Pyramid Scheme - Legal Cases

  • 1975 - LC - Koscot Interplanetary, Inc., 86 F.T.C. 1106, 1178, 1181
  • 1996 - LC - Webster v. Omnitron International, Inc., 79 F.3d 776 (9th Cir. 1996), pyramid scheme test
  • Pacer - FreeLife International; Inc American Educational Music Publications Incorporated; et al 22007cv02210 Arizona District Court 11/15/2007 04/05/201
    • 2007 - LC - FreeLife International, Inc= a Connecticut corporation vs American Educational Music Publications Inc.; David Lucas Burge 
    • 2:07-cv-02210-DGC
    • CV07-2210-PHX-DGC
    • Maricopa County Superior Court, case number CV2Dü7-01
    • UNITED STATES DISTRICT COURT FOR THE DISTRCT OF ARIZONA
    • Order - 11p
    • FreeLife has filed a motion to exclude the testimony of Defendants; rebuttal expert. Jon Taylor Dkt *165
    • Doc 162 - Transcript - FINAL PRETRIAL CONFERENCE - 46p
    • Doc 165- (See J Taylor, "Comparing Recruiting MLM's with No-product Pyramid Schemes. and with Gambling' (attached hereto as Exhibit D)
    • E- Taylor produced a modified version of and documents related to this study in response to a subpoena duces tecum in this case (Attached hereto as Exhibit E)
    • F - FreeLife document, the Compensation Plan (attached hereto as Exhibit F)
    • Taylor opined that decline in sales is the result of its having reached market saturation prior to the launch of the Breathe website
    • 2 Taylor's Opinions About "Loss Rates Are Not Relevant
    • One of Taylor's opinions is that the majority" of MLM participants lose money (Taylor Dep at 15) That opinion has nothing to do with this case FreeLife is claiming as damages only those monies that FreeLife corporate last as a result of Defendants' conduct. FreeLife is not claiming as damages any income last by Marketing Executives There is no "fit" between this opinion and any of the issues in this case.
    • Cheerleading for Burge Many Taylor opinions are just cheerleading for Burge
      • Burge is performing a "valuable public service" through the Breathe website
      • It is "definitely in the public interest' that Burge "be allowed" and to continue' with his website
      • Burge is a "true hero" because he is "taking such risks in standing up for consumer protection"
      • Burge should be for his courage and integrity in standing up to one of the evils impacting overly-trusting consumers",
      • Burge's efforts to "expose FreeLife for what it is should not be stopped but should be encouraged'" and
      • 'It took great courage to do what Mr Burge dicf', congratulate Mr Burge far his courage
    • J - Sheffield is FreeLife's industry expert on the multi-level marketing industry. His testimony is limited to the impact that a website like Breathe would have and has had an a multi-level marketing business like FreeLife (See Sheffield Report at 14-17) (attached as Exhibit J hereto)
    • K- (McDonough Dep at 45 (Exhibit K hereto)
    • L - Von Bargen Report (Exhibit L hereto)
    • Doc 165-1 - Expert Witness Report - Jon M. Taylor - 68p
  • 2012 - LC - FEDERAL TRADE COMMISSION v. BURNLOUNGE -OPINION - 24p
    • 12-55926. D.C. No. 2:07-cv-03654-GW-FMO
    • 12-56197, D.C. No. 2:07-cv-03654-GW-FMO
    • 12-56228, D.C. No. 2:07-cv-03654- GW-FMO
    • The panel affirmed the district court’s order granting a permanent injunction against BurnLounge, Inc.’s continued operation based on the court’s holding that BurnLounge’s
      multi-level marketing business was an illegal pyramid scheme in violation of § 5(a) of the Federal Trade Commission Act.
    • The panel held that BurnLounge’s scheme satisfied both
      prongs of the Webster v. Omnitron International, Inc., 79
      F.3d 776 (9th Cir. 1996), pyramid scheme test