Md. joins suit against Equinox

Six states, U.S. sue Nevada firm accused of pyramid scheme

August 10, 1999|By Kristine Henry | Kristine Henry,SUN STAFF

Hoping to stop an alleged pyramid scheme that officials say has bilked about 400 Marylanders out of $2 million, the state's attorney general's office said yesterday that it has joined the federal government and five other states in a lawsuit seeking to halt the company's practices and get back some of the lost money.

Equinox International Corp., based in Las Vegas, sells environmentally friendly products such as water filters and skin-care products. The company, which operates in Maryland under the names Infinity Group, World Solutions and Paramount, denied any wrongdoing.

Maryland Attorney General J. Joseph Curran Jr. said that Equinox placed advertisements in local newspapers offering what appear to be salaried positions. When applicants arrived, however, they were told that to work for the company they would have to spend $5,000 on products and recruit others, he said.

He and the attorneys general of Hawaii, Nevada, North Carolina, Pennsylvania and South Carolina, along with the Federal Trade Commission, are seeking to halt Equinox's recruitment system and retrieve the money lost by participants.

A pyramid scheme is one in which participants make the bulk of their money not by selling products but by recruiting others to join the company and buy products.

"If you have a sales promotion and you've got sharp or slick promoters, they can sell you, and that's what happened here," Curran said yesterday. "They do a very smooth and very professional job to get you to join up."

Just ask Alex Howard.

The 22-year-old recent college graduate answered a Paramount ad that touted $3,000 to $5,000 monthly earning potential. He attended a presentation in which speakers extolled the earnings power of Paramount and was impressed enough to spend $300, not including travel or lodging, to attend a three-day seminar in Pittsburgh.

At the seminar, speakers explained a complicated compensation package in which the more product one purchased to sell, the larger percentage of profits they could earn, he said. They encouraged participants to pay at least $5,000 for products so they could quickly earn large rewards.

When Howard could only come up with $3,000, company officials turned cold, he said. Realizing something was wrong, he asked for his money back.

"They went from sickly sweet to very foul-mouthed," said Howard, who now works as a consultant in Boston. "I'm embarrassed [now] because I know better and I was definitely grasping for something. And I did see kernels of truth from a biological standpoint with homeopathic remedies and water cleansers. It was very intriguing to me."

Howard's attorney was able to get the $3,000 back and Howard contacted Curran's office in hopes others wouldn't go through the same thing. Curran said his office has received numerous complaints.

But officials at the Paramount of Baltimore office yesterday denied there was anything illegal about their operation.

"Nobody's forcing nobody to buy nothing," said Director Mark Dardozzi. "If people don't like what we have to say, they are free to leave. I don't want to work with anyone who I have to force to work."

U.S. District Judge Johnnie B. Rawlinson in Las Vegas last week issued a restraining order freezing the company's assets and placing it in temporary receivership.

Pub Date: 8/10/99

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