It’s not looking good for Burnlounge as the CEO steps down to focus on personal FTC lawsuit.

The State:

Alex Arnold — head of BurnLounge, an Internet music store popular in Columbia that’s facing federal scrutiny — has resigned.

former USC football and baseball star Rob DeBoer and two others were
named in a suit filed this month by the Federal Trade Commission
accusing BurnLounge of being a pyramid scheme.

The company has denied the allegations, but the lawsuit cost New York-based BurnLounge one of its founders.

“has decided to step down to focus on his personal legal situation
related to the current FTC complaint and to allow BurnLounge to focus
on building our business,” Stephen Murray, the company’s president of
entertainment, said in a statement.

BurnLounge sells franchises
to sell music on the Web, like iTunes. Arnold visted Columbia at least
twice last year to pitch BurnLounge to large gatherings.

But the
FTC said BurnLounge participants earn more money on commissions from
selling franchises to others than from selling music.