A of January 28, 2013 the Federal Trade Commission and the Attorneys General from North Carolina, Kentucky and Illinois finally raided the FHTM offices and shut them down. www.ftc.gov/opa/2013/01/fhtm.shtm
All employees sent walking, no more business operations and the assets of company as well as Paul Orberson & Tom Mills seized. The receiver should begin the claw-back process in the next month or so to take back ill-gotten gains from the net winners in order to return the money to the millions devastated by this inherent fraud and prolific Ponzi Scheme.
Status update on the real FHTM By Darla DiGrandi
For those of you that do not already know, I have left Fortune and moved to a new Network Marketing Company. Below are the reasons why.
Nearly 5 years ago a local business owner introduced me to a Network Marketing company. I saw a way to save & make some extra money on things I was already doing and using. I had no idea at the time where it would lead me and it ended up saving my life at that time from the recession. It eventually retired me from the hair industry and taught me a new industry that I LOVE today! An industry that is based upon people helping people where your success is measured by how many people on your team are making money and achieving their goals!
That is also when I met my Trainer Scott Aguilar, who said to me, “If you will trust me, I will help you buy your life back”. From there I went on to make over $1 million dollars in that company and promoted to the top position in less than 2 years.
Facts & Numbers don’t lie, people do!
> Our first year in the business we ranked #25 in the USA and made over $300, 000 and had many people making over $5, 000 a month with a team of less than 3000 people.
> This past 2012 they combined the USA & Canada numbers together & we ranked #13 overall (#11 in USA), up 14 spots from our first year. But… listen closely when I tell you we made about $100, 000 LESS than our first year! And ONLY one person on our team of over 25, 000 people is currently making more than $5, 000 a month.
> We have been on the top 15 GLOBAL leader board 53 of the past 57 months. This proves we are producers in the company and not just lucky. We used to make $20-$40k a month and now its $8-$15k. And still on the top 15 GLOBAL leader board.
> We have consistently ranked higher each year, yet made less EACH year. If we had ranked lower in the top money earners and made less money, that would be a clear indication that most of the problem was us. But what does it tell you when our income goes down EACH year while our ranking goes up? That it’s not us, it’s the “system”!
> The norm for nationwide weekly presentation meetings used to be 100-300 people in attendance and monthly trainings with 500-1000, prompting Training Centers to open across the country to handle all the growth. Now weekly meetings are a dozen at best and there are not even meetings in some of those locations and Training Centers are being shut down.
> My first full year there was approx 5, 000 people at the annual convention for which I was the emcee. This past year I was also one of the emcees and there was approx 2, 500 in attendance (half the size).
> Many leaders are making their lowest pay in their careers and cant even make their FREE BMW payment. Having 70 Executives in my down line, I am able to see their numbers and it breaks my heart to see that NONE of those 70 ESMs are doubling their E code! These are good hard working people struggling with the “What am I doing wrong” syndrome.
> Not to mention how many Pres Ambassadors, Platinum’s and Nationals are making less than $5, 000 per month and having to go back to getting jobs to pay their bills. These are good people that know how to build a team. Once again it’s not them, it’s the “system”.
> I am one of the hardest working people in this company and probably in the industry. If I can’t help good, hard working people make money, then it’s time to take a step back and look at the “Big Picture”.
After YEARS of CONSTANT compensation plan changes and product & service changes, this is not the same company I joined nearly 5 years ago. Leaving our company is not something we wanted to do. It was something that as a leader, we need to do. Leaders are responsible for taking people towards their WHY, not away from it. We did not take this decision lightly. It was a grueling decision. But we could no longer sit back and ignore “the writing on the walls”.
When I started, I didn’t even know the name of the company. I trusted in a person that I met named Scott Aguilar. I had a WHY. It was to set my family free and get out of debt and it was his role to help me get there.
Before we made this decision, we took time to reflect on all the above facts, did a lot of research, took our concerns directly to the founder, prayed for vision and direction, asked a lot of questions to Industry leaders and ALSO to people who have previously left our company that are having tremendous success in other companies.
We chose our new company based on the 4 balances of business: The Company, The System, The Support & The Product.
In closing I leave you with this thought: You’re on a cross-country journey with your loved ones trying to get to your goals and dreams. One of your tires has a hole in it and you have to keep stopping to put Fix-A-Flat in it every few miles. Praying everyday you don’t get a blow out and that you make it a little further till the next stop. Fix A Flat can only go so far and last so long! Wouldn’t it make more sense to stop the constant stress n struggle and change the tire?
This letter is being released to address the rumors and lies that are being spread by those at the VERY top of the corporate company and the PA and PSM at the top of the west coast. The company plans to “recode” my former team to this PA and PSM. Another Fix-A-Flat attempt. The objective from the tops is to make Scott & I look greedy and lazy and to make our new comp plan look bad.
I am proud to be a Network Marketer! I will stay in this Industry because it is the only industry that allows me to lead an army to their dreams! We are EXCITED about the future and getting back to our goal of helping people achieve their goals.
Take time to research and reflect back on the facts in your business. Don’t listen to hear say or rumors. Ask to see proof of current income from people at the top or that are trying to recode you. Call me if you have any questions [protected] and if you want me to keep it confidential, I will!
Todd Rowland just recently skipped out on a million dollar mortgage leaving the mortgage holder with a...
