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Fortune Hi-Tech An Explanation by Jack Conway, Kentucky AG

Here’s an article by Jack Conway, Attorney General published in The Harlan Daily Enterprise: http://www.harlandaily.com/view/full_story/21947092/article-Recovering-funds-in-hard-times

Earlier this year, I worked with the Federal Trade Commission (FTC) and the attorneys general from North Carolina and Illinois to take legal action against one of the most prolific alleged pyramid schemes in North America.

We filed suit in federal court against Lexington based Fortune Hi-Tech Marketing (FHTM) and its principal operators, Paul Orberson and Thomas Mills.

Investigators from my office and the FTC secured FHTM’s corporate headquarters on Jan. 28 after a judge ordered the business to cease operations. FHTM is now under the control of a court-appointed receiver.

Our lawsuit alleges that Fortune Hi-Tech Marketing lured more than 100,000 people in the U.S. and other countries into its “network” with promises of big pay checks and dreams of becoming millionaires. But our investigation shows what FHTM actually delivered was a massive alleged pyramid scheme that may have cost consumers hundreds of millions of dollars.

This action followed a two-year investigation by my office and the FTC. We began looking into FHTM after North Dakota and Montana took legal action against the alleged pyramid operation.

After receiving about a dozen complaints, we issued subpoenas to the company in August 2010 and August 2011 to look into possible violations of Kentucky’s Pyramid Sales Act and the Consumer Protection Act.

Records we received indicate consumers paid a $249 fee to join FHTM for the opportunity to sell a variety of products and services, including satellite television service, beauty products and home security systems. Unlike legitimate multi-level marketing programs, FHTM distributors had no incentive to sell products.

For example, an FHTM representative received pennies in commission for selling a three-year, $43 per month home security system. Meanwhile, representatives who attained a certain level within the company could receive $100 for every new member they signed up.

The emphasis on recruitment — rather than sales — makes this an alleged pyramid scheme.

A recent report from the court-appointed receiver sheds even more light on this alleged global scam. From 2009-2012, 98 percent of FHTM’s independent representatives received less than $1,000 a year, while 74 percent received less than $10 a year. Nearly 90 percent were unable to recoup their initial investments.

Yet, Fortune Hi-Tech’s principal operators, Paul Orberson and Thomas Mills, earned $21.2 million and $18.1 million in dividends and salary, respectively. An additional $9.5 million was paid to other shareholders, many of whom are family members of Orberson and Mills. Fortune Hi-Tech Marketing promised big returns, but instead delivered big losses to thousands of families across the country.

We will continue working with the FTC and our state partners as we pursue this case against FHTM and its owners. We are working to recover what we can for consumers who invested their hopes, dreams and hard-earned money in a company that left them empty handed in difficult economic times.

For additional information about our lawsuit or Fortune Hi-Tech Marketing, call the FTC’s hotline at 202-326-2643.

Read more: The Harlan Daily Enterprise – Recovering funds in hard times http://www.harlandaily.com/view/full_story/21947092/article-Recovering-funds-in-hard-times