Cease and Desist Order issued against Fortune Hi-Tech Marketing

by louabbott on December 12, 2009

According to radio station KSJB, the North Dakota Attorney General issued a Cease and Desist Order against Fortune Hi-Tech Marketing (FHTM) after the company “…blatantly disregarded” warnings…”assortment of violations”…

BISMARCK – Attorney General Wayne Stenehjem has issued a Cease & Desist Order against Fortune Hi-Tech Marketing of Lexington, KY and its principals Paul C. Oberson, Jeff Oberson, and Thomas A. Mills for violations of North Dakota transient merchant, consumer fraud, and home solicitation sales laws. The Order was filed late yesterday, December 10, 2009.

Apparently, the way I read it, FHTM failed to get a license required by the state.  Seems like not a big deal except that it has then opened them up for further scrutiny:

According to Stenehjem Fortune Hi-Tech continued its business activities in North Dakota even after being told it could not do so without the required Transient Merchant license. “This business blatantly disregarded our effort to ensure compliance with North Dakota law,” Stenehjem said. “This is not the typical response from a legitimate company and its actions must have consequences.”

The Consumer Protection Division is reviewing Fortune Hi-Tech’s activities and it appears there also may be violations of the consumer fraud and home solicitation sales laws. “I’m concerned about this assortment of violations,” said Stenehjem. Stenehjem has requested information about the extent of the company’s business transactions in North Dakota including dates of transactions, customers, and payments received.

In addition to these violations, Stenehjem asked the Consumer Protection Division to review whether this company is engaged in any violations of North Dakota’s pyramid law. North Dakota law prohibits promotional pyramid schemes in which the participant pays for the opportunity to receive income primarily from the recruitment of other participants rather than the sale of goods or services.

In the last sentence above, I put into italics the key principles that distinguish a legitimate MLM from an illegal pyramid.  (I talk about that concept in more detail in Pyramid Scheme or Legitimate MLM?)

FHTM posted this on their website:

Some of you may have heard that we have been contacted by the Attorney General of North Dakota.

Complaints have been made to the Attorney General’s Office about the manner in which our business is being conducted in your state. We respect the right of the Attorney General’s Office to oversee the conduct of companies doing business in North Dakota. While we are in discussions with them, you must not engage in your Fortune business in North Dakota. We hope that this matter will be resolved as quickly as possible, but in order for us to be able to obtain a positive result, you must honor this requirement until you hear from us.

Though this matter may be something different, there is a difficulty that many companies face that market products or services that have low margins.

Simply put, there just isn’t enough mark up to sustain high levels of commissions. Those products or services may include products such as telecom services, common commodities, travel services, technologies that keep getting cheaper, etc. The temptation then is to increase payouts by including sign up fees, distributor web sites, training fees etc. into the line of commissionable products.  Since those items are by their nature only purchased by other distributors – not customers outside of the compensation structure – they can bring the company under legal scrutiny as then the income may be “primarily from the recruitment of other participants rather than the sale of goods or services.”  YTB Travel’s legal problems in California and Illinois are an example of what can happen.

Also, see our overview of Fortune Hi-Tech Marketing

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{ 6 comments… read them below or add one }

Joseph Isaacs February 23, 2013 at 6:56 am Thumb up 1 Thumb down 0

Has anyone taken a look at the latest findings that Robb Evans and Associates has published on FHTM’s website? Incredible and confirms that the focus was on recruiting. Also shows the high drop out rate and the high % of people that didn’t make money.

http://www.robbevans.com/pdf/fortunereport01….

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Joseph Isaacs April 11, 2010 at 6:42 am Thumb up 9 Thumb down 4

You all need to stop drinking the kool-aid. The matter is NOT over in North Dakota. FHTM is still under investigation there for violating the states PYRAMID SCHEME laws which do not allow companies to pay commissions or any money on the initiation fees to sell products. Exactly what FHTM does. They also have been shut down in Montana and another 12+ states have them under investigation.

FHTM also likes to file frivolous lawsuits against ex-reps who spread the word about their illegal activities. They want this reality swept under the carpet so their cash cow continues to operate and make Orberson mega money.

