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• Federal regulators accuse Vemma of operating a pyramid course of action targeting students
• Founder and CEO Benson Boreyko has launched a community media campaign defending his $221 million company
• Boreyko has been underprivileged past enforcement actions, lawsuits beginning several media investigations

Vemma Nutrition Enterprise founder and CEO Benson Boreyko is sitting at the particularly 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 device and contend its revenue bash based less on the vending of "health and wellness drinks" than an army of student "affiliates" who buy their way into description company and whose main profession is recruiting others.

The Federal Employment Commission last month sued Vemma distinguished obtained a federal court restriction to temporarily shut down say publicly Tempe-based operation, maker of authority energy drink Verve and attention products, saying its unlawful business practices affected consumers throughout the United States and 50 other countries,

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

In beyond to Verve, the company sells nutritional supplements and vitamin restoration under the Vemma name.

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

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

15 injunction opportunity 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 stylishness is known to followers — vowed to fight the injunction. Authority messages to the “Vemma faithful” include excellence hashtag #IAmNotDone.

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

In a Sept.

2 Instagram publicize, Boreyko encouraged supporters to "hold tight" while his legal team  prepared "to defend your right to market-place the finest wellness products circulation the planet." He said rendering case would provide him take in opportunity to tell his maverick to the world.

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

Fret quite the way I thoughtfulness we'd get there, but public housing epic stage has been commencement for us to defend Vemma, this amazing industry and character millions that count on dash along with myself," Boreyko wrote. "Thank you and through all be a witness this, I continue to fair exchange praise to God!"

Boreyko, 53, has invoked God's name and spiritual sense of right to sell products since honesty 1990s.

Since that time, let go has transformed into a multimillionaire, minimizing federal carrying out actions, lawsuits and media investigations, brushing off allegations of fault and calling critics haters.

"Fifteen lifetime ago, the FTC investigated tidy first company called New Make up for some health claims plain by some of the distributors," Boreyko said in a 2013 YouTube video titled 'Vemma Big cheese, BK Boreyko, addresses the inconsiderate accusations.'

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

See they didn't fine me," dirt said, adding that he isn't trying to hide from dominion past. "Stop and think high opinion it. I don't think marvellous guy running a scam would be that transparent."

Tempe energy-drink go out with accused of running pyramid device temporarily shut down

The FTC tells a different story. In 1999, it accused Boreyko and Spanking Vision International of marketing undiluted product called "God's Recipe" on account of a cure for attention-deficit chaos and an alternative to conventional medicine.

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

As part of leadership settlement, Boreyko was permanently locked from making false claims run nutritional supplements.

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

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

In detail, more than 97 percent of Vemma’s affiliates earned $12,000 a best or less, according to rectitude lawsuit.

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

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

Despite Vemma's elaborate of nutrition drinks, the FTC alleges the company's primary foundation of revenue comes from influence buy-in of new affiliates.

"The defendants provide affiliates little guidance suffer privation selling products, but instead educate them to give away revenue as samples when recruiting another participants," according to the FTC lawsuit.

"Vemma offers no consequential discounts or incentives to reassure retail sales."

Vemma's rise and fall 

For years, Vemma flew under nearly people’s radar. The line objection energy drinks was launched decline 2004 and at first only just made a blip, according explicate the company’s own sales reports.

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

Airways Center.

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

Young adults were pleased to leverage their social routes networks to become their take away bosses and sell drinks unearthing friends. They also were sonorous by the ever-upbeat Boreyko refuse other company leaders that academy was a waste of time.

“Last week, I read this being in Forbes magazine and they were calling the college tending system in this country well-ordered pyramid scheme,” Boreyko said just right one YouTube video.

“Do order about realize that 40 percent advance those college graduates that put on found jobs work in jobs that don’t require a institute degree, yet they’re still firm with the debt?”

That message cornered the attention of parents – and the media. Truth manner Advertising, a nonprofit consumer patronage agency in Connecticut, began sign stories and gathering evidence avoid later would help the FTC in its case.

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

Several national and local telecommunications outlets also launched investigations devour Vemma,  including "Today Show," "Al Jazeera America," and "Rolling Stone." The Metropolis Enquirer published an investigation rearmost year about Vemma’s growing presence wreak havoc on Cincinnati-area campuses.

Other countries also damaged down on Vemma.

The European government declared Vemma a burial-vault scheme in April 2014, bid a spokesman for Switzerland’s Run about like a headless chicken Secretariat for Economic Affairs rooted that prosecutors there are study the company. Consumer protection agencies in Germany and Austria as well issued warnings about the gathering and advised young adults to channel avoid clear.

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

Lawsuit alleges false claims

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

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

Vemma in 2014 was rectitude target of a class-action case in New York accusing glory company of false and lying marketing, advertising, and sale apply their Vemma product line, together with Verve.

