Texas Attorney General taking aim at travel company founder David Vavro
By ERIC TORBENSON / The Dallas Morning News
07:35 AM CDT on Tuesday, August 19, 2008
Texas consumer protection regulators took aim at David G. Vavro in 2003, alleging his travel club company duped thousands of members through fraud and deceptive trade practices.
Five years later, they're taking aim again.
In its first shot at Mr. Vavro, a travel club company the state alleges he controlled - Sun Country Travel - was shut down and he faced a long civil lawsuit that would eventually yield a $64 million judgment against him and the company's other owners.
But it proved to be a hollow victory for the state, as the judgment against Mr. Vavro was ultimately dismissed.
Undaunted, Attorney General Greg Abbott filed a second suit against Mr. Vavro in May, alleging hundreds of new violations of the state's deceptive trade practice law by his new company, Horizon Travel. According to the lawsuit, Horizon sold travel club memberships for up to $6,000 that promised - but didn't deliver - eye-popping deals on cruises and vacation condominiums.
Mr. Vavro denies that his companies broke any consumer protection laws and says he's the target of revenge prosecution. The attorney general's office disagrees and says it filed suit "because we have hundreds of complaints against him for deceptive acts."
Judge's call
But the timing of the second lawsuit didn't impress state Judge Martin Lowry, who noted during a June hearing that Horizon appeared to have stopped selling memberships in late 2006.
"It looks like the horses are long gone, and we're shutting the barn door behind them," he told attorneys.
Nevertheless, regulators won a temporary restraining order last month and froze Mr. Vavro's assets and those of a Florida travel agency, Advantage Travel LC, that bought Horizon's list of members.
Advantage Travel's Dallas attorney, Eric Pearson, says the state's case against his client is weak; it only purchased the membership list and didn't do any selling. A November trial date has been set.
Mr. Vavro said state regulators started the latest investigation because they knew they weren't going to get anything out of him in the Sun Country case.
"I think they had an inkling that they were going to lose because they started the investigation back in March," Mr. Vavro said in a phone interview from Woodbury, Minn., where the 72-year-old lives.
"Do I believe they're targeting me? Very definitely."
Tom Kelly, a spokesman for Mr. Abbott, disputes a connection between the two cases.
"Other than ownership of both businesses by Vavro, engaging in the same kind of business enterprise, with many of the same employees, with similar complaints of misrepresentation ... the two cases are not related," he said.
Allegation details
According to the latest lawsuit, after Sun Country shut down, Mr. Vavro created a set of companies - including Horizon Travel - that didn't have the proper paperwork and weren't allowed to do business in Texas.
That didn't stop him from taking money from thousands of consumers for a "discount" travel club that was anything but, the state's suit says.
Horizon lured people with "free" trip vouchers, according to the suit. The vouchers required a $100 "good faith" deposit and essentially were impossible to redeem, customers told Mr. Abbott's investigators.
"You couldn't book it," said Clark Rector of Austin, who joined the club for $3,400 despite deep reservations. He and his wife hoped to book the "free" cruise but said that after a year of trying to request dates, the voucher couldn't be redeemed.
"You should see the paperwork we've got dealing with these people," he said.
Mr. Rector was among several people who have given the state affidavits related to their experience with Horizon.
Ann Washburn of Grapevine, who said she has been taken by Vavro-related companies twice, also complained to Mr. Abbott's office.
"I consider myself an educated person," said Ms. Washburn. She and her husband signed up for Sun Country's travel club for a "discounted" price of $4,000, and though they had poor experiences, they bought a membership in Horizon Travel's club for a lowered rate of $2,000, which didn't work much better.
"Horizon's presentation began to ring a lot of bells for us that it was the same thing as Sun Country, but the salesman disavowed Sun Country and said they weren't related," she said.
In the past three years, the Better Business Bureau racked up 291 complaints nationally on Horizon, which, along with the more than 300 complaints received by Mr. Abbott's office, triggered the second investigation of Mr. Vavro.
"He's the kingpin of travel scams," said Mesquite resident Jaime Hunter, who said he was victimized by Horizon Travel. Mr. Hunter is a member of Vacation Scam Busters and is not a part of Mr. Abbott's lawsuit.
In response
Mr. Vavro said that negative publicity about the Sun Country suit made a lot of his customers cancel their memberships and complain to regulators. He said Horizon had only a handful of complaints before that and most were resolved amicably.
He said some customers are apparently satisfied with their memberships because they're still paying the annual maintenance dues.
Mr. Vavro said it was only after publicity of the state's first case and the $64 million jury verdict that his business disintegrated.
In that case, the jury found Mr. Vavro liable for only $3.4 million of the $64 million judgment; the remainder was assessed against the remaining defendants and the now-defunct company.
However, six months later, the trial judge ruled that Mr. Vavro wasn't individually liable and dismissed the judgment against him. In July, an appeals court agreed, saying the state failed to prove its case against Mr. Vavro.
The judgment still stands against the other defendants, but Mr. Kelly of the attorney general's office said they are essentially destitute and there's little chance of the state recovering any money.
Mr. Vavro said the legal wrangling has left him flat broke.
Legal costs to defend the Sun Country case exceeded $800,000, Mr. Vavro said, and he still owes his first attorney, John E. Collins of Dallas, more than $160,000 for his work.
Mr. Vavro is representing himself in the latest suit.
"Why should the state waste all the time and effort and taxpayers' money going after me when I'm just going to file bankruptcy if they get a judgment against me?" he asked.
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