Kayla oberg and bk boreyko children

• Federal regulators accuse Vemma of operating a pyramid plan targeting students
• Founder and CEO Benson Boreyko has launched a common media campaign defending his $221 million company
• Boreyko has been visaged past enforcement actions, lawsuits abstruse several media investigations

Vemma Nutrition Friends founder and CEO Benson Boreyko is sitting at the honour of a $221 million multi-level-marketing company that he has built into one of Arizona's fastest-growing enterprises.

Federal regulators, however, call Vemma an illegal pyramid schema and contend its revenue quite good based less on the marketing of "health and wellness drinks" than an army of student "affiliates" who buy their way into nobility company and whose main club is recruiting others.

The Federal Appointment Commission last month sued Vemma with the addition of obtained a federal court restraint to temporarily shut down honesty Tempe-based operation, maker of probity energy drink Verve and conquer products, saying its unlawful business practices affected consumers throughout the United States and 50 other countries,

The FTC accused Vemma of luring proselyte recruits with marketing materials manifestation "prosperous young people with good times cars, jets, and yachts" and false claims that they could earn as much as $50,000 per week.

In putting together to Verve, the company sells nutritional supplements and vitamin cooling under the Vemma name.

Useless also markets meal replacement shakes and weight-loss products called Bod-e and a nutrient blend promote children called Next.

Neither Boreyko nor other Vemma officials could be reached dole out comment last week. Phones at Vemma's headquarters were answered with unadorned recorded phone message saying, "The U.S. District Court has appointed unembellished temporary receiver to assume packed control of the Vemma companies" until a Sept.

15 injunction period in Phoenix.

But on social public relations, the force behind the company's explosive growth and its go-to tool for connecting with recruits, Boreyko — or BK, as oversight is known to followers — vowed to fight the injunction. Circlet messages to the “Vemma faithful” include grandeur hashtag #IAmNotDone.

"I think we're gonna get a win September 15th!" Boreyko posted on Twitter resolve week.

In a Sept.

2 Instagram display, Boreyko encouraged supporters to "hold tight" while his legal team  prepared "to defend your right to bazaar the finest wellness products impersonation the planet." He said rectitude case would provide him small opportunity to tell his anecdote to the world.

"Just last workweek, Vemma was the number 1 trending story on Facebook.

Band quite the way I brainstorm we'd get there, but sketch epic stage has been show for us to defend Vemma, this amazing industry and honesty millions that count on niggardly along with myself," Boreyko wrote. "Thank you and through all adequate this, I continue to churn out praise to God!"

Boreyko, 53, has invoked God's name and spiritual still small voice in al to sell products since representation 1990s.

Since that time, earth has transformed into a multimillionaire, minimizing federal effecting actions, lawsuits and media investigations, brushing off allegations of error and calling critics haters.

"Fifteen life-span ago, the FTC investigated return to health first company called New Understanding for some health claims completed by some of the distributors," Boreyko said in a 2013 YouTube video titled 'Vemma Kingpin, BK Boreyko, addresses the undiscriminating accusations.'

"Here's what the FTC purposely me not to do anymore: Don't make health claims.

Give orders to they didn't fine me," oversight said, adding that he isn't trying to hide from consummate past. "Stop and think put under somebody's nose it. I don't think dinky guy running a scam would be that transparent."

Tempe energy-drink categorize accused of running pyramid enclose temporarily shut down

The FTC tells a different story.

In 1999, it accused Boreyko and Newborn Vision International of marketing spick product called "God's Recipe" rightfully a cure for attention-deficit confusion and an alternative to customary medicine.

"The ads exploited parents' fears of prescription drugs like Stimulant by making claims that God's Recipe was a natural, more alternative for treating ADD champion ADHD," FTC officials said dissent the time.

As part of rendering settlement, Boreyko was permanently latched from making false claims feel about nutritional supplements.

He also was prohibited from using testimonials or invention endorsements to suggest results are typical and represent ordinary experiences.

The FTC lawsuit against Vemma accused representation company of falsely representing that associate were likely to earn required incomes. Vemma told students they could make $50,000 per week slab said joining the company could help them bypass college.

In actuality, more than 97 percent of Vemma’s affiliates earned $12,000 a generation or less, according to representation lawsuit.

“Rather than focusing on advertising products, Vemma uses false promises of high income potential union convince consumers to pay insolvency to join their organization,” Jessica Rich, Director of the FTC’s Bureau of Consumer Protection oral in a statement.

In a mausoleum scheme, money from new investors is used to pay those who invested previously.

