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In a twist, Florida levels new charges against Palm Coast Travel

February 9, 2010

Only a few weeks ago, Palm Coast Travel, one of three large travel agencies the state of Florida last year alleged had sold unlicensed insurance, seemed to have everything going for it.

The state’s investigation into its activities appeared to have hit a dead end. The company, which runs the site Smartcruiser.com, had sued one of its customers and me in an effort to silence its critics. And it was issuing press releases at a regular clip, touting its Better Business Bureau rating and obsession with customer service.

But late last week, in an unexpected twist, Florida regulators filed an amended notice of intent to issue a cease and desist order (PDF) with more detailed charges against Lake Worth, Fla.-based Smolinski and Associates, Inc., which, in addition to doing business as Palm Coast Travel and Smartcruiser.com, also operates under the names Smart Travel Group, Smart Cruiser Holdings and Tripsmart. (Update: A hearing has been set for April 8. Here’s the docket.) Any way you read the latest claims, it’s clear that Florida’s Department of Financial Services has no intention of letting this case fade away. (Here’s the first notice, for comparison purposes.)


Here are the general allegations, as outlined in the document:

Respondents do not currently hold a license issued under or pursuant to Chapters 624-632, 634, 635, 636, 641, 642, 648 and 651, Florida Statutes (collectively referred to as “Florida Insurance Code”), or hold an appointment under the Florida Insurance Code.

At all times pertinent to the dates and occurrences referenced herein, respondents did not hold a license issued under or pursuant to the Florida Insurance Code, or hold an appointment under the Florida Insurance Code.

By way of explanation, the reason they’re referring to “respondents” is that Smolinski and Associates has a variety of companies and subsidiaries, which the document takes some time to describe. Anyway, on with the charges:

Section 624.401, Florida Statutes, provides that no person shall act as an insurer, and no insurer or its agents, attorneys, subscribers, or representatives shall directly or indirectly transact insurance in this state except as authorized by a subsisting Certificate of Authority issued to the insurer by the Florida Office of Insurance Regulation (“OIR”).

…

Section 624.09, Florida Statutes, provides that an “unauthorized insurer” is an insurer which is not duly authorized by a subsisting certificate of authority issued by OIR to transact insurance in this state.

Section 624.1 0, Florida Statues, provides that transacting insurance includes any of the following, in addition to other applicable provisions of this code: 1) solicitation or inducement; 2) preliminary negotiations; 3) effectuation of a contract of insurance; and 4) transaction of matters subsequent to effectuation of a contract of insurance and arising out of it.

Pursuant to Chapter 626, Florida Statutes, the Florida Department of Financial Services (“Department”) has jurisdiction over respondents, and the business of travel insurance.

In a bulletin (PDF) sent to all registered sellers of travel issued late last year, the Department of Financial Services explained the penalties for selling unlicensed insurance:

The ramifications of soliciting or selling insurance on behalf of any unauthorized insurance company can be severe.

It is classified as a third-degree felony and, under Florida law, if an unauthorized insurance company fails to pay claims, any person who sold the unauthorized coverage can be held responsible for unpaid claims.

Florida Department of Financial Services’ investigations have led to initiating administrative actions against insurance agents and agencies, shutting down unauthorized insurance companies, and filing criminal charges against operators or marketers of unauthorized insurance companies.

All of which brings us to the alleged victims. In the first notice, regulators named only one person: Peter Lay (who is being sued by the company). He is said to have lost $3,900 after buying a policy offered through Prime Travel Protection.

He is joined now by Nancy Swinney, who is alleged to have been sold an Access America insurance policy with her cruise. “However, subsequent to [her] scheduled trip, her travel insurance was transferred from Access America to Prime Travel Protection, Inc.,” the state charges, adding,

Prior to N.S.’s trip, N.S. had to cancel the trip. N.S. filed a claim with Smart Travel Insurance and/or Prime Travel Protection, Inc. Smart Travel Insurance and/or Prime Travel Protection, Inc. neither denied nor paid N.S.’ claim.

A third alleged victim, Chris Lockard, is said to have lost $2,600 in relation to a canceled trip.

