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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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Coming up towards the end of summer and there is not a great deal of news in the industry as many are taking well earned vacations over the next two weeks. One company who has no time for rest is YTB. The embattled company has been dealing with not only the lawsuit filed against them by the California DA but others have jumped on the bandwagon to attack the Co. What is great to see though is that there are a number of YTB distributors who have been coming to the support of the company.

As the Olympics come to a close this Sunday, there are a few bright spots for MLM sponsored athletes. USANA’s Becca Ward got the Bronze in fencing. Nutrilite’s Liu Xiang wasn’t as fortunate after pulling up with a tendon injury and forcing one of China’s most popular athletes to pull out of the track and field events. As we pointed out, one has to wonder about the “curse” of the Nutrilite commercial since other athletes who appear in the ad were all expected to do very well and haven’t at all.

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YTB released their second quarter financials, the news, while not all bad, is -as you can expect, less than spectacular. The online travel agency that has been under heavy fire lately from the California Attorney General, and several former distributors, said that it lost $199,500 in the quarter that ended June 30th, compared to a profit of $1.67 million a year ago. Net loss for the six months ended June 30, 2008 was $3.7 million, or $0.04 per diluted share, compared to a net loss of $0.5 million, or $0.01 per diluted share, for the same period of 2007.  Not a good sign.

Some good news for YTB- they saw a significant increase in their revenue for last year. According to SEC filings, they had a revenue increase to $44.8 million which is a 37% percent increase over the $32.8 million a year earlier. The company also has some very loyal independent agents. Thousands of YTB agents met earlier this month at the company’s annual convention and defended the travel company as a legitimate operation that has empowered thousands to start and run their own businesses.

Scott Tomer, Chief Executive Officer of YTB, commented on the second quarter results, stating, “Our Company has experienced dramatic growth over the last 12 months, and we have witnessed an equally dramatic growth in the revenues achieved during that period. Like many rapidly growing companies, we have had to increase our spending to ensure that we have the proper infrastructure in place to support this growth, and to ensure that the quality of services that we provide does not suffer. We have worked to narrow our net loss on a sequential basis, and are committed to identifying areas for cost savings and improved efficiencies within our business.”

YTB has also finally released an official claim in regards to the California lawsuit, saying, “The complaint was filed after 18 months of dialogue, initiated by the company with the attorney general to discuss the implementation of a new California law’s potential effect on the company’s business model,” YTB said in its filing. “Throughout these discussions, which broadened over time, the company has consistently cooperated with the state’s information requests and provided detailed evidence in face-to-face meetings explaining how and why the company’s business model is in full compliance with California law. The parties recently came to a standstill and the Aug. 4 complaint is a result of this standstill. The company believes it has meritorious defenses to the claims, intends to advocate its position aggressively and believes it will ultimately prevail in the case.”

To decipher what that can mean, the State Attorney General was probably asking for information from YTB to disprove the allegations against them and our guess is that YTB was unable to provide sufficient info.  It is not a good sign at all when you get to a standstill with a high power government agency.  The government will make inquiries and requests for information to either support or disprove allegations against a company/person.  If you are unable (or unwilling) to provide such information or agree that you have acted in a way that could be or was detrimental to parties involved, you end up in a standstill.  It is never a wise decision to end up in a standstill with the government since they have nothing but time and unlimited resources to pursue their objectives.

Stay tuned, this one may be coming to end sooner than we all may expect.

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