FROM: Amy Cornell, Public Information Officer   CONTACT PERSON: Georg Behrens, Deputy District Attorney Major Fraud Unit (408) 792-2964   For release on December 11, 2008   FORMER TRAVEL AGENTS SENTENCED TO 13 YEARS IN STATE PRISON FOR EMBEZZLING CUSTOMER FUNDS   Santa Clara County Superior Court Judge Jerome Brock sentenced former travel agents Joseph Maloof and Norman Hansen to 13 years in the state prison on Wednesday. Maloof and Hansen, the former owners and operators of three now defunct travel agencies known as JM Travel Selections, ITS International Tours, and International Grand Tours, pled guilty in May to 13 felony charges, including a charge of theft by embezzlement. In addition, they admitted an allegation that they had taken more than $1 million from their victims.  Maloof had suffered a prior misdemeanor conviction for similar conduct in 1989.  Judge Brock ordered the defendants to pay varying amounts of restitution to hundreds of victims from across the United States.   Maloof and Hansen were charged after a lengthy investigation led by Deputy District Attorney Martha Donohoe and Investigator Shirley Weber of the California Attorney General’s Office, Consumer Law Section.  The investigation revealed that between 2003 and 2005, the defendants embezzled approximately $1.2 million from customer funds.  In brief, the defendants operated on a business model of “robbing Peter to pay Paul.”  While reassuring customers that their funds were being held in a business trust account, the defendants misappropriated those funds in order to pay for business overhead and in order to purchase travel services for other customers whose payments had been similarly embezzled and spent.  In the end, no funds were left over to purchase travel services or provide refunds for many customers who had paid in full.  Some customers were not notified that their travel plans were being cancelled until days before their contemplated departure date.  Even now, many customers have not received refunds.   Under California law as codified in California Business and Professions Code §17550 and following, a seller of travel must deposit funds received from a customer into a trust account.  The seller of travel may not use the funds for purposes other than paying for the travel services which the customer is requesting, and the seller of travel may not take his profit until after purchasing those travel services.  If the seller of travel is unable to provide the travel services, he must make a full refund to the customer.  For a travel agent to accept funds from a customer and to then to misappropriate those funds to the purchase of new office equipment, payment of personal expenses, payment of business expenses, or the purchase of travel services for another customer, is embezzlement and is against the law.   The victims include prospective travelers from across the country.  ITS International Tours specialized in religiously oriented trips for retired and elderly clients.  JM Travel Selections and International Grand Tours specialized in educational tours for schoolchildren and their teachers.   ###

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