Vemma CEO confident after Tempe company’s court hearing on pyramid scheme allegations
Wednesday, Sept. 16, 2015
NOTE: On Sept. 18, a federal judge barred Vemma Nutrition Co. from resuming most of its business activities. Click here for the follow-up story.
BK Boreyko Tuesday said he felt confident in his team’s work defending Vemma Nutrition Co. against federal regulators who accused them of running a pyramid scheme.
The Tempe-based company’s CEO spent the day listening to arguments in U.S. District Court in Phoenix.
“I feel like we got the facts out,” Boreyko said. “The facts support our cause, and I believe in the justice system.”
Vemma, which markets energy, nutrition and weight-loss drinks, has shut down operations after the court earlier this month agreed to a temporary injunction against the company and seized its assets.
The Federal Trade Commission had filed a complaint against the company, claiming it’s a pyramid scheme that “lures college students and other young adults with the prospect of getting rich without having a traditional 9-to-5 job.”
After listening to testimony Tuesday, a judge will decide whether to lift the injunction, allowing Vemma to continue operations.
Attorneys for the FTC presented information gathered over two years outlining the sales strategies of Vemma.
The nutrition company visits college campuses and recruits what it calls “affiliates” to promote its juice drinks and other nutritional products, according to the initial complaint. The consumer protection agency said the company told Vemma recruits they could make as much $50,000 a week.
The attorney said they were concerned that these affiliates bought more than 70 percent of the company’s product instead of customers.
“The FTC has an incredible record in these kind of hearings,” said Bonnie Patten, executive director of Truth in Advertising after giving testimony. “They’re basically 17-0 when it comes to getting a preliminary injunction after a (temporary restraining order). But you know, it’s a really hard decision the judge has to make.”
The injunction is set to expire at 2 p.m. on Sept. 18. Officials said they expect the judge to issue a verdict before then.
Cronkite News reporter Lynnie Nguyen contributed to this article.
CORRECTION: The name of CEO BK Boreyko was misspelled in an earlier version of this article.