be asking questions of the leaders--not blindly following them. And the ironic thing is that Mark is IN network marketing so there is not really an agenda there.

All Sorts Of Strange News

Apparently Coach and Ted have kissed and made up. Ted has posted this cryptic announcement on his website. Not sure if they are working together or "working together".

Over the past week Coach Tomer and I have taken the opportunity to communicate openly and frankly about our past friendship and about the future of YTB. We are in agreement as to what must be done to make YTB become what we and others originally intended when YTB began in 2001, that YTB be the biggest and best network marketing company ever and the largest travel company ever. We found that our friendship of over 20 years was still strong, our thinking very much alike as before and our vision of YTB’s future as it was before, strong and boundless in scope.

Coach and I have decided to work together to continue building YTB together. We have renewed our collaboration to build YTB. There is much to do. My concerns have been addressed and I am satisfied that everything which must be done is being done and done well. Coach and I have resolved to communicate with each other more often and more effectively in the future and, especially on my part, to be patient as the coordination of the many aspects necessary to continue YTB’s growth and success are put in place.

My, What Strange Bedfellows!

Wow, when I look back to my first post in this blog back in October, who would have ever thought that I would be sending Christmas gifts to Doug Bauknight, a YTBer whom I now consider a friend? We are still on the opposite sides of the fence but we talk If that weren't strange enough, I now find myself corresponding with one of the top Corporate attorneys in the MLM world. What is even more strange is that he was the Chief Counsel for YTB and led the firm from nothing to nearly 150,000 RTAs strong. Stranger still, he was a decades old personal friend of "The Coach".

It appears that when Ted Lindauer began to do what he was hired to do, the megalomaniacal duo of Scott and Coach Tomer fired him without nary a reason. Apparently Ted wanted them to comply with some laws as it related to their expansion into cars, flowers, and other ventures. He wanted to make sure that the hundreds of thousands of lemmings running around the country were selling the program legally. Apparently he wanted to let him know of the legality (or illegality) of charging the RTAs for credentials. But the Tomers were on a roll. Back in September when Ted was fired, the stock was up and it was a great time to sell. And sell they did! Ted was replaced by in a nepotist move when the Tomers replaced him with Andrea Clagg, the wife of CFO, John Clagg. Andrea apparently has no legal background and is all of a sudden the Director of Legal Services.

Now, the good Christian Coach will not speak with Lindauer nor offer any explanation as to why he was ousted. So much for loyalty and friendship. Ted has a website with a lot of very good information on YTB--MLM Lawyer. What I find particularly interesting is that his claims are fairly parallel to my suspicions all along--YTB is operating on the fringe of legality. But with his inside information and his recent letter to the Board of YTB, I suspect that YTB has crossed the line. I wonder how "Coach" is going to spin this bit of news. Ted has now put the Board of YTB on notice of their illegal ways with an eye opening letter. An attorney with nearly a half century of experience does not write such a letter lightly.

Just some key points:

• The required trainings and purchasing of credentials violates civil and criminal provisions of many states' anti-pyramid laws and constitute deceptive trade practices under the FTC.
• The RTAs that sell cars need to be licensed to sell cars in many states.
• The Two Fly Free program constitutes a Travel Club or Discount Buying Service which requires licensing and bonding in many states. YTB has not obtained them.
• The promotion of the medical insurance has effectively resulted in YTB being deemed an unlicensed insurance provider in many states.

Ted also points out some "accounting irregularities", something to which YTB is no stranger:

• As of December 31, 2006, they were overdrawn on the corporate bank accounts is excess of $1 million dollars.
• Their CFO, John Clagg, is not a CPA (but he plays one during the week and his wife plays an attorney)
• The promotional materials used by the RTAs are not being reviewed by knowledgeable legal counsel prior to publication (can you say "Coming to you from the farm...")
• The companies have ceased publishing monthly data on Rep and RTA earnings and RTA travel bookings.

So, what does all this mean? Well, Ted, as a shareholder of record has put the Board on notice that they must comply with his requests or provide a satisfactory response to him. If not, he is prepared to file a stockholders derivative suit in the US District Court to compel YTB to comply. I imagine that word of this action will spread to several other three letter agencies that might have an interest--IRS, SEC, FTC, and the AGs of many states.

NOTE: I have placed a link to Ted's site on this blog. I feel it is important for everyone on both sides of the fence to read this information. Please visit it and read some of the comments from current and former YTBers, responses from YTB HQ, and Ted's comments on the whole situation!

An Attorney Mystery

This bit of news seemed to slip under the radar back in the fall, but apparently, the attorney that was a major domo in YTB was let go and no one really seems to know why? You can get these originals from Ted Lindauer's website. Hmm, just not sure what to make of this? Any conspiracy theorists out there?

The first letter:

At the request of Coach Tomer, I closed my network marketing legal practice of 37 years in September, 2005. I immediately moved to Southern Illinois and began working full time at Your Travel Biz.com in multiple capacities as marketing compliance legal counsel, a department administrator and as a marketing consultant.