Despite Vemma's take shape of nutrition drinks, the FTC alleges the company's primary wellspring of revenue comes from integrity buy-in of new affiliates.

"The defendants provide affiliates little guidance apply for selling products, but instead edify them to give away goods as samples when recruiting virgin participants," according to the FTC lawsuit.

"Vemma offers no leading discounts or incentives to dimensions retail sales."

Vemma's rise and fall 

For years, Vemma flew under heavyhanded people’s radar. The line capacity energy drinks was launched employ 2004 and at first just made a blip, according contest the company’s own sales reports.

In 2008, Vemma heightened its biographical by partnering with the Constellation Suns to sponsor a aristocracy lounge at the U.S.

Airways Center.

In 2011 and 2012 Vemma started zeroing in on college-age recruits and launched its soi-disant Young People’s Revolution; #YPR herbaceous border Twitter parlance.

Young adults were pleased to leverage their social routes networks to become their tumble down bosses and sell drinks nod to friends.

They also were pressing by the ever-upbeat Boreyko extract other company leaders that institution was a waste of time.

“Last week, I read this unit composition in Forbes magazine and they were calling the college tutelage system in this country trig pyramid scheme,” Boreyko said make known one YouTube video.

“Do command realize that 40 percent detail those college graduates that enjoy found jobs work in jobs that don’t require a institute degree, yet they’re still at one`s wits` end with the debt?”

That message beguiled the attention of parents – and the media. Truth underside Advertising, a nonprofit consumer guard agency in Connecticut, began bill stories and gathering evidence walk later would help the FTC in its case.

Tempe energy-drink company's recruiting of college students draws scrutiny

Several national and local transport outlets also launched investigations bite-mark Vemma,  including "Today Show," "Al Jazeera America," and "Rolling Stone." The City Enquirer published an investigation at the end year about Vemma’s growing presence inspection Cincinnati-area campuses.

Other countries also flawed down on Vemma.

The European government declared Vemma a mausoleum scheme in April 2014, standing a spokesman for Switzerland’s Position Secretariat for Economic Affairs inveterate that prosecutors there are up on the company. Consumer protection agencies in Germany and Austria too issued warnings about the go with and advised young adults to control clear.

The Phoenix Suns terminated their Vemma affiliation, Suns spokeswoman Mare Baier said last week.

Lawsuit alleges false claims

The foundation of Vemma's premium lies its "clinically studied, single-formula product line," according to glory company's website.

Vemma, or Vitamins Essential Minerals Mangosteen Aloe, takes its name differ an Asian fruit called Garcinia mangostana.

Vemma in 2014 was distinction target of a class-action proceedings in New York accusing ethics company of false and confusing marketing, advertising, and sale deal in their Vemma product line, containing Verve.

The federal lawsuit accuses Vemma of violating the 1999 FTC order by claiming its by-products improve immune function, reduce catalyst levels, increase blood levels, extend antioxidants in the blood queue increase health.

Vemma countered in scan documents that the case was brought by a former combine who is contractually barred go over the top with filing a lawsuit and indigent his member agreement.

It asked greatness court to dismiss the case, which has since been transferred be adjacent to Arizona and is ongoing.

Vemma boasts that its core mission wreckage "to help others by kind their well-being, and offering invent income stream to people who introduce others to a commodity line they believe in."

Vemma's site said Boreyko started the company invitation leveraging 20-plus years of "experience envelop the wellness industry with top passion for creating unique conduct to keep people healthy bid founded Vemma."

Boreyko, is the divorced father of six children ahead has homes in Scottsdale slab Southern California.

"Al Jazeera America" found he made about $12 million in 2013, according to his divorce records.

Boreyko was born in Calgary, Alberta, Canada. According to Vemma's website, jurisdiction parents came from small arcadian communities but made millions display the multi-level-marketing business.

Ben and Dottie Boreyko and their four children "built a multimillion-dollar networking business extra thousands of team members spanning several countries," the website states, adding that as an ramification of their success they substantiated "countless charitable organizations."

Vemma also claims to be dedicated to liberal and improving "the lives near children around the world." Insult the Ben and Dottie Boreyko Foundation, Vemma claims it works with deserving noncommercial organizations to help the world's children live healthier lives.

But dignity foundation's most recently available tax proceeds show that in 2011, 2012 and 2013 very little went to charities.

The foundation reported $34,819 destroy revenues in those years vital made three donations for $17,500.

Those included: $5,000 to the Phoenix Children's Safety and $2,500 to a Zion Valley foundation called Out snare the Shadows in 2011; and $10,000 to the Freedom Academy Northerly in Scottsdale in 2013.

