107

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FTC Action Summaries

John T. Polk

107. FTC v. John T. Polk, Civil Action No. JFM 99CV 3679 (D. Md. filed Dec. 9, 1999)

Defendants: John T. Polk, Patrick Farah, Peter Hirsch, USAsurance Group, Inc., AKAHI Corp., AKAHI.COM, Inc., 2XTREME Performance International, LLC., and AFEW, Inc.

Type: Pyramid Scheme & Health Products

Defendants allegedly used Web sites, direct mail, infomercials, telemarketing and seminars to convince consumers they could make substantial income by investing in their multi-level marketing scheme, which marketed nutritional supplements, beauty, weight-loss and other products. Defendants also allegedly claimed their recruiting tools -- called "Businesses in a Box"-- would generate a specific level of earnings and help develop an investor’s "downline." The FTC alleged that defendants’ earnings claims were false, that 2Xtreme was actually a pyramid scheme, and that 2Xtreme provided deceptive promotional materials and other 'means and instrumentalities' to violate federal law.

The FTC filed suit on Dec. 9, 1999 and requested entry of a preliminary injunction. Defendants Peter Hirsch, John T. Polk, and AFEW, Inc. stipulated to the entry of a preliminary injunction against them. After a two-day hearing that concluded February 25, 2000, the Court issued a preliminary injunction against the remaining defendants, prohibiting them from operating illegal pyramid schemes and from making misrepresentations pending trial. The injunctions also froze the individual and corporate assets to preserve them for consumer redress.

On September 5, 2000 the Commission approved a Stipulated Final Judgment and Order with Peter Hirsch.

On January 29, 20001, the FTC announced that the remaining defendants, Polk, Farah and AFEW, agreed to settle Federal Trade Commission charges that the scheme violated federal law. The settlements contain a lifetime ban on the defendants from any involvement in any multi-level marketing program. One defendant, John T. Polk, will also be banned from involvement in any business opportunity offer and barred from selling or sharing any information about the consumers who joined the pyramid. Defendant Patrick Farah will be barred from misrepresenting business opportunities. The settlements contain judgments totaling $2.5 million, $1.4 million of which will be suspended based on financial disclosures provided by the defendants. Should the disclosure documents be found to be inaccurate, the entire $2.5 million will become immediately payable.

The Commission vote to accept the consent judgments was 5-0.

http://www.ftc.gov/opa/1999/9912/2xtreme.htm (press release-complaint)

http://www.ftc.gov/opa/2000/04/2xtreme.htm (press release - prelim injunction)

http://www.ftc.gov/opa/2001/01/2xtreme.htm (press release - stipulated final judgments)

This page was last modified on July 22, 2007.

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