Wisconsin v. Fortune in Motion Inc.

Does the possibility of outside sales and not an investment by a prospective recruit allow an otherwise chain distribution scheme to escape application of the statute?

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The Wisconsin Court of Appeals held that the possibility of a sale, instead of an investment, does not exempt a sales program from the application of the state chain distribution statutes. Fortune in Motion designed its program to allow the new recruit to directly invest or sell product. The evidence at trial demonstrated that the vast majority of new recruits directly invested. The trial court dismissed the state's claims because, from the company’s perspective, they did not require investment. The appeals court held that the perspective of the recruit should be considered. Since the vast majority invested and did not sell their way into the program, for them the program fell under the statutory definition of a chain distribution scheme and should be treated as such by the courts.

Case and case summary are also available online at: www.mlmlegal.com/legal-cases/Wisconsin_v_FortuneInMotionInc.php

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Reference Info:State, 7th Circuit, Wisconsin | United States


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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