O.C. Firm First Target of FTC Travel Sweep
An Orange County travel company that federal regulators closed last week is the first of about two dozen such operations nationwide that the Federal Trade Commission is trying to shut down, the agency disclosed Tuesday.
The sweep, dubbed Operation Trip Up, is the FTC’s response to travel-industry complaints that the fast-growing do-it-yourself movement is rife with fraud and deception and consists simply of mills that do little but churn out travel identification cards.
The FTC, with help from officials in 26 states, has quietly obtained temporary court orders against a number of other companies.
“It’s a massive, coordinated effort,” Bonnie Jansen, an FTC spokeswoman, said about the sweep. “The idea is to crack down on those perpetrating a substantial amount of fraud. You will see more card mills as well as other different kinds of cases. And a lot will be from California.”
The agency plans to detail its actions Thursday at conference on travel fraud in Los Angeles, said Eileen Harrington, associate director of the FTC’s consumer protection bureau.
On Tuesday, the FTC won a preliminary injunction that keeps World Class Network in Irvine closed for two more weeks, though the new order does allow an affiliated company to resume operations.
World Class Network, which sold training kits to would-be travel agents, was the first to be closed after the FTC won a temporary order Feb. 28. The agency alleges that the company deceived customers by selling travel kits for up to $495 each with false promises of discounts, travel upgrades and six-figure incomes they could earn.
The California attorney general’s office also won a temporary court order last week in a separate lawsuit accusing the firm of operating an illegal “endless chain scheme.”
The World Class case put 180 employees out of work last week and halted business done by about 25,000 mostly part-time agents, who were active nationwide.
Harrington said the agency is “very pleased” with the preliminary injunction, even though ticketing affiliate World Class Travel in Calabasas was allowed to reopen.
U.S. District Judge Alicemarie H. Stotler lifted the order and the asset freeze on the company and one of its owners, Jerome L. Goldberg. Defense lawyer James T. Duff had argued that the FTC had no evidence that Goldberg did anything wrong.
Duff said Goldberg simply issued tickets that agents in the Irvine company ordered.
Stotler’s order essentially prohibits the sale of travel training kits but allows those who truly are booking airline and cruise reservations to obtain tickets for their customers.
Stotler also modified the freeze order against the other individual defendants--World Class Network owners Daniel R. and Denise L. Dimacale and executives Robert C.K. Lee and Howard Cooper--to allow them each to use $5,000 a month for “reasonable and ordinary business and personal expenses.”
In addition, the judge gave the court-appointed receiver two weeks to file a report on the company’s affairs, which she will use to determine whether a receiver is needed permanently.
Times staff writer Marla Dickerson contributed to this report.