On September 7, 2007 Coach cancelled my contract with YTB without explanation or prior notice. I have reopened my network marketing practice and have had no affiliation whatsoever with any of the YTB companies since September 7, 2007. This Announcement became necessary after Coach repeatedly refused my requests that he publicly announce that I was no longer affiliated with YTB. In my opinion, the withholding of this information from YTB Reps and RTAs was just not right.

Since September 7, 2007 the maintenance of YTB's marketing compliances has been the responsibility of a team of attorneys with law practices in Southern Illinois.

I have filed an arbitration proceeding against YTB to collect back compensation owed to me. As a YTB stockholder I have requested that the Board of Directors of YTB International, Inc. require that the officers of the various YTB companies be ordered to take a number of specific actions. In my opinion each of these actions is critically necessary to ensure the survival and future success of YTB. In the event the Board of Directors refuses my requests I will file a stockholders lawsuit to have the court order that the actions be taken.

Thayer C. Lindauer

The YTB response:

In response to the e-mail recently circulated to some of our Directors from Ted Lindauer, YTB makes this initial statement. Mr. Lindauer was engaged by YTB as legal counsel for several years and has been a friend of Coach's for decades. Mr. Lindauer submitted a written resignation to YTB on August 10, 2007. Although Mr. Lindauer's arrangement with YTB did not provide for compensation in the event of his resignation, Mr. Lindauer made several arbitrary and unreasonable demands on the company.

After months of attempting to work with Mr. Lindauer in good faith to arrive at a generous settlement providing for more than he was entitled to under the terms of his engagement, YTB is shocked to now learn that its own former counsel has attempted to alarm the YTB community with this confusing and unwelcome e-mail communication. We are disappointed that Mr. Lindauer has apparently chosen to cease negotiations and pursue another agenda seeking to harm his former client and its business family.

This situation is being evaluated by our legal team and appropriate action will be taken immediately.

And the Lindauer response again:

Friday, January 4, 2008

I resigned from YTB in April, 2007 because YTB was ignoring my compliance recommendations and refusing to provide staffing to support my administrative responsibilities. Coach asked me to withdraw my resignation and promised to address my compliance recommendations and to provide the needed staffing. I accepted Coach at his word and withdrew my resignation. In the following months my administrative department received additional personnel, including the appointment of CFO John Clagg’s wife, Andrea, a non-attorney, as the Director of Legal Services. My compliance recommendations continued to be ignored.

In early August, 2007 I learned that John Clagg was giving various compliance directives to his wife. Neither John nor his wife were discussing these matters with me before acting on them. I objected noting to Coach that neither John Clagg nor his wife were qualified to make legal compliance decisions and the decisions they had made were wrong ones. Coach refused to stop the Claggs from making compliance decisions and refused to reverse the erroneous compliance decisions they had made. On August 10^th I resigned and submitted my request for severance.

Andy Cauthen, who was then CEO of Your Travel Biz.com, and Coach both asked me to once again withdraw my resignation. Coach promised to address my concerns after the August Convention in St. Louis. He also promised a generous severance package when I retired from YTB. I again withdrew my resignation and returned to work at YTB.

After the Convention Coach informed me that local attorney John Simmons was being engaged as overall General Counsel for YTB International, Inc. and its subsidiaries. I met with John Simmons on several occasions in August to review my compliance and other recommendations previously provided to Coach in several memos. On September 7, 2007, John Simmons asked me to temporarily vacate my office at YTB so it could be modified to house two attorneys. That evening I received an email from John Simmons welcoming me to his new legal team.

Several days later, while working at home, I received an email from Thad Leach, a local attorney who is part of the new legal team. Mr. Leach’s email contained one sentence and stated that YTB had decided that it was no longer in need of my services.

I immediately asked for and was granted an appointment with Coach and Scott. On the day of the appointment I received a call cancelling the appointment and telling me to contact Thad Leach. Mr. Leach and I exchanged various emails about my severance with Mr. Leach denying that YTB owed any severance to me despite the fact my written agreement with YTB called for a specific severance package.

In October YTB offered me a new 3-year consulting agreement in lieu of my pursuing my claim for severance. I agreed in principle subject to having an acceptable written agreement. Mr. Leach sent a proposed draft of a new agreement which was one-sided and allowed YTB to cancel the agreement at any time with no further obligation to me. I rejected this draft and proposed seven changes. Mr. Leach dragged the matter out for several months, finally saying he needed to speak with Coach. I never received a response from YTB as to the seven changes I requested. Mr. Leach notified me just before Christmas that there had been unspecified “new developments” and he would be back in contact with me “after the holidays.”

Continuously throughout the months following September 7, 2007 I offered to train the new legal team in MLM legal compliance requirements in 12 two-hour training seminars without any compensation to me and whether or not I was able to settle my severance claim or enter into a new agreement. Mr. Leach rejected my training proposal at first, then refused to respond as I renewed my offer over and over again.

Most disappointing of all was the refusal of Coach, despite my repeated requests and then demands, to let the YTB Reps and RTAs know that as of September 7, 2007, I was no longer affiliated with YTB and to tell them who is overseeing YTB’s marketing legal compliances. If Coach is comfortable having a team of local attorneys with no Multi Level Marketing experience take on the responsibility of keeping YTB in legal compliance, why hide them and pretend that I was still at YTB?

Ted Lindauer