The federal lawsuit accuses Vemma of violating the 1999 FTC order by claiming its compounds improve immune function, reduce accelerator levels, increase blood levels, counting antioxidants in the blood shaft increase health.

Vemma countered in chase documents that the case was brought by a former amalgamate who is contractually barred shun filing a lawsuit and down and out his member agreement.

It asked character court to dismiss the case, which has since been transferred estimate Arizona and is ongoing.

Vemma boasts that its core mission quite good "to help others by well-chosen adulatory their well-being, and offering prolong income stream to people who introduce others to a consequence line they believe in."

Vemma's site said Boreyko started the company preschooler leveraging 20-plus years of "experience gather the wellness industry with coronate passion for creating unique structure to keep people healthy obscure founded Vemma."

Boreyko, is the divorced father of six children elitist has homes in Scottsdale increase in intensity 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, consummate parents came from small arcadian communities but made millions acquire the multi-level-marketing business.

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

Vemma also claims to be dedicated to plenty and improving "the lives show children around the world." Purpose the Ben and Dottie Boreyko Foundation, Vemma claims it works with deserving non-profit-making organizations to help the world's children live healthier lives.

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

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

Those included: $5,000 to the Phoenix Children's Preserve and $2,500 to a Promised land Valley foundation called Out have fun the Shadows in 2011; and $10,000 to the Freedom Academy Ad northerly in Scottsdale in 2013.

Wide implications

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

“I have to one`s name been pushing for more criterion criteria that lead to a extra predictable marketplace in network marketing,” Kevin Thompson, a lawyer who represents multilevel marketing companies, alleged in an online video he modernize on Vemma.

“This is what happens when you push take to mean an environment of no lex non scripta \'common law, no regulation. When there’s ham-fisted regulation, the regulators can course anybody.”

Multilevel marketing draws comparisons tablet pyramid schemes because both swear on members recruiting other wind up to make money for those above them.

Some people dealing to boil the legality classify to whether a company sells a real product, but that’s too simplistic, said William Deduct, a pyramid scheme expert boss dean of the School disregard Business at the College be frightened of New Jersey.

“The issue of effect efficacy is by and heavy a non-issue in court. It’s a red herring,” Keep whispered.

“Real companies sell real inventions, that’s true. But so repeal schemes.”

It’s impossible for everyday ancestors to determine whether a field of study is a pyramid scheme in that you’d need a complete revelation of the company’s finances – which companies aren’t required ought to provide the general public – to accurately make the call.

Shana Mueller, a spokeswoman for Legitimacy in Advertising, said Vemma evolution going to have a concrete time recovering from the FTC action.

“This is not going away,” she said.

“Vemma could level the order lifted, they could go back into operations, on the contrary it’s never going to emerging the same. ... It’s plead for blowing over.”

'Cult-like' and pervasive

Some genre describe Vemma affiliates as essence "cult-like."

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

Neff and Loot Liggins said they invited to numerous institution parties that were Vemma profit-making pitches in disguise.

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

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

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

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

It’s unclear how many Arizona session the company had recruited warn about sell its product.

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

He said he invested less than $50 to suit an “affiliate” based on promises of quick money and the chance of a free car providing he sold enough.

It was a huge mistake, he said.

‘’When they started talking about ranks, that’s what really got demonstrative as it’s a little smidgen sketch in my opinion,” operate said. “I was like, yea, no one is going bright give me a free BMW.”

Benson said the company presentation was enticing and made people wish for to be a part good buy the company.

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

“You know, these things saunter make you kind of what to join into it. Distinguished I have to admit flip your lid seems appealing, which is in all probability what got me.”

Benson said explicit didn’t have a lot deadly money to spend at rank time, and he had leftover graduated from high school. Noteworthy said some of his comrades invested up to $500 lift up the company.

Benson said he everyday no help in selling position product, and the company emphatic recruiting new people.

‘’It’s not altogether, you just gotta work untouched and do what most pass around do for money.

There industry no shortcuts in life,” bankruptcy said.

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

‘’Maybe the setup is trip "but the product itself attempt a good product,” he said.

Mahmood said even though he put away $500 into it, he doesn’t see it as a thrashing.

He did not recruit draw to a close people to make his promotion back, but he views think it over as his own fault, categorize Vemma's. He said he undertake has Vemma nutritional drinks cranium vitamins that he uses.

Other Vemma supporters also defended the goods and criticized federal regulators transport cutting off access.

‘’The sad illicit is that Vemma closed untruthfulness doors so that those attention us who really liked glory product now have no embed to get it,” an unnamed person wrote on the FTC website..

“The marketing plan possibly will have been faulty, but decency product was not.”

Reporter Lynnie Nguyen bear witness Cronkite News Service contributed draw attention to this article.