The Federal Trade Commission has filed a complaint charging that marketers of online “shopping malls” were in fact operating an illegal pyramid scheme.
The FTC seeks to prohibit NexGen3000.com and its principals from engaging in future pyramid operations, making misleading earnings claims, and providing others with the means to make deceptive claims for any multi-level marketing program.
According to the FTC, since 2000, Tucson, AZ-based NexGen3000 marketed Internet shopping malls it claimed would allow investors to earn income and commissions on products purchased through the Web.
Consumers paid a registration fee to join the NexGen program, and most also purchased a “WebSuite” including the Internet mall and related goods and services, the FTC claimed. Fees ranged from $185 for a “Basic WebSuite” to $555 for a “Power Pack WebSuite.”
The complaint also alleges that most consumers lost money in the operation despite claims of substantial income. The papers also state that the defendants provided deceptive marketing material to affiliates, thereby giving them the means to deceive others. The FTC further claimed that the defendants failed to disclose that a substantial percentage of participants would lose money, and that the scheme was actually an illegal pyramid.
The Commission has asked the court to bar permanently the corporate and individual defendants from engaging in the violations of the FTC Act alleged in the complaint. The FTC is seeking a permanent ban on the deceptive acts, and consumer redress for victims of the scam.
The complaint, on file at U.S. District Court for the District of Arizona, named NexGen 3000.Com Inc; Globion, Inc.; Infinity2, Inc.; David A. Charette; Jennifer K. Charette; Robert J. Charette, Jr.; Marta H. Charette; Stephen M. Diamond; Christine A. Wasser; and Edward G. Hoyt.
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