Judge Refuses to Shut Down O.C. Travel Firm

Dealing a temporary setback to the multi-state crackdown on alleged travel industry abuses, a Superior Court judge refused Wednesday to curtail an Orange County travel company’s operations or freeze the assets of its operators.

Judge J. Richard Haden in San Diego decided that the state had failed to show any immediate, irreparable harm to the public from the continued operation of Nu-Concepts in Travel Inc. in Irvine and its Jetaway Travel Corp. ticketing subsidiary.

The California attorney general’s office sought the court order as part of its lawsuit against the company and four current and former operators.

The state had asserted that a temporary order was needed to protect consumers from spending their money on what the state alleges is an illegal “endless chain scheme,” in which people buy an opportunity to make money and profit only by bringing others into the network.

Executives at Nu-Concepts denied that they are operating an endless chain.

“I’m glad the attorney general is looking at travel agencies. The consumer needs to be protected,” said James Massoli, the company’s president. “There are some bad apples in the industry, but we shouldn’t be lumped into that group.”

The ruling is a stumbling block in the coordinated effort by a dozen states and the Federal Trade Commission to crack down on deceptive practices and do-it-yourself come-ons by travel marketing networks and other firms. The FTC and the states recently filed 36 lawsuits against 20 companies.

“What this indicates is that the court is going to take its time to carefully and thoroughly consider each case,” said Robert C. Braun, attorney for Nu-Concepts. “That kind of approach will help to exonerate Nu-Concepts.”

Nearly three weeks ago, a federal judge in Santa Ana shut down World Class Network in Irvine and froze the assets of its five operators. Though the judge modified the order, a court-appointed receiver remains in control of that travel firm.

World Class Network and Nu-Concepts are two of the larger companies in the booming business of multitiered marketing networks that sell travel kits and promise training to buyers who want to become at-home travel agents.

The California attorney general’s office, which also sued World Class Network, contends that both companies are marketing illegal schemes designed more to sell business opportunities than travel tickets and accommodations.

In the Nu-Concepts case, the state plans to audit the company’s newly established customer trust account next week to make sure that it complies with state laws governing the processing of travel money, said Dennis W. Dawson, a deputy state attorney general.

The state alleges that Nu-Concepts promises to train new travel agents--or distributors--and promises discounts to them for personal travel through the use of a travel card they purchase. And it promises refunds to dissatisfied customers.

But the company has broken those and other promises, the state alleges in a lawsuit.

The company also urges customers to sell additional distributorships, the suit contends, without disclosing that it would ultimately become impossible to find potential participants, “leaving new participants with the inability to recover their initial investment.”

The state seeks a halt to such practices and wants at least $500,000 in penalties.

In denying that the company has deceived anyone, Massoli said he hopes to settle the lawsuit “amicably.”

“Many of the things they allege we did wrong are just minor, technical things that are inconsequential,” Braun said, pointing out that the company already has complied with a recent state audit to correct those issues.

Judge Haden scheduled a hearing for April 11 on the state’s request for a preliminary injunction against Nu-Concepts.