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Mon January 28, 2013
Suit Labels Fortune Hi-Tech Marketing Pyramid Scheme
LEXINGTON, Ky. - Kentucky Attorney General Jack Conway is calling an international marketing company headquartered in Lexington one of the most prolific pyramid schemes operating in North America. Legal action was taken today against Fortune Hi-Tech Marketing.
Fortune Hi-Tech’s assets have been frozen while investigators probe the company’s finances and business model. Conway says the investigation, which also included attorneys general from Illinois and North Carolina and the Federal Trade Commission, began in 2010 after his office received about dozen complaints.
"After our office began reviewing the documents, we believed that Fortune Hi-Tech Marketing was operating a massive pyramid scheme that involved more than 100,000 people across the United States and in several other countries, and we think the damage to consumers in the hundreds of millions of dollars," Conway told reporters Monday.
Legal action against the company has already been taken in three other states. Steve Baker, Director of the FTC’s Midwest Region, says the Fortune Hi-Tech charged fees for membership and products sent to sellers, who were then rewarded primarily for signing up new members, not selling the products.
"A rep that sells a Dish Network package for $50 a month with a two-year commitment makes a commission of 43 cents," Baker says.
Conway says over 90 percent of people who have bought into Fortune Hi-Tech have lost money. Now the action shifts to an investigator called a “receiver,” who will report his findings to the U.S. District Court for the Northern District in Illinois.