MI2N
Music Industry News Network
TUESDAY, AUGUST 30TH
Advanced Search
MusicDish Advertising Network
Subscribe to Mi2N's Free Newsletters B2N (business) i2N (indie)
HOME | FREE NEWS SUBMISSION | PREMIUM PR DISTRIBUTION | PR COPYWRITING | RSS FEEDS | TESTIMONIALS | CONTACT

Sections: Band | Business | Career | Events | Label | Music Releases | Radio | Tech | Video | Web Events
Genres: Country/Folk | Dance/Electronica | Jazz/Blues | Latin | Rock | Urban | World
International: Asia | Canada | Europe

Advertise | Artist Development | Submit Video | MusicDish*China | MusicDish e-Journal | MusicDish Network | Urban Music News Network
Web Events (more headlines) 06-07-2014

U.S. Appeals Court Affirms Ruling In Favor Of FTC, Upholds Lower Court Order Against BurnLounge Pyramid Scheme

Bookmark and Share

In a victory for the Federal Trade Commission, a federal appeals court has upheld a district court ruling that BurnLounge, a multi-level marketing business, and several associated individuals, operated a pyramid scheme causing millions of dollars of consumer harm. The court order permanently halted the defendants' marketing methods, which lured more than 56,000 consumers by pretending to be a legitimate multi-level marketing program and making misleading claims about how much money participants could earn.

In 2007, the FTC alleged that BurnLounge Inc., Juan Alexander Arnold, John Taylor, Rob DeBoer and Scott Elliott sold opportunities to operate on-line digital music stores, but that the scheme was really an illegal pyramid scheme. In 2008, Elliott agreed to a settlement with the FTC that prohibited him from participating in any pyramid scheme or other prohibited marketing scheme, and from making false earning claims, and required him to give up $20,000 in ill-gotten gains.

In 2012, the U.S. District Court for the Central District of California, Western Division, ordered the other defendants collectively to pay $16.2 million in redress, and prohibited them from engaging in pyramid, Ponzi, or chain letter schemes or any schemes in which compensation for recruitment is unrelated to the sale of product to customers who are not participants. The order also barred them from making misrepresentations about multi-level marketing operations or business ventures, including misrepresentations about sales, income, profitability, or legality.

BurnLounge, Arnold and Taylor appealed the district court ruling. On June 2, 2014, the U.S. Court of Appeals for the Ninth Circuit upheld the lower court's findings, stating, in part, "We agree with the district court that BurnLounge was an illegal pyramid scheme . . . because BurnLounge's focus was recruitment, and because the rewards it paid in the form of cash bonuses were tied to recruitment rather than the sale of merchandise."

The appeals court found that the legal test of a pyramid scheme does not require that the rewards be "completely" unrelated to the sale of products. The court noted that "[r]ecruiting was built into the compensation structure in that recruiting led to eligibility for cash rewards, and more recruiting led to higher rewards." The court further stated that in this instance "the rewards for recruiting were 'unrelated' to sales to ultimate users because BurnLounge incentivized recruiting participants, not product sales."

Bookmark and Share

back | top



MusicDish Advertising Network

Mi2N Music PR

"Your Desert My Mind" Is The Latest Album From Punk Rockers The Mutants Released By Killer Tracks

Are The PondHawks Chicago's Best Kept Music Secret?

Back To The Roots EP 12"LP

Independent Artist Holds Top 10 Billboard Position At #8

Trump Helps Artist Finish Album

Summer In The City Gets A Little Hotter With Uptempo Pop Romp 'L.A. Nights' From Indie Singer/Songwriter/Producer Ayhan Sahin

MusicDish*China Acts Menage And Ooberfuse To Perform China's MTA Festival



MusicDish*China Song Blast
Promote Your Music Single In China

News Headlines
Mi2N EDITOR'S PICKS
» Authors Against Music Piracy: Regional Court Munich Sentences Online Service Uploaded To Pay Damages
» Transform Your MIDI File Into An Acoustic Piano Track
» Seattle Digital Label CIN SEA Music Group Signs Distribution Deal With Affluent Records
» CMRRA Announces YouTube Licensing Agreement For Canada
» TuneIn Announces Partnership With Red Bull Music Academy
» BMG US Names Alex Flores Senior Vice President, Marketing, Commercials, Film & Television
» Bandtango Technology Empowers Broadcasters And Artists To Prevent Exploitation By Performance Rights Organizations
» Canadian Rock Band Menage "Lost In China" Tour
» Jade Alger Brings Mischief, Mystique And The Muse
» CES 2017 Music Contest: Open Call For All Musicians And Artists


Get your music news covered...
Have your press release written
by the pros at Mi2N

Articles
MUSICDISH E-JOURNAL
» First Tennessee Hires Andrew Kintz To Lead New Music Industry Banking Group
» Carsick Cars, Chui Wan, Alpine Decline Headline October Tour Of North America
» WANG WEN: Experimental Post-Rock Unit To Release Ninth Studio Album
» TMA Signs CCM Artist John Clark Blackwell To Management
» UK Festival Market Driven By "Super Fans"
» CES 2017 Music Contest: Open Call For All Musicians And Artists
» Victory Records Releases Statement On A Day To Remember Court Case
» Digital Domain Jointly Produces Chris Lee's First VR Music Video With Whaley VR And VS MEDIA
» Andy Ma Named As Warner Music Group's Chief Commercial Officer For Greater China
» Qixi Festival (Chinese Valentine's Day) Playlist
» MusicDish*China Acts Menage And Ooberfuse To Perform China's MTA Festival
» 7th Annual Future Music Forum & Sync Summit: Finding The Next Music Industry

Mi2N's Music PR distribution service guarantees online exposure for your press release. Choose from seven (7) different packages.


HOME | FREE NEWS SUBMISSION | PREMIUM PR DISTRIBUTION | PR COPYWRITING | RSS FEEDS | TESTIMONIALS | CONTACT

Sections: Band | Business | Career | Events | Label | Music Releases | Radio | Tech | Video | Web Events
Genres: Country/Folk | Dance/Electronica | Jazz/Blues | Latin | Rock | Urban | World
International: Asia | Canada | Europe

Advertise | Artist Development | Submit Video | MusicDish*China | MusicDish e-Journal | MusicDish Network | Urban Music News Network
Copyright © 1997-2015 MusicDish LLC, all rights reserved. Text, graphics, and HTML code are protected by US and International Copyright Laws, and may not be copied, reprinted, published, translated, hosted, or otherwise distributed by any means without explicit permission.