Defendants in FTC Case Targeting Multi-Level Marketing of Travel Business Opportunity and Pyramid Schemes Agrees To Settle Charges

Jerome L. Goldberg has agreed to settle Federal Trade Commission charges stemming from his involvement with World Class Network, Inc., a multi-level marketer of travel agent credentials and a work-at-home travel agency business opportunity, which was charged by the Federal Trade Commission as part of "Operation Trip-Up," a March 1997 crackdown on travel-related fraud. Goldberg is the former owner of World Class Travel, L.L.C., which purportedly provided support and ticketing for World Class Network's distributor/travel agents.

The proposed settlement with Goldberg and World Class Travel would prohibit the defendants from participating in any pyramid marketing program, and would prohibit them from misrepresenting potential earnings, benefits or other material facts in connection with the sale of a travel agent business opportunity.

On Feb. 28, the FTC filed charges against World Class Network, Inc. (WCN), of Irvine, California; World Class Travel, L.L.C., of Calabasas, California; and the following officers: WCN Board Chairman Daniel R. Dimacale and Secretary Denise L. Dimacale, both of Newport Beach; WCN Executive Vice President and CFO Robert C.K. Lee, Mission Viejo; WCN President and CEO Howard K. Cooper, of Woodland Hills; and World Class Travel Chairman and CEO Jerome L. Goldberg, of Oxnard. In its court complaint in the WCN case, the FTC alleged that the defendants offered a travel tutorial kit that purportedly would allow purchasers to receive the professional courtesy discounts and upgrades traditionally available to travel agents on their own travel accommodations, and to operate and achieve specified earnings in an at-home travel business. Distributors also could receive commissions by recruiting new distributors and reselling the tutorial to these recruits. In fact, the FTC charged, purchasers could not obtain the promised discounts and upgrades for personal travel because many travel industry service providers did not recognize World Class Network's proprietary I.D. and the travel tutorials were inadequate to allow purchasers to open and operate a functioning business. A judge immediately issued a temporary restraining order halting the challenged practices, freezing the defendants' assets, and placing the companies into receivership. WCN, the Dimacales, Lee and Cooper have previously settled charges with the FTC, and have agreed to pay more than $3 million into a consumer redress fund. The money will be used to provide refunds to many of the more than 51,000 consumers who purchased World Class Network's travel tutorial.

The proposed settlement with Goldberg and World Class Travel, which requires approval of the court, would prohibit the defendants from:

• engaging in any pyramid schemes, which the settlement defines as a program where a distributor's income is derived from commissions for recruiting additional distributors;

• misrepresenting the potential earnings, sales, discounts, upgrades or benefits that a consumer can obtain, that the defendants have received the approval or endorsement of the Federal Trade Commission, or any other material fact; and

• failing to disclose, in connection with any earnings claims they make, the number of purchasers who make at least the amount claimed and the percentage of total purchasers who earn that amount.

Finally, the proposed settlement contains a number or recordkeeping and reporting requirements designed to assist the FTC with monitoring compliance with its terms.

The FTC vote to approve the settlement for filing in court was 4-0. It was filed today in U.S. District Court for the Central District of California, in Los Angeles.

NOTE: The stipulated final judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. The judgments have the force of law when signed by the judge.

Copies of the proposed settlement and other documents associated with "Operation Trip-Up," are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. X970031)
(Civil Action No. SACV-97-162-AHS (EEx))