Monday, January 29, 2001

Pyramid scheme case settled

Denver Business Journal

The principals of a marketing company purportedly selling nutritional supplements and beauty products have settled with the federal government.

The company and its products were actually a pyramid scheme that took in $80 million between 1997 and 1999. The company is known as 2Xtreme Performance International, as well as USAssurance Group/Akahi and as AFEW Inc. and was based in Denver and Dallas.

Pyramid schemes are illegal.

The settlement with the Federal Trade Commission resulted in fines against two defendants. John Polk must pay $833,000 in penalties, with another $1.16 million in fines if the financial information he provided is inaccurate. He's also barred for life from participating in similar marketing programs. Defendant Patrick Ferah must pay $25,000 in penalties, with another $475,000 fine to be imposed if the financial information he gave is wrong. A third defendant, Peter Hirsch, settled with the FTC in September and doesn't have to pay any fines.

 

 

ABOUT USFE?

Michael Jarmana, CEO

Bish Mubarak, President

Doug McCoy, COO

Patrick Ferah, CFO

Brian Kennedy, VP Sales & Marketing

Steve Jarmana, VP Sales & Marketing

Preet Dhillon, VP Sales & Marketing

 

http://www.ftc.gov/opa/2001/01/2xtreme.shtm 

For Release:  January 29, 2001

Pyramid Promoters Settle FTC Charges

Promoters of a pyramid scheme that disguised itself as a legitimate multi-level marketing business have agreed to settle Federal Trade Commission charges that the scheme violated federal law. The settlements contain a lifetime ban on the defendants from any involvement in any multi-level marketing program. One defendant, John T. Polk, will also be banned from involvement in any business opportunity offer and barred from selling or sharing any information about the consumers who joined the pyramid. Defendant Patrick Farah will be barred from misrepresenting business opportunities. The settlements contain judgments totaling $2.5 million, $1.4 million of which will be suspended based on financial disclosures provided by the defendants. Should the disclosure documents be found to be inaccurate, the entire $2.5 million will become immediately payable.

On December 9, 1999, the FTC filed suit in U. S. District Court for the District of Maryland seeking a preliminary and permanent injunction and an asset freeze against Dallas-based 2Xtreme Performance International, its successor, Denver-based USAsurance Group/Akahi, AFEW, Inc., and three individual defendants, John T. Polk, Patrick Farah, and Peter Hirsch. The FTC complaint alleged that the defendants used Web sites, direct mail, infomercials, telemarketing and seminars to convince consumers they could make substantial income by investing in their multi-level marketing scheme, which marketed nutritional supplements, beauty, weight-loss and other products. Marketing materials represented that consumers could expect to earn enough income to retire in two to five years.

The FTC alleged that the earnings claims were false and that 2Xtreme's practices violated federal law. The FTC charged that since 2Xtreme was actually a pyramid, consumers could not earn the specific levels of income touted in the marketing materials. In fact, most consumers would lose money, the complaint says. In addition, by providing promotional materials containing the misrepresentations about income to its participants, 2Xtreme was providing them with the "means and instrumentalities" to violate federal law.

On September 5, 2000 the Commission approved a Stipulated Final Judgment and Order with Peter Hirsch. The settlements announced today settle the suit with respect to Polk, Farah and AFEW.

The settlements will bar the defendants from "engaging in, participating in, promoting, advertising, marketing, offering for sale, selling, or assisting in any manner or in any capacity whatsoever in any multi-level marketing program." Polk will also be barred from any involvement in any business opportunity in the future and from selling, renting, leasing or transferring personal identifying information, including bank account or credit card numbers, of the consumers who signed up for the pyramid. Farah will be barred from misrepresenting the "sales, income, profits or rewards" a person can expect to achieve or has achieved from any business opportunity he's associated with or from misrepresenting that a person who acquires the business opportunity can reasonably expect to recoup his investment. The settlements contain financial judgments of $2 million against Polk and $500,000 against Farah. Polk's judgment will be satisfied by payment of $833,000 to the United States Attorney for the District of Maryland in the matter of United States v. John T. Polk, a criminal matter in which Polk was convicted for developing a real estate investment scam, provided that financial disclosures furnished by the defendant prove to be valid. Should the financial disclosure prove inaccurate, the entire $2 million will be immediately due and payable. Farah's $500,000 judgment will be satisfied by payment of $25,000 with a similar "avalanche" clause that would require payment of the entire $500,000 should financial disclosure information provided by Farah prove to be false. The settlements also contain standard record keeping provisions to allow the FTC to monitor compliance.

The Commission vote to accept the consent judgments was 5-0.

NOTE: Stipulated final judgments and orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the stipulated final judgments and orders and previous news releases in the matter are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works to prevent fraudulent, deceptive and unfair business practices. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form.

