FTC and Kentucky AG call Fortune Hi Tech Marketing ‘massive pyramid’

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by Adam Walser

WHAS11.com

Posted on January 28, 2013 at 8:02 PM

Updated Tuesday, Jan 29 at 10:17 AM

LEXINGTON, Ky. (WHAS11) -- A Kentucky company that Attorney General Jack Conway says was running one of the biggest pyramid schemes in North America is now facing legal action.

Fortune Hi Tech Marketing is a company we first told you about in 2010, as part of a WHAS11 News I-Team investigation.

The company's assets have been seized and have been taken over by the federal government, until a civil lawsuit filed by the FTC goes to court.

On Monday, there were raids at the company headquarters in Lexington and at a distribution warehouse in Danville.

About 100,000 company reps have been told to cease trying to sell products or recruit more members.

“Agents from the Federal Trade Commission and the Kentucky Attorney General’s Office took control of the corporate office of Fortune Hi Tech Marketing,” Conway said at a news conference Monday.

“We think today's actions are the beginning of the end for one of the most prolific pyramid schemes operating in North America,” he said.

The multi-level marketing business was founded by Lexington businessman Paul Orberson.
We first told you about the company back in 2010, the same year the attorney general's office began its investigation.

Several former Fortune members came to us about Fortune's questionable recruiting and payment tactics.

“It's not right and there's a lot of people in a recession that are getting burned. There's a lot of people getting hurt,” said former FHTM member Joe Issacs.

Forune says representatives make money by selling products people use every day, like Dish TV, cell phone service and vitamins.

Federal authorities say 100,000 members bring in $30 Million in sales every month.

“People, they're having some tough economic times. And there is the possibility that if they're willing to work hard, that they can come with our company and make some money,” FHTM Vice President Thomas Mills in a 2010 interview said.

But authorities say the real goal of the company was recruitment, and only those members who brought in lots of new members made much money.

Most members, authorities say, lost an average of $1,500 a year on fees and required purchases.
“No matter how hard you work or would work, there's little chance you could break even,” said FTC Midwest Director Steve Baker. “In fact, when people were doing their best, the plan is set up so that 96 percent of people must lose money to keep this whole enterprise functioning. Fortune knows that and has set this company up to produce those results.”

Orberson is a big donor to University of Kentucky athletics, giving over $1 million to the Wildcat program.

We called Fortune's attorney, former Kentucky Attorney general Chris Gorman, but he said the company would not make a comment because it's a case of pending litigation.

Authorities say Fortune President Paul Orberson, Vice President Thomas Mills and others could face possible felony prosecution for allegedly violating Kentucky's consumer protection laws.


 

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