I am sure many of you have noticed a huge change in the attitude that is here on Fortune Social in the past few weeks. It appears as if all of the NSM’s and Paul Orberson are trying diligently to hide the real truth from everyone about the real structure of the business as well as how and who really makes money.

When Fortune Social was originally conceived it was to be an umbrella for everything positive about FHTM. God only knows there was enough negativity in Google and the other search engines. Our primary objective was to help everyone build a profitable FHTM business. There is so much negativity in the search engines from the latest state actions that it will take years and a team of 1000’s to combat this. We refuse to expend the resources, as we are 100% unappreciated by FHTM owners.

The attitude of the administrators of Fortune Social changed when the Montana Securities Commission issued a cease a desist order not only against FHTM, Paul Orberson and Thomas Mills – but also all of the reps and managers in Montana and specifically Mike Misenheimer. When this happened, FHTM feverishly tried to sweep it under the carpet and merely asked all Montana reps to temporarily stop doing business there. We could not! I personally don’t intend to make Paul any wealthier at the expense of my family. I am also sick in tired of hearing that we are pissed because we FAILED. That is so far from the truth as you can get.

What happened to the dreams and financial freedom of all of those 1,600 somewhat reps that counted on Misenheimer and Orberson to eliminate their jobs and become debt free? Seems to me like all of those dreams have been crushed and all of those reps are forbidden from engaging in any FHTM business. Do they still get their residuals or have they been hung out to dry?

Our staff immediately began an in depth investigation into FHTM and discovered so many irregularities from what they tell you to what is reality. I know this is going to piss off so many of the cult like believers in FHTM and Orberson but if you are going to hang your family’s future and financial freedom on this entity – shouldn’t you all know the REAL truth?

First – they DO not have a single direct relationship with any of the products they represent (except the companies Paul owns or controls) *see attached analysis ~

Secondly – NONE of the CEO’s of any of the companies that FHTM represents ever went to Lexington to visit Paul or cut a deal. S0 many times prospects hear the phrase, “If GE, Verizon and DuPont can align with us – we must not be an illegal pyramid scheme – we must be real”. THIS IS SO BOGUS! Those companies are not DIRECTLY aligned with Fortune Hi-Tech Marketing and most have never heard of FHTM

Thirdly – Paul did not come out of retirement to help anyone other than himself. The pay plan is top heavy and if you read below you might understand why so many Stat Attorney Generals are going after FHTM with both barrels loaded for bear. Our research indicates that Montana was a cease and desist for not only FHTM but its officers and managers. What happens when they decide to issue a financial penalty against all of the ESM’s or NSM’s who purported this Fraud against Montanans’? Who pays this? I guarantee it won’t be Orberson!

Additionally other states have FHTM in their radar and are investigating them for the same things. Unfortunately, like addicts, most of the NSM’s are in total denial. They have to be or their business would disintegrate tomorrow. Have they created a huge nest egg from all of the revenues, or spent it on their new found lavish lifestyle?

There is a fine line between illegal scam and a real network marketing company. All of the administrators of Fortune Social are very pro legal network marketing – but we cannot seem to find any real data that supports the fact that Fortune Hi-Tech Marketing is NOT a scam and illegal!

Open your eyes folks. So many of you around the US and Canada got into the FHTM business to build a future for your families and get away from the JOB. The administrators of Fortune Social understand that more than most as they have been entrepreneurs and self sufficient for over 30 years. We hate to see so many hang their hats on a system that benefits 100 or so people and 99% of the rest invest, suffer, quit or get shut down.

Fortune Social will be adding some new tools over the summer and will try and keep all of its users fully informed as to the latest legal woes of the company so many refuse to quit. Just remember – when you get named in a state cease and desist or lawsuit – YOU ARE OUT OF BUSINESS IMMEDIATELY AND ALL REVENUES STOP! Additionally it may cost you more to defend the fines than you ever made.

It is also inconceivable that Fortune Hi-Tech management would even begin to blame fortune social and its creators for the issues they have in Montana and other jurisdictions around the country. We stopped drinking the kool-aid when we realized that fortune is nothing more than a recruiting machine. You make killer money as an RSM if you recruit-recruit-recruit. The residuals are a JOKE!

