Fortune Hi-Tech Marketing Hit with Class Action Suit

by louabbott on September 3, 2010

In a 42 page document (exclusive of Exhibits) plaintiffs Yvonne Day , Leonard Haslag , James McCormick  and John W. Turner filed a class action law suit against Fortune Hi-Tech Marketing, Inc. (FHTM), the company, the owners, officers, some employees and distributor leaders.  In blistering language and drawing on the recent legal actions by the States of Montana and North Dakota, the suit alleges that FHTM is, and always has been, an “illegal pyramid” scheme and is a “Racketeer Influenced and Corrupt Organization.”

The video on this page is part of a business presentation of the Fortune Hi Tech Marketing compensation plan by Presidential Ambassador, Joel McNinch, that is quoted in the lawsuit.

Others named in the lawsuit are:

Paul C. Orberson, Jeff Orberson, Thomas A. Mills, David Mills, Billy Stahl, Simon Davies, Ruel Morton, Todd Rowland, Ashley Rowland, Todd & Ashley, Inc., Mike Misenheimer, Steve Jordan, Joel McNinch, Chris Doyle, Ken Brown, Jerry Brown, Bob Decant, Joanne McMahon, Terry Walker, Sandi Walker, Sherri Winter, Trey Knight, Kevin Mullins, Scott Aguilar, Molly Aguilar, Nathan Kirby, Dwayne Brown, Aaron Decker, Susan Frank, Ramiro Armenta, Angelina Armenta, Alexis Adame, Teresa Adame, Darla DiGrandi, Matt Morse, Matt Barrett and Roberto Rivera

The suit seeks to close down the company through injunctive relief and recover treble  damages, costs, and attorneys’ fees.

The law firm for the class action suit is:

DINSMORE & SHOHL LLP
1400 PNC Plaza
500 West Jefferson Street
Louisville, Kentucky 40202
(502) 540-2300 (Telephone)
(502) 585-2207 (Facsimile)
kenyon.meyer@dinslaw.com

Copy of the full law suit can be downloaded here.

Interested persons can follow the development of the law suit at Justia Dockets and Filings.

Mr. Jason Baker, who was identified to me at FHTM as general counsel for the company was not immediately available for comment.

Updated: September 4, 2010

According to an article and video at WHAS11.com, a Louisville Kentucky TV station, Former Kentucky Attorney General Chris Gorman, a Fortune “legal advisor,” had this to say:

“The best thing and the fairest thing for everybody is to try the case in the court and that’s what we intend to do. We intend to fight this case vigorously,” Gorman said.

Gorman points out that Dish Network was giving a presentation at Fortune Fest, disputing the lawsuit’s claim that fortune doesn’t have a sales partnership with dish.

He says cease and desist lawsuits are now settled.

“Today, we’re doing business in Montana. Montana does not think we’re a pyramid. Otherwise they would not let us do business,” said Gorman.

Gorman did not mention that in the settlement with Montana, FHTM was required to make significant changes to how the company does business in the State, pay a fine of $100,000, and to refund up to as much $840,000 to Montana participants.

Editor Opinion

While I am hardly qualified to judge the merits of the case on solely legal issues -  like whether the suit has been properly filed, whether the jurisdiction is correct, and whether it is properly framed, etc. – there is little question in my mind that this presents a huge business challenge for FHTM and consequently, for all of their distributors. Regardless of the outcome of the case, with this news capping the other recent legal challenges to the ‘business opportunity,’ it is bound to become very difficult, if not close to impossible to effectively recruit.  Without new recruits, it would seem doubtful that the company can stay in business.

At the heart of the lawsuit is the issue that all networkers need to understand. For a company to stand legal scrutiny, distributors (associates, IBOs, IRs, representatives, whatever) cannot in any way shape or form be compensated for recruiting other distributors.

The law suit makes this allegation that could, in fact, be made against many MLM companies:

85. Fortune’s commission structure makes this possible by allowing IRs [Independent Representatives] to earn commissions on sales without ever actually selling anything to a customer outside the Fortune Pyramid. In fact, prospective IRs are told while joining Fortune that they must purchase certain products to earn their first “customer points” and therefore allow bonuses to be paid to their sponsors.

While the FHTM compensation plan ties the payment of commissions and bonuses to getting customers (at least 3) as measured by “customer points,” in actual practice, the lawsuit alleges this:

90. These “active personal customers” need not be actual human beings, let alone human beings outside of the Fortune Pyramid; rather, a product or service purchased from Fortune by the IR him or herself qualifies as a “customer” for purposes of allowing IRs to receive commissions and bonuses. The “customer points” assigned to each Fortune product or service determine how much of any given Fortune product or service must be purchased to qualify as one customer.

91. A “Customer Point Sheet” provided to new IRs explains what products or services may be purchased to qualify as a new “customer.” As an example, the purchase of $39.99 of True Essentials products by an IR counts as one “customer” and one “customer point.”

