MLM Blog – Network Marketing Blog

According to a new lawsuit, Waiora targeted "gravely ill" consumers and sold them product that contained only 10% of the minerals that were claimed on the label from 2004 to 2010.

In late 2010, an independent lab found that Waiora's NCD (Natural Cellular Defense) product was almost entirely made up of water.  Instead of the 2400 milligrams of zeolite as advertised on the label, the testing showed closer to 150 milligrams.

Here is a copy of the lawsuit:
Waiora Class Action Lawsuit

And if you want the "Cliff's Notes" version it's here:
Waiora Anti-aging Supplement Is Just Water: Lawsuit

There is a great quote by Ronald Reagan that I always think about in situations like this.

"Trust, but verify."

There is a lot of fake science being spouted about in the Network Marketing industry.  I was once told about a "Chief Science Officer" who used to give tours of the lab, (where he obviously spent no time) and once pointed to a copy machine and suggested that it had something to do with Genomics.

There is an old saying...

"You can't put lipstick on a pig."

Back in July of 2010, we  raised the red flag about the Trump Network.

My concern at the time was the fact that Trump's name was being added to an outdated compensation plan with ineffective products and poor management all the while Trump was speaking taking money to endorse another MLM (ACN).

Now, the Trump Network (which actually appears to have very little to do with Donald Trump as I suspected) looks to be in bad financial shape.

Tom Mower, the owner of Sisel and founder of Neways loaned The Trump Network (and it's owners with no mention of Donald Trump) $270,000 back in October of 2011 and it looks like The Trump Network is defaulting on paying the loan.

From the lawsuit:

BACKGROUND ALLEGATIONS

10. In the fall of 2011, Plaintiff became interested in the possibility of acquiring Ideal Health and/or TTN dba THE TRUMP NETWORK.

11. In exploring the possibility of acquiring Ideal Health and/or TTN dba THE TRUMP NETWORK, Plaintiff learned that Ideal Health/TTN was in need of financing to pay current commissions due to its distributors.

12. To assist Ideal Health/TTN and to further explore the possibility of acquiring Ideal Health and/or TTN dba THE TRUMP NETWORK, Plaintiff and Defendants entered into an Agreement on October 31, 2011, whereby Plaintiff agreed to lend Ideal Health/TTN $270,000 as “bridge financing” upon the following terms:

a. Ideal Health/TTN would only use the loaned funds to pay current commissions due to distributors based on Ideal Health/TTN’s commission plan;

b. Ideal Health/TTN would repay the $270,000 including 8% interest compounded annually from funds flowing through Ideal Health/TTN’s Discover and American Express accounts. These payments were to be immediately transferred to Plaintiff’s account upon receipt of funds in the Discover and American Express accounts (at least three times a week).

The lawsuit continues:

20. Ideal Health/TTN have nevertheless breached the Agreement by failing to pay Plaintiff the amounts due under the Agreement.

21. Upon information and belief, Ideal Health/TTN have further breached the Agreement by, without limitation, using the bridge financing for purposes other than to pay the current commissions due to distributors based on Ideal Health/TTN’s commission plan, by failing to establish a joint bank account with Plaintiff into which all of the funds from the Discover and American Express accounts would be deposited, by failing to provide Plaintiff a daily reconciliation through its CFO to account for the funds flowing into the business and the portion forwarded to Plaintiff pursuant to the terms of the Agreement, by failing to enter into good faith negotiations with Plaintiff for the potential purchase of Ideal Health/TTN by Plaintiff, and by promoting or discussing the sale of its business or stock in the business to other parties.

22. As a result, Plaintiff has been damaged in an amount to be determined at trial but not less than $260,476.75, plus interest accruing at the rate of 8% from November 1, 2011 until the entry of Judgment.

Ted Nuyten is reporting that over 20 Trump Diamonds left the company in January .  Ted also reported (then pulled the blog post) that Trump was late with payments to it's distributors. But it looks like Ted's original report is true as he is now saying that over 2/3 of the reported 21,000 reps have left since compensation stopped.

Fortune Hi Tech MLM is in the news again.  This time for a Class Action Lawsuit filed in the State of California.  It is now very clear that FHTM has a target on it's back and it may be time for a reality check if you are currently involved with the company.

The newest lawsuit in California (see PDF) comes on the heals of the following:

Fortune Hi Tech Under Fire In Canada

North Carolina Attorney General Investigating Fortune Hi Tech Marketing

FHTM Class Action Pyramid Scheme Lawsuit (Kentucky)

Montana Shuts Down FHTM

North Dakota Files Cease and Desist against Fortune Hi Tech Marketing

Kevin Thompson, The MLM Attorney has posted information about a new Class Action lawsuit against Fortune Hi Tech Marketing (FHTM).

Here's a snip:

I cannot predict if the allegations will prove true or not because I know very little about the FHTM model; however, it seems like the complaint focuses squarely on the FHTM policies and the pay plan, which means there’s not much wiggle room for FHTM. It will be hard for them to defend their practice of paying commissions on training fees, which I think is their largest problem.

