Fortune Hi-Tech Marketing of Lexington, KY has been ordered to stop doing business in North Dakota. The company claims to offer consumers a “business and compensation plan designed to yield income through network marketing.”
Here is the official statement from the Attorney General.
Here is the cease and desist order.
Here is an article from KSJB radio:
BISMARCK – Attorney General Wayne Stenehjem has issued a Cease & Desist Order against Fortune Hi-Tech Marketing of Lexington, KY and its principals Paul C. Oberson, Jeff Oberson, and Thomas A. Mills for violations of North Dakota transient merchant, consumer fraud, and home solicitation sales laws. The Order was filed late yesterday, December 10, 2009.
Fortune Hi-Tech Marketing claims to offer consumers a “business and compensation plan designed to yield income through network marketing.” According to Stenehjem Fortune Hi-Tech continued its business activities in North Dakota even after being told it could not do so without the required Transient Merchant license. “This business blatantly disregarded our effort to ensure compliance with North Dakota law,” Stenehjem said. “This is not the typical response from a legitimate company and its actions must have consequences.”
The Consumer Protection Division is reviewing Fortune Hi-Tech’s activities and it appears there also may be violations of the consumer fraud and home solicitation sales laws. “I’m concerned about this assortment of violations,” said Stenehjem. Stenehjem has requested information about the extent of the company’s business transactions in North Dakota including dates of transactions, customers, and payments received.
In addition to these violations, Stenehjem asked the Consumer Protection Division to review whether this company is engaged in any violations of North Dakota’s pyramid law. North Dakota law prohibits promotional pyramid schemes in which the participant pays for the opportunity to receive income primarily from the recruitment of other participants rather than the sale of goods or services.
According to Stenehjem there certainly are legitimate network marketing companies, but consumers should be wary of any compensation plans that appear to emphasize recruitment of other participants, as opposed to sales of legitimate products or services. “We are skeptical of these claims to “make money while you sleep.” Stenehjem said.
North Dakota consumers with questions or complaints about Fortune Hi-Tech Marketing should contact the Consumer Protection Division toll-free at 1-800-472-2600
Hey Ty,
A friend of mine got involved with FHTM about 6 months ago and told me about their compensation plan. I warned him that it looked suspicious, but he didn’t want to hear it. “It looks so easy” were his exact words. Now, he’s lost credibility with his friends and gets to start all over.
If someone is going to get involved in the network marketing industry, they better know what to look for.
Keith Brown
FHTM pays bonuses when recruits gather customers. Nobody gets paid unless customers are gathered. As to whether or not they forgot to cross some tees in North Dakota, who knows.
Those guys have been in business for 8 or 9 years now. Their founder was an MLM multi millionaire and took great pains to establish his company legally, as far as I’ve ever heard. As a participant in this industry, I’m more than a little concerned by the over-reaching of government entities. I think we all should be. Instead of taking pot shots at each other, we aught to be looking out for one another when warranted. In this case, I think it may be warranted. I would hope others would do some research instead of jumping to conclusions.
Hi Ken,
No pot shots taken here. When the FHTM compensation plan was explained to me, customers where never mentioned. The only thing that was talked about was how much money you made when you recruited someone. When I asked how much you made when products were ordered, no one could answer me. So the only conclusion I could come up with was suspicion.
Keith Brown
Hi Keith,
Fair enough. It is apparent to me that the compensation plan was not accurately portrayed to you. That being the case, Perhaps there is a problem throughout their distributor force of describing the pay plan incorrectly.
Just for the record, I am not personally involved with FHTM, but I am familiar with the ownership. This is far from being some fly by night. And at its core, this is a customer gathering business. Like the majority of MLMs, FHTM strives to gather a multitude of reps who have a few customers each.
Like I said before, I am troubled by government over-reaching. An attorney general should be protecting consumers, not putting up roadblocks to success. It seems to me that the AG in this case hasn’t even read the actual compensation plan, or does not understand it.
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:
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.