Hundreds of Bermudians who signed up to YourTravelBiz.com (YTB) with the dream of making a fast buck could be set to lose out after California Attorney General Edmund Brown filed a lawsuit to shut down the travel website.

In a statement on the State of California's Office of the Attorney General webpage, Mr. Brown alleged that YTB operated a "gigantic pyramid scheme" that recruited tens of thousands of members with deceptive claims that members could earn huge sums of money through its online travel agencies.

Former United Bermuda Party leader Wayne Furbert, who set up his own affiliated business last year, was at YTB's US national convention in St. Louis yesterday, along with 20,000 people, including 44 Bermudians.

Mr. Furbert made no comment on the charges but said 700 residents, or about one percent of the Island's population, had come on board with the scheme.

Mr. Furbert said in January that he had previously been to St. Louis to discuss the scheme with YTB president J. Kim Sorensen, one of the company founders, who is charged with running an illegal pyramid scheme.

Fellow Bermudian Kenneth Minors, based in Lexington, Kentucky, also contacted The Royal Gazette last year to tell the paper about the franchise of YTB Travel, of Illinois, called Minors Travel, which he runs, in a bid to target business in the Bermuda market.

Mr. Brown said: "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. Today's lawsuit seeks to shut down the company's unlawful operation before more people are exploited by the scam."

Mr. Brown charged YTB, its affiliates, and the company's founders J. Lloyd Tomer, J. Scott Tomer, Mr. 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.

Mr. Brown also charged the company with unfair business practices and false advertising practices, including deceptive claims that members can earn millions of dollars with the company, operating without filing legally mandated documents with the Attorney General and the Department of Corporations, and selling an illegal travel discount programme.

Under California's unfair business practices statute, the company is liable for $2,500 per violation of law. Mr. Brown is suing YTB to get a court order that bars the company from making false or misleading statements and assesses a civil penalty of at least $15 million and at least $10 million in restitution for Californians who were allegedly ripped off by the company.

But YTB believes the allegations were without merit and vowed to "vigorously" defend itself in court.

The YTB initiative, which was officially launched in Bermuda at the Fairmont Southampton in February, works by representatives (Referring Travel Affiliates) selling travel, including flights, holidays and car rental services, through YTB websites.

They also market online travel agencies to others in Bermuda, the US, Puerto Rico, the Bahamas and Canada.

The statement claimed YTB and its affiliates were operating an illegal pyramid scheme that only benefits members if and when they find enough new members to join the scam.

It said that, once enrolled, members who join the scheme earn compensation for each new person they enlist, regardless of whether they sell any travel, and that the company lures new members by offering huge income opportunities through online travel agencies, yet the typical person actually makes nothing selling travel.

According to company records there were more than 200,000 members in 2007 who typically pay more than $1,000 per year to set up an "online travel agency", with a monthly fee of $49.95.

In 2007, only 38 percent of the company's members made any travel commissions, with the minority of members who made any travel commission last year bringing in a median income of $39, while there are at least 139,000 of the company's travel websites, all virtually identical, on the Internet, according to the California prosecutors' statement.

The statement added: "YTB's extensive marketing materials include videos of people driving Porsches and other luxury cars, holding $10,000 dollar cheques, and claiming to be raking in millions of dollars in profits.

"The company advertises through its website www.ytb.com, and at conventions, workshops and nation-wide sales meetings which have been held in California locations, such as Los Angeles, Sacramento, San Francisco and San Diego."

The statement said that members were going to this year's national convention to "learn new techniques to recruit more victims into the illegal pyramid scheme".

A spokesman for YTB said: "We have not had sufficient time to fully review the complaint filed by the California Attorney General's office and, as a matter of policy, do not comment on pending litigation. However, we can tell you that YTB believes the allegations we've heard are without merit and we will vigorously defend ourselves in court."

Cheryl Hayward-Chew, president of Meyer-Franklin Travel, warned Bermudians to be wary of "money-making opportunities" and called on them to use a reputable travel agent.

"Last January, there was a flurry of interest in YourTravelBiz.com (YTB) with people signing up to start their own travel businesses at the same time that others were asking if it was really just a pyramid scheme.

"We see now that the State of California has filed a lawsuit against YTB, charging that the company is operating an "endless chain scheme" and using unlawful business practices. When the next money-making opportunity comes up — whether it's a travel scheme or something else — remember to ask yourself, who wins?

"Too often, those who get taken advantage of in situations like this are the people who haven't done their research. For those who want to travel and get the best value for their money, I always recommend using a trusted and trained travel professional.

"Look for a travel agent who is part of an established travel agency and has a current IATA accreditation, which is an assurance that the agent is a travel professional and has demonstrated trustworthiness in the industry. An affiliation with ASTA, the American Society of Travel Agents is another sign that you are working with a professional.

"As for the chance to earn big money and get big discounts in this or any situation — if it seems too easy or too good to be true, then it almost always is."