CLEVELAND — The vice president of Discovery Tours described a family business that had been on life-support for some time before filing for bankruptcy last month, leaving thousands of students stranded when prepaid school trips were suddenly cancelled.
Shortly before a bankruptcy hearing began, the Summit County Prosecutor’s Office announced that the FBI and the U.S. Attorney’s Office will also be investigating what happened with Discovery Tours.
But, in court and out, Discovery Tours described a situation that appeared more born out of desperation than sinister intent.
Joe Cipoletti, the vice president of Discovery Tours, told the court that the family business his father started has been in financial trouble for years – dating back to the downturn in the travel industry that followed the September 11th attacks in 2001.
He said the financial crisis in 2008 also hurt, and that the company charged too little for its services – hoping to retain clients to rebuild its cash flow.
Lester Potash, a family attorney for the Cipolettis, said family members had poured $500,000 of their own money into the business over the years.
And Joe Cipoletti said they had taken out short term loans with interest rates as high as 40 percent just to try to keep the business afloat.
“We’re devastated,” he said outside the courtroom after the hearing, “we’re people. Broken as a family. You know, you care about the kids; they didn’t deserve this. But we’re doing everything we can, cooperating 100 percent to make sure everything gets told correctly.”
The straw that broke the camel’s back was when a hotel chain said it needed double the money, or it would cancel rooms that had been booked for a Mentor High trip, where families had prepaid over $200,000.
Discovery Tours had been slow to pay bills to the hotel chain from the previous year. When it couldn’t come up with the money in a matter of days this year, it filed for bankruptcy protection.
The bankruptcy process is a complicated one, and it will take at least months to determine how much money Discovery has, and who is entitled to how much.