JoyStar Collapse May Involve More Agents and Higher Losses

2009 started with a bang! Drew Axelrod, a veteran agent and successful meeting planner, filed an involuntary bankruptcy petition against JoyStar/TravelStar, an agency based in Aliso Viejo, CA, in federal bankruptcy court in Fort Lauderdale, FL. Joining 14 other JoyStar-affiliated agents from across the U.S., Axelrod is also encouraging other JoyStar agents to join in the action. A former JoyStar agent, Axelrod is owner of Cruise Groups International, Fort Lauderdale.

In an interview with Travel Agent, Axelrod said that the initial group of 15 agents is owed an estimated $150,000 in unpaid commissions from JoyStar, a unit of TravelStar. Axelrod says that the total outstanding could rise to 30- to 50 agents who may be owned as much as $250,000 in unpaid commissions.

Axelrod asks that JoyStar member agents owed commissions to contact him by email (cruisegroups@hotmail.com) and urges them to join in the legal action. He is also asking agents, host agencies and associations to contribute to a fund to defray legal expenses. TravelStar/JoyStar will have 20 days from the December 31, 2008 filing to respond to the complaint. At press time Axelrod had not retained an attorney but expected to do so.

Axelrod himself is owed $35,491, and other agents from California, New York, Texas and Iowa, claim commissions due ranging from $30,000 to $600. Axelrod believes that the agents can or have documented their claims against JoyStar.

“It's my belief that TravelStar/JoyStar has assets and can pay these commissions due,” he said. “The filing in the federal bankruptcy court will  force TravelStar/JoyStar to open their books and come clean about their assets.”

Compounding the problem is the lack of communications from TravelStar’s president and CEO William Alverson. Alverson is identified in the court filing as a resident of Jupiter, FL. Axelrod noted that it was questionable if TravelStar/Joy Star was still in business or able to meet the requirements of its membership in industry associations.

Axelrod said it is his understanding that the Chapter 7 Involuntary Bankrutptcy filing could force the “liquidation of the debtor for purposeful failure to pay his creditors and forestall dissipation of JoyStar’s assets.” TravelStar is publicly owned company, he notes with stock traded over the counter (OTC).  JoyStar Inc. did business at 95 Argonaut, Suite 100, Aliso Viejo, CA 92656. Its website, www.JoyStar.com, was still operating at press time. The bankruptcy petition is 08-30191-RBR.

Another dimension of the problem, Axelrod says, is if industry suppliers are still paying the JoyStar Corporation for sales by JoyStar agents. If so, Axelrod believes JoyStar may be holding the cash and not paying their agents commissions on legitimate sales. Axelrod questions if the suppliers involved are aware of JoyStar’s actions and if they are not culpable. “What if anything is supplier responsibility?” he asks.

He also questions if associations such as IATAN, CLIA and ASTA are aware of JoyStar’s status. “Does TravelStar/JoyStar meet the requirements of certifying organizations? Is there any enforcement?” he asks, questioning if the federal Securities and Exchange Commission (SEC) should be involved.

It is unclear if any consumers have been impacted by the TravelStar/JoyStar imbroglio. If so, Axelrod believes this will focus additional media and industry attention on the issues. JoyStar claims membership in IATAN, ARC, CLIA, OSSN and ASTA.

Underscoring the problem for JoyStar agents is the formation of a JoyStar community to exchange information at joystarcommunity55806.yuku.com. Current statistics for the site (JoyStar Independent Contractors only) include: Average Daily Visits: 30;  Average Daily Posts: 5; Total Visits: 25,775;  Total Members: 369;  Total Posts: 6574.

As reported, Axelrod’s actions have earned strong support from Peter Stilphen of Coral Sands Travel in LaBelle, FL, an established host agency and long time critic of JoyStar’s business model. In his online newsletter, Stilphen urged agents to support Axelrod’s  court filing, including financial contributions. He notes the lack of communication by TravelStar’/JoyStar’s CEO Alverson as a major problem for JoyStar agents, the industry and the media. Even reported attempts to get an influx of cash from investors that might resolve many of the complaints against TravelStar/JoyStar and restore confidence remains unknown.

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