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Fortune Hi Tech – FHTM Pyramid Scheme Class Action Lawsuit

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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.

 

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“Ty Tribble is an Internet entrepreneur, author and Work At Home Dad who lives in Seattle, Washington with his wife, Richelle and two children, Emma and Tyler. Ty has been featured in Entrepreneur and Success From Home magazine and is considered by many as the # 1 blogger in the world on the subject of Network Marketing. Author of the book, ‘Double Your Income with Network Marketing’, Ty teaches lead generation strategies through social media and blogging to tens of thousands of Network Marketers around the world.”

27 COMMENTS

  1. Where’s the value for the 90% or so of people who pay the big up front fee at FHTM who fail to lift a finger…and never earn any income? I figure that’s where stuff like this comes from.

    The more successful FHTM becomes, the more people there will be at the “bottom” who forked over the couple hundred dollar fee in exchange for……nothing of any value to them.

  2. As with any MLM company that’s growing fast, becomes a target for allegations and pyramid practices, no different with FHTM. I’m sure every single MLM company, especially that’s been around for 5+ years and have grown real good, have been sued or filed a lawsuit against one time or another. FHTM has a fair and viable compensation plan. Heck even ACN had been shut down by Montana (which by the way, FHTM had resolved the issue there and Montana has a reputation for shutting down businesses from doing business in their state..including travelocity, etc.) I disagree that reps make money without a sale because, IR’s do not receive any bonuses without moving any products, that’s why they have bundle products available. A new rep has 60 days to sell or move a product or service and have to have a certain amount of customer points before their sponsor and uplines will get their bonuses. So on that end, its not a viable complaint that IR’s get paid for recruiting. Like any viable and legitimate companies, as things like this arise you fix and improve the business to be compliant. Every month FHTM had been putting into place additional things such as outside customer tracking system and soon to come even an online training reporting and certification system.
    Again like any good growing company, especially mlm, someone will always try to complain or sue our companies, usually its by those who never really build any type of business or jealous of another company’s growth. So if you’re in MLM don’t think you’re always safe from similar allegations, lets hope our companies do the right things and fix what needs to be fixed instead of just shutting down and running off with the funds. Again like any other mlm companies, fhtm’s represent proper compensation to those who help build their team and create volume!

    • The class action was not filed by non-working jealous reps. It was filed because the entire FHTM company is built on one GIANT LIE. They are not even DEBT-FREE as they claim. The products are just a way to look legal – even though they are not.

  3. Wow that is crazy. Great post. FHTM was rocking too. You just never know what’s going to happen in an MLM. That’s why I brand myself!

  4. That’s the rub. Most mlm companies are “guilty” of many of the same things with which FHTM is accused: disproportionate levels of internal consumption, and a focus on recruiting over selling being chief among them.

    Where Fortune falls down and sets itself up for challenges is in the lack of perceived value in exchange for your “investment” dollar. At least with pills, potions, and lotions, you still hold something you can use after you figure out that you aren’t really going to work your business.

  5. Wow!! I figured they were so solid! I went once to a FHTM seminar…I did find it quite boring, so I am glad I followed my *gut* on that one!

    Kris

  6. September 18, 2010. By Brenda Craig

    Louisville, KY: A giant pyramid scheme that has been masquerading as a marketing company appears to be starting to crumble. The only “fortune” the company created went mostly to the company’s father figure, Paul Orbison, and a short list of his confederates.

    Fortune Hi-Tech Marketing Hit with National Class Action. Although Fortune Hi-Tech Marketing purports to sell everything from hair care products to cell phones, the real sales job was done on potential recruits to the organization.

    “The law against pyramid schemes is clear,” says R. Kenyon Meyer, an attorney who works with the well-known firm of Dinsmore and Shohl in Louisville, Kentucky. Meyer represents four former Fortune sales representatives in a national class action alleging they were victims of Orbison’s operation.

    According to the suit, sales representatives were charged $299 for the privilege of joining the Fortune team. Then they were pressured into buying a never-ending stream of services and equipment in order to do the job, says Meyer, who has been researching the company for several months now.

    “Fortune requires sales representatives to get ‘frequent customer points.’ Those points are obtained not by selling something, but by signing up for something in order to do your job as a representative!”

    Just because Fortune maintained a list of products for sale doesn’t mean it isn’t a pyramid scheme, warns Meyer. “Every pyramid scheme has some product that it purports to promote. The focus on recruitment overrides the focus on the sale of a product to the ultimate consumer meaning somebody not involved in the pyramid.”

