BULLETIN: BurnLounge MLM Operators, Top Promoters Ordered To Pay Nearly $17 Million In FTC Pyramid-Scheme Case
The FTC brought the BurnLounge pyramid-scheme case in 2007, saying the program “primarily provided payments to participants for recruiting of new participants, not on the retail sale of products or services.”
In an amended final judgment and order for permanent injunction released by the FTC today, U.S. District Judge George H. Wu of the Central District of California directed BurnLounge Inc. and CEO Juan Alexander Arnold of Studio City, Calif., to pay $16,245,799.
Pitchman John Taylor of Houston was ordered to pay $620,138 , and pitchman Rob DeBoer of Irmo, S.C., was ordered to pay $150,000. In 2007, pitchman Scott Elliott of Forney, Texas, settled with the agency for $20,000.
BurnLounge masqueraded as a legitimate multilevel-maketing firm and made misleading claims about earnings while sucking in more than 56,000 participants, the FTC said.
“BurnLounge recruited consumers from across the country by telling them that participants earned huge incomes,” the FTC said. “Investors could buy into the BurnLounge organization for prices ranging from $29.95 to $429.95, plus monthly fees. While participants were compensated for music and album sales, most compensation came from recruiting others into the plan.”
More details at the FTC site.