FTC Files Case Against VEMMA

Posted by ASDUpdates on August 28, 2015One Comment

FTC Acts to Halt Vemma as Alleged Pyramid Scheme

Promised Unlimited Income Potential, But Most Participants Lose Money


At the Federal Trade Commission’s request, a federal court has temporarily halted an alleged pyramid scheme, Vemma Nutrition Company, that lures college students and other young adults with the prospect of getting rich without having a traditional 9-to-5 job. The FTC seeks to stop the operation, which earned more than $200 million annually in 2013 and 2014 and has affected consumers throughout the United States and in more than 50 other countries, from continuing as an unlawful pyramid.

“Rather than focusing on selling products, Vemma uses false promises of high income potential to convince consumers to pay money to join their organization,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We are also alleging that Vemma is an illegal pyramid scheme.”

Vemma is a multilevel marketing company that claims to use its members, called “affiliates,” to promote its health and wellness drinks. According to the FTC’s complaint, the defendants claim affiliates can earn substantial income by enrolling others either as affiliates or as customers, but Vemma focuses on recruitment rather than retail sales of its products to generate this income. The vast majority of participants make no money, and most of them lose money.

According to the FTC’s complaint, the defendants’ websites, social media, and marketing materials show seemingly prosperous young people with luxury cars, jets, and yachts, and falsely claim that Vemma affiliates can earn substantial incomes – as much as $50,000 per week. The defendants allegedly claim that affiliates’ earning potential is limited only by their own efforts and that Vemma provides young adults an opportunity to bypass college and student loan debt. Vemma urges consumers to make an initial investment of $500-$600 for an “Affiliate Pack” of products and business tools, buy $150 in Vemma products each month to remain eligible for bonuses, and enroll others to do the same.

Consumer losses are inevitable because Vemma is an illegal pyramid scheme that rewards affiliates for recruiting participants rather than for selling products, the FTC alleges. The defendants provide affiliates little guidance for selling products, but instead teach them to give away products as samples when recruiting new participants. Vemma offers no meaningful discounts or incentives to encourage retail sales, according to the complaint.

In addition to allegedly running an illegal pyramid scheme, the defendants are charged with making false earnings claims, failing to disclose that Vemma’s structure ensures that most people who join will not earn substantial income, and furnishing affiliates with false and misleading materials to recruit others.

The defendants are Vemma Nutrition Company, Vemma International Holdings Inc., Tom Alkazin, and Benson K. Boreyko, who is under a 1999 court order after settling with the FTC for his involvement with New Vision International Inc.,  a multilevel marketing company that sold nutritional supplements. The complaint names Bethany Alkazin as a relief defendant who profited from the scheme. On August 21, 2015, the court halted the deceptive practices, froze the defendants’ assets, and appointed a temporary receiver over the business pending a trial.

The Commission vote authorizing the staff to file the complaint for permanent injunction was 5-0. The order was entered by the U.S. District Court for the District of Arizona on August 21, 2015.

The FTC appreciates the assistance of the Attorney General Offices of Arizona, South Carolina, and Michigan, the Tempe Police Department, and the nonprofit organization Truth in Advertising in bringing this case.

To learn more about multilevel marketing, read Multilevel Marketing and Business Opportunity Scams.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook(link is external), follow us on Twitter(link is external), and subscribe to press releases for the latest FTC news and resources.

More Problems for Robert Craddock

Posted by ASDUpdates on October 16, 2014No Comments

We have 2 Orders entered by the District of Nevada against Fun Club USA and its figurehead, Robert Craddock; the first is an ORDER to show cause:

This matter is before the Court on Defendant Fun Club USA, Inc.’s failure to retain new
counsel. This Court’s Order (#23) gave Defendant until August 25, 2014 to retain new counsel.
To date, the Defendant has not complied. Accordingly,

IT IS ORDERED that Defendant Fun Club USA, Inc. shall show cause, in writing, no later
than October 6, 2014, why sanctions should not be imposed for the failure to comply with this
Court’s prior order. Failure to timely respond to this Order to Show Cause may result in the
imposition of sanctions up to and including a recommendation to the District Judge to strike
Defendant’s Answer and enter a default judgment against Defendant for violation of the Court’s

And, surprise, surprise, Fun Club USA did not comply with that Court ORDER, so there’s this:


This matter is before the Court on the Order to Show Cause (#25), filed September 24,
2014, wherein this Court ordered Defendant Fun Club USA, Inc. to show cause, in writing, no later
than October 6, 2014, why sanctions should not be imposed for its failure to comply with this
Court’s prior order (#23) to retain counsel. To date, Defendant Fun Club USA, Inc. has failed to
comply. Accordingly,

IT IS RECOMMENDED by the undersigned United States Magistrate Judge that the
Answer of Defendant Fun Club USA, Inc. should be stricken and its default entered based on
Defendant’s failure to comply with this Court’s Order to obtain counsel.

