FTC axes 'MLM Income Opportunity' racket, 'Vemma.'

FTC Acts to Halt Vemma as Alleged Pyramid Scheme

Promised Unlimited Income Potential, But Most Participants Lose Money

FOR RELEASE

August 26, 2015

TAGS:

• deceptive/misleading conduct
 
• Bureau of Consumer Protection
 
• Southwest Region
• Consumer Protection
 
• Going into Business

At the Federal Trade Commission’s request, a federal court has temporarily halted an alleged pyramid scheme, Vemma Nutrition Company, that lures college students and other young adults with the prospect of getting rich without having a traditional 9-to-5 job. The FTC seeks to stop the operation, which earned more than $200 million annually in 2013 and 2014 and has affected consumers throughout the United States and in more than 50 other countries, from continuing as an unlawful pyramid.

“Rather than focusing on selling products, Vemma uses false promises of high income potential to convince consumers to pay money to join their organization,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We are also alleging that Vemma is an illegal pyramid scheme.”

Vemma is a multilevel marketing company that claims to use its members, called “affiliates,” to promote its health and wellness drinks. According to the FTC’s complaint, the defendants claim affiliates can earn substantial income by enrolling others either as affiliates or as customers, but Vemma focuses on recruitment rather than retail sales of its products to generate this income. The vast majority of participants make no money, and most of them lose money.

According to the FTC’s complaint, the defendants’ websites, social media, and marketing materials show seemingly prosperous young people with luxury cars, jets, and yachts, and falsely claim that Vemma affiliates can earn substantial incomes – as much as $50,000 per week. The defendants allegedly claim that affiliates’ earning potential is limited only by their own efforts and that Vemma provides young adults an opportunity to bypass college and student loan debt. Vemma urges consumers to make an initial investment of $500-$600 for an “Affiliate Pack” of products and business tools, buy $150 in Vemma products each month to remain eligible for bonuses, and enroll others to do the same.

Consumer losses are inevitable because Vemma is an illegal pyramid scheme that rewards affiliates for recruiting participants rather than for selling products, the FTC alleges. The defendants provide affiliates little guidance for selling products, but instead teach them to give away products as samples when recruiting new participants. Vemma offers no meaningful discounts or incentives to encourage retail sales, according to the complaint.

In addition to allegedly running an illegal pyramid scheme, the defendants are charged with making false earnings claims, failing to disclose that Vemma’s structure ensures that most people who join will not earn substantial income, and furnishing affiliates with false and misleading materials to recruit others.

The defendants are Vemma Nutrition Company, Vemma International Holdings Inc., Tom Alkazin, and Benson K. Boreyko, who is under a 1999 court order after settling with the FTC for his involvement with New Vision International Inc.,  a multilevel marketing company that sold nutritional supplements. The complaint names Bethany Alkazin as a relief defendant who profited from the scheme. On August 21, 2015, the court halted the deceptive practices, froze the defendants’ assets, and appointed a temporary receiver over the business pending a trial.

The Commission vote authorizing the staff to file the complaint for permanent injunction was 5-0. The order was entered by the U.S. District Court for the District of Arizona on August 21, 2015.

The FTC appreciates the assistance of the Attorney General Offices of Arizona, South Carolina, and Michigan, the Tempe Police Department, and the nonprofit organization Truth in Advertising in bringing this case.

To learn more about multilevel marketing, read Multilevel Marketing and Business Opportunity Scams.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

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 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook(link is external), follow us on Twitter(link is external), and subscribe to press releases for the latest FTC news and resources.

PRESS RELEASE REFERENCE: 

Multi-Level Marketing Company to Settle FTC Charges That It Made Unsubstantiated Claims That Its "God's Recipe" Dietary Regimen Could Cure ADD/ADHD

CONTACT INFORMATION

MEDIA CONTACT:

Frank Dorman

Office of Public Affairs

202-326-2674

STAFF CONTACT:

Angeleque Linville

FTC’s Southwest Region

214-979-9381

_____________________________________________________________________________________________

A brief analysis of the 'Vemma' racket.

The leaders of 'Vemma' have sought to control all information entering not only their adherents’ minds, but also that entering the minds of casual observers. This has been achieved by constantly denigrating all external sources of information whilst constantly repeating the group’s reality-inverting key words and images, and/or by the physical isolation of adherents. 'Vemma' leaders have systematically categorized, condemned and excluded as unenlightened, negative, impure, evil, etc. all free-thinking individuals and any quantifiable evidence challenging the authenticity of their imaginary scenario of control. In this way, the minds of 'Vemma' adherents have become converted to accept only what their leadership arbitrarily sanctions as enlightened, positive, pure, absolutely righteous, etc. Consequently, 'Vemma' adherents habitually communicate amongst themselves using their group’s thought-stopping ritual 'Income Opportunity' jargon, and they find it difficult, if not impossible, to communicate with negative persons outside of their group whom they falsely believe to be not only doomed, but also to be a suppressive threat to redemption.

In 'Vemma,' a core-group of adherents has been gradually dissociated from external reality and reformed into deployable agents and de facto slaves, furthering the hidden criminal objectives of their leaders, completely dependent on a collective paranoid delusion of absolute moral and intellectual supremacy fundamental to the maintenance of their individual self-esteem/identity and related psychological function.

My evidence-based analysis of 'Vemma' can already be found on 'MLM The American Dream Made Nightmare.'

Briefly: 

'Vemma' is part of an ongoing criminogenic phenomenon of historic significance. It has been the legally-registered corporate front for an 'Amway' copy-cat blame the victim 'MLM Income Opportunity' cultic racket.

'Vemma' has been particularly insidious racket; for its bosses have been specifically targeting students (many of whom are struggling with debt) - hiding the closed-market swindle, and related advance fee frauds, behind effectively-unsaleable wampum in the form of 'Verve' - an 'energy drink,' priced at a jaw-dropping $40+ per can.

More than half a century of quantifiable evidence, proves beyond all reasonable doubt that what has become popularly known as 'Multi-Level Marketing' is nothing more than an absurd, cultic, economic pseudo-science, and that the impressive-sounding made-up term 'MLM,' is, therefore, part of an extensive, thought-stopping, non-traditional jargon which has been developed, and constantly-repeated, by the instigators, and associates, of various, copy-cat, major, and minor, ongoing organized crime groups (hiding behind labyrinths of legally-registered corporate structures) to shut-down the critical, and evaluative, faculties of victims, and of casual observers, in order to perpetrate, and dissimulate, a series of blame-the-victim closed-market swindles or pyramid scams (dressed up as 'legitimate direct selling income opportunites'), and related advance-fee frauds (dressed up as 'legitimate training and motivation, self-betterment, programs, leads, lead generation systems,' etc.).

David Brear (copyright 2015)