ARC to Accredit Agency in 'Unusually Complicated' Case

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By Fran Durbin

FAIRFAX, Va. --Travel agent arbiter William McGee ordered the Airlines Reporting Corp. to accredit an agency that, through several flukes of fate, never was accredited but operated as if it were for nearly a year. He said the agency, Tradewinds Travel Managers LLC of Fremont, Calif., had "a perfect compliance record" during its "highly unusual" status. He denied an ARC request to make the agency maintain a $70,000 bond (instead of $20,000), but he required the owners to sign personal guarantees making them personally liable for any default for five years.

The arbiter said he reached his conclusions after wading through a "quagmire" of information in an "unusually complicated" case. According to McGee's decision, the extraordinary situation developed after Tradewinds' owners bought an agency branch called Go Travel Managers, changed its name to Tradewinds and took over in August 1996. The owners consumated the purchase without ARC approval because they were advised by an unnamed travel atttorney that they didn't need it right away.

In October 1996, the new owners filed a change of ownership application with ARC. However, ARC terminated the accreditation of the Go Travel location and its home office due to suspected fraud at the home office. The home office turned in its ticket stock, but when ARC demanded the stock at the branch (which had become Tradewinds), the new owners got a temporary restraining order from a court, preventing ARC from taking their stock. Meanwhile, ARC said the change of ownership application was moot because Go Travel no longer existed.

So the new owners filed an application last December for accreditation as a brand-new entity. ARC turned down the application and the new owners appealed to the arbiter. The arbiter commented that the whole situation involved many "unfortunate misunderstandings."

For example, he cited 16,000 tickets that were delivered to Go Travel in 1994 and were missing. ARC thought Tradewinds had the tickets at one time, but McGee determined that the firm actually did not. All in all, McGee said much of the confusion in the case stemmed from the new owners' "haste," poorly prepared forms and "lack of adequate understanding of the ARC requirements," as well as side-effects from apparent fraud "by the seller of the branch operation. While not justifiable, these errors are understandable under all of the circumstances."

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