The Blame Game deepens as Fortune Hi-Tech (FHTM) leaders attempt to destroy Whistleblower! By Slavick Scungilia, The Sentinel
Talk to any of the top leaders in Fortune Hi-Tech Marketing nowadays and they will tell you that Joseph Isaacs is the key to their recent business failures, representative departures, product losses and legal woes. These stories have been fabricated by Paul Orberson and passed down to many of the leaders including Todd Rowland, Ruel Morton and Woodson Gardner, who have in turn spread the rumors through the lower ranks of the FHTM sales force. Fortune holds weekly leadership calls that include the Presidential Ambassadors and top NSM’s to discuss their legal woes and put a spin on the latest BS that they intend to disseminate to the troops in order to cover up the real truth about their scam and to totally discredit Isaacs. Instead of facing the facts about the situation, they claim he has single handedly destroyed their business relationships, their down lines, their product offerings and brought numerous AG's up their ###. If Isaacs is capable of such a huge feat - then FHTM should wake up and hire him to rebuild their highly tarnished image. Isaacs obviously possess better determination and skills than they ever gave him credit for.
They have created elaborate stories about him that are about as real as their supposed direct relationships were with GE, DuPont, Verizon, Travelocity, Dish Networks and AT&T. Everyone now knows that those direct relationships never existed, nor did FHTM have permission to use those company logos. In fact, during the past year since the harassment against Isaacs began, FHTM has lost the ability to sell Verizon Wireless, AT&T, Travelocity, Peter Lamas, BSP Rewards Mall and GE. DuPont has forbidden them from any additional use of their logo or name (no more trying to be “legal by association”). Time, Inc., a Time Warner Company and owner of Fortune magazine, required them in 2011, to add the following disclaimer on the bottom of www.fhtm.net, “FHTM is not sponsored by, endorsed by affiliated with or otherwise associated with Time Inc or Fortune Magazine”. They have been claiming association for years.
Isaacs applauds these companies for protecting their reputations and walking from any distant relationships they may have had with FHTM. We can only conclude that their reputations were more important, to these icons, than the menial amount of business sent to them by FHTM. Maybe these entities didn’t want a public relations nightmare on their hands in the event another state or federal agency shut FHTM down in 2011, or even worse the FTC enforcement bureau charges Paul Orberson criminally. It’s unfortunate that the FHTM leaders aren’t familiar with the expression, “Keep your friends close and your enemies closer”. Isaacs was a huge ally of FHTM until regulatory authorities began their investigations and fines.
FHTM and the top leaders are so desperate for business and recruits that they have made up ridiculous stories about Isaacs in an effort to save their preverbal ###. The story lines are so bizarre and false that they sound like they are right out of the Twilight Zone. Then to make it worse they have sued this whistleblower, lied to the courts and created more BS to hide the real fact that they operate, according to Monica Lindeen of the Montana Securities Commission, an “illegal promotional pyramid scheme”. This story would make a great documentary pinning the criminals against the advocates of the truth.
They were not exonerated in Montana. It was never proven they were a legal enterprise. In fact Montana required they change their entire method of operation and refund almost $1Million to ex reps who felt they had been ripped-off. FHTM intentionally settled the case with Montana so they wouldn’t have to publically admit any guilt, have a determination and being branded a “pyramid scheme” or have a media nightmare when the lost in court. This is the modis apperendi for most MLM’s that get in trouble for operating illegally.
Newspapers and thousands of past reps talk about FHTM on hundreds of blogging sites with complaints of fraud, scam and pyramid scheme dating back to 2003, yet FHTM has decided to focus merely on Isaacs and in a recent brief to the court states that FHTM has no issues with any other reps except Isaacs. This is because FHTM has never persecuted any other reps or ex-reps for expressing their opinions or repeating what newspapers and government agencies have said. The despise Orberson and his staff has for Isaacs is borderline schizophrenic. Isaacs is the victim here yet FHTM has done everything to portray him as a lunatic out to destroy them.
“The victims of these frauds are our neighbors – people who are trying to make an honest living, ” said David C. Vladeck, Director of the FTC’s Bureau of Consumer Protection. “Under pressure to make ends meet, they risked their limited financial resources in response to the promise of a job, an income – a chance at a profitable home-based business. But these turned out to be empty promises – and the people who counted on them ended up with high levels of frustration and even higher levels of debt.” “When jobs are scarce, claims to help people make money fast become plentiful, ” Cooper said. “Consumers think they’re buying into a great way to earn a living, but they could end up paying far more than they’ll ever make.” Why isn’t FHTM suing the FTC director for his slanderous statements? Do we live in the United States of Cuba and Castro is our president?
According to a press release issued by the NC AG’s office in March 2011, Fortune Hi Tech Marketing claims that people who buy into its business earn thousands of dollars a year. Based on consumer complaints, Cooper’s office launched an investigation into FHTM in mid 2010. Consumers say they paid money to the company but were only able to make money by recruiting others into the scheme, not by selling any actual goods or services. A total of 25 consumers have now complained about FHTM, and Cooper’s office is investigating the company.
Although this case is currently under investigation, it’s important for consumers to know that a pyramid scheme is a violation of the law and is defined as any plan in which a participant pays money for the chance to receive money upon the introduction of new participants into the program.
The truth of the matter, according to FHTM’s own Income Disclosure statement from 2009, (before all these legal issues) 30% of the people made zero and 90% earned less than $100 a month prior to expenses. Isaacs feels this fits the FHTM business model to a tee. The old adage, “Don’t shoot the messenger” definitely applies to the FHTM-Isaacs ordeal. They should work on cleaning up their internal house of cards instead of persecuting the messenger of the truth. It appears ok when an AG makes such a statement but FHTM considers it slanderous when it’s repeated by Isaacs (according to recent motions and briefs filed in the court case). How is that reasonable? Where is the justice in this country? What happens to Isaacs’ rights as an American citizen?
