The FTC and the states jointly filed a lawsuit against FHTM in January, alleging that instead of incentivizing its distributors to sell actual consumer goods and services, the company's promotional materials focused almost entirely on signing up new members. Distributors only received pennies for selling goods and services such as satellite TV service, home security systems and beauty products, and received substantial payments for each new distributor they recruited. The court-appointed receiver confirmed the allegations by the FTC and the states. More than 98 percent of FHTM's distributors lost more money than they ever earned, and more than 81 percent of the payments to participants were based on recruiting and not for the sale of products.
In addition to the multilevel marketing ban, the settlement permanently bans Thomas A. Mills, Fortune Hi-Tech Marketing Inc., FHTM Inc., Alan Clark Holdings LLC, FHTM Canada Inc., and Fortune Network Marketing (UK) Limited from misrepresenting material facts about any product or service, selling or otherwise benefiting from customers' personal information, or collecting any additional money from consumers. The founder of FHTM, Paul C. Orberson, died during the course of the litigation. The assets of Orberson's estate will be included in the $7.75 million which will be used for restitution to consumers.
