The State of Texas has charged a Dallas-area travel firm and three of its principals with violating the Texas Deceptive Trade Practices Act by marketing worthless travel club memberships.
According to court documents filed by the state, Royal Palms Travel Inc. and All Inclusive Excursions promised prospects they would get steep discounts on travel purchases if they signed up as members of Sealand Travel club, which Texas Attorney General Greg Abbott says was nothing more than a shell company.
The state maintains the memberships actually had little or no value. In response to the state's enforcement action, a Dallas County District Court issued a temporary restraining order against the defendants that prevents them from continuing to violate the law. A temporary injunction hearing is set for 2 p.m., March 30.
Among the defendants charged with legal violations were company principals Adrian D. Miller, William H. Bailey and Christy Spensberger. Other named defendants were Travel Services Inc., Funseekers Vacations Inc. and Royal Palms Travel. According to state investigators, Royal Palms Travel and a related entity, All Inclusive Excursions, unlawfully misled potential customers and relied upon improper high-pressure sales tactics to sell worthless travel club memberships.
Abbott says he's seen this kind of scheme before. It's similar, he says, to other illegal travel scams he's shut down in the past.
Lots of Restrictions
The state's court documents show the defendants lured customers to sales presentations by offering free trips, airline tickets -- even gasoline. However, seminar attendees were informed that their free trips and tickets were contingent upon paying a deposit and submitting receipts for vouchers or rebates. Customers also discovered that the "free" trips were subject to restrictions that rendered them effectively worthless.
The defendants urged other prospective customers to join Sealand Travel Club, which claimed to provide significant discounts and the lowest prices for travel. The state's enforcement action reveals those claims were false and thus unlawful, and that Sealand is an unincorporated shell company existing in name only.
The defendants routed Sealand memberships they sold customers to a mail drop at a UPS office in Kansas City, Mo. In turn, Travel Services Inc., a Delaware corporation also known as Funseekers Vacations Inc., received the forwarded Sealand memberships at an office in Litchfield, Ill.
Sealand charged its members from $2,000 to $8,000, but customers received little or nothing of value, as they were unable to book travel at lower prices than they could find without the Sealand membership. Thus, prices under the "Sealand" banner were no more discounted than ordinary prices quoted on the Internet, according to Abbott.
To prevent further unlawful conduct and prevent additional Texans from being harmed, the attorney general is seeking a temporary injunction that will extend the temporary restraining order the court granted has already granted. The Office of the Attorney General is also seeking civil penalties of up to $20,000 for each instance the defendant violated the DTPA.
Because Travel Services Inc. unlawfully failed to obtain a certificate of authority for conducting business from the Texas Secretary of State, the attorney general also charged the defendant with violating the Business Organization Code - a violation that renders the defendant liable for franchise taxes from 2008 through 2010.