“We’re looking closely at business opportunities that seem to offer false hopes, and also reaching out to educate consumers on how to recognize and avoid fraud, ” Cooper said. Isaacs has done nothing but inform the public of the truth but FHTM is attempting to completely discredit Isaacs, claiming he lies about his statements regarding FHTM when in fact FHTM has lied about their entire operation since its founder Paul Orberson started the criminal enterprise in 2001.
Isaacs integrity and moral fiber runs deep and therefore he spent his own time and money to dig up and uncover the real facts about many facets of their criminal enterprise such as the fact that they a) had no direct relationships with the companies they claimed (FHTM was nothing more than a 3rd or 4th part affiliate – they were never an authorized dealer of anyone as they claim); b) did not have permission from icons such as GE and DuPont to use those company logos in the FHTM presentation, marketing materials, online or in the representative kits. FHTM had the audacity to blame their own representatives for this cease and desist even though they used the DuPont logo in all company produced marketing and presentation materials; c) FHTM was not debt free as they still claimed in their business presentations and up until mid 2010 - the entire company and all of its assets including inventory and receivables were pledged as collateral for a business loan; d) FHTM has not had a 3A1 Dunn & Bradstreet rating for many years but as recently as the summer of 2010 the NSM’s and top leaders in FHTM still used that in their recruiting presentations; and e) many Attorneys Generals had FHTM on their scope after the Montana issue arose in early 2010. Isaacs should not be blamed for the misrepresentations and deceit FHTM has perpetrated on too many people. FHTM should look within instead.
Recently rumors have circulated (as comments on various blog sites and articles posted throughout the internet) that Isaacs was terminated from FHTM for selling porn on "Fortune Social".
Fortune Social was developed by Isaacs and his team from India to be the first social network dedicated to the direct selling industry (which according to Isaacs he supports). As a former rep in FHTM he thought there was a need for such a FREE tool. FHTM has rumored that the tool made money, violated their rules and stole their intellectual property. What a delusional thought pattern they have. Others say, including verbiage in a Federal lawsuit filed by FHTM against Isaacs, it was for trademark violations for using the word "Fortune" in his website URL (even though FHTM has been issued a cease and desist from Time, Inc - the real owner of the word Fortune) and his logo for Fortune Social. This is about as far from reality as one could get.
FHTM knows it has no claim to the word “Fortune” especially since the rightful owners (Time, Inc.) demanded, as far back as 2009 and prior to Isaacs being a rep or being sued by FHTM, that Fortune Hi-Tech Marketing rebrand or risk legal actions. It was demanded that Fortune Hi-Tech Marketing become FHTM and stop using the “Fortune” name in their URLs, logos, materials, etc. No more association with Fortune magazine, no more Fortune Wireless or Fortune TV, etc. How arrogant is it for FHTM to then file a trademark infringement and cybersquatting lawsuit against Isaacs for using the word they have been told to cease using as they were violating someone else’s intellectual property. This is totally an abuse of process. Soon the truth will surface and they will once again have egg on their face. Recently in a brief to the Arbitrator in the trademark case, after one year of insane litigation and abuse of process, they admitted they have no right to the word “Fortune”, although FHTM has refused to drop the case. The lawsuit against Isaacs is not about winning, which is extremely obvious by the fact that they only claim a mere $208.00 in total damages, have zero proof that Isaacs ever used or intended to use their logos in commerce and have spent, in our estimate, upwards of ½ million in legal fees to date. Who in their right mind spends $500, 000 to maybe win $208.00? This is about the destruction of Isaacs and not justice.
Others, including FHTM corporate, rumor that he tried to extort millions from FHTM because he failed as an independent representative. The real fact was that after Montana shut FHTM down, Isaacs attempted to get into a financial transaction with FHTM to have them buy his software, system and programs which they could have resold to their reps. His webinar program was proprietary and would have been a great business building tool for any direct selling organization. FHTM declined his offer and then spun a story that Isaacs attempted to extort money from FHTM by trying to sell them their intellectual property. The truth of the matter is that FHTM didn’t have nor will they ever have an interest in the Isaacs webinar system. FHTM has no legal right to the word Fortune so selling them www.fortunewebinars.com or www.fortunesocial.com was something they never owned. Go to Meeting and WebEx were similar programs that are used by network marketers worldwide. This tool was one FHTM had no ability to develop, now or in the future - their loss.
Others say it wasn’t for following the FHTM rules (same rules the top leaders ignore and taught him to ignore). FHTM has a very selective enforcement team and is riddled with massive nepotism. If you make Paul Orberson millions of dollars annually you are exempt from any rules and never get punished for anything, even if you bring the heat onto FHTM – like Mike Misenheimer (Presidential Ambassador) did in Montana. If you are a peon representative at the bottom of the pyramid, you are subject to ridicule, termination and ridiculous legal actions.
FHTM has tried to convict Isaacs of running a smear campaign against them for repeating what other newspapers have written, Attorneys Generals have said and for merely telling the truth about their scam. Isn’t this the pot calling the kettle black? Clearly it appears to be insane that the company built on lies and deceit is suing the person who exposes them, claiming tortuous interference, slander and defamation. Doesn’t the US Constitution prevent such abuse of process?
They even attempted, in December 2010, to have a Federal Judge eliminate Isaacs’ right to freedom of speech by asking for an injunction. Obviously the federal court sided with Isaacs and denied such a request. They have tried over and over to destroy Isaacs financially by continuing to file frivolous and inappropriate motions in both federal court and arbitration. They have dug into Isaacs’ background in order to create stories and shed light on his integrity. It seems to be legal for FHTM, the gorilla, to do this but when Isaacs digs into the FHTM background and exposes the truth about them he gets dragged through the mud in court. When will a court or Federal regulatory authority get so deep into the FHTM lies that they are prevented from scamming so many hundreds of thousands of unsuspecting people just trying to get ahead in this world?
