Consumers Lose Millions In Pyramid Scheme Run By Kentucky Based Company

1:48 PM, Jan 28, 2013   |    comments
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 PDF Document: FTC Pyramid Scheme Lawsuit  PDF Document: Pyramid Scheme Complaint

Kentucky -- Tens of thousands of people in the United States and abroad may have lost millions in what federal and state officials are calling a classic pyramid scheme being run by a Kentucky-based company.

Kentucky Attorney General Jack Conway said Monday the state and the U.S. Federal Trade Commission are investigating Fortune Hi-Tech Marketing of Lexington. The company charged fees to consumers in exchange for allowing them to sell consumer goods such as satellite television service.

Conway says members only received substantial payments when they signed up new members. The states of North Dakota, Montana and Texas have previously taken legal action against Fortune and reached settlements.

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.

Read Restraining Order

The attorneys general of North Carolina and Illinois contacted Conway and the FTC regarding complaints from consumers in their states.

According to a news release, 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.

Read full complaint here 

Consumers from North Carolina or other states can file a complaint with the FTC on this website or call 1-877-FTC-HELP.

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