Even as their travel companies faltered, brothers Tom and Robert Paris paid themselves enormous salaries and other compensation worth more than $1 million.
The brothers knew the end was coming, the state said, but they continued to solicit and accept payments from would-be vacationers.
When the companies went belly up in October 2012, 52 travelers were abandoned overseas without reservations or flights, and the travel plans of about 200 others who had already paid for vacations were shattered.
The state accused the brothers and their companies of Consumer Fraud Act and advertising regulation violations, alleging they stole nearly $1 million from customers.
The parties came to a settlement in September 2015, in which the brothers agreed to pay $525,000 in restitution for customers, plus another $119,000 in civil penalties. Those civil penalties would be dropped if the parties satisfied the terms of the agreement, which imposed certain restrictions on the brothers
But at least two former Club ABC Tours customers who spoke to Bamboozled received a letter that brings into question whether the terms of the settlement are being violated, and it spotlights some weaknesses in the agreement, which one consumer law attorney called “Consumer Protection Lite.”
The letter said Paris has been “scouring the marketplace to uncover travel opportunities for past Club ABC members,” and he introduced YMT Vacations.
“YMT’s president, Jerre Fuqua, shares my passion for travel and focus on offering vacationers unparalleled value as they create treasured memories,” he wrote, suggesting customers look at YMT’s vacation offerings.
The second page was a listing of vacation offerings and contact information for YMT.
We reached out to the Paris brothers to ask for clarification on Tom Paris’ relationship with YMT Vacations, but neither responded to email or LinkedIn requests for comment.
But we did speak to Jerre Fuqua, YMT Vacations’ president.
“I’ve known Tom for a number of years and he was kind enough to provide our company name to people to think about when they’re thinking about travel,” Fuqua said, noting that YMT has been in business since 1967.
Fuqua said Paris was not an employee.
“We have no formal relationship whatsoever,” he said.
When asked if Paris had been paid to send the letters, Fuqua wouldn’t answer the question directly.
“If you’re familiar with any marketing endeavor, you know to acquire a list, you do that through a variety of commercial agreements and commercial relationships,” he said. “It would be akin to any business getting list of people who may be interested in a product.”
But then Fuqua wanted to make one thing absolutely clear.
“We sent the letter. The letter came from us,” he said. “It had a cover letter from Tom introducing the business. He was kind enough to make a referral letter.”
We wondered if those actions were a violation of the settlement with the state.
WHAT THE SETTLEMENT SAID
We took a closer look at the consent judgment that covers the settlement.
Section 5, titled “Injunctive Relief and Business Practices,” says the defendants can’t engage in any unfair, deceptive acts or practices in the state. It also said they may not accept payment from a consumer for a travel package “and then fail to provide some of all of the merchandise for which he/she paid.”
Of course they can’t sell something and not provide what was sold. That wording isn’t any special punishment for the Paris brothers — it’s the law. What’s important here is that the settlement doesn’t prohibit the brothers from working in the travel business.
The settlement also said the travel companies — but not specifically the Paris brothers — may not advertise or offer travel packages for sale. The companies would also be dissolved.
Finally, it said the Paris brothers would not have to pay the $119,000 in civil penalties if they honor the agreements in Sections 5, 6, and 7. Otherwise, the settlement said, the state would seek payment for the suspended $119,000 penalty.
And then there’s Section 11.
That part of the agreement says the brothers must provide written notice to the state if they plan to open, close or relocate any business in New Jersey, or if they plan to advertise, offer for sale or sell merchandise in New Jersey.
Consumer Affairs would not discuss whether it received notification from Paris.
“We are aware of the alleged activities of Mr. Paris and we have contacted his legal counsel to discuss this matter,” spokesman Jeff Lamm said. “We expect full compliance with our prior settlement and any violations committed by Mr. Paris will lead to serious consequences, which we will pursue to the fullest.”
Consumer Affairs didn’t say if it knew of the letter before the agency was notified by Bamboozled, and it wouldn’t go into further detail about whether it was a violation.
We shared copies of the consent judgment and the Paris letter with several consumer law attorneys and asked their opinions.
Allen Gillman with Gillman & Gillman in Edison called the settlement “Consumer Protection Lite: Pay a fine and promise not to do it again.”
He said the result of the settlement is identical to the deals that prosecutors cut with banks, Wall Street hedge fund guys and a other entities that deliberately make material misrepresentations of fact or conceal facts, Gillman said.
“If you are going to deter this kind of behavior, shouldn’t some of these people go to jail?” he said.
Jack Feinstein, a professor at the Rutgers Law School and director of the college’s Civil Justice Clinic, said even though the consent judgment doesn’t ban Paris from the travel business, there are other issues worth noting.
“First of all, he’s saying that the ripple effects of the economic downturn forced the closure of the business. I would say based on what that state has said that’s not accurate at all,” Feinstein said.
That statement by itself could be a violation of the settlement and the Consumer Fraud Act, Feinstein said.
“The consent judgment says the defendant shall not engage in any deceptive acts and practices, so sending a solicitation that states his old company shut down because of the economic downturn? That seems to be misleading,” Feinstein said.
Feinstein said if Paris didn’t notify the state that he was advertising, that could be considered a violation.
Kearny-based attorney Anthony Vignier called the letter “cagey” and agreed it could be deemed a violation if the state wasn’t notified.
“In my opinion, he is in violation,” Vignier said. “The reality is no one would send a letter out like that if there isn’t something in it for them.”
But even if it is a violation, the state might have a hard time forcing Paris to pay the $119,000 suspended penalty. That’s because Section 11 — the part that says Paris needs to notify the state — isn’t included in the sections that Paris must follow in order to have the fines forgiven.
Bamboozled: Restitution coming for stranded travel customers
Bamboozled: Restitution coming for stranded travel customers
The state is getting some restitution for customers of Club ABC Tours, a travel company that went belly up.
Thomas Calcagni, a former head of the Division of Consumer Affairs and an attorney with Calcagni & Kanefsky in Newark, said the letter appears to be a solicitation.
“Based on the plain language of the final consent judgment and the legal definitions of ‘advertisement’ and ‘merchandise,’ it seems Mr. Paris would have been required to notify in writing the Division of Consumer Affairs of his plan to send out these letters,” Calcagni said. “This requirement would seem to be triggered regardless of whether Mr. Paris is directly involved with this new travel company.”
Calcagni also agreed that a violation of the notification provision would probably not be considered an act of non-compliance that would allow the state to seek the $119,000 suspended penalty. He said the penalty for a lack of notification isn’t clear.
If there was a violation, Calcagni said, the state could apply to the court to hold Paris in contempt of the judgment and enforce the notification requirement.
But that doesn’t mean the state would take action.
“It strikes me as very unlikely that the Division would pursue that course in response to a single notice violation,” Calcagni said. “A conversation with the defendant, seeking information about the solicitation and assurances of future compliance, is more likely.”
Have you been Bamboozled? Reach Karin Price Mueller at Bamboozled@NJAdvanceMedia.com. Follow her on Twitter @KPMueller. Find Bamboozled on Facebook. Mueller is also the founder of NJMoneyHelp.com. Stay informed and sign up for NJMoneyHelp.com’s weekly e-newsletter.