Current FHTM representatives have so many issues because of the loss of products, points and commissions that they need a scapegoat and an excuse for their woes. Nobody has had the balls to stand up to this MLM in a way Isaacs has. They have now used Isaacs as the poster child for what happens to those that speak out against them. If Isaacs was reporting government agency or public corporation lies in a similar fashion to his expose of FHTM he would be protected by the US Federal Whistleblower laws that prevent the type of retaliatory litigation and harassment he has had to endure for the past 14 months.
When will the crap cease and FHTM begin to tell the truth? Probably never since none of their plan is built on anything with substance and none of their lies have any proven facts attached to them. They have not won the case against Isaacs, the multiple class actions have not been decided in FHTM’s favor, as of the date of this article, and Isaacs continues to feel the wrath of the self proclaimed King of MLM, Paul Orberson. We feel sorry for Isaacs and applaud his morals and ethics in standing up for the little guy and telling the world what is right and how FHTM is wrong.
Fortune Hi-tech Marketing was caught in another huge lie this week. We got our hands on a copy of their current Dun and Bradstreet business profile to find out that they have not had a 3A1 rating since 2004. Today's is lower, their Paydex is more risky and it was a huge misrepresentation to go along with being debt free, which they weren't either. When will the lies and misrepresentations ever stop? Nothing they claim in the presentations has a stitch of truth associated with it.
Here is a link to the current D&B report from March 2011.
FTC Steps Up Efforts Against Scams That Target Financially-Strapped Consumers
More Than 90 Actions Brought By Commission and Its Law Enforcement Partners
Attorney General Roy Cooper today joined state attorneys general from across the country and the Federal Trade Commission to announce a national sweep targeting business opportunity scams, including actions against four companies that have targeted North Carolina consumers.
“When jobs are scarce, claims to help people make money fast become plentiful, ” Cooper said. “Consumers think they’re buying into a great way to earn a living, but they could end up paying far more than they’ll ever make.”
In challenging economic times, many people in the state are looking for work. Unfortunately, sometimes they find scams instead of legitimate opportunities. Complaints to the Attorney General’s Consumer Protection Division about business opportunity, work-at-home schemes, and other employment related scams were up 11 percent last year, from 177 complaints in 2009 to 197 complaints in 2010.
Operation Empty Promises is a national sweep by the FTC, Cooper and other state attorneys general aimed at stopping business opportunity scams and educating consumers about how to avoid them.
Announced as part of the sweep are actions taken by Cooper’s Consumer Protection Division against four companies including Fortune Hi Tech Marketing who claims that people who buy into its business earn thousands of dollars a year. Based on consumer complaints, Cooper’s office launched an investigation into FHTM in mid 2010. Consumers say they paid money to the company but were only able to make money by recruiting others into the scheme, not by selling any actual goods or services. A total of 25 consumers have now complained about FHTM, and Cooper’s office is investigating the company. Although this case is currently under investigation, it’s important for consumers to know that a pyramid scheme is a violation of the law and is defined as any plan in which a participant pays money for the chance to receive money upon the introduction of new participants into the program.
“We’re looking closely at business opportunities that seem to offer false hopes, and also reaching out to educate consumers on how to recognize and avoid fraud, ” Cooper said.
Later this month, Cooper’s office plans to launch a tool kit to educate consumers on fake business opportunities which will include print, web and video materials. The goal is to prevent North Carolina consumers from losing their hard-earned money to scammers trying to take advantage of a tough employment market.
“Don’t let scammers use empty promises of jobs with high earnings to take your money, ” Cooper warned consumers. “Before you agree to invest in any business, check it out thoroughly and always be skeptical of claims of guaranteed profits.”
Cooper has taken action against a number of other kinds of scams fueled by hard times. For example, his Consumer Protection Division has won 13 cases against foreclosure assistance and loan modification scams in the past five years, including two so far in 2011.The Federal Trade Commission today stepped up its ongoing campaign against scammers who falsely promise guaranteed jobs and opportunities to “be your own boss” to consumers who are struggling with unemployment and diminished incomes as a consequence of the economic downturn.
“Operation Empty Promises, ” a multi-agency law enforcement initiative today announced more than 90 enforcement actions, including three new FTC cases and developments in seven other matters, 48 criminal actions by the Department of Justice (many of which involved the assistance of the U.S. Postal Inspection Service), seven additional civil actions by the Postal Inspection Service, and 28 actions by state law enforcement agencies in Alaska, California, Indiana, Kansas, Maryland, Montana, New Jersey, North Carolina, Oregon, Washington, and the District of Columbia.
In a press conference at the FTC, David Vladeck, Director of the FTC’s Bureau of Consumer Protection, was joined by Tony West, Assistant Attorney General for the Civil Division of the Department of Justice; Greg Campbell, Deputy Chief Inspector of the U.S. Postal Inspection Service; North Carolina Attorney General Roy Cooper; and a California consumer who had bought into a program to start his own Internet business.
“The victims of these frauds are our neighbors – people who are trying to make an honest living, ” said David C. Vladeck, Director of the FTC’s Bureau of Consumer Protection. “Under pressure to make ends meet, they risked their limited financial resources in response to the promise of a job, an income – a chance at a profitable home-based business. But these turned out to be empty promises – and the people who counted on them ended up with high levels of frustration and even higher levels of debt.”
