BURNLOUNGE FINAL DONE!
IS THE BINARY PAY PLAN DEAD?
Rod Cook Ed. Note: Over 26 email have came in asking "is the Binary Pay Plan Dead?" My answer is no... the precendent in this court case which has the effect of law in legal precedence is no. BUT, we have to make sure the Commissions paid out in the Binary have 50% OF THE MONEY come from end customers WHO ARE NOT DISTRIBUTORS in the pay plan.
BURNLOUNGE 2 July 2008
Pyramid Scheme Operator Settles FTC Charges
(also see below history making case)
In June 2007, the FTC brought charges that BurnLounge and its principals recruited consumers claiming that participants were likely to make substantial income operating on-line digital music stores. BurnLounge recruited participants by selling them so-called “product packages,” ranging in price from $29.95 to $429.95 per year. More expensive packages purportedly provided participants with an increased ability to earn rewards through the BurnLounge compensation program.
The BurnLounge Binary compensation program primarily provided payments to participants for recruiting new participants, not for selling products or services, which the FTC alleges would result in a substantial percentage of participants losing money.
U.S. District Court Judge George Wu ordered a halt to the deceptive practices and froze the defendant’s assets, pending a trial, to preserve them for consumer redress. The settlement announced today ends the litigation with defendant Scott Elliott.
An operator who used deceptive earnings promises to recruit consumers for a multi-level marketing operation that was a pyramid scheme agreed to settle Federal Trade Commission charges that the operation was illegal and violated federal law. The settlement bars the defendant from participating in any pyramid scheme or other prohibited marketing scheme, bars false earning claims, and requires Scott Elliot to give up $20,000 in ill-gotten gains.
The settlement bars Scott Elliott from participating in or assisting others in participating in prohibited marketing schemes, including pyramid schemes. It bars misrepresentations about earnings in any multi-level marketing program or business venture. The settlement enters a judgment of $117,710.69 – the entire amount earned by Elliott through BurnLounge. That judgment is suspended subject to a payment of $20,000 based on his limited ability to pay. If the court finds that Elliott misrepresented his financial circumstances, the entire amount will be due. Finally, the order contains reporting and record-keeping provisions to allow the FTC to monitor compliance.
This case was brought with the invaluable assistance of the Office of the Attorney General of South Carolina. The case was filed in the U.S. District Court for the Central District of California. The FTC Commissioners voted to accept the settlement was 4-0.
NOTE: A stipulated final judgment and order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent orders have the force of law when signed by the judge.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad.
BURNLOUNGE WEBSITE GONE
5 June 2008 – The case that made history when the FTC hit. The Burn Lounge case made legal history in showing that 50% of commissions must come from end consumers – customers that do not belong to the compensation plan. Burn Lounge dropped their Distributors and tried to make a go of with regular marketing. Rod Cook Ur Ed. Note: Website down for good? Maybe not if someone buys them out for pennies on the dollar. There was value in the process but not the pay plan by new FTC standards!
Full historical analysis of how the FTC used court cases (precedent law) to move to the requirement that 50% of commissions paid must come from end users – customers – consumers that do not belong to the pay plan.
BURNLOUNGE - FTC SETTLEMENT CONFERENCE
6 Nov 2007 - The end, defendents fight to keep settlement secret and not have an FTC action against their individual names.
BURNLOUNGE PYRAMID SHUTDOWN BELOW
FTC Asks Court to Shut Down Illegal Pyramid Operation
On June 6, 2007, the FTC filed a complaint in the U.S. District Court for the Central District of California against BurnLounge, Inc. The complaint charges that BurnLounge sold opportunities to operate on-line digital music stores that was, in fact, an illegal pyramid scheme. The agency is seeking a permanent halt to the illegal pyramid practices as well as other illegal practices alleged in the complaint.
According to the FTC, BurnLounge recruited consumers through the Internet, telephone calls, and in-person meetings. The sales pitch represented that participants in BurnLounge were likely to make substantial income. BurnLounge recruited participants by selling them so-called “product packages,” ranging from $29.95 to $429.95 per year. More expensive packages purportedly provided participants with an increased ability to earn rewards through the BurnLounge compensation program.
The BurnLounge compensation program primarily provided payments to participants for recruiting of new participants, not on the retail sale of products or services, which the FTC alleges would result in a substantial percentage of participants losing money. Editors Note: The FTC wants 50% of the commissions paid to Distributors to come from Consumers who do not belong to the pay plan.
The FTC specifically alleges that the defendants operate an illegal pyramid scheme, make deceptive earnings claims, and fail to disclose that most consumers who invest in pyramid schemes don’t receive substantial income, but lose money, instead. These practices violate the FTC Act, the agency alleges.
The FTC has asked the court to halt the deceptive practices and misrepresentations and to freeze the defendants assets, pending a trial, to preserve them for consumer redress. At a hearing on the FTC’s request for a temporary restraining order, on June 8, 2007, BurnLounge’s attorneys asked for more time to respond fully, and U. S. District Court Judge George Wu ordered that a full hearing on the FTC’s request for a preliminary injunction and asset freeze be held on June 19, 2007, after which he will rule on the FTC’s requests.
In addition to naming BurnLounge, Inc., a Delaware corporation based in New York City, the Commission’s complaint also names: Juan Alexander Arnold, of Studio City, California; John Taylor, of Houston, Texas; Rob DeBoer of Irmo, South Carolina; and Scott Elliott of Forney, Texas. Ed. Note: Each one has to pay their own legal fees! Ouch!