FHTM reps habitually say “we have former state attorney generals on our legal team.” Allow me to address this point: simply because a company has hired “former AGs” as their attorneys, it does not mean that those AGs understand the industry.

Read the rest of Kevin's post including a copy of the lawsuit.

Here's more on the lawsuit:

A class action lawsuit was filed against Fortune Hi-Tech Marketing (FHTM), its officers, directors, Presidential Ambassadors and all National Sales Managers claiming fraud, pyramid scheme and RICO violations in the Eastern District of the Federal Courts on September 2, 2010

Defendants listed in the lawsuit include: Fortune Hi-Tech Marketing, Paul C. Orberson, Jeff Orberson, Thomas A. Mills, David Mills, Billy Stahl, Simon Davies, Ruel Morton, Todd Rowland, Ashley Rowland, Todd & Ashley, Inc., Mike Misenheimer, Steve Jordan, Joel McNinch, Chris Doyle, Ken Brown, Jerry Brown, Bob Decant, Joanne McMahon, Terry Walker, Sandi Walker, Sherri Winter, Trey Knight, Kevin Mullins, Scott Aguilar, Molly Aguilar, Nathan Kirby, Dwayne Brown, Aaron Decker, Susan Frank, Ramiro Armenta, Angelina Armenta, Alexis Adame, Teresa Adame, Darla DiGrandi, Matt Morse, Matt Barrett and Roberto Rivera.

This is an action by plaintiffs on behalf of themselves and those similarly situated to recover damages caused by the defendants' operation of an inherently fraudulent pyramid scheme. The pyramid scheme is fraudulent because it requires the payment by participants of money to defendant Fortune Hi-Tech Marketing, Inc. ("Fortune"), in return for which participants receive (1) the right to sell products and (2) the right to receive in return for recruiting other participants into the program rewards which are unrelated to sale of the product to ultimate users.

This action is brought on behalf of a national class of persons who serve or have served as independent representatives for Fortune, pursuant to the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961-1968 ("RICO"), the Kentucky Consumer Protection Act, KRS Chapter 367, and the laws of Kentucky.

Under the Compensation Plan utilized by Fortune until at least July 1, 2010, IRs are able to earn compensation from two sources: (1) bonuses for recruiting and sponsoring new representatives; and (2) commissions from sales of products and services by themselves and by recruits in their "downline.

Fortune operates as an illegal pyramid scheme because this compensation plan affords IRs the right to receive in return for recruiting other participants into Fortune rewards which are unrelated to the sale of products or services to ultimate users outside of Fortune. Fortune's compensation plan involves an elaborate set of bonuses which are effectively the only way to earn money in Fortune and which are all tied not to real sales to outside customers, but rather to recruitment of new IRs.

To perpetuate the fraudulent pyramid scheme described above, Fortune claims to have special relationships with or to be a "partner" of several large major national companies whose products and services Fortune offers. These companies include, but are not limited to, AT&T, Verizon Wireless, Sprint, Dish Networks, General Electric Security ("GE Security"), DuPont and Home Depot. Fortune has used the trademarks of these and other companies in marketing materials and business presentations in order to convince prospective customers that Fortune is a legal business. In reality, Fortune does not have any sort of special relationship with these companies. Fortune is not a "partner" with Dish Networks. Rather it is a third-party independent contractor authorized to sell Dish Networks service. There are numerous other such third-party vendors of Dish Network.

All of the defendants in this action collectively form an "enterprise" under RICO, 18 U.S.C. § 1962, in that they are a group of individuals and entities associated in fact, although not a legal entity.

The defendants' promotion of an illegal pyramid scheme is a per se scheme to defraud under the mail and wire fraud statutes; thus, the defendants have committed racketeering acts by promoting an illegal pyramid scheme by using and causing others to use the mail and by transmitting and causing others to transmit, by means of wire in interstate commerce, writing, signs, signals, pictures and sounds, all in furtherance of and for purposes of executing a scheme or artifice to defraud, namely an illegal pyramid scheme.

Monavie is being sued by MLM company Xowii for allegedly making "deceptive statements" about the Xowii company and products.  

I will update this post with more soon, meanwhile, here is a link to the lawsuit.

Here is some commentary from the MLM Watch Dog:

This one may wreck Monavie because of the California Business and Professional law. The case quotes Monavies policy they issued "that distributors should be able to come and go as they please (which I liked)." Then they violated that policy and even brought suit against the people who chose to GO!

Your editor is NOT A Lawyer but hangs out with some good MLM lawyers who reviewed the case and said, "wow bet Monavie won't try to go public this year!"

The California Business and Professional law is different than what any other state has. Read through this case it is definitely a door slammer for Xowii!

The MLMWatchDog has an update about MonaVie suing Zrii and then goes on to speculate about MonaVie's matching bonuses going away and bonus pools declining, along with a whopping 67% drop in website visits.

I haven't found the information on the MonaVie vs. Zrii lawsuit but MLMWatchDog mentions compensation plan copyright violations.  We will post details of the lawsuit as soon as they come in.