Texas Sues Travel Clubs

Clubs defrauded unsuspecting consumers, state charges

May 29, 2008

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Texas Attorney General Greg Abbott today charged a North Texas travel club and its owner with defrauding its unsuspecting customers. Dallas County 101st District Judge Teresa G. Snelson froze the defendants’ assets, thereby ensuring funds are available to reimburse Texans who purchased vacation packages with little or no actual value.

The action names 16 companies and individuals, including the scheme’s principal architect, David G. Vavro, and his three firms: Horizon Travel, Travel Club International and VIP Travel Incentives Inc. All 16 defendants are charged with conspiring to hide assets from authorities and failing to deliver legitimate travel discounts or free trips to dues-paying travel club members.

According to the Attorney General’s investigators, Vavro created multiple “travel clubs” shortly after the collapse of a similar firm, Sun Country Travel, where he served as a director. Relying on direct mail and high-pressure sales calls, Vavro’s companies used false advertising to convince potential customers to attend sales presentations.

Although seminar attendees were promised “free vacations” from Horizon Travel, the defendants actually required a $100 deposit to secure purchasers’ travel plans. Customers who attempted to schedule their “free trip” were consistently told that the requested travel dates were unavailable. Because the “free trips” frequently never materialized before customers’ vouchers expired, many lost their $100 deposits.

According to investigators, Horizon Travel customers were pressured to join Travel Club International for between $2,000 and $6,000. Travel Club customers were told they and their families would receive steep, members-only travel discounts.

However, many members quickly realized that their travel rates were available to the general public.

The Attorney General’s investigation also found that travel club publications offering special offers and discount vacation plans often arrived in mailboxes after the deals had expired. The state’s enforcement action charged Vavro and the defendants with marketing memberships that were of little or no value.

When consumer complaints against Vavro’s companies began to increase in early 2006, investigators discovered that the defendants began transferring financial assets between various travel corporations, which were also named in the Attorney General’s enforcement action.

Entities that received financial transfers from Vavro’s companies were actually sham corporations designed to obscure financial transactions, hide assets from authorities, and shield Vavro from state enforcement efforts, according to court documents filed by the state.

The Attorney General charged the defendants with multiple Texas Deceptive Trade Practices Act violations, which carry penalties of up to $20,000 per infraction.

Because the defendant businesses failed to obtain certificates of authority from the Texas Secretary of State, Vavro faces up to $5,000 in penalties every month that each business failed to comply with the Texas Business Corporation Act. The Attorney General also charged Vavro with violating the Contest and Gift Giveaway Act by unlawfully conducting travel voucher program. Finally, the state also charged the defendant with violating the Texas No-Call law.

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