92. To obtain the required three customer points, new IRs are encouraged to merely purchase Fortune products and services themselves, rather than attempt to sell them to outsiders. Potential IRs are frequently told at recruiting meetings that they are already paying for the types of  products and services offered by Fortune – e.g., television, Internet service, cellular phone service,vitamins or travel – so they should simply switch from their current service provider to a product offered by Fortune.

93. Although one of the three “customers” purportedly must be “other than his/her own personal or household account”, Fortune neither tracks nor enforces this policy, and the policy itself permits this customer to be another IR.

One of the 12 Critical Success Factors I teach in the MLM The Whole Truth Special Report and Course, is “#8 – Are there Real Customers?”  The test is essentially this: can it be demonstrated that there exists a significant percentage of customers buying the company’s products or services who do so even though they are NO part of the compensation plan?

If the answer is ‘yes,’ probably any other legal issues that may exist can be fixed.  If the answer is ‘no,’ any other legal manipulations may not suffice to prevent the company from being attacked as illegal.

I am actually shocked at how many companies would probably fail that test if the true numbers were known.  And, I am then further concerned as to how many distributors have no idea that the company is then vulnerable.

It is also important for network marketers to understand that each of the named defendants, including company principals, officers, management, and distributor leaders,  are being accused of participating “in a pattern of racketeering activity,” not just the FHTM corporation:

173. Each defendant is a “person” for purposes of RICO, 18 U.S.C. § 1962, because each defendant is, and was at all relevant times, an individual or entity capable of holding legal or beneficial interest in property.

174. All of the defendants in this action collectively form an “enterprise” under RICO, 18U.S.C. § 1962, in that they are a group of individuals and entities associated in fact, although not a legal entity.

175. In the alternative, the enterprise consisted of Fortune, which is controlled by defendants Paul C. Orberson, Jeff Orberson, Thomas A. Mills, David Mills, Billy Stahl, and Simon Davies.

176. In the alternative, the Fortune Pyramid is an enterprise, in that it is an association in fact of all defendants and others which, although not gathered under any legal entity, operates the illegal pyramid scheme to draw new investors to Fortune.

177. The defendants engaged in a pattern of racketeering activity by participating in a scheme and artifice to defraud in violation of the mail and wire fraud statutes, 18 U.S.C. §§ 1341 and 1343.

If this line of argument stands, distributors who plan on succeeding and achieving top leadership status had better be sure that the company they represent can stand rigorous legal scrutiny for reasons other than it makes good business sense – they can end up being sued or even going to jail along with the principles of the company!

I welcome informed and thoughtful comments below.

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{ 98 comments… read them below or add one }

I know the truth September 14, 2012 at 9:21 pm Thumb up 3 Thumb down 0

FHTM lost in federal court appeal yesterday. A judge has thrown out the arbitration agreement since no one had ever signed one or even saw it for that matter, But that was not the reason the judge named, You need to read it for yourself. Now the case will move forward. I know this is a huge surprize to all of the FHTM followers who were lied to that it was over. In fact the only thing the judge said last time was it was going to arbitration, never at anytime did she say they had won. Now that she has been shown the error of the law rulings she has changed this. Sorry, it is just another lie they have told you to futher the BS they give you. The court document can be seen on Troy Dooleys website and I am sure it will be posted on http://www.fhtmfacts.webs.com.

Reply

FHTM Facts September 3, 2012 at 7:51 am Thumb up 2 Thumb down 1

FHTM graduates from Pyramid Fraud to attempted murder!!

It is so incomprehensible to understand how a company (Fortune Hi-Tech Marketing) that claims its mere existence is to help as many as possible, with help of the church, can also be so obnoxiously arrogant to believe they can manipulate the justice system to a point where they can push someone to death. After exposing the truth about Fortune Hi-Tech Marketing (FHTM) the whistleblower was sued in an attempt to shut him up and stifle his rights to freedom of speech.

“If the fate of your business model rests at the hands of one individual, (not me) to the extent that you have to spend millions of dollars to try and shut him up then the system is just fatally flawed. Fix the PROBLEM not the SYMPTOM. This is all just a side effect of what you have created. I don’t see the worst of the worst companies out there that act like this or have to put up with this nonsense. What’s the common denominator? Stop acting like 3rd graders and run a business for once”, says Rob Jenkins.

Not only are they arrogant enough to think they have to the right to destroy Mr. Isaacs financially, but they continue, to this day, the harassment and intentional lies to the Federal courts and American Arbitration Association until he was on his death bed almost gone. Their briefs and motions totally elude any factual statements and are based on unsubstantiated speculation and outright falsities, just like the foundation of their business since 2001. For 10 years they have claimed partnerships with Fortune 500 companies, being 100% debt free, solid enterprise and a money making franchise opportunity.

When you peel the outside off of this lemon one discovers the bitterness and the exact opposite is true. They are also on the FTC Operations Empty Promises list of companies being investigated for illegal activities. During the settlement with Texas AG in 2011 they claimed to not have enough money to pay back the 1+ Million in restitution yet they have found the funds to persecute the whistleblower that brought it all to light.

