Summary of the FTC case against Fortuna Alliance

   
     _________________________________________________________________
   
   
   
   The Federal Trade Commission (FTC) has sued Fortuna Alliance,
   Augustine (“Augie”) Delgado, Libby Gustine Welch, Donald Grant,
   Monique Delgado, and Gail Oliver. It filed a complaint charging them
   with operating a fraudulent and unlawful pyramid sales scheme. The
   United States District Court for the Western District of Washington
   has found that the FTC is likely to succeed in proving its case. It
   issued a restraining order temporarily prohibiting further sales and
   promotional activities of Fortuna Alliance. A court-appointed receiver
   is currently running the Fortuna offices.
   
   The reason pyramid schemes are fraudulent is that they always injure
   consumers. The first few people make money from the ones who come
   later. The later ones lose out. If Fortuna currently has 17,000
   members, the people at the bottom would have to recruit nearly 200,000
   new members just to break even. They’d need 2.4 million new members to
   reach the $5,249 goal. This doesn’t even take into account the fact
   that as soon as someone reaches the break even point, Fortuna may take
   out another $250 from their account for its monthly fee.
   
   An FTC economist calculated that Fortuna’s scheme will leave 95% of
   participants with a loss. He also calculated that despite Fortuna’s
   claim that members share profits equal to 45% of the money they put
   in, they actually will get less than 17%. Fortuna keeps at least 68%.
   And this assumes that none of the Fortuna organizers have placed
   themselves high up in the chain. If they have, outside members will
   get even less.
     _________________________________________________________________