Whistleblower fights back after frivolous suit by FHTM for exposing their ILLEGAL Pyramid Scheme
Lexington, Kentucky – June 16, 2010 – In light of all of the recent investments scams including the infamous Bernie Maddoff, whistleblowers and those with morals fear that the frauds they expose will result in unjust lawsuits filed against them by the companies they complain about. One such situation was that of the lawsuit filed by Fortune Hi-Tech Marketing against Fortune Social LLC and Joseph Isaacs in May 2010.
Joseph Isaacs and Fortune Social, LLC (collectively “Isaacs”) deny each and every claim brought by Fortune Hi-Tech Marketing, Inc. (“FHTM”) in a filing made today with the American Arbitration Association, who is overseeing this case. In addition, Isaacs fights back and asserts his own counterclaim for relief against FHTM, Paul C. Orberson (individually and in his capacity as President of FHTM), Jeff Orberson (individually and in his capacity as Chief Operating Officer of FHTM), and Thomas A. Mills (individually and in his capacity as Vice-President and Chief Executive Officer of FHTM) (collectively “FHTM”). Isaacs counterclaim claim Breach of Fiduciary Duty, Breach of Contract, Common Law Fraud, Unfair & Deceptive Business Practices, Failure to Register Securities, Fraudulent Practices Regarding the Sale of Securities, Civil Racketeering Conspiracy (violation of the Federal RICO statutes) and Defamation.
FHTM operates an unlawful product-based endless recruiting pyramid scheme that relies on untrue and misleading representations and unlawful, unfair, and fraudulent business practices. While FHTM purports to be in the business of selling name-brand services like wireless, satellite television, home security, vitamins, nutritional products and travel services, its true business is using consumers to generate fee income for representing non-existent partnerships, major sports figures, and prominent businessmen. To entice consumers to participate, FHTM makes untrue or misleading claims regarding its relationship with Fortune 100 companies like Verizon Wireless, GE Security, Dish Networks and Travelocity to create the illusion that consumers can become millionaires in three to five years.
FHTM’s growth exploded when it began to lure consumers disenchanted with traditional jobs and the recession that began in 2007 to inspirational and high-pressure business opportunity seminars touting an innovative business model that promises huge financial rewards through multi-level network marketing. FHTM erring presenters claim to have proprietary tools, special relationships, and other support that allow consumers to grow their own business by partnering with FHTM’s “companies”.
It would not be long before Isaacs (and the world) made several troubling discoveries about FHTM’s business plan and practices that doused his enthusiasm: (1) Paul Orberson had not made any special arrangements with the companies mentioned at the business opportunity/presentation seminar or in the company produced videos; (2) the only way to earn a significant income and be promoted up the ranks was to recruit additional IRs; (3) FHTM had not received regulatory approval for its pyramiding scheme in every state; (4) only a handful of IRs had earned anywhere near the residuals projected; (5) the prominent businessmen, politicians, former attorney generals and sports figures to whom FHTM constantly alluded were in fact IRs actively promoting their own FHTM business; and (6) a growing number of state attorneys general had already begun investigating FHTM in response to numerous complaints.
It turns out that FHTM’s ‘innovative’ marketing plan is nothing more than a face lift to an age-old scheme. According to the FTC’s Consumer Protection Bureau:
Pyramid schemes now come in so many forms that they may be difficult to recognize immediately. However, they all share one overriding characteristic. They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure. There are two tell-tale signs that a product is simply being used to disguise a pyramid scheme: inventory loading and a lack of retail sales. Inventory loading occurs when a company’s incentive program forces recruits to buy more products than they could ever sell, often at inflated prices. If this occurs throughout the company’s distribution system, the people at the top of the pyramid reap substantial profits, even though little or no product moves to market. The people at the bottom make excessive payments for inventory that simply accumulates in their basements. A lack of retail sales is also a red flag that a pyramid exists. Many pyramid schemes will claim that their product is selling like hot cakes. However, on closer examination, the sales occur only between people inside the pyramid structure or to new recruits joining the structure, not to consumers out in the general public.
