Arizona Court Temporarily Halts 'Serial Pyramid Scheme Promoter'
A federal court in Arizona has temporarily shut down a multilevel marketing company after a complaint filed by the Federal Trade Commission. The FTC says the venture, Success By Health, is led by a "serial pyramid scheme promoter."
It’s not the first time the FTC has gone after James “Jay” Noland Jr. In 2002, the agency sued Noland and others for running an online shopping network based in Mesa the FTC alleged was an illegal pyramid scheme. A court order barred Noland from participating in future pyramid schemes.
The latest allegation centers around Success By Health (SBH), which sells coffee, tea and dietary supplements through independent distributors called "affiliates." The FTC claims the company pressured affiliates to max out credit cards, borrow money and get bank loans to buy inventory. The FTC said the company told people they could replace their job income in six months if they followed Noland’s instructions, but the business model ensured the vast majority of affiliates lost money.
The complaint, filed in U.S. District Court in Arizona, alleges James “Jay” Dwight Noland Jr., Lina Noland, Scott A. Harris and Thomas G. Saccara have taken more than $7 million from consumers in 49 states, including Arizona, and pocketed over $1.3 million for themselves.
The FTC’s lawsuit alleges:
SBH’s claims that consumers who invest in the program will make substantial income are false.
That promotional materials SBH furnishes to affiliates for recruiting make the false and misleading income claims and therefore provide the means for others to deceive consumers.
That SBH is actually a pyramid scheme.
According to the complaint, the SBH pushes affiliates to invest heavily in products and training events but rather than compensate them on the sales of products to retail customers, SBH compensates them on how many new affiliates they recruit and the volume of SBH products they and their recruits buy.
After learning the FTC was investigating the company, the agency alleges Jay and Lina Noland fled their $1.2 million rented house for South America in October 2019. The following month, the complaint alleges, fellow defendant Scott Harris put his house on the market for $1.8 million and announced plans to join them.
In granting the FTC’s request to shut down the company, the judge also froze the assets of the company and its executives.