Read the suit against Fortune - Lexington Herald

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UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF KENTUCKY
AT LEXINGTON
[Filed Electronically]
YVONNE DAY
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PLAINTIFFS
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and
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LEONARD HASLAG
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and
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JAMES McCORMICK
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and
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JOHN W. TURNER,
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on behalf of themselves and others
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similarly situated
) CASE NO. ______________________
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v.
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FORTUNE HI-TECH MARKETING, INC. )
DEFENDANTS
880 Corporate Drive, Suite 300
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Lexington, Kentucky 40503
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SERVE:
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Thomas A. Mills
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and
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PAUL C. ORBERSON
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President/Director
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Fortune Hi-Tech Marketing, Inc.
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and
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JEFF ORBERSON
Chief Business Officer
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THOMAS A. MILLS
Vice President/Chief Executive Officer
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DAVID MILLS
Chief Operating Officer
and
BILLY STAHL
Senior Executive Vice President of
Marketing and Training
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SIMON DAVIES
Chief Financial Officer
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RUEL MORTON
1 Wellington Drive
Longview, TX 75605-2017
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TODD ROWLAND
1000 Lowes Blvd.
Mooresville, NC 28117-8520
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ASHLEY ROWLAND
1000 Lowes Blvd.
Mooresville, NC 28117-8520
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TODD & ASHLEY, INC.
261 Knoxview Lane
Mooresville, North Carolina 28117
and
MIKE MISENHEIMER
11725 Stage Coach Road
Gravette, AR 72736-9248
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STEVE JORDAN
3315 Heritage Drive
Claremore, OK 74019-4989
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JOEL McNINCH
SERVE:
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CHRIS DOYLE
62 Haverhill Drive
Jackson, TN 38305-8506
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KEN BROWN
SERVE:
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JERRY BROWN
SERVE:
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BOB DECANT
754 N. Decant Road
Oregon, OH 43616-5889
and
JOANNE McMAHON
J.T. McMahon
3540 Secor Rd., Ste 301
Toledo, OH 43606-1538
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TERRY WALKER
2022 E. Lakeview
Benton, AR 72015-2799
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SANDI WALKER
19617 Congo Ferndale Rd.
Little Rock, AR 72210-5691
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SHERRI WINTER
SERVE:
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and
TREY KNIGHT
701 Columbia Rd.
Titusville, FL 32780-7902
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KEVIN MULLINS
SERVE:
and
SCOTT AGUILAR
6845 Osterling Crt.
San Diego, CA 92114-7828
and
MOLLY AGUILAR
755 Wala Drive
Oceanside, CA 92058-0616
and
NATHAN KIRBY
4520 Old Village Rd.
Raleigh, NC 27612-3930
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DWAYNE BROWN
480 Monticello Drive
Auburn, AL 36830-1427
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AARON DECKER
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443 Lawrence Street
Bellevue, OH 44811-1631
and
SUSAN FRANK
2030 Sierra Trace Road
Denton, NC 27239
and
RAMIRO ARMENTA
5414 Salma St.
Plainfield, IL 60586-5585
and
ANGELINA ARMENTA
384 Thelma Ct.
Wheeling, IL 60090-4434
and
ALEXIS ADAME
2694 Avenue H
Ingleside, TX 78362-6302
and
TERESA ADAME
114 Huisache Street
Crystal City, TX
and
DARLA DiGRANDI
SERVE:
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MATT MORSE
308 Mead Street
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Lake City, AR 72437-9592
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and
MATT BARRETT
829 Montevideo Dr., Apt. 22
Lansing, MI 48917-4833
and
ROBERTO RIVERA
2509 Trinity Street
Irving, TX 76062-5258
** ** ** **
CLASS ACTION COMPLAINT
Plaintiffs Yvonne Day, Leonard Haslag, James McCormick, and John W. Turner, by counsel
and on behalf of themselves and others similarly situated, for their Class Action Complaint, state as
follows:
INTRODUCTION
1.
This is an action by plaintiffs on behalf of themselves and those similarly situated to
recover damages caused by the defendants’ operation of an inherently fraudulent pyramid scheme.
The pyramid scheme is fraudulent because it requires the payment by participants of money to
defendant Fortune Hi-Tech Marketing, Inc. (“Fortune”), in return for which participants receive (1)
the right to sell products and (2) the right to receive in return for recruiting other participants into the
program rewards which are unrelated to sale of the product to ultimate users.
2.
This action is brought on behalf of a national class of persons who serve or have
served as independent representatives for Fortune, pursuant to the Racketeer Influenced and Corrupt
Organizations Act, 18 U.S.C. § 1961-1968 (“RICO”), the Kentucky Consumer Protection Act, KRS
Chapter 367, and the laws of Kentucky.
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PARTIES
3.
Plaintiff Yvonne Day is and was at all times relevant to the allegations in this
complaint a resident of Comal County, Texas and a citizen of the United States.
4.