The FTC has updated consumer education materials to help consumers avoid falling victim to these scams. Screen shots from the websites of some of the operators charged in this law enforcement sweep, as well as video footage of FTC Consumer Protection Director Vladeck and FTC attorney Daniel Hanks, are also available at the FTC website.
My family got sucked into joining this company with the promise that I would get a green card in 3 months. It was all BS. Two of my cousins were deported and I have IRS issues becasue of the bogus SS# the Fortune NSM told me to use.
Stay clear of these guys. They will make promises and then ruin your life.
Fortune Hi-Tech: American dream or pyramid scheme?
By Jayne O'Donnell, USA TODAY
LEXINGTON, Ky. — Marie Richardson of Daytona Beach, Fla., has never been as excited about a business opportunity as she is about her new work for Fortune Hi-Tech Marketing. In her first week and a half as an independent sales representative this summer, she earned $800 in bonuses for recruiting four customers who agreed to pay a fee to become salespeople and buy or sell products.
Kimberly Asper of Missoula, Mont., however, says she sometimes has to feed her family cereal or ramen noodles for dinner since she was laid off from a job and spent thousands trying to build a business through Fortune. She soon realized it was all about "signing people up."
Richardson was one of several thousand salespeople who gathered here last month for a Fortune conference to learn how to recruit people and sell products including cell phone service and private-label vitamins for the company, which Fortune's top money earner, Ruel Morton, calls "the most lucrative financial opportunity in the history of the country." Asper, meanwhile, was one of the Montanans whose complaints led to a lawsuit filed by the state securities commissioner and settlement that required Fortune to tell current and new representatives that no compensation will be paid for recruitment. Fortune paid $1 million to settle the charges, including $840, 000 to reimburse Montanans, but did not admit wrongdoing.
Multilevel or "network" marketing pays commissions to salespeople for the products they sell, on products sold by others they recruit, and often bonuses when their teams reach a certain level of sales. The Direct Selling Association, which represents companies that have multilevel compensation plans, estimates there were about 16.1 million of these "direct" salespeople in the U.S. last year, up from 15.1 million in 2008, thanks to high unemployment and the need for many to supplement incomes. Avon, Amway and Mary Kay Cosmetics are among the largest companies in multilevel marketing, but there are hundreds of lesser-known businesses that sell everything from jewelry to cell phone service.
Critics of Fortune, including the Montana Commissioner of Securities and the plaintiffs in a new lawsuit seeking class-action status, say Fortune is a "pyramid scheme" because salespeople are primarily paid for recruiting, not product sales, and more recent recruits can't earn anything close to what the early entrants do. Fortune has until Nov. 2 to respond to the lawsuit seeking class-action status.
"Presidential ambassadors" such as Morton average $1, 240, 992 in income a year, yet make up just 0.07% of the company's representatives, according to a financial disclosure Fortune filed as part of its April settlement with Montana. The statement also shows 30% of Fortune representatives make nothing, and 54% of those with earnings average just $93 a month, before costs. More than 99% of those who make money earn less than $31, 524 a year.
In a written response to questions, Fortune CEO Tom Mills stressed its independent salespeople's "success depends upon and requires successful sales efforts, hard work, leadership and teamwork." There's a big difference in what people make, because some people only work part time, he says.
To afford big payouts at the upper levels, former Fortune regional sales manager Joseph Isaacs says the company targets desperate unemployed people, Hispanic immigrants and others who are struggling to make ends meet. Joanne McMahon, a national sales manager speaking at a training session USA TODAY attended here, said it is the people who can't afford the fee to join Fortune who need the company the most.
"I heard testimony of people who had become millionaires in a matter of months, " says Asper, 38, who once earned $100, 000 a year in retail management. "They led us to believe we'd be one of those people."
The reward for recruitment
Fortune documents show its sales reps are paid $100 to $480 for recruiting customers who pay fees to become representatives and buy or sell a small number of products. They receive commissions of up to 1% — or less than $1 on a $100-a-month cell phone bill — on products and services, which they are often encouraged to buy for themselves or give away. Former sales managers including Isaacs and Yvonne Day, a plaintiff in the lawsuit seeking class-action status, say their product commission checks were often less than $20, while income from bonuses totaled several thousand dollars. A lawsuit filed by Isaacs alleges 82% of 100, 000 Fortune representatives last year "failed to earn a single residual commission over $20 despite making personal purchases."
The company says it has about 104, 000 salespeople and has customers in every state, Canada, Puerto Rico and the United Kingdom. Mills says because its salespeople are "independent, " they aren't required to notify the company when they have meetings. But there were still recruitment meetings in 12 states including New York, Virginia and Alabama being publicized by Fortune on its website this week.
Fortune and its independent representatives also regularly promote the turnaround stories of its top earners in videotaped meetings, the conference here, a book written by its president and in interviews in Success From Home magazine. Matt Morse of Arkansas told the magazine his first child had hand-me-downs, but that after he joined Fortune he became debt free, got new things for his second child and started going to a country club twice a week and Disney World three times a year. Anna Chorost of Oklahoma said that since she joined Fortune, she and her husband have flown to California "simply because we wanted a nice glass of wine." Companies that are featured on the cover of Success From Home agree to buy at least $330, 000 worth of issues, according to a description of the prerequisites obtained by USA TODAY.
Fortune president defends company
The Federal Trade Commission considers a company a pyramid scheme even if it has products for sale if it's clear during recruitment that "the real way to make money isn't by selling that product but by recruiting other people to pay money for the right to sell that product, " says Monica Vaca, assistant director for the FTC's division of marketing practices.
