Tag Archive for MLM Lawsuits

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Class Action Complaint Against ACN And XOOM Energy

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Oladipupo Adesina files this class action (Case 3:14-cv-00562-GCM) complaint in the USA – North Carolina on behalf of himself and all others similarly situated.
The class action alleges that ACN and XOOM used a fraudulent and deceptive bait-and-switch sales model to get customers to switch to the XOOM Energy Simpleflex flexible energy plan with a low promotional rate offer and energy savings, and then charging customers exorbitant, non-competitive rates after the promotional period.
It also alleges that ACN and XOOM concealed certain material information regarding the upward trend of the customers’ energy rates and that ACN IBO’s and that ACN’s and XOOM’s websites fraudulently state that consumer would save money on their energy bills and that the consumers’ rates were competitive.
It is further alleged that ACN and XOOM make the cancellation process lengthy and difficult, with cancellation taking up to two billing cycles.
The complaint cites numerous online customer complaints about the plan.
According to the class action complaint:

“ACN and XOOM sales pitch is in reality false and misleading in that the rates actually charged to consumers are not competitive and bear little relation to prevailing market conditions. As a consequence of this scheme, consumers across the nation are essentially being scammed out of

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SEC Alleges Zhunrize To Be A Pyramid Scheme – Assets Frozen

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Zhunrize, launched in 2013 is a shopping and savings portal and offers affiliates a replicated storefront, which the company has branded “ZhunCity”. The shopping portal starts at $99 and $30 a month,  up to $3,000 and $100 a month.
According to a SEC Press release:
“On September 22, 2014, the Securities and Exchange Commission filed a civil injunctive action in the Northern District of Georgia against Zhunrize, Inc. (“Zhunrize”) and its CEO, Jeff Pan (“Pan”). In connection with the filing of this action, the Commission obtained a temporary restraining order against the defendants and an order freezing all of defendants’ assets.
The Commission alleges that Zhunrize, an Atlanta-based multi-level marketing company, and Pan have been operating a fraudulent pyramid scheme that has raised over $100 million from investors worldwide.
According to the Commission’s complaint, Zhunrize purports to be a legitimate multi-level marketing business by which members purchase online stores and then sell merchandise through them, while earning commissions on products purchased by their customers and through store sales to other members and hosting fees paid by those members.
In fact, the company is operating as a pyramid scheme because its commission structure is based on the continual recruitment of new members, with the

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Herbalife About To Settle Class-Action Lawsuit

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Herbalife is close to reaching a settlement with five former distributors who claim the controversial nutritional products company is running a pyramid scheme that has victimized thousands.
Lawyers for both sides told California federal judge Beverly O’Connell last month that “the parties have tentatively agreed on the principal terms of a settlement,” according to court papers.
The parties asked for an extension of several pretrial filing dates, saying they needed more time to finalize a deal.
The suit was brought by California resident Dana Bostick in April 2013, less than four months after hedge fund activist Bill Ackman called Herbalife a fraud and placed a $1 billion short bet on the shares.
In June, four new plaintiffs joined the proposed class-action suit against the Los Angeles company.
Both sides declined to comment on the talks or the amount of the potential settlement under discussion.
Herbalife, which is under investigation by the Federal Trade Commission and other regulators, has denied the allegations and earlier said the suit had no merit.
But it now appears willing to accept a class-wide settlement to put a cap on its liability, sources told The Post.
The class would cover about 1.5 million people — those who joined in the US after 2009 to the present, excluding

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Lyoness Responds To Ponzi Allegations In Australia

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Lyoness Australia has issued the next statement:
“Lyoness rejects allegations raised by the ACCC, and will vigorously defend the proceedings commenced by the Commission on 28 August.
Lyoness is a shopping community, customer loyalty program and network marketing business.
Benefits are exclusively generated by shopping activities within the Lyoness community. Members receive benefits when they shop, whether they introduce other members or not. Lyoness members may introduce members and receive benefits when the new member shops in the Lyoness community, but no benefits come from the introduction alone.
Lyoness has been active for 10 years and in none of the 46 markets in which it is active has Lyoness been found guilty of or convicted for operating a pyramid scheme.
Over four million members take advantage of the Lyoness benefits at over 40,000 loyalty merchants around the world. In Australia, there are now 780 Lyoness loyalty merchants, including many small and medium sized enterprises.
Lyoness is committed to full compliance with the law and to dealing honestly with Australian consumers.
Daily business is not affected. This court action has no effect on Lyoness members, loyalty merchants or staff, and Lyoness may be contacted by them in the usual way.
Since the proceedings are before the court, Lyoness

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Australia Sues Lyoness With Pyramid Allegations

