FTC Settles with Man Behind Dietary Supplement Pyramid Scheme

WASHINGTON--A participant in a pyramid business selling dietary supplements and other health care products has settled with the Federal Trade Commission (FTC). Robert Waitkus will pay $30,000 for operating an illegal pyramid operation while selling products containing false health claims and the toxic herb comfrey.

The case began in June 2001 when FTC charged Waitkus and Streamline International with operating a fraudulent business. The company's marketing materials claimed participants could earn money quickly and easily, but FTC alleged ".the vast majority of participants in the Streamline program achieve little or no financial success, or make very modest earnings."

According to FTC's complaint filed last year, the company had been using the Internet, radio, direct mail and print advertisements to promote its health care products for the past five years. FTC began investigating Streamline (found at the now defunct herbalmall.com) in 1997 but was unable to follow through with its actions because of being short-staffed.

FTC's 2001 complaint reported that the company's business model required participants to make minimum monthly purchases in order to earn recruitment-related commissions. Marketing materials for the company claim "YES! YOU CAN MAKE $500 - $2,000 PER MONTH FOREVER!!!" which the Commission found misleading since participants in the Streamline program achieve little or no financial success.

"There were other health claim issues we could have made, but we wanted to keep the focus on the pyramid allegations," stated Jim Davis, a staff lawyer at FTC, last June. According to Davis, the agency became concerned with Streamline after receiving consumer complaints and noticing its practices while conducting a periodic sweep for fraudulent Internet companies. [For more on when the complaint was issued, visit www.naturalproductsinsider.com/hotnews/16h22155733.html.]

The settlement will bar Waitkus from engaging, participating or assisting in any other pyramid schemes in the future. Also, the settlement bars Waitkus from misrepresenting the income or rewards a participant is likely to earn or the income that previous participants earned in any future multi-level marketing enterprises. The FTC's release about the case can be found at www.ftc.gov/opa/2001/06/streamline.htm. The release on the settlement is at www.ftc.gov/opa/2002/01/waitkus.htm.