Troubled travel agency books trip out of offices; attorney general looks into Hemphill Harris situation.Troubled travel agency books trip out of offices Attorney general looks into Hemphill Harris situation For years, Hemphill Harris Travel Corp. was one of the most trusted names in the travel business, selling deluxe de·luxe also de luxe adj. Particularly elegant and luxurious; sumptuous: deluxe accommodations; a de luxe automobile. adv. vacation packages to exotic locations around the world. Last October the bottom fell out: Tours were canceled and dozens of travelers were stranded strand 1 n. The land bordering a body of water; a beach. v. strand·ed, strand·ing, strands v.tr. 1. To drive or run ashore or aground. 2. overseas. Since then, several lawsuits have been filed against the company, including a $3 million class action suit by a New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. man who claims he and his wife were stranded in Japan. Now the travel agency, one of the largest in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , seems to have vanished. Its Encino offices were locked last week, the phones were not being answered, and company officials could not be reached for comment. In addition, the consumer affairs division of the California Attorney General's Office is investigating what happened. So far, no charges have been filed. What has troubled many in the travel business is that the company remained open, even though it was not selling any vacation packages, and that it continued to promise that consumer and supplier losses would be covered. The company had maintained that it was seeking refinancing Refinancing An extension and/or increase in amount of existing debt. and would soon be back booking vacation packages. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. travel industry officials, travel agents around the country who booked Hemphill Harris packages for their clients may have lost up to $2 million, and losses to suppliers like hotels may reach several millions of dollars. Several hotel companies have suits against the firm, charging they are owed money by Hemphill Harris. The decline of the company may have begun in December 1988 when the firm, which once boasted annual sales up to $70 million, was sold to Weststar Acquisition Corp. by Ronald Harris, John Hemphill John Hemphill is the name of:
Harris and Hemphill, who are both now involved in other travel industry businesses, claim they have never been fully paid for the $6 million transaction. Lavitt, who continued to work at the company for some time after the sale, has declined to comment. Harris and Hemphill charge that the principals of Weststar raided existing company funds to buy the travel company, thereby draining the firm of cash and leading to the cancellation of the tours. The man who heads Weststar, which various court papers have described as both a Delaware and California corporation, is David Dukesherer. When the sale was announced, Weststar described itself as a New York-based company that ran delivery services in Los Angeles and New York City. Its chairman was said to be Robert Sarnoff, former chairman of RCA See RCA connector and video/TV history. Corp. Sarnoff has said he was never chairman of the firm but did serve as a consultant. He declined further comment. "I actually met Sarnoff and thought since he was involved it was a good deal and the company would be taken care of," said Hemphill. Dukesherer has not discussed the transaction. However, several months ago as part of a lawsuit lawsuit: see procedure; tort. against Harris, he denied any wrongdoing wrong·do·er n. One who does wrong, especially morally or ethically. wrong  do and blamed the former owners for the company's troubles.
Harris, who owned 60 percent of the travel company, has also been named as a defendant in the class action suit, which is still pending in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . Harris has claimed that Weststar deposited more than $1.7 million in worthless checks in a Hemphill Harris bank account and then withdrew $2.8 million to buy the company. Dukesherer said in his suit that the checks were to be used for recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. of a Hemphill Harris subsidiary. He said the financial institutions backing Weststar put the recapitalization plan, and the checks, "on hold" when "irregularities" were discovered during an audit of the company's finances. "The checks were never intended to fund the purchases of Hemphill Harris," said Dukesherer. He blamed the canceled tours on contractual problems with overseas suppliers, which were left over from the operations of the company under the previous owners. In addition, he said the company had a sharp drop in revenues following the political unrest Unrest is a sociological phenomenon, for instance:
China had been one of Hemphill Harris's primary vacation markets. Hemphill Harris Travel Corp. at one time employed up to 70 people around the country and sold its tour packages, which cost up to $15,000 for two people, through hundreds of travel agents. It was formed in 1975 by Hemphill and Harris, sons of two travel industry veterans. Since October 1989, Dukesherer promised several times that travel agents, who usually repay their clients for canceled tours, would receive refunds. There is little evidence, however, that any refunds have been issued. A spokeswoman for the American Society of Travel Agents ASTA, short for the American Society of Travel Agents, claims over 20,000 members in 140 countries. Its members include travel agents and companies who offer travel products, such as tours, cruises, hotels, car rentals, etc. in Alexandria, Va., said she does not know of any travel agents who have received refunds. Last November, Dukesherer announced that the company had been sold to Gala World Corp., which was headed by three travel industry veterans. A week after the announcement, the three denied any involvement with the transaction and Dukesherer withdrew the statement. Shortly after that, Dukesherer named Richard DeLyle, another industry veteran, president of the company. A few weeks after DeLyle was named president, U.S. postal inspectors raided the company's offices in Encino, confiscating records. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion