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PYRAMID SETTLEMENT TO PROVIDE $20 MILLION FOR CONSUMERS
Distribution of $20 million dollars in consumer redress will begin in the near future for alleged victims of SkyBiz, an alleged massive international pyramid operation. The money for consumer redress is part of a settlement between the pyramid's promoters and FTC. The settlement also bars defendants from (1) participating in pyramid schemes in the future, and misrepresenting business ventures. It bars one defendant from engaging in any multilevel marketing programs for life and bars three others from engaging in multilevel marketing programs for periods ranging from seven to 22 years.
In May 2001, FTC filed suit in U.S. District Court in Tulsa, Oklahoma
charging that SkyBiz and its principals promoted a pyramid scheme
with claims of quick riches. FTC alleged that in sales presentations,
seminars, teleconferences, Web site presentations and other marketing
material, the defendants touted the opportunity to earn thousands of
dollars a week by recruiting new "associates" into the program. The
cost to join the SkyBiz program was $125, ostensibly used to buy an
"e-Commerce Web Pak." The company's sales presentations, however,
focused on the huge sums of money that could be made by recruiting
additional participants. Participants were urged to invest in more
than one "Web Pak" to maximize their earning potential.
FTC claimed that the program was a classic pyramid scheme. The agency
charged that the claims that consumers who invested in SkyBiz would
make substantial income were deceptive; that the defendants' failure
to disclose that most people in pyramid schemes lose money is
deceptive; that the defendants provided the means and
instrumentalities for others to deceive consumers by providing
speakers and promotional materials that made the false and misleading
claims; and that SkyBiz was actually an illegal pyramid scheme. The
FTC alleged that all four actions violate the FTC Act.
Defendants agreed to a settlement, reached in principle January 4,
2003, and entered by the court on January 28, 2003, to end the
litigation as to nine defendants.
NOTE: A stipulated final judgement is for settlement purposes only
and does not constitute an admission of a law violation. Stipulated
final judgments and orders have the force of law when signed by the
(SkyBiz, et al., FTC File No. X010046, March 24, 2003.)
VENDING MACHINE FRANCHISOR SETTLES FTC CHARGES
Univend, LLC, and its owner Paul Hall, agreed to settle FTC charges that they failed to
provide the pre-sale disclosure documents required by FTC's Franchise
Rule to prospective purchasers of their vending machine business
opportunities. In its complaint, FTC alleged that defendants
solicited consumers primarily through classified ads, touting
statements such as: "$400+MONTH Vending Route" with "Prime
According to FTC, defendants, when advertising their vending
machines, made specific earnings claims without providing an earnings
claim document and without having a reasonable basis for those
Under the settlements' terms, defendants are:
required to pay an $11,000 civil penalty;
barred from making false and misleading representations in connection
with the sale of business opportunities;
barred from providing prospective business opportunity purchasers
with the names of references other than those that the Franchise Rule
required to comply with the Franchise Rule.
NOTE: This stipulated judgment and order is for settlement purposes
only and does not constitute an admission by the defendants of a law
violation. Stipulated judgment and orders have the force of law when
signed by the judge.
(Univend, LLC, et al., FTC Matter No. X020084, Civil Action No.
02-0433-P-L, March 31, 2003)
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