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FTC Action Summaries

Equinox Int'l Corp.

98. FTC v. Equinox Int’l Corp. et al, Civil Action No. CV-S-99-0969-JBR-RLH (D. Nev. filed Aug. 3, 1999)

Defendants: Equinox International Corporation, Advanced Marketing Seminars, Inc., BG Enterprises, Inc., and William Gouldd

Type: Pyramid Scheme, Health Products & False Advertising

Defendants allegedly operated a multi-level marketing company which offered distributorships for products including water filters, vitamins, nutritional supplements, and skin care products. Equinox distributors ran classified ads in the "Help Wanted" sections of newspapers which implied that a salaried position was being offered. Persons who responded to the ads allegedly were given a sales presentation designed to recruit new distributors. Equinox also advertised and communicated with distributors through its Web site at www.equinoxinternational.com. This site contained several testimonials and information about distributorships, Equinox products and payout plans.

The FTC and 5 states filed a joint action on Aug. 3, 1999, alleging that the defendants operated a pyramid scheme, made false earnings claims, failed to disclose material information, and violated the FTC Act as well as state securities laws, deceptive trade practices laws, false advertising laws, pyramid laws, and licensing requirements. State co-plaintiffs were Hawaii, Maryland, Nevada, North Carolina, Pennsylvania, South Carolina - later joined by Tennessee, Michigan, and Virginia, with South Carolina dropping its suit. The Court granted the FTC and states’ request for an ex parte TRO and imposed a freeze on the defendants’ assets and a receivership over their business.

On Sept. 14, 1999, after a full hearing, the Court issued a modified preliminary injunction against the defendants. Pending a full trial, the Order prohibits any pyramid activity or misrepresentations about earnings. It requires defendants to modify their business terms and keeps a receiver in place to monitor defendants’ business and prevent the dissipation of assets.

Trial began April 3, 2000 and after the FTC and the states had presented their case, the parties reached a final settlement. The Court approved a provisional stipulated final judgment and order on April 20, 2000. The settlement bars Gouldd, for life, from engaging in any multi-level marketing operations. It also orders that cash and corporate and individual assets be placed in the hands of the court-appointed receiver for liquidation. The assets have an estimated liquidated value of $40 million to $50 million. Proceeds from the sale of assets will be used for consumer redress and payment of certain court-approved expenses, including the payment of states plaintiffs' fees and costs and fees and costs to defendants' and private class action plaintiffs' lawyers.

http://www.ftc.gov/opa/1999/9908/equinox1.htm (press release - complaint / TRO)

http://www.ftc.gov/opa/2000/04/equinox.htm (press release - settlement)

This page was last modified on July 22, 2007.

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