(WHAS11) - It's been called the fastest, easiest and cheapest way to own your own business… Fortune Hi-Tech Marketing, based here in Kentucky, is growing rapidly worldwide.
The company says average people can quickly make big bucks by selling products from well known, trusted companies.
But former Fortune managers tell WHAS11 that the company is a pyramid scheme, where raises and promotions are not based on product sales, but on recruiting.
FHTM is seemingly turning up everywhere…all over the Internet, on YouTube and in meeting rooms, auditoriums and restaurants in all 50 states.
An estimated 200,000 representatives have been recruited, mostly at scheduled weekly gatherings.
In Louisville, they're held at the Fern Valley Inn and at Furlong's Restaurant.
“You’re gonna get paid $100,000 a year for doing exactly what you do today,” said Florida Fortune Representative Trey Knight, one of the company’s top recruiters in a promotional video obtained by WHAS11.
Todd Rowland, a Fortune Rep from Arkansas, claims before a packed meeting room, “Last month, what I was paid on a monthly basis was more than I would have been paid in five years coaching at the high school level.”
The pitches promise fast cash with help from a higher power.
Kevin Mullens, a Pentecostal pastor out of Crawford, FL delivers his recorded speech inside a church.
He encourages other pastors in the audience to get involved by signing up members of their congregations.
“The Lord wanted you to be here today,” he says during a recruiting session under a cross. “Can't survive. Can't pay your bills and all of the sudden, the Lord opened a door.”
FHTM says you can make money by representing products your family already uses, like GE, Dish Network, Travelocity, and Home Depot.
“Everyone in this room is familiar with these names on the screen,” said Woodson Gardner, an Executive Sales Manager from Charlotte, NC, as she shows a Power Point presentation featuring the names of several Fortune 500 companies. “Chances are you are already doing business with them. They factor in your life. They factor in your world.”
But some former representatives we talked to said that the focus of Fortune Hi-Tech Marketing is on anything but the products.
“They don't even train you in how to sell the product,” said Joseph Isaacs of Tampa, who joined Fortune in 2009.
“It's a people mill. They just run them through,” said Isaacs.
“Your promotions are not based on product volume. They're not even based on product sales. They're based on the number of people you bring in and recruit into the business,” Isaacs said.
Recruitment is a recurring theme.
“When you get your first three people signed up, you will have made $300, so you're quickly back to even on your investment,” said Rowland, while pointing to a graph on the screen during his presentation. “Then we'll teach them the exact same thing and everything necessary to repeat the process.”
“If you've got 90 people in the room and five of them are guests, something's wrong. It means you didn't put someone in the car and bring them,” said Mullens, speaking at the church.
Joseph Isaacs brought plenty of people to meetings, and signed them up for FHTM. That helped him quickly rise to the level of Regional Manager.
“98 percent of my income came from recruiting others into the business,” Isaacs said. “I made $16 in residuals in six months.” Residuals are the payments from the sale of products.
The commissions are as low as one-half percent, according to Fortune’s pay structure plan.
“If I got switch my own cell phone over, as an example, I make a $1 a month on my cell phone bill. So I'm making $12 a year. If I switch over somebody else, I make a nickel a month, so I make 60 cents a year.”
But payments received for recruiting new members range from $100 for those at the lowest level to $480 for a National Sales Manager.
Former representatives say that the top National Sales Managers can each make $20,000 on a good night of recruiting, so they constantly tour the country, speaking at local Fortune meetings.
“He's there for one reason and one reason only. When you get in the business, the guy makes $400. So the only thing he cares about is your $400. He doesn't care if you're successful or not. He knows it's a numbers game,” said Isaacs.
WHAS11 talked to another woman who sold her business to join Fortune.
“I can't tell you how stupid I feel that I fell for this,” said the woman, who doesn’t want to be named.
“Once I started doing the numbers, I realized something's terribly wrong here,” she said.
The former Regional Director says Fortune overcharges for many products.
“I called Allstate and asked them how much this package of roadside assistance would be. It was $52 a year. Ours was $191.”
Each Fortune representative is required to buy or sell multiple Fortune products and services in order to accumulate points which allow them to get paid.
Fortune also charges service fees of up to $30 a month just for members to receive weekly commission and bonus checks.
That's in addition to a $299 joining fee, a $250 optional training fee and a $199 annual renewal fee.
Fortune Hi Tech Marketing, headquartered in Lexington, KY, was formed by Paul Orberson and Tom Mills.
Both made millions of dollars in the now-defunct Excell Telecommunications network marketing company, which sold long-distance service in the late 1980s and early 1990s.
“Just this year, there have been three magazines, two cover-to-cover, plus there's been a book written about Paul, our company, his journey,” said Knight, showing the magazine and book covers to an audience of potential recruits.
Knight says in the presentation that Fortune has revenues of $500 Million per year.
Yet the whole operation is based in a suite in a Lexington Office building that it shares with several other businesses.
According to Fayette County, KY land records, Fortune does not own the building, which is featured prominently on the company’s website and in marketing materials.
“If they told you that, the smoke and mirrors would all be gone,” said Isaacs. “They have to have this big facade that they're this giant mushroom.”
WHAS11 News recently went to the corporate headquarters try to learn more.
Adam spoke with Fortune C.E.O. Tom Mills.
Their crew also recorded the interview.
“People, they're having some tough economic times,” said Mills. “There is the possibility that they're willing to work hard, that they can come with our company and make some money.”
“Everybody wants that dream to be able to have your own business. Be able to build something and not have the boss,” Mills said. .
WHAS11 asked Mills about Cease and Desist Orders filed earlier in 2010 in North Dakota and Montana.
The Montana Auditor alleged that Fortune conducted "a pyramid promotional scheme".
Included in the complaint are letters from many of the alleged partner companies saying that they have no direct sales agreements with Fortune Hi-Tech Marketing.
“I have a great deal of respect for the people from both North Dakota and Montana,” Mills said. “The authorities handled it appropriately in my mind, and I think we're moving forward and we're still doing business in their states.”
To continue doing business in those states, Fortune will have to pay about $1 million in fines and refunds. It will also have to change many of its business practices, according to Consent Agreements.
“We can't control, even though we try, everything that's said throughout the country. We're gonna be doing some more concentrated training,” said Mills.
But Joe Isaacs says he doesn't expect the company to really make changes.
“It's an endless recruiting scheme, because it never stops. If you stop recruiting. you don't have any income. You're basically done,” Isaacs said.
For more information:
Better Business Bureau Rating for Fortune Hi-Tech Marketing Inc.