Posted by ASDUpdates on January 28th, 2013
From USA Today: You can read the full article here.
The Federal Trade Commission and three state attorneys general announced Monday that they shut down a national multilevel marketing company they called a “global pyramid scheme” because recruiting others was the only way to make money.
Fortune Hi-Tech Marketing of Lexington, Ky., and its top two executives were sued by the FTC and the attorneys general of Kentucky, North Carolina and Illinois for “unfair and deceptive actions” that violated state and federal laws. Among the charges: misrepresenting that the company is “a good way for average people to make substantial income and achieve financial independence.”
“Today’s actions are the beginning of the end for one of the most prolific pyramid schemes operating in North America,” said Kentucky Attorney General Jack Conway.
The Lexington headquarters and a warehouse for Fortune Hi-Tech Marketing were raided Monday morning and the contents confiscated by a receiver appointed by the U.S. District Court for the Northern District of Illinois. The receiver, Robb Evans, and his firm met with FHTM employees and sent most home.
“The fact that they targeted people who just wanted to better themselves in this economy is unconscionable,” Conway said in an interview.
More than 85% of the compensation paid is from recruiting new members, the complaint said. The compensation plan is designed so the majority of people will spend more than they earn. As Conway noted in an interview, about 90% of people made less than $15 a year, yet were asked to spend about $1,500 a year on products and membership fees.
FHTM’s “Presidential ambassadors” averaged $1,240,992 in income a year, yet made up just 0.07% of the company’s representatives, according to a financial disclosure Fortune filed as part of its April 2010 settlement with Montana. The statement also showed 30% of Fortune representatives make nothing, and 54% of those with earnings averaging just $93 a month, before costs. More than 99% of those who make money earn less than $31,524 a year.
The FTC has set up a hot line to answer questions from former Fortune representatives, who are no longer allowed to sell or recruit for the company. English and Spanish options are available at 202-326-2643.