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*FTC, USPS, Attorneys General Announce Internet Pyramid Sweep

The Federal Trade Commission and other federal and state agencies announced a nationwide law enforcement sweep at a press conference in San Diego yesterday, designed to police the Internet for illegal pyramid schemes.

As a result of the surf, which took place yesterday and is taking place today, the FTC will send messages to sites identified that says pyramid schemes are illegal in the United States.

“We know these illegal pyramid schemes are being promoted out on the 'Net,” said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. “We're using these surf days to remind the promoters that we're out on the 'Net, too. We've swept for pyramid scams in the past, and we promised pyramid promoters that we'd be back. We're committed to taking on the con artists who think they can use the Internet to promote illegal schemes.”

The FTC and state law enforcement officials have pledged to continue this sweep and will announce additional actions targeting Internet pyramid schemes in the next few months. The North American Securities Administrators Association, U. S. Postal Inspection Service, Securities and Exchange Commission 27 state Attorneys General, and other state and local law enforcers are all taking place in the sweep.

State and federal officials also announced at the conference that they have taken 33 law enforcement actions against 67 defendants promoting Internet pyramids over the past year.

In conjunction with the sweep, the FTC also announced that it has filed suit in federal district court charging that Five Star Auto Club, Inc. and two of its principals lured online consumers to invest in their pyramid scheme by claiming that an annual fee and $100 monthly payments would give consumers the opportunity to lease their “dream vehicle” for “free” while earning between $180 and $80,000 a month by recruiting others to join the scheme.

The FTC alleged that the vast majority of participants could neither lease a “free” car, nor earn money from joining the scheme. On March 8, a federal district court halted the scam and froze the defendants' assets, pending trial. The FTC will seek a permanent injunction on the conduct and will ask the court to order consumer redress for its victims. The office of the New York State Attorney General, in coordination with the FTC, has filed a law suit against 5 Star Auto Club in New York State Supreme Court.

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