FORTUNE SOCIAL HAD NOTHING TO DO WITH FHTM BEING SHUT DOWN IN MONTANA OR THE DISTRIBUTION OF A BOGUS SUIT BY THE CALIFORNIA ATTORNEY GENERAL. FHTM is looking for a scapegoat to blame their pyramid scheme issues on and it will not be us.

FORTUNE SOCIAL IS NOT AFFILIATED WITH FORTUNE HI-TECH MARKETING AND IS OPEN TO ANY NETWORK MARKETER.

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Daniel April 11, 2010 at 3:22 pm Thumb up 6 Thumb down 9

You people need to get a life. I have been to conventions and met CEO’s of many of the companies FHTM represents. If you ever atteded a convention you would know that, obviously you have not. Paul Orberson’s take home pay is less than $200.00 per week. The only reason he takes that is because he has to take something under the way the corporation is structured. Can’t work for free . Now go to Dunn and Bradstreet and check for your self. Fortune has the best reatings a company can get. And if you see the estmated earnings in the hundreds of millions of dollars per year than you have to ask yourself, why would the CEO of company that generates
hundreds of millions of dollars per year, only take home less than $200.00 per year when every other corporation of that size is paying it’s CEO’s millions per year.
I will tell you, it’s because he has a heart of gold and coming out of retirement to help others find success is “exactly” what he did. As far as the business model goes, it works for some people and it doesn’t work for others, why is that? It’s because some people do what it takes and some people don’t. The free enterprise system will lovingly knock you down and roll you around and find out what your made of. It will bring you face to face with what ever your not good at, and you have to two choices. Get good at it or quit. Quitting is a personal choice and those people have nobody to blame but themselves. Winners never quit and quiters never win. Put that in your pipe and smoke it. When your done, go get your facts straight before you start slamming good people and great opportunities. I will bet money that the none of the people writting negative things on this site or anyother have ever been hugely successful at anything and they never will be. They will always find someone or something to blame, when the reality is they should be looking in the mirror and accepting responsibility for their place in life. I highly recomment “The Secret”. Get the book or the video and study it. Lastly, I have studied many compensation plans and the FHTM comp plan is the best I have ever seen. There is a quote that says “There is a millionaire inside of you, and only you can decide if he/she wins of loses” Get out of your way own way people and stop blaming everything and everyone for your inability to win. when you point one finger at some one else there are 3 fingers pointing back at you.

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Diana February 3, 2010 at 2:59 pm Thumb up 6 Thumb down 8

Update: You will be happy to know that the matter has been resolved and the North Dakota FHTM reps are legally free to do business once again. The matter took only about 1 month to resolved.

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John Chatman December 14, 2009 at 12:34 am Thumb up 9 Thumb down 1

This is very unfortunate for those hard working folks who are sincere in their business building approach to the FHTM Opportunity. I sincerely wish them the best and hope that this will work out in their favor.

One of the earliest companies that I was introduced to in the industry is a well known communications company (which will remain nameless) that I actually started to build with under some of the statements that were put out by my then upline. About 3 weeks into the business I had a sit down with my upline and had him explain the compensation plan to me in detail and this is where I realized that for me to build any true residual income I would have had to build an incredibly large team due to the fact that the service that was being marketed was priced at $24.95 and the margins were so slim.

Once having realized this fact and that the real way that these folks were making their money was by running a recruiting machine I stepped away from the company. Recently I have been in touch with that same upline who is still with the same company and still working just as hard to build his team.

The issue with this is that as many as this gentleman recruits into his team there are just about that many people leaving it when they come to the same realization that I did.

The moral of the story is to make sure that you understand the compensation plan of the company that you are getting involved in. There are some really great companies out there whose compensation plans are geared more towards having a hefty commission check upfront and a much smaller residual based income on the backend while at the same time there are those companies who don’t pay that upfront commission and are weighed towards solely building a residual based income.

This is of course a recounting of my personal experience and should not be construed as to reflect negatively on any company. The bottom line responsibility of understanding what I was getting into was mine alone and I am that much richer from having had the experience.

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STEPHEN CLARKE December 21, 2009 at 4:23 pm Thumb up 5 Thumb down 3

Good advice John….isn’t it interesting that so many people get involved in a “business opportunity” where they are looking to make money but have no idea of how they are getting paid? That would be similar to taking a job but not asking how much or when you’re going to be compensated?

Continued success!!!

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