Calif. AG sues YTB International over alleged pyramid scheme

California's attorney general sued YTB International, blasting it as a "gigantic pyramid scheme."

Attorney General Jerry Brown Jr. filed a lawsuit suit Monday seeking more than $25 million in fines and restitution from YTB International, also calledYourTravelBiz.com, a Wood River, Ill.-based online travel business.

"YourTravelBiz.com operates a gigantic pyramid scheme that is immensely profitable to a few individuals on top and a complete rip-off for most everyone else," Brown said in a statement. "Today's lawsuit seeks to shut down the company's unlawful operation before more people are exploited by the scam."

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YTB's president and chief executive Andy Cauthen did not immediately return a call seeking comment.

From Wednesday through Sunday, thousands of YTB members are preparing to travel to St. Louis for a national convention.

Last year, 10,000 people attended a similar conference.

The company lures new members with videos of people driving Porsches, holding ten-thousand dollar checks and claiming to be raking in millions of dollars, but the typical person actually makes nothing selling travel.

More than 200,000 members in 2007 paid more than $1,000 a year to set up online travel agencies, but only 38 percent of the company's members made any travel commissions.

Consumers paid more than $103 million to the company in 2007, but made $13 million in travel sales commissions, according to the lawsuit.

Members earn compensation for each new person they enlist, regardless of whether they sell any travel.

For the few members did make travel commission in 2007, the median income was $39 --less than one month's cost to keep the Web site.

Brown charges the company and its founders J. Lloyd Tomer, J. Scott Tomer, J. Kim Sorensen and Andrew Cauthen with operating an "endless chain scheme," an unlawful pyramid in which a person pays money for the chance to receive money by recruiting new members to join the pyramid. He also charges the company with unfair business and false advertising practices.

Under California's unfair business practices statue, the company is liable for $2,500 per violation of law.

Brown filed the suit Monday in Los Angeles County Superior Court.