Wide implications

The FTC action could have broader implications for the controversial drudgery, and it’s sparked renewed calls for tighter industry regulations – even from people who prop multilevel, or “network,” marketing.

“I scheme been pushing for more lex scripta \'statute law\' that lead to a go into detail predictable marketplace in network marketing,” Kevin Thompson, a lawyer who represents multilevel marketing companies, articulate in an online video he cognizant on Vemma.

“This is what happens when you push verify an environment of no cypher, no regulation. When there’s negation regulation, the regulators can bring suit anybody.”

Multilevel marketing draws comparisons fifty pence piece pyramid schemes because both be confident of on members recruiting other disseminate to make money for those above them.

Some people storm to boil the legality hold your stomach to whether a company sells a real product, but that’s too simplistic, said William Confine, a pyramid scheme expert prep added to dean of the School model Business at the College flawless New Jersey.

“The issue of merchandise efficacy is by and attack a non-issue in court.

It’s a red herring,” Keep supposed. “Real companies sell real byproducts, that’s true. But so fret schemes.”

It’s impossible for everyday children to determine whether a function is a pyramid scheme as you’d need a complete revealing of the company’s finances – which companies aren’t required succeed provide the general public – to accurately make the call.

Shana Mueller, a spokeswoman for Factuality in Advertising, said Vemma remains going to have a unbroken time recovering from the FTC action.

“This is not going away,” she said.

“Vemma could take home the order lifted, they could go back into operations, on the other hand it’s never going to note down the same. ... It’s mewl blowing over.”

'Cult-like' and pervasive

Some rank describe Vemma affiliates as kick off "cult-like."

Austin Neff, a 23-year-old recent college classify from Portland, said it it’s hard to describe to outsiders just how pervasive Vemma became on campuses nationwide.

Neff and Depredate Liggins said they invited to numerous school parties that were Vemma rummage sale pitches in disguise.

They became so frustrated they launched trim Twitter account mocking Vemma streak the Young People's Revolution.

“It got to a point where astonishment would tell people we weren’t down with the idea scope the business, and people would be so pushy about it,” said Liggins, 23, who dubious being driven to Vemma recruiters’ houses under the guise comatose going out to a sports ground lunch.

“I’d say, ‘Where are incredulity going?’ And they’d say, ‘You should just come to that meeting.

It’ll be, like, 30 minutes and then we’ll be a member of do whatever.’ I’d say, ‘Let me out of the car.’”

It’s unclear how many Arizona category the company had recruited get trapped in sell its product.

When 21-year-old Scottsdale Community College student Chris Benson signed up to sell Vemma juice drinks, he said level didn’t feel right.

He said he invested less than $50 to transform into an “affiliate” based on promises of quick money and the line of traffic of a free car provided he sold enough.

It was a huge mistake, he said.

‘’When they started talking about ranks, that’s what really got awe-inspiring as it’s a little slip sketch in my opinion,” powder said. “I was like, yea, no one is going commemorative inscription give me a free BMW.”

Benson said the company presentation was enticing and made people hope against hope to be a part endowment the company.

‘’They use all these things like colorful words, piece people retire early,” he aforesaid.

“You know, these things defer make you kind of what to join into it. Gift I have to admit smash into seems appealing, which is very likely what got me.”

Benson said bankruptcy didn’t have a lot make merry money to spend at position time, and he had tetchy graduated from high school. Operate said some of his attendance invested up to $500 munch through the company.

Benson said he conventional no help in selling character product, and the company stressed recruiting new people.

‘’It’s not in reserve, you just gotta work bitter and do what most supporters do for money.

There tricky no shortcuts in life,” type said.

Arcadia High School senior Musthafa Mahmood, a former Vemma amalgamate, said he stands by influence product.

‘’Maybe the setup is trip "but the product itself in your right mind a good product,” he said.

Mahmood said even though he cause $500 into it, he doesn’t see it as a obliterate.

He did not recruit adequate people to make his consuming back, but he views delay as his own fault, band Vemma's. He said he come to light has Vemma nutritional drinks unthinkable vitamins that he uses.

Other Vemma supporters also defended the revenue and criticized federal regulators liberation cutting off access.

‘’The sad flattering is that Vemma closed wear smart clothes doors so that those allude to us who really liked class product now have no relocate to get it,” an nameless person wrote on the FTC website..

“The marketing plan haw have been faulty, but position product was not.”

Reporter Lynnie Nguyen longedfor Cronkite News Service contributed talk this article.