1 Held, 2nd Sought in Travel Scam

A Canoga Park man was arrested and a Los Angeles man was being sought Thursday on accusations of defrauding 2,500 people nationwide of $1.2 million by telling them that they had won free trips to Hawaii, taking their credit card numbers to “validate” the prize and ringing up unauthorized sales, federal prosecutors said.

Between March and May of 1985, the Executive Gold Card Travel Club employed 120 people, including 90 telephone salesmen, at Wilshire Boulevard offices, making it one of the largest “boiler room” sales operations ever uncovered in California, Assistant U.S. Atty. Mark H. Bonner said.

“Everybody’s eyeballs popped out when they went in and saw the size of the operation,” Bonner said.

The travel club’s owner, Roy William Castner, 43, was arrested at his Canoga Park home, and authorities are seeking the company’s manager, Lawrence David Berry, 39, he said.

A federal grand jury indicted the two men Wednesday on 29 counts of mail, wire and bank fraud, unlawful interception of wire communications and conspiring to use unauthorized long-distance telephone access codes.

Berry was the co-owner and executive director of a private West Los Angeles company that came under intense criticism in January for attempting to issue identity cards to people who pass tests showing that they do not have AIDS antibodies. But the company, the National Assn. for AIDS Awareness, never accepted customers after outraged Los Angeles City Council members called for an investigation.

Castner was being held Thursday at Terminal Island Federal Penitentiary in lieu of $200,000 bail. He is scheduled to be arraigned on Monday in U.S. District Court in Los Angeles.

According to the indictment, the travel club placed at least 50,000 telephone calls to tell would-be customers that they had won a seven-day, six-night trip to Hawaii if they had a major credit card. Club solicitors asked for a card number to verify that the customer was a card holder, and then tried to sell them $349 in coupon books for travel services.

Bonner said salesmen wrote credit card sales drafts and filled in the purchase of the coupon books, even when the customer decided against buying. The sales slips were funneled through two businesses operating in the Los Angeles area--Ugly Duckling Car Rental and Dollar Saver Advertising, he said.

Those two businesses completed the sales slips by writing in their names and then cashed the drafts through their accounts at Security Pacific National Bank, Bonner said.

Bonner said about 90% of customers rejected the charges when they appeared on monthly credit card bills. Security Pacific absorbed the bulk of the losses, he said, but the bank has not revealed how much was paid out. In response to the fraud, Security Pacific froze the accounts of Ugly Duckling and Dollar Saver, seizing about $210,000, Bonner said.

Drafts Cashed Elsewhere

Sales drafts were also cashed through companies in Miami and the Virgin Islands, he added.

Castner and Berry also allegedly used unauthorized long-distance telephone access codes from U.S. Telecom and GTE Sprint to make sales calls around the nation, causing losses of more than $100,000 to those companies, the prosecutor said.

The travel club was shut down in May, 1985, when federal investigators, including agents from the U.S. Secret Service, seized hundreds of credit card drafts, Bonner said.

The Justice Department is still studying the evidence involving Ugly Duckling and Dollar Saver, he said.