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Direct-Seller Fortune Hi-Tech Marketing Accused of Fraud

Fortune Hi-Tech Marketing Inc., a company describing itself as a direct seller of consumer goods and services that gives people “the opportunity to build their own business,” is a fraud, state and federal authorities said.

Since 2001, FHTM has been running an unlawful scheme emphasizing the recruitment of fee-paying new members over product sales, according to a federal court complaint filed under seal Jan. 24 in Chicago by Illinois Attorney General Lisa Madigan, Kentucky Attorney General Jack Conway, North Carolina Attorney General Roy Cooper and the Federal Trade Commission.

The company charges new representatives $250 to join its sales force and the same amount in subsequent years while paying them little for selling products including vitamins, beauty products and satellite TV service and the bulk of their income for recruiting more sellers, according to the complaint, a copy of which was provided by Conway’s office.

“We believe that Fortune Hi-Tech Marketing was operating a massive pyramid scheme that involved more than 100,000 people” across the U.S. and in other countries, Conway said today in a statement.

‘Significant Losses’

“The perpetrators of this pyramid scheme promised big returns but instead delivered significant losses for thousands of families,” in Illinois and elsewhere, Madigan said in a separate statement.

Alleging violations of the FTC Act, Illinois’ consumer fraud law as well as the laws of North Carolina and Kentucky, the authorities have asked for a court order freezing Fortune’s assets, appointing a receiver, an injunction barring future violations and the imposition of monetary penalties.

Named as individual defendants in the litigation are Fortune President Paul Orberson and Chief Executive Officer Thomas Mills. Information on lawyers for the two men and the company wasn’t immediately available.

Investigators and a court-appointed receiver have taken over the company’s Lexington, Kentucky, headquarters and a warehouse in Danville, Kentucky, the attorneys general said.

The case is Federal Trade Commission v. Fortune Hi-Tech Marketing, 13-cv-00578, U.S. District Court, Northern District of Illinois (Chicago).

To contact the reporter on this story: Andrew Harris in Chicago at aharris16@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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