The matter is awaiting a scheduling order by an Administrative Law Judge. If the company is found to have violated Florida law, it faces fines and the imposition of a cease and desist order.

But there is more — much more — to this story. I’ve made a public records request for everything related to Florida’s case against Palm Coast Travel and its related companies, and will begin to release them on this site as they become available.

The process may take a while, but I promise, it’ll be worth the wait.

(Photo: merfam/Flickr Creative Commons)

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

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18 comments

  • Jim_J

    Could the sudden turnabout by Florida regulators have anything to do with this being an election year, that the Florida Attorney General, Bill McCollum, is running for Governor and that an opponent of Mr. McCollum is attempting to label him as being soft on consumer issues?

  • MikeZ

    @Jim_J
    And what if it is? The allegations stand and must be addressed in a hearing.

    If it turns out they’re found to be valid, then appropriate sanctions will be made.

    And if it’s just political hot air, then the AG will look so bad that his campaign will be hurt, not helped.

    Seems to me that if it’s the latter, the Respondents would be eager to deal with this as quickly as possible and vindicate themselves.

    Right?

  • Cliff Sousa

    The sudden turnaround is because of the publicity the lawsuits Palm Coast Travel filed against a journalist and customer. The internet has gone viral with this story and you can bet the DFS has been bombarded with inquiries. At this point I see no possibility of vindication for Palm Coast Travel. The fact has been established the owner sold illegal insurance. So, at best the judge will buy his, “I didn’t know” excuse. Nothing can change the fact that he sued a journalist and a customer. Not good for public relations. I wouldn’t buy from a company that sues its customers or an owner who sold illegal insurance and didn’t know he did.

  • Billie Keirstead

    After reading the amended notice of intent, I see that in at least two of the cases (Peter’s and Nancy’s), the travel insurance the party thought they were getting was switched at the last minute to PTP. This bait-and-switch scheme seems to be an MO for these travel agents, altho perhaps AccessAmerica is a legitimate, licensed seller of travel insurance. Legendary Journeys also switched our “insurance” from TPS to PTP and further linked our invoice to a third company, Travelex. (TPS and PTP are basically the same unlicensed product issued by Jerry Watson’s company.) Are the other perpetrators (TAs) getting nervous?

  • Duke Nukem

    They’re getting scr*wed!

  • LeeAnne

    This is an excellent example of karma. Bad behavior will eventually be revealed and punished. Kudos to Christopher for not backing down and letting the bad guys win. I look forward to reading further details revealed by the public records request.

  • Les

    It’s not clear that this kind of suit fits the definition of a SLAPP (Strategic Lawsuit Against Public Participation) action but the possibility seems worth exploring. Some states have specific laws prohibiting these punitive “Shut up and go away” suits – others do not. There are, however, a variety of resources such as the First Amendment Project that might be of help.

  • Harry Baxter

    …and the charges keep accumulating!

    However, here’s one that the State of Florida missed, so I’m documenting it.
    In two of the cases cited in the complaint, mention was made of the fact that Mr. Smolinski led the clients to believe that they were buying AccessAmerica insurance, and then switched them to Prime Travel Protection. Billie Kierstead (see above) mentioned that this was a “bait and switch” scheme. It may be that, but it could be a crime as well. Real travel insurance like AccessAmerica, Travel Guard, etc. is not, to my knowledge, a cancellable product. Once you buy it, you own it. You can, within a finite time, amend the policy to change your travel dates, but I don’t think you can get your money back.
    Therefore, if Mr. Smolinski was “switching” from AccessAmerica to PTP, he was, in all likelihood, holding on to the payment, instead of buying the AccessAmerica insurance, and this is something that NO honest Travel Agent does.
    I’m a pretty experienced traveler, and I’ve learned to check my credit card statements online a few days after purchasing a trip or travel insurance, since if the payment doesn’t show that that the payee is the trip or travel insurance company, the Travel Agent has his hands on your funds. Some very large Travel Agencies have pulled this scheme recently.
    Maybe Mr. Smolinski has a special deal that allows him to buy, and then cancel policies from AccessAmerica without accumulating a charge, but I have my doubts.

