Harmony International Bookkeeper Says Owners Used Band Trip Money for Personal Expenses - NBC 7 San Diego

Harmony International Bookkeeper Says Owners Used Band Trip Money for Personal Expenses

Parents, high school band teachers and the company’s former bookkeeper testified before the Grand Jury case against Brad and Margie Matheson.

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    For over eight months, NBC 7 Responds has been searching for answers to what happened to thousands of dollars local high school students and parents paid for a canceled band trip to Japan.

    Now, newly released transcripts of witness testimony before the San Diego County Grand Jury may shed some light on what happened to the money paid to an Atlanta based travel tour company Harmony International.

    One of the key witnesses to testify was Harmony International’s bookkeeper. NBC 7 Responds is not using her name because she has not been charged with a crime. The bookkeeper testified Harmony International accepted $148,992 from parents and students but no funds were used to pay hotels, airfare or other vendors associated with the promised trip to Japan.

    Students told us they were planning for a “trip of a lifetime” when Harmony International owner Brad Matheson pitched the 2017 trip to Japan to band students at San Marcos, Del Norte, Mission Hills and Eastlake high schools.

    Court Records Reveal New Details About Travel Tour Company

    [DGO] Court Records Reveal New Details About Travel Tour Company

    Parents and students from local high schools wonder where is the money they used to pay for a band trip to Japan after it was canceled. NBC 7 Responds' Bob Hansen reports.

    (Published Tuesday, Jan. 16, 2018)

    A year later, the trip was suddenly canceled and Harmony International filed for bankruptcy, lessening the likelihood that students and their parents would see their payments refunded.

    To see NBC 7 Responds’ past stories of the trip, click here

    In November, the San Diego County District Attorney’s office announced the grand jury indictment of Brad and his wife Margie Matheson, co-owner of Harmony International, on over 90 felony counts and two misdemeanor counts including embezzlement, failing to maintain passenger funds in a trust account, and failing to provide refunds. 

    The Mathesons were extradited to San Diego where they faced a Judge and pleaded not guilty to the charges. A preliminary hearing for the case is set for January 24. 

    Among those who testified before the Grand Jury last year were 31 parents and two high school band teachers, according to the records.

    Harmony International’s former bookkeeper told the jury she had been working with Harmony International since 2012 with Margie Matheson as her supervisor.

    In her testimony, the bookkeeper said she was responsible for receiving and keeping track of payments made by parents for the Japan trip. The bookkeeper testified she was never instructed to deposit funds paid into a trust account, a violation of state law. Instead, the bookkeeper said the parents and students’ payments were deposited into the Mathesons’ checking accounts. 

    The bookkeeper testified she witnessed the Mathesons using trip funds for personal expenses. Before the Grand Jury, the prosecutor asked, “What personal expenses did you see Margie or Brad Matheson pay using funds from the accounts where the Japan money was deposited?." The bookkeeper answered, "Oh, we had veterinary bills, we had medical bills coming through. We had meals and other expenses that used to come through the bank account...meals and entertainment."

    The bookkeeper also added she witnessed the Mathesons using payments made for the Japan trip for another business the couple owns in Key West, Florida: Harmony Yacht Vacations. This contradicts with what an attorney representing the Mathesons told parents at a meeting in May when she said none of their money went towards the yacht business. 

    Parents told NBC 7 Responds Harmony International had changed the way the company was accepting payments towards the end of 2016, eventually requiring parents make out checks directly to the company. The bookkeeper’s testimony revealed new details about why that was the case. 

    In August 2016, the bookkeeper testified Elavon Merchant Services “withdrew the relationship with Harmony International” after another trip the company organized was canceled and parents began requesting “chargebacks” with their credit card companies. 

    Harmony International then switched to Paypal but in December, the bookkeeper said Paypal also quit working with Harmony International. 

    As an incentive to sign up for the trip early, parents were told by Brad Matheson himself, via a Skype call in January 2016, the company would buy travel insurance policies for each trip participant. In May 2017, parents were told the company never bought the insurance. The bookkeeper told the grand jury that in the past, the company would hold off on buying policies until just before the trip embarked. 

    “I would be notified that they have offered it to the participants at the time of registration,” the bookkeeper testified, “But the actual payments to Travel Guard would not be done until about two months before the tour has gone.”

    The bookkeeper said her job became stressful when parents and students were calling the Harmony International offices, looking for refunds after paying thousands of dollars for trips that were canceled. The calls also included a Texas group that had been promised a trip to France. After seeing the state of the company she worked for erode, the bookkeeper said she decided to resign at the end of April 2017, testifying, “it was very stressful, and I didn't see where -- how this company was going to come out of it, personally.”

    An investigator for the California Attorney General’s office also testified before the Grand Jury, stating neither Brad nor Margie Matheson had ever registered Harmony International as a ‘seller of travel’, another requirement of state law.

    NBC 7 Responds reached out to the public defenders defending Brad and Margie Matheson to comment for this report but they did not respond. 

    To read more of the Grand Jury transcripts from the case against the Mathesons, click here.