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Paul Orberson & Thomas Mills (FHTM) getting fried by the KY AG MLM fraud whistle-blower, Joseph Isaacs, who

was made famous after exposing the Fortune Hi-Tech Marketing (FHTM) pyramid scheme and fraud back in 2010 finally gets vindicated by the Federal Trade Commission and the Attorneys general of North Carolina, Kentucky & Illinois in January 2013. His memoir, SKAPEGOAT the FHTM Blame Game Story is available on the Kindle, Nook and in paperback his website www.joseph-isaacs.com this week. FHTM was officially shut down on January 28, 2013. They have been doing their wrangling in and out of court in an effort to get the case dismissed, to no avail. They even tried to convince the Illinois judge to allow them to use Insurance proceeds to pay for their lawyers. That request was adamantly DENIED! Just this week, Illinois Judge Darrah granted Orbersons, et al, motion to move the case to Federal court in the Eastern District of Kentucky their backyard. Now they dont have to spend any money traveling to hearings since all of their business and personal assets have been frozen and are under control of the receiver. Now the best part - Sr. Federal Judge Carl Forrester is now presiding over both class action lawsuits, under appeal in the 6th Circuit Court of Appeals, as well as the case by the FTC and the AGs claiming FHTM operated a massive pyramid scheme. He inherited the class actions after the previous judge retired at the beginning of the year. The class actions seem to be an exercise in futility at this point as I am certain Judge Forrester will have to rule on the FTC case first. His ruling on permanent receivership and injunction is due before May 14, 2013. The 6th circuit is also watching the FTC/AG case and it could be another year before they make a definitive ruling. Arbitration by the reps seems irrelevant pending the much stronger and aggressive Federal case against FHTM. On May 6th attorneys from the KY Consumer Protection Division of the KY AGs office filed another Motion for Permanent Injunction and Permanent Receivership of FHTM (and affiliated companies) as well as the assets of the Orberson and Mills families. According to this 17 page motion, Defendants have been operating a massive pyramid scheme

for over a decade at the expense of consumers nationwide. The Federal Trade Commission, along with the Commonwealth of Kentucky, the State of Illinois, and the State of North Carolina filed an eight count Complaint for Permanent Injunction and Other Relief (Complaint) (Doc. 4), alleging that Defendants violated the Federal Trade Commission Act, 15 U.S.C. 45(a), and five state statutes by: (1) promoting a pyramid scheme; (2) misrepresenting that consumers who become representatives of Defendants would earn substantial income; and, (3) providing promotional materials to be used in recruiting new participants that contain false and misleading representations. After considering four volumes of evidence submitted by Plaintiffs, Judge Darrah, sitting in the Northern District of Illinois, granted Plaintiffs Ex Parte Motion for a Temporary Restraining Order (TRO) and appointed a Temporary Receiver over the Corporate Defendants (Doc. 23).

In entering the TRO, after considering the weight of Plaintiffs evidence, the court found good cause to believe that Defendants were violating Section 5(a) of the FTC Act, 15 U.S.C. 45(a), as well as the statutes of Kentucky, Illinois, and North Carolina. (Doc. 23 at 2-3.) The court also

