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 FTC’s 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 alleged that Jacobson participated 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 prohibits 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. The order announced today settles all of the FTC's and all of the State of Maryland's charges against Jacobson. The FTC appreciates the assistance of the Maryland Attorney General’s office in this case.
The Commission vote authorizing the staff to file the stipulated final order was 4-0. The stipulated final order for permanent injunction was filed in the U.S. District Court for the District of Maryland on September 6, 2005.
NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order has the force of law when signed by the judge.
Copies of the stipulated final order 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 for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), 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 at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Office of Public Affairs
John Jacobs or Jennifer Brennan,
FTCs Western Region, Los Angeles
Maryland Attorney Generals Office