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The Australian Competition and Consumer Commission (ACCC) has instituted proceedings against Lyoness International AG, Lyoness Asia Limited, Lyoness UK Limited and Lyoness Australia Pty Limited (together ‘Lyoness’) for operating a pyramid selling scheme and engaging in referral selling.
Although Lyoness has been investigated by regulators for conduct in other countries, this is the first court action taken against Lyoness alleging that the Lyoness Loyalty Program constitutes a pyramid scheme.
Pyramid schemes involve new participants providing a financial or other benefit to other existing participants in the scheme.  New participants are induced to join substantially by the prospect that they will be entitled to benefits relating to the recruitment of further new participants. Pyramid schemes may also offer products or services, but making money out of recruitment is their main aim, and often the only way for a member to recover any money is to convince other people to join up.  In contrast, people in legitimate multi-level marketing schemes earn money by selling genuine products to consumers, not from the recruiting process.
The ACCC alleges that Lyoness has operated the scheme in Australia from mid-2011 and that it continues to operate the scheme. The scheme offers ‘cash back’ rebates to members who shop through

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TelexFree Co-Owner Pleads Not Guilty In Alleged Fraud

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James Merrill entered a not-guilty plea for the TelexFree Inc. co-owner Wednesday in federal court in Worcester, his lawyer said.
Merrill, of Ashland, was president of the Marlborough-based phone service company, which is accused of running a $1 billion global pyramid scheme. His business partner, Carlos Wanzeler, remains a fugitive in Brazil and did not appear in court to face the charges.
Both men have been charged with nine counts of wire fraud and conspiracy. Each charge carries a possible maximum sentence of 20 years, but actual sentences are generally less than the maximums, according to the US Attorney’s office.
TelexFree sought federal bankruptcy protection in April, just as state and US securities regulators were days from filing civil fraud charges against the principals. Wanzeler fled the country that month to his native Vitoria, Brazil, while Merrill was arrested and held in jail for several weeks.
Merrill will remain home, wearing a GPS tracking bracelet and on $900,000 bail, officials said.

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Claims Can Be Lodged For Banners Broker Loss

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Those who put money in the collapsed Banners Broker investment scheme have been given the opportunity to stake a claim for their losses.
The joint liquidators of Banners Brokers International Ltd in the Isle of Man have also taken steps to inform investors about the ongoing investigation into the company’s affairs.
A website has been established where information documents can be downloaded and proofs of claim submitted.
These are to be supported with bank statements showing the initial investment and the pictures of the onscreen balance currently held in Banners Broker accounts.
The move comes three months after the joint liquidators, Paul Appleton and Miles Andrew Benham, were appointed following concerns about the conduct of the suspected pyramid scheme.
Immediately after the liquidation of the Isle of Man company, and the seizure of up to £6m (€7.5m) in assets, the Canadian-based owners of the operation claimed the bulk of their resources had already been moved to a sister company in Belize.
The cash in the bank in the Isle of Man was described as a rainy day fund which was not core to their business.
A statement on the advisory website said the joint liquidators were still investigating where the rest of the company’s money is held.
“The

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Zeek Rewards Leaders Outside The USA Will Face Legal Proceedings

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How the Zeek Rewards Receivership intends to go after Zeek investors who are outside of the USA, has made clear in his status report for the second quarter of 2014.
Receiver Kenneth Bell:
Counsel for the Receiver prepared a request for proposal, which it distributed to a select number of law firms in countries where the largest ZeekRewards net winners reside.
The Receiver Team has been in discussions with multiple overseas law firms regarding the logistics, strategy, and costs involved with pursuit of net winners residing in these firms’ various countries.
Claims against foreign net winners will likely be grouped by the country in which these individuals reside, with some actions being initiated here in the Western District of North Carolina and other actions being filed in the foreign net winners’ home countries.
The Receiver is evaluating the most efficient means of pursuing these individuals that will generate the greatest possible return for the Receivership Estate.

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Zeek Rewards – Former Management Agrees To Pay $600 Million Back

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As first reported by Behind MLM, Paul Burks, Dawn Wright-Olivares and Daniel Olivares have agreed to pay $600 million back to the Zeek Rewards receiver.
In his status report for the second quarter of 2014, Receiver Kenneth Bell has revealed that: “By the filing date of this report, the Receiver had reached settlement agreements with Paul Burks, Dawn Wright-Olivares, and Daniel Olivares, pending Court approval.
Each of these defendants agreed to a consent judgment of $600 million to be satisfied with substantially all of their assets.
How the $600M figure will be paid back, in particular who is paying what amount, is unclear. Ditto how much of the judgement will be distributed to the scheme’s victims by the Receivership.
What is clear though is that it appears to be a lump sum, and after it’s paid – those primarily responsible for the creation and operation of the Zeek Rewards Ponzi scheme will have absolutely nothing left to show for it.
Full story: Behind MLM

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