IT IS HEREBY ORDERED that the Clerk of the Court shall mail a copy of this Findings
& Recommendation and Order to Defendant Fun Club USA, Inc., c/o Robert Craddock, xxxx
Baron Court, Port Orange, Florida 32128.

Zeek Rewards: Kenneth Bell Files Amended Complaint Against Kevin Grimes

Posted by ASDUpdates on August 6, 2014One Comment

Kenneth Bell, receiver for Rex Ventures Group, has filed an Amended Complaint in his Malpractive lawsuit against Zeek “compliance” attorney, Kevin Grimes.

This lawsuit is one of several steps the Receiver is taking pursuant to his court-ordered duties to the Receivership Estate to recover damages for the harms incurred by RVG.

By virtue of his knowledge of RVG and ZeekRewards and his legal expertise, Grimes knew or should have known that RVG was perpetrating an unlawful scheme which involved a pyramid scheme, an unregistered investment contract and/or a Ponzi scheme. Despite this knowledge, Grimes actively encouraged investors to participate in the scheme by creating a so-called “compliance” program through his captive entity, MLM Compliance VT, LLC (“MLM Compliance”), which provided a false façade of legality and legitimacy and knowingly allowed his name to be used to promote the scheme. Grimes’ improper and negligent actions, which breached his fiduciary duties to RVG and assisted RVG’s Insiders to breach their fiduciary duties, caused significant damage to RVG. As described in detail below, Grimes and his firms are liable to RVG both for those damages and the profits they made from RVG. In addition, Grimes and MLM Compliance are liable to repay to the Receiver the more than $840,000 they received from RVG for the bogus compliance course.

Farther down the Amended Complaint, mr. Bell alleges this:

Beginning at least as far back as 1997, Paul Burks, RVG’s owner and lead executive, operated a number of generally unsuccessful multi-level marketing businesses through Rex Venture Group, LLC (and related entities).

Dawn Wright-Olivares was RVG’s Chief Operating Officer and the Chief Marketing Officer of ZeekRewards. Together with Burks, Wright-Olivares developed the ZeekRewards scheme.

Other key employees of RVG included Daniel (“Danny”) Olivares, Wright-Olivares’ stepson who was responsible for designing and running RVG’s websites and databases with Burks; Alexandre (“Alex”) de Brantes, Wright-Olivares’ then-fiancée who had the title of Executive Director of Training and Support Services; Roger Plyler, who handled “affiliate relations”; and Darryle Douglas, who was a member of RVG’s senior-level management. Collectively, these individuals may be referred to as RVG’s “Insiders.”

And then there is this:

Grimes helped in several ways. First, despite his knowledge that ZeekRewards was a fundamentally flawed and unlawful pyramid and/or Ponzi scheme and was selling unregistered securities, Grimes, through his entity MLM Compliance, offered to create and did create a so-called “compliance course” specifically designed to encourage investors and potential investors to believe that if they satisfied the course then it would be a lawful enterprise. Thus, Grimes and MLM Compliance knowingly allowed Zeek to portray a false appearance of legality through their bogus “compliance” course.

I have uploaded the full document (9) onto the Files website.

Zeek Rewards: More Clerk’s “Entry of Default”

Posted by ASDUpdates on July 3, 2014No Comments

The US District Court Clerk has issued an Entry of Default for these three Defendants in this Civil case Bell v. Disner, et al  (14-cv-00091-GCM):

  • David Sorrells
  • Michael Van Leeuwen
  • Todd Disner

All three Defaults were due to the Affidavits in Support, which contained this:

More than twenty one (21) days have elapsed since the Defendant was served, and the Defendant has failed to plead or otherwise defend as provided by the Federal Rules of Civil Procedure.

In addition, the Court’s June 30, 2014 deadline in this case for filing a responsive pleading has also passed, and the Defendant has failed to plead or otherwise defend as provided by the Federal Rules of Civil Procedure.

Preliminary Injunction Issued, Assets Frozen, in SEC v TelexFree case

Posted by ASDUpdates on April 30, 2014One Comment

Here is a tidbit from the docket, I have uploaded these documents onto the Files website for your perusal.


