A group of shareholders in Ambassadors Group, a Spokane travel company, has filed suit, alleging executives misled investors and analysts about the company’s financial troubles and wrongly inflated the company’s publicly traded stock.
The suit was filed this week in U.S. District Court in Spokane.
Plaintiffs, the pension fund of Plumbers Union Local 12, are asking the court to declare the suit a class action, to include all other potentially affected stockholders.
Attempts to reach executives from Ambassadors Group on Thursday were unsuccessful.
The company issued a news release that read: “Although the company has not yet been served, the company has reviewed the complaint and denies the allegations contained therein. It intends to vigorously defend this lawsuit and any alleged claims for damages.”
Ambassadors provides student and professional travel and education programs.
The suit states the actions and misleading statements of CEO Jeff Thomas, his wife, Peg Thomas, the company’s executive vice president, and one other company official amounted to securities fraud.
The key period for the alleged acts by company officials dates from February 2007 until late October of that year, the suit says.
It alleges the Thomases, along with Chief Financial Officer Chadwick Byrd, misrepresented the company’s financial health. As a result, the suit charges, investors believed the company was financially healthy and bought shares at artificially inflated prices. When company officials in October 2007 announced that earnings were falling, Ambassadors stock price fell 44 percent in one day, by $17.73 per share, the suit states.
“This drop removed the inflation from (the stock), causing real economic loss to investors who had purchased stock (during 2007),” the suit explains.
The suit also contends the Thomases and other company officials sold $7.8 million worth of Ambassadors stock during the inflated price period. Byrd was not in that group, however, the suit points out.
In addition to seeking class status, the suit asks for a trial to determine damages for shareholders.
Subscribe to the Morning Review newsletter
Get the day’s top headlines delivered to your inbox every morning by subscribing to our newsletter.