OpTree

As we told you a week ago, YTB Travel is being sued by the California Attorney General claiming that the online travel company is operating a pyramid scheme. Now, YTB has more problems on its hand. Two former agents have filed a $100 million dollar class action suit, and the Better Business Bureau has released reports claiming the have received numerous complaints against the company and has a rating of “unsatisfactory”.

The new suit that has been filed in federal court in Illinois makes similar claims to that of the California suit. The suit claims that YTB ran an illegal pyramid scheme and defrauded “agents” out of thousands of dollars. The class action suit was filed both on behalf of as many as 1,000 people who were former YTB members.

The Better Business Bureau also released many complaints it had received about the company. The BBB says that they have received complaints about the company in at least 31 states.

The lawsuit, brought about by the plaintiffs, two former YTB agents, Faye Morris of St. Louis and Kwame Thompson of Atlanta was filed Friday in federal court in Illinois and seeks $100 million in damages on behalf of the named plaintiffs along with 1,000 other former members.

The defendants named in the suit were the same as in the California suit; YTB International Inc., YourTravelBiz.Com, YTB Travel Network Inc., YTB Travel Network of Illinois and its technology unit Rezconnect Technologies.

Along with the company itself, several officers of YTB were also named including founder J. Lloyd Tomer.

Executive Officer Scott Toner, released a brief statement addressing the accusations saying that they were “unaware” of any unresolved BBB complaints. He added, “we are proud of our business model and how our operations are conducted in an ethical and transparent way. We also are wholly confident that our business model will withstand scrutiny, and look forward to setting the record straight in court.”

Class action suits are easy to file against publicly traded company so expect to see more of them.  Unfortunately, a lot of people will try and jump on this bandwagon and make it frustrating for YTB - especially if it is not guilty of the charges alleged.

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YourTravelBiz.com,- a subsidiary of YTB travel, has been sued by California Atty. Gen. Jerry Brown for $25 million in fines and restitution. Brown claims that the company is operating an illegal pyramid scheme, and has defrauded thousands out of money.

YourTravelBiz is an online travel company that uses independent distributors to sell its travel products through their own websites and travel agencies. There are two ways to make money through the company, commissions from travel sales and fees for recruiting others to participate in the business.

Brown claims that the business is “immensely profitable to a few individuals on top and a complete rip-off for most everyone else.” “Today’s lawsuit seeks to shut down the company’s unlawful operation before more people are exploited by the scam.”

Calls to YourTravelBiz.com have not been returned. The company has seen huge profits over the last few years. In 2007 they reported revenue of $141.3 million which is a 177% percent increase from the previous year.

In the suit, the L.A. Superior Court claims YourTravelBiz enticed thousands to pay large fees in excess of $1,000 with the promises that not only would they would become millionaires, but they would gain access to travel deals and bargains accessible only to professional travel agents. The suit goes on to claim that in 2007, consumers paid over $103 million to the Defendants for websites and in fees, but made only $13 million in travel commissions. An estimated 62% percent of YourTravelBiz participants did not earn a single dime in travel sales commissions in 2007.

This latest news cant be helping the company’s languishing stock. (OTCBB: YTBLA) which in the last year has seen its shares go from $7 to as low as $0.60 and now hovering at around $1.30. These types of swings are not positive for any company and even less to one that is being accused of fraud.

This is the first lawsuit filed against YTB or its subsidiaries, although there have been rumblings over the last two years from many unhappy former participants in the YTB program. We will give you updates on the case as it moves forward.

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ASD Cash Generator - a network marketing company that buys and sells advertising packages, has apparently been shut down by the SEC.

According to the company, ASD is a “Gateway to Financial Independence.” The company makes money by charging customers fees each month to buy advertising packages that they can they resell. Members can also make money selling monthly memberships to new recruits. According to ASD, purchasers can earn rebates up to 100 percent of their ad cost, and can even earn an additional 25 percent by convincing others to purchase packages for resale as well.

Details of exactly what has gone down are still a bit fuzzy, but from what we can gather, the Florida based company was sued by the Florida’s attorney general, Bill McCollum. Just last week, the company was raided by the U.S. Secret Service and was shut down by the U.S. Attorney’s Office for the District of Columbia who claims that ASD was running a “massive internet based wire fraud scheme.

In the lawsuit filed in Florida, McCollum says that ASD and its President, Thomas Andy Bowdoin Jr, and employees, have conned and defrauded countless people out of money and McCollum is seeking civil damages as well as an injunction against the company, its president and employees to stop them from operating their deceptive business.

The Secret Service raided the ASD office last week and seized the Presidents home. The U.S. Attorney’s Office for the District of Columbia called the business a “Ponzi scheme, masked as an advertising company. Nobody has been officially charged with a crime just yet, but the investigation is ongoing and for the time being, the company is shut down. The official message on ASD’s website reads:

–Upon direction from the U.S. Attorney’s Office in the District of Columbia, ASD will not be able to move funds into company accounts, or out of them. We will work to resolve this problem, and return to normal operation, as soon as we are permitted to do so.
-ASD Management

Bowdoin has not been answering calls, but on a message on his answering machine it says that he will not be making any comments on advice of lawyers. While I do not fully understand the business, something does seem a bit off about the services they are offering, and the amount of money the company has been raking in, is almost unreal. Bowdoin has told officials that he expects sales of more than $100 million this year with ad sales over the first half of the year reaching $40 million. There are over 75,000 members in the ASD network.

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