{"id":552,"date":"2015-09-20T23:05:06","date_gmt":"2015-09-20T23:05:06","guid":{"rendered":"http:\/\/www.ftcguardian.com\/articles\/?p=552"},"modified":"2017-03-17T05:55:58","modified_gmt":"2017-03-17T05:55:58","slug":"ftc-charges-vemma-to-be-an-200-million-iilegal-pyramid-scheme","status":"publish","type":"post","link":"https:\/\/www.ftcguardian.com\/articles\/ftc-charges-vemma-to-be-an-200-million-iilegal-pyramid-scheme\/","title":{"rendered":"FTC Charges Vemma To Be An $200 Million IIlegal Pyramid Scheme"},"content":{"rendered":"
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FTC Charges Vemma To Be A $200 Million iIlegal Pyramid Scheme<\/h1>\n
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Are YOU in an MLM? This is serious stuff… I'm sure there are really good MLM companies out there, I'm in two myself, SOC & Isagenix, primarily because I LOVE the products, although…The FTC action against Vemma Nutrition is going to have a ripple effect in the industry.<\/p>\n

The FTC was granted a court order to FREEZE the Company\u2019s and the CEO, Benson K. Boreyko\u2019s *personal assets* as well as a Temporary Restraining order. Also named in the court documents is top-ranking Vemma *distributor* Tom Alkazin.<\/p>\n

Do yourself a favor… If you work online, market to consumers, and people who work from home are considered consumers in the eyes of the FTC, work with an MLM, do *any* kind of online advertising, or even ask for someone\u2019s email address on our website… For Goodness Sakes – Make Sure YOU are FTC Compliant, and that You Actually Know What That Means!!<\/p>\n

<\/a><\/p>\n

The FTC was granted a court order to freeze the company\u2019s and CEO B.K. Boreyko\u2019s assets as well as a temporary restraining order. The first hearing in court of law in Phoenix, Arizona, USA<\/strong><\/a> is set to September 3. If the judge deny the freeze then, Vemma might be back in business.<\/p>\n

\u201cDefendants are running a global pyramid scheme that has likely victimized hundreds of thousands or millions of consumers\u201d<\/strong><\/em> \u00a0the FTC said in court filings released to the public Tuesday.<\/p>\n

It is a direct attack on the MLM \u2013 network marketing industry. If Vemma is closed down, a lot of network marketing companies with a simular model in the USA are in deep trouble.<\/p>\n

The FTC names Vemma\u00a0Nutrition Company, Vemma International Holdings, B. K. Boreyko, and Tom Alkazin as defendants.Tom Alkazin\u2019s wife, Bethany Alkazin is named as a relief defendant.<\/p>\n

The FTC conclude that:<\/p>\n

“Unlike legitimate multilevel marketing businesses, Vemma reward affiliates for recruiting and for purchasing products to maintain bonus eligibility rather than for selling products to ultimate-user consumers.<\/strong><\/em><\/p>\n

Vemma emphasize recruitment over product sales and stress the importance of recruiting new participants into the Vemma program. Defendants direct new and prospective affiliates to follow a simple \u201csystem\u201d in order to be successful, which greatly consists of the following four steps.<\/strong><\/em><\/p>\n

First, the individual should become an affiliate by purchasing an \u201cAffiliate Pack\u201d, which costs approximately $500 or $600.<\/strong><\/em><\/p>\n

Defendants frequently describe the Affiliate Pack as the Affiliate\u2019s initial investment or start-up cost. Second the affiliate should sign up for monthly \u201cauto-deliver in an amount sufficient to maintain eligibility for bonuses, which is approximately $150 per month”.<\/strong><\/em><\/p><\/blockquote>\n

The full law suit can be download here.<\/a><\/strong><\/p>\n

These are the FTC allegations:<\/p>\n

Count 1: Illegal pyramid scheme<\/strong><\/p>\n

Defendants promote participation in Vemma, which has a compensation program based primarily on providing payments to participants for the recruitment of new participants, not on the retail sale of products or services. Defendants\u2019 promotion of this type of scheme, often referred to as a pyramid scheme, constitutes a deceptive act or practice.<\/strong><\/p><\/blockquote>\n

Count 2: Income claims<\/strong><\/p>\n

In numerous instances in connection with the advertising, marketing, promotion, offering for sale, or sale of the right to participate in the Vemma program, Defendants have represented \u2026 that consumers who become Vemma affiliates are likely to earn substantial income.\u00a0 In truth and fact consumers who become Vemma affiliates are not likely to earn substantial income.<\/strong><\/p><\/blockquote>\n

Count 3:\u00a0 Failure to disclose<\/strong><\/p>\n

In numerous instances defendants have represented that individuals have earned substantial income from participation in the Vemma program, and that any consumer who becomes a Vemma affiliate has the ability to earn substantial income. In numerous instances Defendants have failed to disclose, or disclose adequately, that Vemma\u2019s structure ensures that most consumers who become Vemma affiliates will not earn substantial income.<\/strong><\/p><\/blockquote>\n

Count 4: Means and instrumentalities<\/strong><\/p>\n

By furnishing Vemma affiliates with promotional materials to be used in recruiting new participants that contain false and misleading representations, (Vemma) have provided the means and instrumentalities for the commission of deceptive acts and practices.<\/strong><\/p><\/blockquote>\n

Count 5: Relief defendant<\/strong><\/p>\n

Relief Defendant Bethany Alkazin, has received funds or other assets from that are traceable to funds obtained from customers through the deceptive acts or practices described herein. Relief Defendant will be unjustly enriched if she is not required to disgorge the funds or the value of the benefit she received as a result of deceptive acts or practices.<\/p>\n

The FTC has 5 requests to the court:<\/strong><\/p>\n

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  1. A preliminary injunction be granted against Vemma.<\/li>\n
  2. A permanent injunction against Vemma, B.K. Boreyko and Tom Alkazin, which will prohibit them committing future violations of the FTC Act.<\/li>\n
  3. Award such relief to redress injury to consumers as a result of the defendant\u2019s violations of the FTC Act.<\/li>\n
  4. The court order the defendants disgorge all funds and assets which are traceable to defendant\u2019s deceptive acts or practices.<\/li>\n
  5. Legal costs<\/li>\n<\/ol>\n<\/div>\n

    via FTC Charges Vemma To Be An $200 Million iIlegal Pyramid Scheme<\/a><\/p>\n

    Here\u2019s How To Make Sure You,<\/span>
    \n<\/span>Your Business & Website Is FTC Compliant<\/span><\/span><\/h2>\n

    By now it should be clear how important it is for you to be FTC compliant. But how can you do that without spending $7,500-$8,000 or more on Internet Attorneys?<\/span><\/p>\n

    Smart business owners around the world are doing it with the help of <\/span>FTC Guardian<\/span>.<\/span><\/p>\n

    FTC Guardian is a service that is 100% focused on helping to keep you get and stay FTC compliant and fully protected. And right now, we are offering a free training to give you the knowledge, information, and guidance that you need to stay out of trouble with the Federal Trade Commission.<\/a><\/p>\n

    The training is titled: 3 Tragic (Legal) Privacy Policy List Building Mistakes That Can Get You In Hot Water With The FTC Today – Resulting In Your Business Being Shut Down… And How To Solve It!<\/strong><\/a><\/p>\n

    Here are some of the things you\u2019ll discover on the training:<\/span><\/p>\n