FHTM has not only engaged in a malicious prosecution since the very beginning but they have had their representatives call and threaten Mr. Isaacs life. Filing a trademark violation case for using the world “Fortune” which they knew was owned by Time Magazine, and not them, was just a way to take advantage of the system by someone with more money that the poor defendant had. The ex- FHTM general counsel, Judy Hammerschmidt, who was not even licensed to practice law in Kentucky, during her tenure with FHTM, has displayed a great deal of malice and wrongful intent. Her attempts at intimidation as their general counsel were hilarious considering the fact that she was acting as a lawyer illegally. She has since been reprimanded by the Kentucky Bar Association. No evidence existed or exists to back any of their claims. If FHTM had a case with legal merit they would have never agreed to a settlement and dismissal in June 2011. They didn’t win anything as they have rumored through the ranks of their cult-like followers.

Reply

louabbott September 3, 2012 at 10:01 am Thumb up 1 Thumb down 0

Attempted murder? Wow. That’s quite an accusation, ‘FHTM Facts’! Who are you? Are you prepared to present evidence of that? Or perhaps I should delete your post?

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Chad December 16, 2012 at 12:41 pm Thumb up 0 Thumb down 0

It is obvious that FHTM legal team is out to kill Mr. Isaacs. Their harassment has caused lifelong medical issues. There are tons of facts to back up these claims.

Reply

louabbott December 16, 2012 at 1:10 pm Thumb up 1 Thumb down 0

Chad – there is a big difference between saying there are facts and presenting the facts. Again, serious charges. Tons of facts are not needed. Some would elevate the credibility of your statements.

Reply

jospeh isaacs December 28, 2012 at 8:15 am Thumb up 0 Thumb down 1

The story written is 100% factual and true. Due to the prolonged frivolous lawsuit that had NO merit (i.e.a settlement in 6/11) I suffered 2 life threatening major heart attacks. My widow maker artery in my heart was 98% blocked due to STRESS! Since the settlement I have suffered a third minor heart attack and will have damage to my heart muscle for the rest of my life. Fortune wasn’t satisfied with the settlement and going our separate ways. They have lied, cheated, misrepresented facts and continued their intentional harassment of me during the last 18 months. They refuse to let sleepy dogs lie. I will not release my medical records. FHTM has even gone as far as violating FERPA by illegally obtaining my high school transcripts. They wont be satisfied until I am bankrupt or dead.

Mona April 27, 2012 at 12:09 pm Thumb up 2 Thumb down 1

My Boyfriend’s Boss is a new member and She wants both of us to join this so called wonderful event. I listened to her presentation with her partner who has been a member for years. I was not impressed with the presentation and they sounded like beginners in the company and everytime I asked a question they never would give me a straight answer. I noticed that they just kept pushing both of us to sign and join the so called family and learn the business later. They did not share any hidden fees out there. Which I read about later on. I told my boyfriend I am still not sold on this so called I can make more money then working my current job.

Reply

Dan February 24, 2012 at 8:27 pm Thumb up 2 Thumb down 1

Only of the 3 lawsuits is over. There is still a pending Class Action Lawsuit in California, An individual lawsuit, the FTC operation Empty Promises investigation, the North Carolina Attorney General Investigation. Too many red flags still out there.

Reply

Gabe February 23, 2012 at 8:10 am Thumb up 3 Thumb down 5
Bruce March 20, 2012 at 7:04 pm Thumb up 2 Thumb down 0

An appeal was filed today. The first of two Class Action lawsuits isn’t over yet!
http://www.fhtmscamnews.com/FHTM_Appeal_03.20.12.pdf

Reply

I know the truth September 14, 2012 at 9:14 pm Thumb up 3 Thumb down 0

The lawsuit is NOT over! In fact the arbitration agreement was knocked out and the case is going to trail. You can see it on Troy Dooleys website and I am sure it will be posted on http://www.fhtmfacts.webs.com soon.
Can’t wait for everyone to hear all of the other illegal aweful stuff that has been uncovered!

Reply

Patricia August 11, 2011 at 11:34 am Thumb up 4 Thumb down 1

I was a victim of Fortune Hi Tech Marketing Scam. I there any way a can add my name to the Class Action Law Suit.

Patricia Andrews
pa1andrews@gmail.com

Reply

Dan March 22, 2011 at 10:23 am Thumb up 5 Thumb down 1

North Carolina’s Attorney General Roy Cooper and the Dept. of Jutice joins nationwide crackdown on business opportunity rip offs. FHTM is one of them:

http://www.ncdoj.gov/News-and-Alerts/News-Releases-and-Advisories/Press-Releases/Cooper-joins-nationwide-crackdown-on-business-oppo.aspx

Link to FTC’s Operation Empty Promises List where FHTM is listed:
http://www.ftc.gov/os/2011/03/110302emptypromisesstate.pdf

Reply

Fernando March 7, 2011 at 9:00 pm Thumb up 6 Thumb down 2

FTC now involved in the investigation on FHTM in what is known as “Operation Empty Promises.”

http://www.docstoc.com/docs/73064536/NCDOJ-and-FTC-Nail-FHTM-for-illegal-business-practices

Reply

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