Sellers Found Violating State Law

California toughens enforcement efforts

By: R. Scott Macintosh

During desperate times, some resort to desperate measures.

In a recent crackdown on the industry, California regulators say they have found economic strains leading some travel businesses to use money that is required by state law to be kept in a trust fund to keep their business afloat instead.

Others, they say, have intentionally defrauded clients out of thousands of dollars before their businesses fail and they disappear altogether.

“Some could have closed shop and gone out of business, but instead they decide to go out in a blaze of glory,” said Antoine Georges, co-owner of Happy Traveler and president of the Travel Consumer Restitution Corp.

The TCRC is charged with overseeing the state restitution fund used to compensate consumers who are defrauded by sellers of travel. It recently has intensified efforts to fight travel-related scams by requiring consumers seeking restitution to file police reports.

“Many people who come to us don’t even go to law enforcement,” said Georges. “They are just looking for a refund, so no one prosecutes the people who ripped them off because no one knows about it. We can’t get law enforcement involved unless a consumer files a report with them.”

The strengthened enforcement effort is boosting the profile of travel-related crimes in the state and is getting law enforcement involved from the federal level to the state attorney general’s office to local police.

“There’s been an increased interest in this,” said Herschel Elkins, head of the California Attorney General’s consumer law section. “The depressed economy has caused some travel agents to use shortcuts or to redirect money to help their businesses. Some travel agents who are in an economic pinch are using money for purposes that are not allowed under state law.”

The TCRC recently released details on 13 travel sellers that have had criminal charges filed against them this year for allegedly violating state law.

Of those, Georges said some may not have intentionally defrauded clients and that economic strain caused by cancellations after Sept. 11 and global instability likely caused them to redirect funds to make up for losses, leading to a downward spiral into insolvency.

Some of the recently prosecuted include Hesderia-based A1-EZ, whose owner pleaded guilty to charges that he booked a group on a Carnival cruise but never forwarded the money. David Anderson of Santa Barbara-based David Anderson Safaris also pleaded guilty to three felony counts and is expected to be ordered to pay $193,000 in restitution.

Georges said three of the agencies currently being prosecuted will have a significant impact on the restitution fund, and may represent the future mold of travel-seller scam artists.

Georges said these are people who, rather than cheating consumers out of low-priced items like airline tickets, are setting their sights higher.

“It now involves a total package that includes air fare, hotel and other accommodations,” he said, noting the amount is now around $10,000 to $15,000 a package.

The result places a bigger demand on the fund.

“The trend in the future is that each consumer claim is going to be more than it has in the past,” Georges said.