This case was brought with the invaluable assistance of the Office of the Attorney General of South Carolina.
Over the last 10 years, the Commission has halted 17 pyramid schemes and has collected almost $90 million in consumer redress and tens of millions of additional dollars in suspended judgments.
Copies of the legal documents associated with this case are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov/ftc/complaint.shtm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.
MEDIA CONTACT:
Claudia Bourne Farrell
Office of Public Affairs
202-326-2181
1. In the BurnLounge “hit” by the FTC the state of South Carolina grabbing the BurnLounge distributors by the throat. The AG basically got all the evidence that of commissions paid to distributors, SALES TO END CONSUMERS (NOT BELONGING TO THE PAY PLAN) were a lot less money than what came from signing up distributors. The FTC and some states are now demanding 50% of the money paid out in a compensation plan come from sales to end consumers. If not = Pyramid!
2. I am documenting if this to see if it a new way that the FTC and State AG’s are work together. I called a source connected with the Investigation with and flat out asked them if this was the “new” plan. Denial (expected). I also know that the South Carolina and Florida AG talk to each frequently. So let’s watch and see how this plays out. But, I tell you with states and the FTC focusing on investigating leaders and their books, it is scary.
3. I also know that the distributors in the BurnLounge case are probably going to lay out at least $200k @ to stay out of the poor house. Poor Brett Radamacher, top distributor for Sea Silver got hit for about $1.2 million by the FTC. I think he got the FTC down some on the fine, but still took a terrible financial hit personally.
4. The good news? Maybe? This saves the FTC from coming in with Federal Marshals and marching in a company’s front door with guns, chasing all the employees out in the parking lot, seizing all bank accounts (including the owners accounts) and locking the doors.
FTC WANTS CUSTOMER MONEY!
MONEY FROM END CONSUMERS NOT BELONGING TO PAY PLAN MUST PROVIDE 50% OF COMMISSIONS - NOT FROM SIGN UPS
DID You Read The Precedent Law History?
Burn Lounge Is Burned – Link Below
BURN LOUNGE KILLS DISTRIBUTORS, STUPID NEWS RELEASE BY BURN LOUNGE AND INVESTORS !
June 22, 2007, Simplify Business Model? Kill off distributors? http://biz.yahoo.com/bw/070621/20070621005996.html?.v=1
SOUTH CAROLINA AG HOT ON PYRAMIDS?
June 15, 2007, The South Carolina AG’s office said there are companies enticing military troops to invest, reportedly in foreign currency. The crooks promise that soldiers and their wives will get a 10 % monthly return on their investment after 91 days. As most MLM WatchDog readers know, this is the first mark of a scam. International Bankers would kill to get a 10% return. Soldiers can also choose to pay a fee and have the mortgage of their home paid off after 16 months; have credit cards paid off after 12 months; or have a car loan paid off after 12 months. Generally the investments were in the $1,000 to $5,000 range, but at least one person in the AG court document was said to have given the companies more than $50,000. Interesting, this is the same AG that nailed BurnLounge by sicking the FTC on them!
BURNLOUNGE, INC. RESPONSE TO COMPLAINT
BY FEDERAL TRADE COMMISSION
For Release: June 14, 2007
In response to inquiries, Sheldon H. Sloan, attorney for BurnLounge, Inc., today issued the following statement:
"BurnLounge is pleased with the United States District Court Central District of California's decision refusing to grant the Federal Trade Commission's request for a Temporary Restraining Order (TRO) and remains committed to compliance with all applicable laws and regulations. The Court's denial of the FTC's request is a significant victory, and furthers the Company's belief that it has conducted its business lawfully. The Company's business continues uninterrupted and it will defend itself vigorously in subsequent Court hearings.
"Through its unique and revolutionary business model, BurnLounge will continue to afford its customers the opportunity to enjoy sharing their tastes in music and films, while providing an avenue for them to express their entrepreneurial talents."
For a Corporate Update, Listen to Conf Calls
For Release: June 12, 2007
YTB YOUR TRAVEL BUSINESS - LOOKING FOR THE SAME END
The case file cited below relates to a civil -- not a criminal -- investigation. The existence of an investigation does not constitute proof of any violation of law.
Case Number:
L06-3-1113
L06-3-1113Subject of investigation:
Rick & Brenda Ricketts Corp., d/b/a www.rickrickettstravel.com, www.rickettstravel.com, and Your Ticket to Paradise; and Dolan W. Ricketts, an individual, and Brenda S. Ricketts, an individual
Subject's address:
Deleted for Privacy - New strategy hitting Top Distribuors too - usually income claims.
Subject's business:
Business Opportunity; Travel
Allegation or issue being investigated:
Possible unfair and deceptive business practices in the sale of internet travel website opportunities or in the recruitment and operation of multi-level marketing systems promoting business opportunities and recruiting sellers of travel. Possible violations of Florida Deceptive and Unfair Trade Practices Act, Chapter 501, Part II, Fla.Stat., and violations of Section 849.091, Fla. Stat., prohibiting operating, participating in, or soliciting on behalf of a chain letter or pyramid sales scheme.
AG unit handling case:
Economic Crimes Division in Tampa, Florida
