The Federal Trade Commission has just posted the official BurnLounge lawsuit information within the last few hours. You can view all of the official information, including the complaint, a press release, and a memorandum here.
The suit is listed as Federal Trade Commission, Plaintiff, v. BurnLounge, Inc., a corporation, Juan Alexander Arnold, an individual, John Taylor, an individual, Rob DeBoer, an individual, and Scott Elliott, an individual, Defendants and will be heard in California. More to come…
OFFICIAL NEWS RELEASE:
On June 6, 2007, the FTC filed a complaint in the U.S. District Court for the Central District of California against BurnLounge, Inc. The complaint charges that BurnLounge sold opportunities to operate on-line digital music stores that was, in fact, an illegal pyramid scheme. The agency is seeking a permanent halt to the illegal pyramid practices as well as other illegal practices alleged in the complaint.
According to the FTC, BurnLounge recruited consumers through the Internet, telephone calls, and in-person meetings. The sales pitch represented that participants in BurnLounge were likely to make substantial income. BurnLounge recruited participants by selling them so-called “product packages,” ranging from $29.95 to $429.95 per year. More expensive packages purportedly provided participants with an increased ability to earn rewards through the BurnLounge compensation program.
The BurnLounge compensation program primarily provided payments to participants for recruiting of new participants, not on the retail sale of products or services, which the FTC alleges would result in a substantial percentage of participants losing money.
The FTC specifically alleges that the defendants operate an illegal pyramid scheme, make deceptive earnings claims, and fail to disclose that most consumers who invest in pyramid schemes don’t receive substantial income, but lose money, instead. These practices violate the FTC Act, the agency alleges.
The FTC has asked the court to halt the deceptive practices and misrepresentations and to freeze the defendants assets, pending a trial, to preserve them for consumer redress. At a hearing on the FTC’s request for a temporary restraining order, on June 8, 2007, BurnLounge’s attorneys asked for more time to respond fully, and U. S. District Court Judge George Wu ordered that a full hearing on the FTC’s request for a preliminary injunction and asset freeze be held on June 19, 2007, after which he will rule on the FTC’s requests.
In addition to naming BurnLounge, Inc., a Delaware corporation based in New York City, the Commission’s complaint also names: Juan Alexander Arnold, of Studio City, California; John Taylor, of Houston, Texas; Rob DeBoer of Irmo, South Carolina; and Scott Elliott of Forney, Texas.
This case was brought with the invaluable assistance of the Office of the Attorney General of South Carolina.
Over the last 10 years, the Commission has halted 17 pyramid schemes and has collected almost $90 million in consumer redress and tens of millions of additional dollars in suspended judgments.
Copies of the legal documents associated with this case are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov/ftc/complaint.shtm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.
This entry was posted on Wednesday, June 13th, 2007 at 9:55 am and is filed under Judicial. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
How did Todd Ellis avoid getting named in this lawsuit?
about time
Waste of taxpayers’ money. Burnlounge provides a platform for digital media distribution. Its not just about selling 99c music download. Their software is “digital media”. Since when selling software became illegal? So the real question is, who is the “real” gun behind FTC, who stands to benefit from putting Burnlounge out of business?
The FTC is doing their job. Burnlounge.com and all of their active individual agents need to do what they say they will do and sell music (not spend the majority of their time trying to “recruit”(persuade/bother) people for signing up (online, email, in the malls, bookstores, meetings, then set up bait and switch dinners or other get-togethers that turn into “opportunity” meetings). They are doing exactly what those in other organizations (scamway, melanoma, kwikscar, etc) have done for years. People: If it looks too good to be true, it usually almost always is. Most of these MLMs are run by people that are looking to take your money (and will do anything to get it). Buyer Beware!!!
Where can one find a large library of music like the burnlounge library; with new artists and established artists? Will we still be able to buy this music? Can people still submit their music to be sold? Is their a binding injunction that closes the business entirely or is this a temporary injunction that temporarily stops commerce?
[...] If it looks like a pyramid scheme and smells like a pyramid scheme, it probably is a pyramid scheme. And of course, that means it ends like a pyramid [...]
[...] If it looks like a pyramid scheme and smells like a pyramid scheme, it probably is a pyramid scheme. And of course, that means it ends like a pyramid [...]
What has traspired as of today? Is Burnlounge reopening as something else. Is there some one I can talk to who is still conneted withBurnlounge or what is or was Burnlounge? , and knows what is going on?
I did not care for the way that burnlounge conducted its business. There were always problems in using there services & many friends had the same complaints. After a couples of months I decided to quit the burnlounge company, but received no fair compensation for the remaining months of my otherwise membership. Basically, I feel that they ripped me off pretty good & would not object to be included in a class action against them. Sincerely, RJ Fox
I’m right there with you RJ Fox. My wife and I signed up with the company in February 2007. What a total scam. When we started pushing for our money back, we were given the run around. I questioned a few people up the pyramid about the amount of money made off of sign-ups and was given the run around there also. I saw Rob speak in West Palm Beach. Very charismatic - I would have reached for the glass of kool-aid if asked. But I purchased a $400 glass instead….
Sign me up for class action. Not that we’d get anything.
I would love in on this class action suit. I signed up as an artist and even performed at one of their seminars. I was recruited to be a potential spokesperson. Wow, this sounds great, so I thought. I submitted to the A&R department to have my music posted. They told me I could make five bucks per download. Cool! Months went by and my music still wasn’t posted. I sent them E-mail after E-mail. Finally they responded and said I need to do a resubmission. My CD got lost. I opted out right then and tried to get my money back. They refunded me for the remainder of my subscription but I ended up dinged for the 400 bucks on the sign up fee without a refund. They tried to get me back later on, saying they found my original CD and wanted me to reconsider. I responded and told them it was only a matter of time before the lounge burned to the ground. These guys are crooks. Another one bites the dust, and another gone, another one bites the dust…Good riddance.
I spent $300.00 on “money to burn” cards. I received them 20 days after I placed the order and my account was debited. The cards did not work and burnlounge never refunded me or sent new cards -what a scam!
I also signed up and took part organizing and speaking at meetings we hosted. Many of our “suggestions” fell on deaf ears and finally our entire group opted out. Did I have big ideas and big plans??? You bet! I’m just glad it came tumbling down before the real money got spent.
What these people have to realize is that MLM companies are legit and work when you follow the rules. Too many get too greedy too fast and that’s when they cross the line just like Burnlounge. It’s really ashame because the underlying concept was really a solid one.