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FTC Actions FTC Action Summaries FutureNet33. FTC v. FutureNet, et al., Civil No. 98-1113GHK (AIJx) (Filed February 17, 1998)
Defendants: FutureNet, Inc., FutureNet Online, Inc., Alan J. Setlin, Robert DePew, Larry Stephen Huff, Chris Lobato, and David Soto
Type: Pyramid Scheme
Defendants claimed recruits could earn substantial incomes by joining a multilevel marketing program selling Internet access devices, but according to the Commission, defendants ran an illegal pyramid, where income was dependent not on product sales but on recruitment of paying members "downline."
On February 23, 1998, the Court issued a temporary restraining order freezing defendants’ assets and appointing a receiver for the corporate defendants. On March 6, 1998, the Court issued a preliminary injunction continuing the TRO’s provisions.
On April 8, 1998, a stipulated final judgment was filed, banning the corporate defendants and two individual defendants from operating pyramid schemes and selling distributorships through multi-level marketing; ordering payment of $1,000,000 in consumer redress, and requiring a bond of $100,000 to $1,000,000, to escalate as sales grow, before engaging in any multi-level marketing.
On Nov. 24, 1998, Larry Stephen Huff agreed to settle allegations against him. The proposed settlement would bar him from participating in future pyramid schemes and
any form of multi-level marketing. Based on Mr. Huff’s financial disclosures, no consumer redress was ordered. However, should those financial disclosure statements prove to be false, an avalanche clause would make Huff liable for $21 million in consumer redress.On Dec. 22, 1998, the Commission announced settlements with the two remaining defendants, Robert De Pew and David Soto. The settlements bar them from: participating in any future pyramid schemes; misrepresenting sales, earnings or other material facts about products or services they sell; selling electric power or other energy services without meeting licensing and registration requirements; and participating in any multi-level marketing program owned, operated or controlled by the other FutureNet principals. Both defendants also are required to obtain $1 million performance bonds before engaging in future multi-level marketing. If their financial disclosure statements are shown to be false, they also will face a $21 million judgment.
http://www.ftc.gov/opa/1998/9803/netopp.htm (press release - complaint / TRO)
http://www.ftc.gov/opa/1998/9804/futurenet.htm (press release - settlement w FutureNet)
http://www.ftc.gov/opa/1998/9811/huff.htm (press release - settlement w Huff)
http://www.ftc.gov/opa/1998/9812/depew.htm (press release - settlement w DePew, DeSoto)
This page was last modified on July 22, 2007.
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