OpTree

Natural Health Trends announced that the Securities and Exchange Commission has finally completed an investigation into the company involvement with two former executives charged with fraud.

As we told you last week, the two execs, Mark Woodburn and Terry LaCore did face civil charges related to this investigation and were each ordered to pay fines as well as agree not to hold executive positions for the next few years. Neither however had to either admit to or deny any wrongdoing in the case.

The investigation was launched almost two years ago, in October of 2006. The SEC was not only investigating the two former employees, but also the company’s actions regarding the fraudulent activity and subsequent firing of the two individuals.

After an investigation that NHT fully cooperated with, they received a letter this week from the SEC stating that they do not intent to recommend any enforcement action against the company.

NHT is thrilled to finally put this legal issue behind them. “Current management of the Company worked diligently to fully cooperate with the SEC in its investigation,” said the Company’s President, Chris Sharng. “We are pleased that no enforcement action has been recommended against the Company, and we look forward to continuing to focus on our business with this investigation behind us,” added Mr. Sharng.

With this investigation behind them, NHT can now fully tend problems regarding the trading, or non-trading of their stock, which has failed to meet the criteria needed for it to continue trading on the NASDAQ Capital Markets.

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Adding more insult to injury for YTB, we just got word that The Waterford School District in Michigan which was once a distributor of YTB has decided to disassociate themselves from the embattled company.

“Last fall, in an effort to generate revenue for the Waterford school district, we entered into an agreement with YTB Travel to place a link to their website. The Waterford School District did not pay any start up costs and we have never paid any monthly maintenance fees to provide the link.”
“During the last school year, the Waterford School District did receive small commission checks as a result of our staff and community utilizing YTB Travel. Just recently, the decision to disassociate ourselves from YTB Travel was made. We no longer promote their travel website on our website.”

The Waterford School District

We actually have a cached version of the old webiste which once had a link to YTB on it which you can see here. It also seems the YTB/Waterford site is still up as well. Guess no one at YTB was told of the breakup. The new version of the Waterford site no longer features the YTB link.

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Although online travel company YTB proclaimed their innocence and defended themselves against accusations of fraud, it seems all is not well over at YTB headquarters. Apparently the lawsuits have begun to affect the company in a very short period of time. YTB International Inc. has reportedly terminated 25 people from its corporate headquarters this past Wednesday.

One employee who was laid off said that he and over two dozen others were told their positions were being terminated due to the tough economic situation in the United States. They were told that the management “regrets this necessary decision.”

The laid off man who asked to remain anonymous, said that ever since the California Attorney General filed a suits against YTB the company has continued to tell employees that all if fine, but that doesn’t seem to be the case.

In a recent statement, YTB CEO Scott Tomer defended the company saying, “As a matter of policy, we do not comment on pending litigation. However, we can tell you that YTB believes the allegations we’ve heard are without merit, and we will vigorously defend ourselves

YTB Employs between 300 and 350 people at its Wood River Illinois headquarters. Currently the company is spending $25 million to expand the facility. While YTB has grown significantly over the last few years, it seems that this case is hitting them hard.

A local Wood River Paper attempted to contact the company, but to no avail as the company would not respond to any inquiries regard layoffs or the current financial situation at the company.

YTB is pretty adamant about their innocence and feels justified telling their employees that all is “OK” with the company. However, for a company that is allegedly financial sound and feels secure with their business model, it seems odd that they would “lie” to their employees about the company’s stability, only to turn around and lay their loyal employees off. Instead of spending a ridiculous amount of money expanding an organization that is under attack, they should focus on treating their employees better and defending themselves against fraud allegations.

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In some strange news out of Florida, a University of Miami Business School Graduate, Andres Pimstein, has just confessed to running a sort of multi level marketing or ‘ponzi’ scheme in which he promised investors returns of up to 18% percent. Pimstein, and his company, Bottom Line of South Florida, apparently made false promises to many investors and lured them into giving him money. Pimstein then paid new investors with money from original investors, a classic pyramid scheme.

Apparently, Pimstein used school facilities, and computers as well as recruited faculty, staff and students . According to Miami Dade Police, Pimstein had a joint bank account with the university’s director of contract admission and was using a conference room along with as many as three dozen current and former UM employees.

It is estimated that the scheme managed to bilk investors out of an estimated $30 million dollars. One investor who gave Pimstein over $3 million dollars became skeptical when he wasn’t getting paid and hired a private detective who then uncovered the scheme. The FBI is currently looking into the whole operation.

The university said that they are fully aware of the investigation and that although University funds are not involved, there are a few employees who lost money in the scheme.

Pimstein was apparently very convincing luring lawyers, accountants, and even retired law enforcement officials. According to several investors, Pimstein presented detailed flow charts and fake invoices to potential investors detailing the future operations of the company, The Bottom Line of South Florida. Pimstein told them that they would be selling perfumes and electronics to Ripley, a large department store in Chile and Peru. According to reports, Bottom Line has no relationship with Ripley. I’m sure the full story will come out as the FBI continues to probe into the matter.

Pimstein had no comment.

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