    Fortune Hi-Tech Marketing was recently routed in a Montana state class action where regulators successfully litigated against the company for operating a pyramid scheme.

    Orbison, who lives and operates Fortune from Lexington, Kentucky, tells recruits he was able to retire after he made a million dollars month with another multi-level marketing company. He started Fortune in order “to give back” and allow others an opportunity to get rich.

    Meyer’s clients, however, would prefer that Fortune simply give back the money they were duped into pouring into a pyramid scheme. According to the research done by Dinsmore and Shohl, the majority of sales reps actually made less than $90 dollars a month before expenses.

    There may be thousands of potential class members across the US and even in Canada and Britain, but Fortune is unclear about how many sales representatives it actually has on the books. “They have made some vague representations from time to time, like we have had tens of thousands of representatives join in the last couple of months,” says Meyer. “But there have been no official numbers released.”

    The class has yet to be certified. Meyer believes it will happen soon. “I am really looking forward to the discovery phase,” he says.

    • I joined this parasite company from recommendation from a friend, Big mistake!I am usually so cautious but listened to her. It did not take me a week until I knew I was not going to be part of this crooked company. My main goal name is to see them put out of business.

  7. Unfortunately, the law is pretty clear about paying on recruiting and not on the sale of products. A lot of companies figure out how to emphasize recruiting legally, but in some cases they simply don’t. I’m not saying that happened in Fortune’s case, but we’ll see how the proceedings go.

  8. Well after all of the hype about how wonderful and Christian this man is we now find out that he is a big fat liar! How can you stand there in front of thousands of people and tell them you are debt free!
    You are the biggest hipocrite ever! You have blamed all of your issues on everyone except yourself yet you still expect everyone to believe that you are the God like figure that you have presented yourself to be?
    When I read the articles on fhtmclassaction.info and saw the actual papers from the Dunn and Bradstreet report that FHTM claims to have such a high regard for showing that Paul has used the entire companies collateral for loans. This was done as far back as 2004!
    Dude, How can you live with yourself knowing you have put some many people in jeopardy? You allowed people to think this and go out telling these lies on your behalf?
    Just like you allowed all of the lies about Dish and their 23 attorneys coing out to look at your books, and Charlie Ergen signing the contract with you..It is all a LIE!!
    I hope they nail you to the jail house wall!
    There is a place in hell for people like you!

  9. Sounds like a lot of lazy people looking for an excuse for their lack of effort on here. If you don’t agree with the practices of FHTM then do not get involved. Stay at your job and do just as your boss tells you to do. Be a good little worker bee.

    FHTM may not be perfect but it does work and I do get value from the services I use from FHTM. Like my Sprint cell phones, my Dish Network, my home security system, A joint health vitamin that works better than anything else I have ever tried over the last several years. The other business volume I do is from neighbors and a sister in law.

    Look, maybe FHTM isn’t perfect but I bet we could find some flaws in your company also. Heck, I bet I can find plenty of flaws at my church.

    If FHTM isn’t for you that is fine. I have friends that aren’t interested either. They are still my friends. But find something better to do with your time than sitting around bashing MLM’s. You sound like an angry ex girlfriend that hasn’t moved on.

    Jason

  10. Typical FHTM croonie BS…..Always resort to name calling – Lazy, unmotivated, didnt work hard enough.

    That’s not at all what this is about in my opinion. It is about the company and its founder lying to everyone to get them to enroll in a business that he knows is never going to make 99% of them money regardless of who they are, where they are from or how hard they work.

    When you peel off the skin of a lemon it is a sour fruit – Just like Paul and FHTM. I am happy to see someone has taken the time to peel this lemon and see how much deceit they perpetrate on others.

  11. Thanks for all the feedback. I just had a meeting with some reps yesterday and will be on a call later tonight. Is it true that Paul Orberson will be on the Oprah Show in February? The selling pitch is that once he hits Oprah people will want to be part of this company. Thanks!

  12. Why would Verizon, sprint, Tmobile, Dishnetwork, let an (illegally) pyramid scheme to sell their products and service. One post says that FHTM assumes to have attorny genral on staff, whether that is true or not who cares.. I promise that verizon, sprint, tmobile, dishnetwork etc.. that they do have lawyers, researchers, and attorny genral on staff, why would they contract with FHTM if it was an illegal company,,think about that for a moment, they would not a loud a legally company to use their names, and promotes their services if it was illegal,,,I have joined FHTM and loving it,,,you too need to consider it for the future of your job and career choices!!

