Read MLM/Direct Sales Law updates, articles, and legal commentary from leading lawyers and law firms:
Bruner was accused of selling unregistered securities in violation of Texas state law. Bruner sold soap in an MLM structure to Owens who bought into the program based on representations that he would not have to perform any...more
The Ninth Circuit held that the promotional brochure was not part of the agreement, and contained fundamental elements that did not create a security as defined by federal law. The distributor agreement specified that the...more
The Court of Appeals ruled that the District Court erred when it did not consider the distributor agreement between Koscot and Bond to be a security. Bond signed a distributor agreement, authorizing her to purchase cosmetics...more
The Virginia Supreme Court held that the program was a pyramid scheme. The Company defended itself on the grounds that state statute required a pyramid program to receive consideration from a member to qualify as an illegal...more
The Court of appeals held that a claim that is plainly frivolous or insubstantial should be dismissed for lack of subject matter jurisdiction. The Plaintiffs successfully made a colorable claim that the payment of a finder’s...more
The Court of Appeals was asked to determine the circumstances under which a class member can object to the settlement and certification of a mandatory class action. The case is also available at:...more
The court held that an expert need not be given an unlimited scope on which they may testify and that an investment contract is the investment of money in an enterprise with the expectation of return, but without the ability...more
The FTC alleged in its complaint that Sandra Jacobson, through her participation in the Trek Alliance pyramid program, made deceptive claims about employment opportunities, earnings potentials, and promoted a pyramid program...more
The Securities & Exchange Commission brought suit against International Heritage, Inc. (IHI) for various securities violations and obtained an injunction, partly relating to the compensation plan. IHI tendered a modified...more
The Better Life Club of America, Inc., offered people who paid $39 for membership an opportunity to join the "Advertising Pool," a "wealth-building project" which promised a double return on investment in 60 to 90 days. The...more
Kenning and Carpenter worked for Dean Witter Reynolds. They told over 100 clients (including Plaintiff Henderson) that, as Dean Witter employees, they had access to discounted municipal bonds and would buy them on behalf of...more
The Court of Appeals held that to succeed on Summary Judgment by asserting an "Amway safeguards defense", a company must present evidence that their safeguards are actually effective in preventing inventory loading and...more
The Tennessee Supreme Court held that the proper definition of an investment contract is the definition espoused by the Supreme Court of Hawaii: (1) An offeree furnishes initial value to an offeror, and (2) a portion of this...more
The District Court granted summary judgment in favor of Omnitrition and dismissed the claim. The court found that Omnitrition had adopted programs that previous court decisions had found to be conclusive evidence that an...more
The New Mexico Court of Appeals held that the definition of a security under New Mexico State law is the same a the definition of the Ninth Circuit in Glenn W. Turner, an investment of money with profits to come primarily...more
The Louisiana Supreme Court ruled that because the federal court had pendant jurisdiction over the state law claims arising out of the same transaction as the federal claims, the plaintiff is barred res judicata from bringing...more
The Court of Appeals held that the District Court had applied the correct definition of a security, and that the District Court's discretion concerning irregularities at trial should be respected. Danek was convicted on...more
The DC Circuit upheld the District Court ruling finding ILN's products were "securities" and subject to regulation by the SEC. The Defendants argued that the products were not securities because no money need be paid directly...more
The Supreme Court of Kansas was asked if summary judgment was appropriate to determine that an airplane investment program was a security, and that the promoters of the program could be held liable as sellers of securities....more
The DC District court held that the standard for issuing a preliminary injunction was a proper showing that "the evidence establishes a strong prima facie case of previous violations and a reasonable likelihood that the wrong...more
Defendant Probst was in the business of estate planning. He advised clients to invest in a construction project undertaken by a firm he was intimately involved in, although that relationship was not divulged to the...more
The 9th Circuit Court of Appeals decided that the focus of the analysis should be on the expectations the parties had in the original transaction. To determine the expectations, the court looked at the terms of the contract,...more
The court held that that American Savings was not entitled to have each investor’s claim individually litigated on the issues of reliance, causation, materiality and due diligence. The state filed suit against the company...more
Rose was the president of a small oil and gas company. He was convicted for securities fraud relating to the sale of limited partnership interests in an oil well venture without disclosing to investors that the equipment and...more
Golden State Home Loans (GSHL) was a broker and servicer of loans secured by deeds of trust on real property. The Wrights invested in GSHL's loans. GSHL had a policy of advancing payments to its investors if the mortgagee...more
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