AG Cooper, FTC take down alleged pyramid scheme
Release date: 1/28/2013
Fortune Hi-Tech Marketing recruited 100,000 plus consumers, including in NC
Raleigh: Fortune Hi-Tech Marketing, an alleged pyramid scheme in Kentucky that recruited more than 100,000 participants including consumers in North Carolina, has been shut down and its assets frozen, Attorney General Roy Cooper announced Monday.
“Operations like this claim to offer career success and high earnings. But the reality is that only the few at the top make money, and they make it at the expense of new recruits who end up losing,” said Cooper.
Cooper partnered with the Federal Trade Commission and attorneys general in Kentucky and Illinois to ask a federal judge to shut down Fortune Hi-Tech Marketing (FHTM) last week. A court-appointed receiver now has possession of FHTM’s assets and secured the company’s headquarters and warehouse in Kentucky this morning.
Cooper, the FTC, and the other attorneys general filed a lawsuit on Thursday, January 24 in federal court against FHTM and its principal operators, Paul Orberson, president, and Thomas Mills, vice president. U.S. District Court Judge John W. Darrah issued a temporary restraining order
against the company, which required FHTM to immediately cease operations. The lawsuit seeks a permanent ban on FHTM’s illegal operations, civil penalties, and refunds for consumers.
As alleged in the complaint filed with the court
, FHTM claimed participants could earn tens of thousands of dollars a year by buying into the operation to sell satellite television service, home security systems, beauty products and other consumer goods and services. Consumers paid $249 to join FHTM. To qualify for sales commissions and recruiting bonuses, they had to pay an extra $130 to $400 and agree to be billed monthly for products unless they canceled the plan. Despite FHTM’s claims, nearly every consumer who signed up lost more money than they ever made.
Those who did make money did so by recruiting others to join the scheme, not by selling anything, Cooper, the FTC and the other attorneys general contend. FHTM’s promotional presentations and materials focused almost entirely on recruiting new members rather than selling products, and FHTM distributors had no incentive to sell products. For example, FHTM distributors only received pennies for selling multi-year service contracts, but received substantial payments for each new FHTM member they recruited.
“This is a classic pyramid scheme in every sense of the word,” Kentucky Attorney General Jack Conway said. “The vast majority, more than 90 percent, who bought in to FHTM lost their money.”
FHTM affected more than 100,000 consumers throughout the United States and in other countries. Cooper’s Consumer Protection Division received 37 written complaints and inquiries about FHTM starting in 2008, and opened its investigation into the company in 2010.
North Carolina consumers can file a complaint about Fortune Hi-Tech Marketing with the NC Attorney General’s Consumer Protection Division by calling 1-877-5-NO-SCAM (toll-free within NC) or online at www.ncdoj.gov
. Consumers from North Carolina or other states can file a complaint with the FTC at 1-877-FTC-HELP or www.ftccomplaintassistant.gov
Media contact: Noelle Talley (919) 716-6413