WOOD RIVER, Ill. (Legal Newsline)-YTB International, the Illinois-based Internet travel agency under fire from the California attorney general, posted a loss in the most recent quarter, compared to the $1.6 million profit the company made in the same period a year ago.
Wood River, Ill.-based YourTravelBiz.com posted a $199,500 loss in the reporting quarter that ended June 30, filings with the U.S. Securities and Exchange Commission show.
The company has been sued by California Attorney General Jerry Brown for allegedly operating a pyramid scheme in which thousands of members were recruited with promises of making big money by setting up personal travel agency Web sites.
Brown said the business is "immensely profitable to a few individuals on top and a complete rip-off for most everyone else."
The company is also the target of a federal class action lawsuit brought by Faye Morrison and Kwame Thompson, who worked for the company as Independent Marketing Representatives and Referring Travel Agents.
They too claim the company is a pyramid scheme that relies on a chain-referral sales technique.
In its SEC filings, the company said Thursday its revenue increased to $44.8 million, up from $32.8 million a year earlier.
YTB also disclosed it invested $1 million in auction-rate securities. Since the market collapsed in February, the company has been unable to access its investment.
The company said in its SEC filing that Brown filed the lawsuit against them after 18 months of dialogue that was "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."
The statement said the company has "consistently cooperated" with California investigators.
"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," the filing said.
From Legal Newsline: Reach reporter Chris Rizo at email@example.com.