The FTC Act also prohibits "deceptive and misleading practices, " which may include claims about what people make that don't make "clear if it's not typical of what everyone who joins is making, " Vaca says.
In an interview at the conference, Fortune founder and President Paul Orberson defended his company against the charges it is a pyramid scheme: "If it were illegal, I wouldn't be standing here."
As with laws enforced by the FTC, at least 46 states also ban the payment of money to reward the act of recruiting another participant, says Gerald Nehra, a multilevel marketing defense attorney who headed Amway's legal division from 1982 to 1991.
Nehra says he advises his clients that "80% or more of money that moves around the enterprise should be directly related to sales of products or services." Nehra would not comment on any particular company.
Diane Graber, a former executive sales manager from Montana who is a supporter of Fortune, acknowledges that "if you were not recruiting, your business was dying." The checks from product sales were "not good enough to live on, " says Graber, who was a defendant in the Montana lawsuit.
"All compensation is based on sales, and sales alone, " Mills said in his written response. "There is never any compensation for recruiting, only for the acquisition and retention of customers."
"Customer acquisition bonuses, " he says, "reward the (independent representatives) for acquiring new customers."
Qualifying for bonuses
Fortune only pays these customer-acquisition bonuses to those who bring in people who pay the $99 fee to join and agree to buy or sell some products or services. Once that new representative makes enough sales to get five "customer points, " they are qualified to get bonuses themselves for bringing in others.
A customer, Nehra says, is a person who "has no expectation of making money and just receives the product or service for the value paid." They don't provide Social Security numbers or taxpayer ID numbers and sign independent contractor agreements, he says.
Most recurring purchases — such as cell phone service, satellite TV or regular deliveries of vitamins — count for one or two points. A "First Day Packet, " distributed to new Fortune salespeople as recently as last June, says three customer points could be easily obtained by the new salesperson by paying a monthly fee to have a Fortune website and a travel website. The packet noted that the "goal" is to have 10 points with at least two or four points representing sales to another person.
Mills says the company didn't produce or endorse the packet, but a similar suggestion is made by Fortune presidential ambassador Todd Rowland in a videotaped presentation viewed by USA TODAY and sold by Fortune last year. Rowland noted the Fortune website is the first point and that new recruits could buy nutritional or beauty products or switch their family's cell phone service and TV to satellite service offered by Fortune to earn their points, as his family did.
Former managers, including Asper, Isaacs and Day, all say they were encouraged to become customers themselves.
"You could sell the products to others, but nobody ever does that, " says Isaacs, who is being sued by Fortune for trademark infringement and filed a counterclaim calling Fortune an "unlawful pyramid scheme." "In reality, it isn't taught that way. All new managers buy their first three, five or 10 points to immediately qualify their business."
Kevin Mullens, a Pentecostal preacher and Fortune national sales manager in Crawfordville, Fla., used the Bible in a videotaped presentation last fall to emphasize why the downtrodden need a plan that includes Fortune: "The Scripture says without a vision, people perish."
Fortune, he said, is "a ministry that can produce whatever it is that you need."
State officials step in
Some government officials aren't so sure. What states are doing:
•Montana Commissioner of Securities Monica Lindeen says she was pitched to join Fortune by her brother. He recruited her mother and other family members before she learned her office was investigating. She called Fortune a "pyramid scheme" when she filed suit against the company in March. Along with prohibiting Fortune from paying people for recruiting and insisting that bonuses only be based on product sales outside the home, Montana's consent agreement requires Fortune to lower its entry fee from $299 at the time to $75 and to give every representative a "disclosure document" that explains how long it takes to earn different levels of income. All of Lindeen's family members have left Fortune.
•The Texas Attorney General's office sent Fortune a "civil investigative demand" letter on Aug. 26. The letter asked for the names of all state residents enrolled in Fortune, how much they paid to get in and got in return, along with the gross product sales in the state. The letter also asks the names and earnings of the highest-ranking managers of the company, who is below them on their teams and how much comes from direct product sales as opposed to "commissions, bonuses or sales by others." Jerry Strickland, a spokesman for Texas Attorney General Greg Abbott, says the office is reviewing Fortune's response, and the "investigation is ongoing."
•Kentucky Attorney General Jack Conway's office is also investigating, according to former Fortune managers Day and Isaacs, who have been interviewed. The office doesn't confirm or deny investigations and wouldn't comment about Fortune. In an interview, however, Conway said it could violate the state's anti-pyramid scheme law if product sales alone couldn't "sustain the people at the lower end of the chain." And it could be considered an "unconscionable act" under the state's consumer protection law to not disclose how unlikely it is for new salespeople to make anything close to what more senior managers do.
•North Dakota Attorney General Wayne Stenehjem issued a cease-and-desist order last December against Fortune for violations of several state laws. Fortune agreed to pay a $12, 500 fine and to voluntarily comply with state laws. But Stenehjem said the state's consumer protection division would continue to investigate whether Fortune violates the state's anti-pyramid, consumer fraud and home-solicitation laws.
•North Carolina Attorney General Roy Cooper's office has received "a number of complaints" about Fortune, and the consumer protection division launched an investigation, according to spokeswoman Noelle Talley.
•At least four other states — Missouri, South Carolina, Illinois and Florida — have followed up on complaints from disgruntled former Fortune representatives.
Non-English speakers vulnerable
Some say Fortune goes too far in targeting vulnerable Hispanics who aren't fluent in English. Ilse Bustamante, a printing company executive from Deland, Fla., filed a complaint with her state after a friend tried to strong-arm her into joining Fortune because of her Latin connections. She says Fortune is determined to tap into the growing Hispanic market to fuel its own growth and targets bilingual people like her to lure non-English-speakers.