Nonetheless, the truth is catching up with FHTM. On December 10, 2009, The North Dakota Attorney General’s Office filed a Cease and Desist Order for violation of the Consumer Fraud Law, the Transient Merchant Law, the Home Solicitation Sales Law, and the North Dakota Pyramid Schemes Act. On January 19, 2010, FHTM entered into a Assurance of Voluntary Compliance with the North Dakota Attorney General’s Office. On March 16, 2010, the Montana State Auditor’s Office filed a Temporary Cease and Desist Order against FHTM, Paul C. Orberson, Thomas A. Mills, and Dianne Graber (a Montana IR). According to the Montana State Auditor’s Office, FHTM has engaged in acts or practices constituting violations of the Securities Act of Montana, Montana Code ANN.30-10-101 et seq. On April 22, 2010, FHTM agreed to pay nearly $1 million and to change its business practices to resolve the charge that it is operating a pyramid promotional scheme.
With each passing day, more states are jumping on FHTM’s bandwagon. The alarming rise in consumer complaints and governmental sanctions has prompted the Better Business Bureau of Central and Eastern Kentucky to downgrade FHTM’s rating from “B-” to “F”. At the same time, a proliferation of online bulletin boards and blogs, such as www.complaintsboard.com and www.scams.com criticize FHTM’s pyramid scheme confirms that Isaacs’ experience is not unique. Will those operations be the next target of Fortune’s high price legal team?
FHTM Blogs 
August 2, 2010 at 3:16 pm |
I have read this and earlier posts of yours. I am wondering what happened between March and August, since that is a hug posting gap. I have not heard any claims of the partnerships you write about with celebrity sports figures etc. I have not been lead to purchase excessive amounts of inventory as you state either – I am only using and purchasing basically the same items I was before joining FHTM except from different vendors. Of course I am gong to buy the items I represent vs those of another brand I do not. That is just smart.
What I see happening is people becoming disillusioned with a company because they did not attain the success they wanted. Usually this happens due to unrealistic expectations on their part (not preached by the company) and /or not working the business as necessary to attain the goals they set. This company has made no unrealistic claims and I came in knowing I had to work my butt off to attain my goals – it is not something for nothing which many expect, not only from this but any multi-level direct marketing company.
As for a pyramid, (laughing) I should sue the last “corporation” I worked for, for all the things mentioned in your article. Those at the top brought in scores of individuals below them, made salary and benefit promises, including imaginary ways to rise in the ranks, then laid off much of the staff they hired when they actually did reach the ridiculous expectations because the(the corporate management) couldn’t make good on their promises due to their own bad business decisions regarding the company. Hmmmm – Corporations sound like the Pyramid Scheme. In fact, our government bailed out a couple of those pyramid schemes!!
Multi-level marketing has been around a long time and it works, is legitimate, and those who work hard actually get paid for their hard work, unlike in many corporations. Franchising received the same grief back when it started – going even to the supreme court.
Each individual has to decide what is right for them – first J.O.B. or another way, and then which vehicle they can best work in and thru. If FHTM wasn’t right for someone, then I encourage them to stop crying “spilt milk” and simply find the one this is right for them. Of course, you also have to look at why one didn’t work for you, and whether that has more to do with your work ethic than theirs, because no vehicle will work if you don’t drive it!!
August 2, 2010 at 6:06 pm |
This is not about whining or complaining about individual successes. It is not about how hard you work or where you end up in FHTM. You sound like an FHTM robot with your canned answers.
It is about how FHTM was created. It is about the relationship lies. It is about the extremely top heavy comp plan. It is about the lies the NSM’s travel the country and tell. It is about the fact that most money is earned from recruiting and not product sales. Nobody said you had to buy anything in excess – except the product bundles centered exclusively on products and companies owned by Orberson.
It is about misrepresentation, fraud, lies, cheating, etc. I know you will not understand until the day you quit FHTM.