The Vemma shut down comes after the FTC filed an “illegal pyramid scheme” complaint against Vemma Nutrition Company, Vemma International Holdings Inc., Tom Alkazin, and Benson K. Boreyko. The Vemma defendants are being charged with “making false earnings claims, failing to disclose that Vemma’s structure ensures that most people who join will not earn substantial income, and furnishing affiliates with false and misleading materials to recruit others.”
Vemma’s shut down will be temporary until a court decides whether or not the FTC’s complaint can be substantiated, reports ABC15 on August 27. The Federal Trade Commission (FTC) works to protect consumers from fraud and deceptive illegal business practices.
The FTC’s complaint against Vemma — resulting in the current shut down of the Arizona-based multilevel marketing company that sells health and wellness drinks like the energy drink Verve – states that the company runs “an illegal pyramid scheme” especially targeting students on college campuses.
“According to the FTC’s complaint, the defendants’ websites, social media, and marketing materials show seemingly prosperous young people with luxury cars, jets, and yachts, and falsely claim that Vemma affiliates can earn substantial incomes – as much as $50,000 per week. The defendants allegedly claim that affiliates’ earning potential is limited only by their own efforts and that Vemma provides young adults an opportunity to bypass college and student loan debt. Vemma urges consumers to make an initial investment of $500-$600 for an ‘Affiliate Pack’ of products and business tools, buy $150 in Vemma products each month to remain eligible for bonuses, and enroll others to do the same.”
In reality, Vemma’s pyramid scheme earned the company more than $200 million annually in 2013 and 2014. The company’s affiliates made less than $3,674 per year. According to the FTC complaint, Vemma did not earn the massive amount of revenue from the sale of its products but from affiliates buying the up-front $500 pack of marketing materials and having to subscribe to ongoing product shipments for $150 per month.
A federal judge temporarily shut down Vemma last week following the FTC’s complaint. On its website, Vemma states that it has received a temporary restraining order and that it has suspended all Vemma operations until a scheduled preliminary injunction hearing is concluded. In response to the FTC’s complaint, Benson K. Boreyko, Vemma’s Chief Executive Officer, posted a quote by megachurch minister Joel Osteen on his Facebook page: “Sometimes God will ask you to release the thing you want the most. If you’ll pass that test, at some point, He’ll either give back what you had or He’ll bring something better into your life.”