Madigan joins lawsuit to shut down
global pyramid scheme
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[January 29, 2013]
CHICAGO
-- Joining the U.S. Federal Trade Commission and attorneys general
from Kentucky and North Carolina, Attorney General Lisa Madigan on
Monday announced legal action against Fortune Hi-Tech Marketing, an
alleged global pyramid scheme operating since 2001 from its
corporate headquarters in Lexington, Ky. The headquarters and a
warehouse in Danville, Ky., were seized and secured Monday morning
by investigators. A receiver appointed by the U.S. District Court
for the Northern District of Illinois now has possession of FHTM's
assets.
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"The perpetrators of this pyramid scheme promised big returns but instead
delivered significant losses for thousands of families in Illinois and all
across the country," Madigan said. "In collaborating with our state and federal
partners, we're seeking to bring the full force of the law against this entity
to ensure that it is put out of business for good." In conjunction with the
FTC and the attorneys general of Kentucky and North Carolina, Madigan filed a
lawsuit on Jan. 24 in federal court against FHTM and its principal operators --
Paul Orberson, president, and Thomas Mills, vice president. A temporary
restraining order was issued against the company, requiring FHTM to cease
operations. The receiver, which now controls FHTM's assets, will report its
findings to the court after a thorough review of FHTM's finances and business
model.
"After our office began reviewing the documents, we believed that Fortune
Hi-Tech Marketing was operating a massive pyramid scheme that involved more than
100,000 people across the United States and in several other countries," said
Kentucky Attorney General Jack Conway. "We think damage to consumers could be in
the hundreds of millions of dollars. Today's actions are the beginning of the
end for one of the most prolific pyramid schemes operating in North America."
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The joint federal and state lawsuit alleges that consumers paid a
$249 fee to join FHTM. Members sold satellite television service,
home security systems, beauty products, and other consumer goods and
services. In promotional materials and at recruitment events,
consumers allegedly were told they could "get rich" if they sold
FHTM-affiliated products. But unlike legitimate multilevel marketing
programs, FHTM distributors had no incentive to sell products. For
example, according to the lawsuit, FHTM distributors only received
pennies in commission for selling multiyear service contracts but
received substantial payments for every new FHTM member they signed
up. FHTM's promotional presentations and materials focused almost
entirely on recruiting new members rather than selling products.
The FTC and states are seeking permanent injunctive relief
prohibiting the illegal operations of FHTM, along with civil
penalties, damages and restitution for consumers. Consumers or FHTM
employees with questions about the lawsuit should call the FTC's
hotline at 202-326-2643. The hotline has information available in
English and Spanish.
[Text from file received from the office
of
Illinois Attorney General Lisa
Madigan] |