MI2N
Music Industry News Network
THURSDAY, JULY 2ND
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

Angela Chen And Tiffany & Co. Host A Cocktail Reception For The National Ballet Of China

365 Days From Dusk Till Dawn: DDC 1 Year Anniversary Program

The 12th Annual IAMA (International Acoustic Music Awards) Kicks Off

Xprnc Media Working With Eagle Rock On National Promotion Of Rolling Stones Release

From North Korea To NYC - Shanghai DJ B.O Spins Libation & Leftfield

Tamara Laurel's "Whiskey" Recorded At Hybrid Studios

Johnoscar Releases "Cinema Paradiso: A Night At The Movie

Armonite's Album 'The Sun Is New Each Day' Available On June 19, 2015



MusicDish*China Song Blast
Promote Your Music Single In China

News Headlines
Mi2N EDITOR'S PICKS
» Copyright In Canada Extended To 70 Years For Sound Recordings
» Willcox Guitars Offers Atlantis ElectroAcoustic Guitar
» Sirius XM Agrees To Pay For Recordings Released Before 1972
» TELEFUNKEN Teams With JamBase For 50th Anniversary Grateful Dead Video Series
» Kangol Teams Up With Ten Underground Record Labels To Launch Radio Kangol
» Ocean Way Audio Appoints Rick Plushner President
» Ethical Ticket Exchange Scarlet Mist Relaunches
» Seminar To Mix Footie Fan Engagement With West End Ticketing Wisdom
» Tuomas Holopainen Talks To LA Metal Media
» Doug Briney, Xander Demos And MTS Join Billy Yates, Paradigm Talent Among 2015 CMG Award Winners


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

Articles
MUSICDISH E-JOURNAL
» 365 Days From Dusk Till Dawn: DDC 1 Year Anniversary Program
» The Challenges Of Learning How To Play Drums
» Blue Note Entertainment Group Further Expands East With New Venue In Beijing
» From North Korea To NYC - Shanghai DJ B.O Spins Libation & Leftfield
» Bay Area Chinese Music Association Presents Second Hand Rose West Coast Show
» Cooking Vinyl's Martin Goldschmidt Calls For Direct Tax Breaks For Music
» Strong Opportunities For International Tech Manufacturers Among Chinese Consumers
» New Island Entertainment Presents Second Hand Rose @ New York's Santos Party House
» MusicDish*China Tours, Signing, NYCxDesign And Planetrox
» Award-Nominated DJ Soulier Performs At Beijing's Award-Winning DDC
» Second Hand Rose "Crossing Boundaries" World Tour
» CMW Live Touring Summit: Interview With Elliott Lefko

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.