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President of bankrupt Discovery Tours is back in travel business, under a new name

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Posted at 6:18 PM, May 02, 2019

CLEVELAND — The president and founder of Discovery Tours Inc., the now defunct Mayfield Village-based bus tour company that inexplicably and suddenly folded amid controversy last year, appears to be actively recruiting customers as part of a new tour-related business venture, according to documents obtained by News 5. The new business has been operating even as Discovery Tours still owes millions of dollars to creditors, including the families of thousands of area school children whose Washington D.C. trips were abruptly canceled last spring.

Nearly one year ago, the family-run Discovery Tours Inc. collapsed, prompting the sudden cancellation of school trips for dozens of districts across Ohio. Families of the students who were set to go on the Washington D.C. trip had prepaid as much as $500 to reserve their child’s spot. The sudden insolvency of Discovery Tours Inc. put area school districts in a bind as some opted to use public money to diffuse the loss, while others tried to help families through private donations.

In its Chapter 7 bankruptcy petition, Discovery Tours claimed it had nearly $4 million in liabilities compared to roughly $1.3 million in assets. The company listed more than 5,000 creditors, a majority of whom where local families who had prepaid for the Washington D.C. trip. The bankruptcy filing also detailed large sums of expense reimbursements made to six family members who work for or have loaned money to the company. These reimbursements were made prior the bankruptcy filing and totaled $768,840.71. Most of that money went to Discovery Tours Vice President Joe Cipolletti who, according to the filing, was owed $537,348.90 for loan repayments and payments made on his personal credit cards.

“You care about the kids. They didn’t deserve this. But we’re doing everything we can and cooperating 100% to make sure everything gets totaled correctly,” said Joe Cipolletti following a June 2018 bankruptcy proceeding.

It was the ultimate fall from grace for a company that had operated with a sterling reputation for more than three decades. Founded in the 1980s by Alfred Cipolletti, a former educator and school board member, Discovery Tours had provided school trips to the nation’s capital for tens of thousands of students. Unbeknownst to anyone but the Cipolletti family, in the years leading up to the company’s demise, the business was suffocating under mounting debt and high-interest loans.

However, in December 2017, roughly four months before Discovery Tours Inc. went under, company president Alfred Cipolletti created a new business venture, New Destinations LLC, on December 27, 2017, according to business filings with the Ohio Secretary of State’s Office. The limited liability company was created as Discovery Tours and Cipolletti himself were hemorrhaging money.

Cipolletti and his wife, Donna, filed for personal Chapter 7 bankruptcy later in 2018, claiming they were upside down by nearly $600,000. In their joint personal bankruptcy filing, Cipolletti stated he was the sole owner of New Destinations, holding 100% of the stake in the company. Later in the petition, Cipolletti stated that the value of New Destinations was zero. Cipolletti was also the sole member of the organization, according to court records.

It is unclear when Cipolletti began to actively operate under the New Destinations company. However, a complaint filed with the Ohio attorney general’s office suggests New Destinations was used as early as May 2018. A Broadview Heights woman stated she purchased a ticket for a bus trip and tour for July 2018. The woman claimed she had booked the trip through Cipolletti using the new company name, New Destinations LLC.

Recently, it appears Cipolletti has been ramping up efforts to bring in new business for New Destinations. Former adult customers of Discovery Tours have received brochures and letters from Cipolletti advertising upcoming trips to New Mexico, as well as a cruise on the Adriatic coast. The trips would be sponsored by Mayflower Cruises and Tours but New Destinations would receive a commission. In one of the letters, Cipolletti boasted that he has the best contacts in the travel business and the experience would be unmatched.

A News 5 staff member called Cipolletti on the phone number listed on the brochure. In a series of conversations, Cipolletti told the News 5 staff member about the upcoming New Mexico trip and relayed information on securing a spot on the trip. Cipolletti also told the News 5 staff member that New Destinations LLC is being operated out of his home in Brecksville, despite official state business filings listing the address as Cipolletti’s home in Richmond Heights.

Cipolletti never once mentioned the pending bankruptcies nor did he mention the millions of dollars still owed to thousands of creditors. When he was asked why his company did not have a website or its own storefront, Cipolletti said he was downsizing.

“We had our own office for a while. I decided to save some money, pull back and offer a few trips. That’s where I’m at right now,” Cipolletti said.

News 5 tried to ask Cipolletti about New Destinations LLC at his Brecksville home. Although Cipolletti answered the door, he declined to answer any questions. Calls and emails to his bankruptcy attorney were also not returned.

Legal experts that News 5 consulted with agreed that, generally, an ongoing bankruptcy case would not preclude anyone from starting or running a business that is separate from the business that is being liquidated. However, if that person is determined to have tried to hide assets from the bankrupt company inside of the new company, it could be illegal.

A bankruptcy law expert consulted by News 5 offered a hypothetical difference between what is and isn’t permitted. In the hypothetical case, the owner of a pharmacy whose business closed and filed for bankruptcy is permitted to start and operate a new pharmacy. However, if the owner takes something of value – a cash register for example – from the defunct business and uses it in the new business without the approval of the bankruptcy trustee, that would be considered an illegal act.

Prior case law has found that people who are undergoing bankruptcy are entitled to make a living.

In Cipolletti’s case, however, it is unclear how much money New Destinations LLC has brought in and what has happened to the money. According to a recent report in Cipolletti’s personal bankruptcy, Cipolletti was due more than $25,000 in commissions from Mayflower. That money remains in the estate, which is under the control of the bankruptcy trustee.

It is unclear if and when the affected families of area school children will be reimbursed. Many school districts, including Twinsburg, have opted to continue trips to Washington D.C. with different providers.