YTB International, a multilevel marketing travel company, told the Securities and Exchange Commission on Tuesday that it issued a memo to its staff and sales force advising of a tentative agreement with California's attorney general to settle a lawsuit.
The suit charged that YTB is an illegal pyramid and engages in deceptive business practices.
However, Legal Newsline, a newswire dedicated to coverage of state supreme courts and state attorneys general, reported late Tuesday that no agreement had been reached. It quoted Scott Gerber, director of communications for the California attorney general's office, as saying that YTB's announcement was premature.
When California launched its suit last August, state Attorney General Edmund (Jerry) Brown said the lawsuit sought "to shut down the company's unlawful operation before more people are exploited by the scam."
The state said it was seeking $10 million in restitution for California residents who bought into the business and $15 million in civil penalties, as well as injunctive relief to end various "misleading" and "unfair" YTB practices. The trial was set for Sept. 21.
Meanwhile, several former YTB investors launched two class actions in the U.S. District Court in Southern Illinois, claiming they and the members of their class suffered financial losses because YTB International and its divisions operated an illegal pyramid scheme.
The Illinois attorney general's office also confirmed it was conducting its own investigation of YTB's business. It is too early to determine what effect developments in California might have on the Illinois investigation.
This article has been updated to reflect that the California attorney general's office has not confirmed the settlement.
