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 will be repeated." International Loan Network provided financial products that advertised significant returns. Prospective members would buy into one of the plans with a membership fee, payable to the company, and an investment, which would be apportioned, to the company and the prospective member's sponsoring member. The court concluded that ILN sold "investment contracts" within the meaning of federal securities laws because the efforts of others in recruiting new members was undeniably significant in the success of the group. Because of the precarious financial situation of the company, its assets were frozen to protect the current membership, and an injunction was issued to prevent the sale of any more investment contracts.
Full case and case summary also available online at: http://www.mlmlegal.com/legal-cases/SEC_v_InternationalLoanNetworkInc770FSupp678.php
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