  • LeeAnne

    By the way, has anyone else noticed the photo of the “sinking ship” at the top of this article? Perfect image, Chris! ;-)

  • Debbie Lockard

    To whom it may concern, We are listed in the article about the prime travel insurance going out of business and not paying for our cruise. This is true Prime Travel never paid, but instead Smartcruiser’s owner paid our claim out of poctet and we have already made another trip. This informationin this article has not been updated. Smartcruiser was unware of our claim until I contacted them in October 2009 and at that time they reimbursed us for our claim. I will plan another trip using Smartcruiser in the future. Chris and Debbie Lockard

  • David

    This is good news that the Lockard’s were reimbursed. It doesn’t take away from the fact that Palm Coast Travel/Smartcruiser.com was selling unauthorized trip insurance nor does it negate the fact that Mr. Lay has not been reimbursed and is facing a lawsuit (as Chris is) for pursuing his claim.

  • Cliff Sousa

    Yes, it is nice that the Lockard’s were paid back for the bogus insurance they purchased. And it’s certainly admirable that Mr. Smolinski paid the claim “out of pocket” – the same pocket that tens of thousands of dollars in premiums went into from the sale of unauthorized insurance, sold without a license. And from the same pocket he’s financing his bullying against Chris Elliott and Peter Lay.

    Now that you’ve contacted the Lockard’s, Lee, can we expect a post from Nancy Swinney, too? Your reputation is sinking faster than the boat in the picture above. Grow up and act like the professional you claim to be.

  • Harry Baxter

    Back in the days when I was in Elementary School, we were taught the difference between “perfect contrition” and “imperfect contrition”. Perfect Contrition is when you’re sorry for doing something because it was a bad thing to do; Imperfect Contrition is when you’re sorry for doing something because you got caught. Smolinski’s actions in dealing with the Lockards appear to fall into the Imperfect Contrition category.
    Chris and Debbie, I’m glad that you got your money back, but I’d be interested in the timing, because it appears that you were frustrated enough to file a complaint with the State of Florida after you were sold an illegal travel product by Mr. Smolinski. There are hundreds of honest Travel Agents in the country who would have sold you a legal travel insurance package in the first place. At a minimum, I’d refuse to buy, or even accept for free, any travel insurance or protection policy offered by Lee Smolinski.

  • Harold

    The very first person I contacted when my claim was denied was my travel agent. I then contacted the so-called “insurance” company to file my claim. I find it very suspicious that Mrs. Lockard made no mention to Smartcruiser about her claim until October 2009. Do the math – that’s almost a year and a half after she cancelled her cruise. Smartcruiser knew she cancelled the cruise because she obviously cancelled the cruise through them. So, are we to believe this was news to Smartcruiser almost a year and a half later when Mrs. Lockard informed Smartcruiser that her claim was denied?

  • Frankie Leo

    I’m also happy that the Lockards retrieved their money. I know that they constitute a miniscule minority of people who purchased the scam insurance and recovered their money. I hope that they’ll post again on this board, and tell us when the money was paid by Mr. Smolinski, since the State of Florida assumed only last week (see the State’s order to Mr. Smolinski above) that they had not recovered anything.
    It’s significant that they filed a complaint specifically against Mr. Smolinski and his company; so at some time in the process, they were a lot less happy with Palm Coast Travel than they are now.
    The Florida Public Records Laws allow for pretty easy access to public records, and their complaint fits this category, so you can be pretty sure that someone will request a copy of their complaint. When I had a complaint against Trip Assured, a predecessor of PTP in the selling of scam travel insurance, I had to swear under oath that my complaint was true, so I’m assuming that they had to do the same. It will be interesting to find out what they said then, compared to what they’re saying now.

  • Billie Keirstead

    Looks like the parent company of Access America has heard about what is going on in Fla. and is in the process of “looking into” it. AA’s underwriters appear to be registered with the Fla. DFS, office of insurance regulation.

  • Paulette Baker

    I’m glad that the Lockards made out, but they should realize that they only got reimbursed because of all the bad publicity. They’ve got to be nuts to do business with Smolinski again — unless he made a deal with them: “I’ll pay your claim if you give me good press.” Just wondering . . .

  • Pingback: Palm Coast Travel fined $2,500 and placed on probation for selling unauthorized travel insurance

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