  13. Hello Kelly,you said “Why would Verizon, sprint, Tmobile, Dishnetwork, let an (illegally) pyramid scheme to sell their products and service.” Well to tell you the truth FHTM is only a reseller for these companies and they do not do business directly with them, they do not have contracts. FHTM uses an affiliated marketing company to sell these products, so most likely these companies do not know who FHTM is. These companies would know who the authorized dealers are which is Simplexity, Ocenture and Protect America to name a few. You might want to read the cease and desist order in Montana on the letters they received from some of these companies to understand the type of business your in.

  14. the only reason any of you on this site are critical is be cause Fortune is a very successful company and the owner is more generous than any boss you’ll ever have and your the type of people who have time to sit and critisize success. I’m not sure why? Maybe because you’re unwilling to take your own initiative or just plain ignorant!!

  15. I just want to know from any of the people on here who have been defending Fortune if they have made any money since all of this bad news has come out. I have been looking at this since my friend showed it to me. I am just concerned that no matter how good the company might have been, the lawsuits, classa ctions and all of the websites bashing them may just be too much to fight.
    I really will appreciate it if you replied to me.
    Thanks

  16. Thank you for the info on this company. A rep for this company approached me this morning. I immediatly recognized the pyramid theme associated with the sales pitch. It seemed very complicated with points n such. I told the rep that I wanted to research the company first. After reading this info it really is too good to be true which was my first reaction. Thanks.

  17. Its amazing how alot of these posts about FHTM being a scheme, and attacks on Paul Orberson, while having different “names” have the same exact IP Address. Ulterior motives drives much of the negative press about all companies in Network Marketing.

    “ACN is a scam….but my company works”
    “FHTM is a scam, but my company isn’t”
    “MLM is a scam….buy my DVD and learn how to market online”

    So many people claim to be experts at everything. Very few are.

    Sad thing this internet has become.

    Thank God politics needs more expertise and ethics than internet blogging.

  18. Too bad you got that all wrong! The bonuses aren’t paid out to someone sponsoring a rep into the business until they “GATHER 5 CUSTOMER POINTS”.So I would say that classifies as “related to sale of products or services.” A “pyramid scheme” also does not grow as large as FHTM has and they don’t stick around for 10 yrs and wouldn’t be doing record numbers and still going strong as ever today.

  19. Justin, a pyramid scheme can get larger than the size of FHTM. Since Montana FHTM has had to change their comp plan because they operated in close relation to a pyramid scheme. Texas finally completed their investigation on FHTM. All the info can be found on the Texas Attorney General Website. FHTM will have to pay close to $2 million in attorney fees and restitution to claimants.

  20. Kevin, I commend you for your efforts. The MLM industry needs reform. You are a true refomer on a mission! The MLM model works and is worth fighting for! Help these companies get it rigt and defend those abused by all the wrongs!

  21. The memoir is finally available. All of the truth telling about the internal workings of FHTM as a corrupt and Ponzi type MLM is available. Whistle-blower Joseph Isaacs, who was made famous by exposing the Fortune Hi-Tech Marketing (FHTM) pyramid scheme and fraud back in 2010 has just released his memoir called, “Skapegoat – the FHTM Blame Game Story” via Amazon at http://www.amazon.com/dp/B00C43JKQG or in paperback via https://www.createspace.com/4227088 This compelling, true and personal, story is about a successful semi-retired 30+ year entrepreneur that turned whistle-blower after getting involved with an illegal Ponzi style MLM called Fortune Hi-Tech Marketing (FHTM) in 2009. Top FHTM leaders and its founder Paul Orberson tried to destroy his life after he developed a FREE Facebook style tool-set for the industry. Subsequent to FHTM receiving their 2nd cease and desist from Montana, he filed a complaint with the Kentucky BBB explaining their fraudulent ways, in an effort to get reimbursement for unwanted inventory. Shortly thereafter they make him the global scapegoat for everything bad happening to FHTM. Mr. Isaacs was hit with a frivolous lawsuit claiming trademark violation for marks they never owned. The “fortune mark” is owned by Time, Inc. and FHTM was under an order to stop using it themselves. This was a foolish attempt to gag him and stifle his “Freedom of Speech” rights to prevent FHTM from being further branded as an “Illegal Pyramid Scheme”. The stress of the harassing litigation caused multiple life-threatening heart attacks. Mr. Isaacs almost died in 2011 from the heart issues caused by FHTM. This story will keep you mesmerized by the deceit, sexual harassment, lies, judicial manipulation, influence peddling and the drama that unfolds over the next couple of years.

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