MI2N
Music Industry News Network
SATURDAY, NOVEMBER 22ND
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

Gauge Introduces ECM-80 Vocal Microphone

Natalie Brown Releases "This Christmas" EP In Time For The Holidays

ABANDONED SOULS - NEW CD, "INSIGHTFUL MINDS AT EASE"

Rising Young Star Craig James Releases Debut Single, "(Maw Maw) Why Her?" Produced By Arden Lo

Supermodel Astronaut Challenge By Worldwide Groove Corporation Gaining Momentum In Wake Of Other Feminist Trends

All Music Guide Premieres Exclusive Stream Of Rachael Sage's "Blue Roses," Available In Stores Now!

New Hit Single "Impossible" JA The DragAn Ft. Gudda Gudda

Underground 114 (Rock Night)



MusicDish*China Song Blast
Promote Your Music Single In China

News Headlines
Mi2N EDITOR'S PICKS
» Record-Breaking Year At The Greek Theatre Under Nederlander Concerts Management
» The DJ Party 3.0 With Hercules Universal DJ
» Warner Music Group And Tencent Enter Groundbreaking Strategic Partnership In China
» Robert Kramer Guarantees "Strange Times" For New Music Videos
» IDOL OF FEAR Streaming Full Album 'All Sights Affixed, Ablaze' On Metal Nation Radio Due Out Nov. 18th
» Universal Music Appoints Dickon Stainer As President And Chief Executive Officer Of Global Classics
» A New Economy Based On Sharing And Collaboration Launches On Indiegogo.
» The Ultimate Seminar Returns For 2014
» LEGENDARY SINGERS OF CHRISTMAS SONGS CELEBRATED IN NEW MUSICAL TRIBUTE
» Taylor Swift, Global Superstar And Record-Breaking Singer-Songwriter, Re-Signs With BMI


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

Articles
MUSICDISH E-JOURNAL
» BMG Signs Worldwide Rights Management Deal With Chinese Music Company Giant Jump
» CMA Gives Snapshot Into Music Discovery Behavior
» How To Manage Your Talent: FIVE Realistic Tips For Success
» Executive Wach: Villanova University School Of Law, Mozart's Estates Theatre, Universal Music Publishing Group, Music Group, HighVolMusic, New West Records
» PRS Guitars Amps Up 30 Years Of Manufacturing
» Spotify Overtakes ITunes In Europe For Kobalt
» Incisors Break Through The Dawn With Their Debut Album On Nov. 28
» The First Chinese Rock Exhibition Launched In Beijing
» CIAM Congress Meets In Nashville To Discuss Music Copyright In The Digital Age
» The Modern Musical Magi Of Beijing
» World's Most Influential Electronic Music Figureheads Head To Asia
» MOCAMIX: DJ Daniel Wang

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 © 1997-2014 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.