Media Contact:

Claudia Bourne Farrell

Office of Public Affairs

202-326-2181

Staff Contact:

David Torok

Bureau of Consumer Protection

202-326-3075

(FTC File No. X000018)

Please google Patrick Ferah & FTC, he has been involved with Pyramid Schemes. This is just food for thought, I thought it was interesting the comment about changing the name several times. These were just copied and pasted in their entirety. There is contact information for the Federal Trade Commisison. Please read the bottom half carefully.

The settlements will bar the defendants from "engaging in, participating in, promoting, advertising, marketing, offering for sale, selling, or assisting in any manner or in any capacity whatsoever in any multi-level marketing program." Polk will also be barred from any involvement in any business opportunity in the future and from selling, renting, leasing or transferring personal identifying information, including bank account or credit card numbers, of the consumers who signed up for the pyramid. Farah will be barred from misrepresenting the "sales, income, profits or rewards" a person can expect to achieve or has achieved from any business opportunity he's associated with or from misrepresenting that a person who acquires the business opportunity can reasonably expect to recoup his investment.

Monday, January 29, 2001

Pyramid scheme case settled

Denver Business Journal

The principals of a marketing company purportedly selling nutritional supplements and beauty products have settled with the federal government.

The company and its products were actually a pyramid scheme that took in $80 million between 1997 and 1999. The company is known as 2Xtreme Performance International, as well as USAssurance Group/Akahi and as AFEW Inc. and was based in Denver and Dallas.

Pyramid schemes are illegal.

The settlement with the Federal Trade Commission resulted in fines against two defendants. John Polk must pay $833,000 in penalties, with another $1.16 million in fines if the financial information he provided is inaccurate. He's also barred for life from participating in similar marketing programs. Defendant Patrick Ferah must pay $25,000 in penalties, with another $475,000 fine to be imposed if the financial information he gave is wrong. A third defendant, Peter Hirsch, settled with the FTC in September and doesn't have to pay any fines.

 

 

ABOUT USFE?

Michael Jarmana, CEO

Bish Mubarak, President

Doug McCoy, COO

Patrick Ferah, CFO

Brian Kennedy, VP Sales & Marketing

Steve Jarmana, VP Sales & Marketing

Preet Dhillon, VP Sales & Marketing

 

http://www.ftc.gov/opa/2001/01/2xtreme.shtm 

For Release:  January 29, 2001

Pyramid Promoters Settle FTC Charges

Promoters of a pyramid scheme that disguised itself as a legitimate multi-level marketing business have agreed to settle Federal Trade Commission charges that the scheme violated federal law. The settlements contain a lifetime ban on the defendants from any involvement in any multi-level marketing program. One defendant, John T. Polk, will also be banned from involvement in any business opportunity offer and barred from selling or sharing any information about the consumers who joined the pyramid. Defendant Patrick Farah will be barred from misrepresenting business opportunities. The settlements contain judgments totaling $2.5 million, $1.4 million of which will be suspended based on financial disclosures provided by the defendants. Should the disclosure documents be found to be inaccurate, the entire $2.5 million will become immediately payable.

On December 9, 1999, the FTC filed suit in U. S. District Court for the District of Maryland seeking a preliminary and permanent injunction and an asset freeze against Dallas-based 2Xtreme Performance International, its successor, Denver-based USAsurance Group/Akahi, AFEW, Inc., and three individual defendants, John T. Polk, Patrick Farah, and Peter Hirsch. The FTC complaint alleged that the defendants used Web sites, direct mail, infomercials, telemarketing and seminars to convince consumers they could make substantial income by investing in their multi-level marketing scheme, which marketed nutritional supplements, beauty, weight-loss and other products. Marketing materials represented that consumers could expect to earn enough income to retire in two to five years.

The FTC alleged that the earnings claims were false and that 2Xtreme's practices violated federal law. The FTC charged that since 2Xtreme was actually a pyramid, consumers could not earn the specific levels of income touted in the marketing materials. In fact, most consumers would lose money, the complaint says. In addition, by providing promotional materials containing the misrepresentations about income to its participants, 2Xtreme was providing them with the "means and instrumentalities" to violate federal law.

On September 5, 2000 the Commission approved a Stipulated Final Judgment and Order with Peter Hirsch. The settlements announced today settle the suit with respect to Polk, Farah and AFEW.

