FTC temporarily shuts down energy drink company for running pyramid schemePosted: Updated:
The Federal Trade Commission has temporarily shut down Vemma Nutrition, an Arizona-based dietary supplement and energy drink company.
The FTC said Wednesday that Vemma Nutrition was operating a pyramid scheme that promised college students riches if they sold its nutritional drinks, but most ended up losing money.
The consumer protection agency said that Vemma told recruits that they could make as much as $50,000 per week selling its nutritional beverage Vemma, energy drink Verge or protein shake Bod-e. An initial investment of $600 was paid for products and business tools and $150 in Vemma products had to be bought each month to receive bonuses. The FTC said Vemma provided little help on how to sell its products and instead rewarded them for recruiting more people.
Vemma earned $200 million a year in 2013 and 2014, according to the FTC.
A representative from Vemma, which is based in Tempe, Arizona, did not immediately respond to a request for comment.
A federal court in Arizona temporarily seized the company's assets. Products on Vemma's website could not be bought Wednesday. The website said that products were "temporarily unavailable at this time."
In the complaint, the FTC said Vemma employees visited college campuses and told students that selling the beverages was an alternative to a regular job. Its marketing materials features young people in luxury vehicles, jets and yachts, the FTC said.
Chris and Heidi Powell, two married stars from ABC's reality show "Extreme Weight Loss," appear in promotional videos and packaging of weight-loss drink Bod-e. Representatives of the Powells and ABC did not immediately respond to a request for comment.
Along with the company, Vemma CEO Benson Boreyko is also named as a defendant in the complaint, as are Vemma promoter Tom Alkazin and his wife Bethany Alkazin.
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