A top distributor in a multilevel-marketing program, who deceptively led prospective recruits to believe they would be applying for marketing jobs and that they would make a substantial income, has been banned from the multilevel marketing industry and has paid $5,000 to settle Federal Trade Commission charges.
In addition, the defendant is further prohibited from making any material misrepresentations about other business opportunities she may promote in the future.
The defendant, Sandra Lee Jacobson, was a high-level distributor for Trek Alliance (Trek), a multilevel-marketing company that sold water filters, cleaning supplies, nutritional supplements, and beauty aids.
Jacobson had previously been a distributor for Equinox International, a company operating an alleged pyramid scheme that the FTC sued in 1999. The FTC sued Trek and its principals in December 2002. That case is still in litigation.
Jacobson helped start and manage numerous Trek training centers, which functioned primarily as recruitment centers. Distributors who worked in these training centers often used classified ads, in the Help Wanted section, to solicit new recruits.
The FTCs complaint alleged that, in numerous instances, prospective recruits were deceptively told that they could expect to receive substantial income, and that salaried employment positions were being offered.
The complaint further alleged that Jacobson participated in making these misrepresentations and provided the means and instrumentalities for other distributors to make these misrepresentations. It also accused Jacobson of participating in Trek's marketing of an illegal pyramid scheme.
In addition to the ban on multilevel marketing and the prohibition against making future material misrepresentations, the order also bans Jacobson from helping others make misrepresentations when selling business opportunities.
As part of the stipulated final order, a judgment was entered against Jacobson in the amount of $804,813 -- the amount Trek paid her in commissions. The amount was reduced to $5,000 based on financial documentation provided by the defendant.
If it is found those documents were falsified, she will be responsible for the full amount. Finally, the order contains standard monitoring and record-keeping provisions.
The State of Maryland was a co-plaintiff in this case with the FTC. This order settles all of the FTC's and all of the State of Maryland's charges against Jacobson.