The settlements will bar the defendants from "engaging in, participating in, promoting, advertising, marketing, offering for sale, selling, or assisting in any manner or in any capacity whatsoever in any multi-level marketing program." Polk will also be barred from any involvement in any business opportunity in the future and from selling, renting, leasing or transferring personal identifying information, including bank account or credit card numbers, of the consumers who signed up for the pyramid. Farah will be barred from misrepresenting the "sales, income, profits or rewards" a person can expect to achieve or has achieved from any business opportunity he's associated with or from misrepresenting that a person who acquires the business opportunity can reasonably expect to recoup his investment. The settlements contain financial judgments of $2 million against Polk and $500,000 against Farah. Polk's judgment will be satisfied by payment of $833,000 to the United States Attorney for the District of Maryland in the matter of United States v. John T. Polk, a criminal matter in which Polk was convicted for developing a real estate investment scam, provided that financial disclosures furnished by the defendant prove to be valid. Should the financial disclosure prove inaccurate, the entire $2 million will be immediately due and payable. Farah's $500,000 judgment will be satisfied by payment of $25,000 with a similar "avalanche" clause that would require payment of the entire $500,000 should financial disclosure information provided by Farah prove to be false. The settlements also contain standard record keeping provisions to allow the FTC to monitor compliance.

The Commission vote to accept the consent judgments was 5-0.

NOTE: Stipulated final judgments and orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the stipulated final judgments and orders and previous news releases in the matter are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works to prevent fraudulent, deceptive and unfair business practices. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form.

Media Contact:

Claudia Bourne Farrell

Office of Public Affairs

202-326-2181

Staff Contact:

David Torok

Bureau of Consumer Protection

202-326-3075

(FTC File No. X000018)

I worked for this company for a short time and I disagree with the fact that this co. is a "scam"  What these people aren't saying is that the job itself is a marketing position where you have to inform people about deregulation then if you sign them up you get a great commission.  I was even given help from an officer of the co on a big deal.  these ppl really just cant handle sales.  I have been in sales for pretty much my whole professional life and this company only helped me with learning more ways to close a customer.  I have moved on to another job and will shortly be in  another state but if they opened an office in south FL I'd probably jump at an opportunity to get in ground level in a new office.

Honestly, if you cant handle SALES AND MARKETING then look elsewhere but don't go complaining about how a company handles its training and subsequent business.
just my 2 cents. 

also i will be pasting this rebuttal in every report for Chicago.

I worked for USFE for about 7 months. I saw at least 70-100 people or "agents" come in and out. There's constant recruiting... There's a script for that, too. They get their potential contractors from schools. They went to a lot of universities and passed out surveys. They called all of the career-hungry students to come in for an interview, and for those who didn't answer their phones or refused the invitation, the recruiter keeps the phone number and calls again 2 or 4 more times! Little did the poor applicants know that anyone showing interest in the job with the "right" positive attitude gets a call-back that same night that they're hired. Then, they need to get "certified." It was a webinar for three days and at the end you have to a take an exam as many times until you pass. Then you get a call to be invited to come in for the in-class training. They did this cycle every week and yes, they buy lunch for the trainees. About 10 people will show up and at the end of the week, 2 or 3 people will stay and after that maybe a week later, only one remains. poor guy. The training was intensive. You have to stay very late at night and even work on weekends! For college students, it didn't work out. Eventually, they got banned from universities because of complaints from students. After exhausting their contacts from the schools, they started using craigslist and careerbuilder. But same cycle happens, 10 people in, all out by the following month. It's a classic revolving door. They were really vague on their salary terms and how the business really work. They target not so smart people in order to manipulate them in to memorizing their script to sell their "product" and doing almost everything to get the customer to sign for the 3 or 5 year contract. Here's the thing, it's a pyramid scam -- the agent does all the leg work, the team leader closes the deal and the area leader gets most of the commission. Its a classic poor gets scammed while the rich guy manipulates them. They were also blabbing non-stop about how they party hard and they show how relaxed the work environment is. They call it their "culture." What a terrible culture that is that they don't even know what ethics is. Its great and all that they give people with criminal background or low-paying jobs another chance, but to manipulate them? That's a whole-nother level! Once you get in to the culture -- by memorizing the 10 cardinal rules, then you're in. But wait, cardinal rules? Rules are fine, but one of the rules is about not being a "sheep", by telling you that the job is not a typical 9 to 5, guess what, its more like 7 to midnight! Talk about harsh working conditions! The department of labor should and must look in to this. Another sign that this is a scam, the Chicago location changed their name to Superior Energy or Superior Power, while the Dallas location is Texas First Energy. And their usfirstenergy.com website has been taken down. Are they hiding from anyone? IRS or FTC or Dept of Labor?

yep i was one of the employee's thier. I was their for almost a year everything that this person said was true to the bone. I had no hope fpr a new job so I invited us first energy into my life ohhh and what a diaster it was this isn't a company its an open eye ripoff half of the employee's weren't payed lucky for me I got their early enough to get my lil ole 1200 for training