found good cause to believe that immediate and irreparable damage to the Courts ability to grant effective final relief for consumers in the form of monetary relief would occur absent an asset freeze. (Id. at 3). In support of the TRO motion, Plaintiffs submitted four volumes of declarations and exhibits, including dozens of Defendants own documents, transcripts of undercover recordings and presentations made by leading representatives of the Defendants, and a declaration from an expert economist analyzing Defendants business practices. (See Docs. 15-0 through 15-30; 17-0 through 17-16; 18-0 through 18-22; & 19-0 through 19-22.4) On February 20, 2013, the court appointed Receiver submitted a detailed Report of Temporary Receivers Activities (Receivers Report) (Doc. 58), which confirms the factual allegations in Plaintiffs Complaint. Across the board, Defendants highest earning representatives make specific earnings claims, as well as spin tales of their grand lifestyles. The record is replete with such examples. These statements are made by those occupying the highest echelons of Defendants ranks, including Presidential Ambassadors (the highest level of FHTM Representative). In fact, Plaintiffs have submitted evidence showing that Defendant Orberson directly encourages his representatives to make false and misleading earnings claims. Moreover, the Receivers independent investigation establishes that Defendants earnings representations have been false; only a tiny fraction of representatives come close to making a decent living with FHTM, much less achieve the financial independence promised by Defendants. According to the Receivers analysis, 98% of Defendants representatives made less than $1000 per year and 74.4% earned less than $10 per year. (Doc. 58 at 1) At a minimum, 88% of people signing up with Defendants lose money and that is not even considering the unwanted goods and services the representatives are essentially forced to purchase to remain in good standing with the company. (See id) Over just the last four years, more than 400,000 people have signed up for FHTM in the United States and Canada. (Id. at 6-7.) More than 97% of the consumers who signed up most recently with Defendants dropped out within a year. Plaintiffs also submitted voluminous evidence demonstrating that Defendants are engaged in an unlawful pyramid scheme. The Receivers Report, based on the most recent data kept by Defendants, confirms that Defendants were operating a pyramid scheme. The data demonstrates that the vast majority of compensation earned by Defendants representatives is for recruiting other representatives and not for the sale of products and services. (Doc. 58 at 78.) In fact, according to Defendants own data, at least 83% of all commissions paid by Defendants, in the last four years, has been for signing up new recruits and not the sale of products or services to customers. (Doc. 58-3.) Finally, the Receivers Report establishes that, except for a few people at the top of the pyramid, only Defendants Paul Orberson and Thomas Mills (and their families) made any money at FHTM. Orberson and Mills paid themselves nearly $40 million and their family members an additional $8 million. (Id. at 10-11.)

To make the situation and fraud worse, Orberson and Mills, knowing they were in a heap of legal trouble, fraudulently converted all company assets to their family members. The Motion states, Subsequent to the multiple state actions and the commencement of the class actions against

Defendants, Orberson created multiple trusts, which may well have been an attempt to protect assets from possible law enforcement action. In fact, certainly Defendants assets should be conserved for the benefit of consumers.

The next real legal question is, Is this collusion of company assets a criminal offense? Will The Kentucky AG be able to convince his counterpart of the State Attorneys office to file criminal charges against these hoodlums? To make matters worse, Defendants ask for attorneys fees should the asset freeze continue. This Court has the authority to limit or to deny altogether the payment of attorneys fees from frozen funds. See CFTC v. Noble Metals Intl, Inc., 67 F.3d 766, 775 (9th Cir. 1995); FTC v. World Wide Factors, Ltd., 882 F.2d 344, 347 (9th Cir. 1989) (Courts regularly have frozen assets and denied attorney fees or limited the amount for attorney fees.). As the Seventh Circuit explained in SEC v. Quinn, 997 F.2d 287, 289 (7th Cir. 1993): Just as a bank robber cannot use the loot to wage the best defense money can buy, so a swindler . . . cannot use the victims assets to hire counsel who will help him retain the gleanings of crime. (internal citations omitted). See also Caplin & Drysdale, Chartered v. U.S., 491 U.S. 617, 626 (1989). In this instance, Plaintiffs already have agreed to significant monthly stipends for Mills and Orberson until a decision on the preliminary injunction motion is reached, and to release additional funds of an unknown and uncapped amount would certainly squander any chance to provide consumers with meaningful relief in this case. It is unfair to allow criminals to use ill-gotten gains to pay for the best legal counsel money can buy. FHTM and Orberson have spent millions, or better yet owe millions to the many law firms they have hired since 2009 to defend themselves against the AG litigation in Montana, N. Dakota and Texas, the multiple class action lawsuits, the idiotic cases against Isaacs and now the FTC current case. What happened to the $50 million they pilfered from FHTM during that timeframe? Why arent family members taking some of their ill-gotten money to pay for daddys legal bills? Why isnt Jeff Orberson listed as a defendant in this case? Only time will help sort out these questions!

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