FTC Suit Accuses Firm of Pyramid Scam

The Federal Trade Commission announced a lawsuit against a business operation accused of using illegal pyramid schemes to cheat consumers out of $200 million. Six state attorneys general joined in the complaint, filed in U.S. District Court in Nevada, against Equinox International Corp. and its affiliates, Advanced Marketing Seminars Inc. and BG Management Inc. The companies are based in Las Vegas, and the suit also names their founder, William Gouldd. The commission charged the operators of the business with misrepresenting the potential profits to be earned by participants. While the companies purport to sell water filters, vitamins, nutritional supplements and skin-care products, the real way participants make money is by successfully recruiting other distributors, not by actual retail sales, the FTC said. New participants paid money to the company for the right to sell its products, according to the complaint. According to the FTC, the scheme has caused more than $200 million in consumer injury. Both Equinox and BG Management declined to comment. The court has granted a temporary restraining order against the company and placed it in receivership. Gouldd has been the subject of law enforcement action before. California filed suit against him in 1990 for his work as a distributor of another multilevel marketing scheme. He signed a permanent injunction that barred him from future pyramid schemes.