"The way they (Fortune) present this info is misleading, and with them not knowing English that well, they're going to fall for it, " Bustamante says.
Mary Jude Ramirez, whose son-in-law left Fortune because of the high monthly fees, agrees. "These are people who really have an American dream, " Ramirez says. "The Fortune people tell them they only need a great desire to get ahead, and if they spread the word of this program, riches will pour into their lap."
A central part of the Fortune pitch, as heard at the conference here and explained by several former managers, is that it's easy to recruit other managers because the brands and products it sells are ones almost everyone already needs and uses. But nearly all of the household names, including Travelocity, Citibank, Allstate and Home Depot, that the company listed on its website as recently as this summer are no longer named.
Currently, Fortune representatives can sell satellite TV through Dish Network. Although it had a large display at the conference, Dish downplayed its relationship with Fortune and told Montana officials that it didn't have a partnership with Fortune, which it called a "third-party independent contractor, " according to the Montana cease-and-desist order against Fortune. Dish didn't reply to a request for comment.
Fortune representatives can also sell cellphone service for most major carriers through a company called The Wireless Shop, which is owned by Reston, Va.-based Simplexity. Other products include Fortune's private-label vitamin line, True Essentials, private-label skin-care products, online music downloads, roadside assistance and home-security systems.
Fortune often notes that its commissions are up to 25%, but those who choose that route forfeit the "customer points" necessary to advance in the company and receive bonuses in bringing in other salespeople who are also customers. And the larger commissions are only available on its private-label products.
Fortune lowers fees after complaints
Fortune has been changing its national policies, including lowering the entrance fee outside Montana from $299 to $199 to $99 in the last four months — following complaints and legal charges. In a taped conference call with his team members on Sept. 29, Morton said the company would no longer pay recruitment bonuses until managers have 12 people on their teams, which places them at the regional sales manager level. To have 12 people on a team, a person has to recruit three people who recruit three people who get three more people who bring in another three. USA TODAY listened to the call.
Commissions on products were also increased from 0.25% to either 0.50% or 1%, which would boost residuals from product sales but still make Fortune's product commissions extremely low compared with other companies using multilevel compensation plans. Nehra says even 25% commissions would be low in multilevel marketing, as many companies pay up to 45% commissions because they sell such high-margin products. Kenyon Meyer, the attorney who filed the lawsuit seeking class-action status, says such a small change doesn't change the legality as it's still far more lucrative to recruit. "If you create a system where recruitment is rewarded more than the sale of products, what is a rational person going to do?" says Meyer, whose law firm has represented subsidiaries of Gannett, the parent company of USA TODAY.
Lou Abbott, an advocate of multilevel marketing and founder of the website MLM-thewholetruth.com, says he believes Fortune is in "a gray area and always has been."
"For a company to stand legal scrutiny, distributors cannot in any way, shape or form be compensated for recruiting other distributors, " Abbott says. The lawsuit seeking class-action status is asking the court to force Fortune to pay back the money that representatives paid the company and to stop Fortune from operating as an "illegal pyramid scheme."
Richardson, who has a kettle corn business at a flea market and sells real estate, found the story of a former dishwasher in Mexico who is now a presidential ambassador was compelling at the conference. She's also motivated by the Lexus vehicle Fortune is now making payments on for the person who recruited her. Fortune agrees to make payments on certain luxury vehicles when representatives reach the executive sales manager level — which means they have 90 people on their teams — as long as they remain at that level.
"That's my goal, " Richardson says.
Kimberly Asper and her husband were both laid off more than a year ago and lost their home in a foreclosure this summer. She's now working up to 10 hours a week for minimum wage in a coffee shop. She estimates she spent about $5, 000 to join Fortune, buy products, hold meetings and pay for travel to Fortune conferences. "The people in the company who are higher up keep benefiting from people who are struggling to be at the same level, " Asper says.
When Asper met Orberson at a Canadian conference, however, she says he told her it didn't have to be that way: "He wanted to know why I wasn't on stage, and when was I going to be his next millionaire."
Fortune Hi-Tech Marketing (FHTM) Analysis of Product and Business Model
FHTM is a multi level marketing company that purports to allow you to work directly with well known companies and make lots of money by taking a percentage back from purchases made through your FHTM representative site. In reality, if a representative stops signing people up under them, they will make very little money, as little as .5% on products sold through the site (unless you have eight levels of representatives sign up under you, and you also get a small cut of those under you who sell services or products). The get rich quick portion of the presentation relies on signing up people under you for $299 a person, and getting them to sign others up, as well as pay for training at $250 a person. Note that you also must pay a $199 renewal fee each year, and if you pay for the trainer course, an additional $100 trainer renewal fee. This is a text book example of a pyramid scheme, with a token product line on the side to try and make the business legitimate.
I will analyze some of the products that a FHTM representative can get a percentage back on (.5%), which is supposedly the primary focus of the business (if it is not, it is possibly illegal, so they have to pretend that this is the focus). From research and hearing actual representatives say it, the way to make money is to sign people up under you. One representative I heard from only made $17 in a month through the products, but made much more by convincing others to sign up too.
The whole point of this analysis is to show that the sale of products and services through FHTM is not a way to make large amounts of money, and in fact is offered to try and mask the true source of most earnings, which are derived from the sign up fees of new people joining. Thus the primary purpose of the company is to sign up new representatives, making it an illegal pyramid scheme.
This is a product only available to Representatives and costs $19.99 a month. So clearly buying this won’t make you money as a representative, and in fact will cost you $19.99 a month.
