Charter-Bus Case Highlights County Problem : Tourism: The area has ‘significant’ difficulties in its tour industry with unlicensed operators, regulator says.

In a case that one regulator says focuses on a widespread problem in Orange County’s tour industry, the owner of a charter-bus company that served Disneyland is to be arraigned Thursday on charges that he continued to operate after his permit was suspended.

Michael John Padilla of Lancaster is due to appear in Municipal Court in Fullerton to face charges filed by the Anaheim city attorney’s office following an investigation by the state Public Utilities Commission.

Padilla provided daily shuttle service from Anaheim-area hotels to Disneyland on a bus operated through his company, American Flyer Ltd. of Tustin, according to the PUC’s investigative report.

The charges were filed after PUC investigator Toni Crowley interviewed several American Flyer drivers as well as motel managers in the area and determined that American Flyer continued to operate, even though its license had been suspended for failure to carry adequate insurance, according to the court filing.

PUC investigative supervisor Larry McNeely said Monday that Orange County has “significant” problems in its tour industry with unlicensed operators.

Some operators try to go without insurance because of its cost--as much as $4,000 a year per vehicle. They also have to pass Highway Patrol safety inspections.

While the licensing problems extend to taxicabs and limousines, McNeely said, buses are a special worry in his office. “The sightseeing part gives me special concern because it involves a 47-passenger bus driving around,” he said.

In Padilla’s case, McNeely said, the criminal charges came after previous brushes with the PUC.

Crowley said in his report that Padilla was given a verbal admonishment in January followed by a citation and fine of $1,500 for operating without a permit. Crowley reported that the fine had not been paid.

Padilla could not be reached Monday for comment.

One tour operator agreed that the industry has problems. Bev Rush, owner of American Sightseeing Co. in Tustin, said her business is hurt because she faces unfair competition from unlicensed operators and tour companies that make cash payments to concierges and clerks at local hotels “off the books.”

Making payments to encourage hotel personnel to steer passengers toward certain sightseeing operators is not illegal if the payments are reported. Rush said she follows the Internal Revenue Service’s recommended procedure of paying only by check and keeping track of hotel workers’ Social Security numbers.

But not all companies follow the rules, Rush said, and that is costing her business. One concierge “said directly that he would use another company because they pay cash under the table,” she said.

Rush said the IRS contacted her several months ago in what she thought might be a systematic check of the tour industry. She said an agent asked about her hotel payment policies and warned that off-the-books cash payments to hotel workers could result in fines of as much as $250,000.

IRS spokeswoman Judith Golden in Laguna Niguel said she was unaware of any large-scale industry investigation of the tour industry.