FTC Charges NexGen in Pyramid Scam

The Federal Trade Commission yesterday charged the operators of an Internet-based business with operating an illegal pyramid scam.

The FTC said it will seek to bar the defendants from engaging in future pyramid operations, from making misleading earnings claims and from providing others with the means to make deceptive claims for any multi-level marketing program.

In a complaint filed in the U.S. District Court of Arizona, the FTC said NexGen3000.com, Tucson, AZ, and its principals have been marketing Internet “shopping malls” since 2000, claiming they would allow investors to earn “substantial income and commissions on products purchased through the Internet.” The malls contained a collection of links to retail Web sites maintained by merchants, the FTC said.

The FTC said the defendants advertised their business opportunity through NexGen’s Web site, live presentations and telemarketing calls, as well as maintaining a network of affiliates to promote and sell the malls. Consumers paid a registration fee to join the NexGen program, the FTC said, and most purchased a “WebSuite” for $185-$555.

The FTC voted 5-0 to file the complaint. It has asked the court to permanently bar the company and the defendants from engaging in the violations of the FTC Act mentioned in the complaint. Also named in the complaint are Globion Inc., Infinity2 Inc., David A. Charette, Jennifer K. Charette, Robert J. Charette Jr., Marta H. Charette, Stephen M. Diamond, Christine A. Wasser and Edward G. Hoyt.

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