Peter Lamas has a direct affiliate program paying 20% http://www.lamasbeauty.com/affiliate/, that is free to sign up for. So going through FHTM pays you .5%, and signing up for a free affiliate account pays 20%.
Choice Plans RX
This is a FHTM company that they pay Ocenture to set up and run for them. When you go to the website, it has copyright FHTM, but when you look who owns the domain name, all contact emails are to ocenture.com email addresses. If you use this product, remember you are actually buying from FHTM, and be sure to check prices you are paying against a site such as drugstore.com. ChoicePlanRX Price List is available at http://www.choiceplansrx.com/downloads/pricesheet.pdf. A spot check of the price list shows the drug Pegasys for 180MCG/0.5 for $1, 482.23. It appears to be available from drugstore.com as a 1ml vial for $651.98. If the 0.5 in the ChoicePlanRX price refers to half a ML, then you pay $2, 964.46 for 1ml, while at drugstore.com you can get it for $651.98. I suggest you look at the prices yourself.
This product is yet another product that FHTM paid Ocenture to run, and Ocenture uses VantageAmerica Solutions, Inc. to run the card discounts. It looks like FHTM paid Ocenture to rebrand their pre packaged product called MedAffordable. If you want a Medical Card, I suggest you go straight to www.vantageamericasolutions.com so you can work with just one middle man instead of three (FHTM, Ocenture, and VantageAmericaSolutions)
This is another service where FHTM paid Ocenture to rebrand and rename their existing product called TrotHop http://ocenture.com/docs/OC_Prod_Travel.pdf, and to set up an affiliate site through Travelocity, to book tickets through an airline. If you buy from TravelFHTM, you are going through three middlemen to reach the airline (FHTM, Ocenture, & Travelocity). Basically this service uses Travelocity, rebranded to look like TravelFHTM, adding on a fee to each ticket. Tickets tend to be $5 – $10 dollars more on TravelFHTM than buying straight from Travelocity, you can test this by checking the price for an identical flight through Travelocity and TravelFHTM. Also, in order to offer this product, the representative must pay $49.99
This is simply a service set up by Ocenture to provide roadside assistance. You can go to http://ocenture.com/PrePackPrograms to look at all the services Ocenture can set up for your organization. It looks like this is what FHTM did.
Ingrid Home Security
The link to this service did not work, so I was unable to assess what this service was. If the link is not working, it’s safe to say you can’t use this service.
This appears to be a GE security product that FHTM markets, by going through an authorized dealer, greatalarms.com. So you have 2 middle men, (FHTM and greatalarms.com) As of 2.26.10, the FHTM’s site had free* sign up options, but the asterisk beside the FREE does not have an explanation. It should include this: * “Standard monitoring agreement required with approved credit. “, FHTM is misleading if they don’t show the disclaimer. It is not free.
This is a product only available to Fortune Representatives, and so is not a way for FHTM reps to make money.
This is a Quick Website Creation Company that welcomes Multi Level Marketing Companies as affiliates. Information about joining EZnet Tools as an affiliate is available at http://www.eznettools.net/reseller/multiunitcorp.html. If you want to set up a simple website, I suggest you use a reputable company like wordpress.com, who can have you online on your own domain name for $15 a year
Anyone can become an affiliate of Dish Network, and be paid $120 per installation, you can become an affiliate here
http://www.vmcsatellite.com/red_design/program_overview.cfm. Compare that to .5% through FHTM, and the best choice is clear.
You can sign up for free to be an affiliate of Magazines.com, and earn a 35% commission on subscriptions sold. http://www.magazines.com/affiliate/index . Compare that to .5% through FHTM.
The Wireless Shop
One of the most talked about services at FHTM is the wireless shop. This is a website that FHTM uses Simplexity to run. You can buy cell phones and cell phone contracts through this service. Simplexity uses linkshare.com to purchase these services. By going through FHTM Wireless Shop you appear to be using three middlemen (FHTM, Simplexity, and Linkshare). Linkshare can be joined for free by going to simplexity’s site which can be joined for free by going to http://www.simplexity.com/Pages/affiliate_main.html# and clicking on “Join Our Wireless Program Today” Alternately, you can go straight to LinkShare.com http://www.linkshare.com/publishers/join/ and create a free affiliate account, and start earning the full commission instead of the .5% FHTM gives back to their representatives. With this free account, you can earn affiliate money from many companies, a list of which can be found here http://www.linkshare.com/clients/ . So FHTM does not really have a direct relationship with Verizon and AT&T, contrary to the impression given by the company.
The money that is implied to be available to be made to Representatives (as much as $80, 000 a month is shown) is derived almost entirely from spreadsheets showing what would happen if you signed up three people at $299 a person, and they each signed up three people, and so on, down to eight levels. The problem with this type of business model, besides possibly being illegal, is that in order for people to make the money they were told they could, they have to continue signing up people. Whenever people no longer sign up, then all of the people at the bottom of the pyramid will lose their money. So even if you can get into a pyramid scheme like this before it collapses, and make money off of signing people up under you, when it does fail, most of the money that you made would have been taken from those under you, and they would lose it. For ethical and moral reasons, I would not want to take other people’s money, knowing that sooner or later the money I make will be lost by someone down the line.
If you are still not convinced that this is not a legitimate business, the North Dakota attorney general issued a cease and desist order against FHTM in December (it has since been lifted).
Update: News Coverage of the Cease and Desist order in Montana available here (thanks to comment below for this info)
Update 2: You can read the Temporary Cease and Desist Order here. It is lengthy, but has a lot of very relevant information.