United States District Court
District of Massachusetts (Boston)
CIVIL DOCKET FOR CASE #: 1:14-cv-11858-NMG

Securities and Exchange Commission v. Telexfree, Inc. et al
Assigned to: Judge Nathaniel M. Gorton
Cause: 15:78m(a) Securities Exchange Act
Date Filed: 04/15/2014
Jury Demand: Plaintiff
Nature of Suit: 850 Securities/Commodities
Jurisdiction: U.S. Government Plaintiff
04/30/2014 60 MOTION for Preliminary Injunction , Order Freezing Assets and Order for Other Relief as to Defendants Telexfree Inc,Telexfree, LLC, Merrill, Wanzeler, Labriola, Craft, Rodriques and Sloan and the Relief Defendants by Securities and Exchange Commission. (Attachments: # 1 Text of Proposed Order, # 2 Declaration of Janet Conforti In Support, # 3 Second Declaration of Frank Huntington In Support, # 4 Fourth Declaration of Scott Stanley in Support)(Huntington, Franklin) (Entered: 04/30/2014)
04/30/2014 61 MEMORANDUM in Support re 60 MOTION for Preliminary Injunction , Order Freezing Assets and Order for Other Relief as to Defendants Telexfree Inc,Telexfree, LLC, Merrill, Wanzeler, Labriola, Craft, Rodriques and Sloan and the Relief Defendants filed by Securities and Exchange Commission. (Huntington, Franklin) (Entered: 04/30/2014)
04/30/2014 62 Judge Nathaniel M. Gorton: ENDORSED ORDER entered granting 58 Motion for Preliminary Injunction as to Defendants De La Rosa and Crosby (Patch, Christine) (Entered: 04/30/2014)
04/30/2014 63 Judge Nathaniel M. Gorton: ORDER entered. PRELIMINARY INJUNCTION Order, Order Freezing Assets and Order as to other Equitable Relief as to Defendant Santiago De La Rosa.(Patch, Christine) (Entered: 04/30/2014)
04/30/2014 64 Judge Nathaniel M. Gorton: ORDER entered. PRELIMINARY INJUNCTION Order, Order Freezing Assets and Order as to Other Equitable Relief as to Defendant Randy Crosby.(Patch, Christine) (Entered: 04/30/2014)

California Issues “Cease and Refrain Order” Against WCM777

Posted by ASDUpdates on February 15, 2014No Comments

The state of California has joined the list of states calling WCM777 (a.k.a. Kingdom777) a scam and lists the executives of this “opportunity” in the Order.

The California Department of Business Oversight (DBO) has asked all California residents who put any money into the WCM777  “investment scheme” to contact them to file a formal complaint at (866) 275-2677 or online at: www.dbo.ca.gov/Consumers/consumer_services.asp.

Here is a link to the C&R Order:   WorldCapitalMarketInc_dr

From BehindMLM: TelexFree vows recovery in Bankruptcy Protection

Posted by ASDUpdates on September 22, 20132 Comments


TelexFree vows recovery in Bankruptcy Protection

Sep.21, 2013 in TelexFree 8 Comments



If the injunction continues TelexFree may enter into bankruptcy.

Should the company spend a few more days being prohibited from signing up new investors, they would have no money to pay the old ones.

-Djacir Falcão, one of TelexFree’s lawyers explaining on July 10th why the Acre injunction should be lifted

News broke yesterday on BehindMLM that TelexFree was entertaining the idea of applying for Bankruptcy Protection in Brazil.

The comment was accompanied by a TelexFree Facebook notice, informing the company’s affiliate investors that owner Carlos Costa would shortly be putting up a video explaining the move.

Less than twenty-four hours later Costa came through, announcing, amongst other things, that on Thursday the 19th TelexFree had indeed filed for Bankruptcy Protection in the Brazilian state of Espírito Santo.

In both the TelexFree Facebook announcement and Carlos Costa’s video, it is claimed that the company filing for bankruptcy is to “protect its affiliates”. But is that really the case?

Having failed to convince judges in Brazil to lift the business crippling Acre injunction, handed down in June which prohibits TelexFree from recruiting new investors and paying out existing ones, the main thrust behind the bankruptcy protection filing appears to be the belief that TelexFree will be able to present an alternative business model to the courts, and more importantly this time have it accepted.

[Read the rest of this entry…]

From BehindMLM: TelexFree civil action case filed in Brazil

Posted by ASDUpdates on September 5, 2013No Comments

TelexFree civil action case filed in Brazil

Sep.06, 2013 in TelexFree


Following the business crippling injunction won against TelexFree, Public Prosecutors in Acre have followed up with a civil lawsuit filed against the company.

Alleging that TelexFree is a Ponzi scheme, the case was filed in the 2nd Civil Court of Rio Branco and is being heard by Judge Thais Borges. As is required when all public civil action cases are filed in Brazil for the benefit of consumer-awareness, Judge Borges published the notice last Monday.

[Read the rest of this entry…]