POST: Maloof & Hansen to prison

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.