Plaintiff Leonard Haslag is and was at all times relevant to the allegations in this
complaint a resident of Osage County, Missouri and a citizen of the United States.
5.
Plaintiff James McCormick is and was at all times relevant to the allegations in this
complaint a resident of Pasco County, Florida and a citizen of the United States.
6.
Plaintiff John W. Turner is and was at all times relevant to the allegations in this
complaint a resident of Comal County, Texas and a citizen of the United States.
7..
Defendant Fortune Hi-Tech Marketing, Inc. is a Kentucky corporation with a
principal office at 880 Corporate Drive, Suite 300, Lexington, Kentucky 40503.
8.
Defendant Paul C. Orberson, the president, founder and director of Fortune, is and
was at all times relevant to the allegations in this complaint a resident of Fayette County, Kentucky
and a citizen of the United States.
9.
Defendant Thomas A. Mills, the Chief Executive Officer of Fortune, is and was at all
times relevant to the allegations in this complaint a resident of Fayette County, Kentucky and a
citizen of the United States.
10.
Defendant David Mills, the Chief Operating Officer of Fortune, is and was at all
11.
Defendant Jeff Orberson, the Chief Business Officer of Fortune, is and was at all
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12.
Defendant Ruel Morton is and was at all times relevant to the allegations in this
complaint a resident of Gregg County, Texas and a citizen of the United States. Morton is a
Presidential Ambassador for Fortune.
13.
Defendant Todd Rowland is and was at all times relevant to the allegations in this
complaint a resident of Iredell County, North Carolina and a citizen of the United States. Mr.
Rowland is a Presidential Ambassador for Fortune.
14.
Defendant Ashley Rowland is and was at all times relevant to the allegations in this
complaint a resident of Iredell County, North Carolina and a citizen of the United States. Ms.
Rowland is a Presidential Ambassador for Fortune.
15.
Defendant Todd & Ashley, Inc. (“Todd & Ashley”) is a North Carolina corporation,
operated by Todd & Ashley Rowland, with its principal office located at 261 Knoxview Lane,
Mooresville, NC 28117.
16.
Defendant Mike Misenheimer is and was at all times relevant to the allegations in this
complaint a resident of Benton County, Arkansas and a citizen of the United States. Misenheimer is
a Presidential Ambassador for Fortune.
17.
Defendant Steve Jordan is and was at all times relevant to the allegations in this
complaint a resident of Madison County, Tennessee and a citizen of the United States. Jordan is a
18.
Defendant Joel McNinch is and was at all times relevant to the allegations in this
complaint a resident of Oakland County, Michigan and a citizen of the United States. McNinch is a
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19.
Defendant Chris Doyle is and was at all times relevant to the allegations in this
complaint a resident of Dallas County, Texas and a citizen of the United States. Doyle is a
20.
Defendant Ken Brown is and was at all times relevant to the allegations in this
complaint a resident of Stanislaus County, California and a citizen of the United States. Ken Brown
is a National Sales Manager for Fortune.
21.
Defendant Jerry Brown is and was at all times relevant to the allegations in this
complaint a resident of Fulton County, Georgia and a citizen of the United States. Jerry Brown is a
National Sales Manager for Fortune.
22.
Defendant Bob Decant is and was at all times relevant to the allegations in this
complaint a resident of Lucas County, Ohio and a citizen of the United States. Decant is a National
Sales Manager for Fortune.
23.
Defendant Joanne McMahon is and was at all times relevant to the allegations in this
complaint a resident of Lucas County, Ohio and a citizen of the United States. McMahon is a
24.
Defendant Terry Walker is and was at all times relevant to the allegations in this
complaint a resident of Saline County, Arkansas and a citizen of the United States. Terry Walker is
a National Sales Manager for Fortune.
25.
Defendant Sandi Walker is and was at all times relevant to the allegations in this
complaint a resident of Saline County, Arkansas and a citizen of the United States. Sandi Walker is
26.
Defendant Sherri Winter is a resident of Gregg County, Texas and a citizen of the
United States. Winter is a National Sales Manager for Fortune.
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27.
Defendant Trey Knight is and was at all times relevant to the allegations in this
complaint a resident of Duval County, Florida and a citizen of the United States. Knight is a
28.
Defendant Kevin Mullins is and was at all times relevant to the allegations in this
complaint a resident of Leon County, Florida and a citizen of the United States. Mullins is a
29.
Defendant Scott Aguilar is and was at all times relevant to the allegations in this
complaint a resident of San Diego County, California and a citizen of the United States. Scott
Aguilar is a National Sales Manager for Fortune.
30.
Defendant Molly Aguilar is and was at all times relevant to the allegations in this
complaint a resident of San Diego County, California and a citizen of the United States. Molly
Aguilar is a National Sales Manager for Fortune.
31.
Defendant Nathan Kirby is and was at all times relevant to the allegations in this
complaint a resident of San Diego County, California and a citizen of the United States. Kirby is a
32.
Defendant Dwayne Brown is and was at all times relevant to the allegations in this
complaint a resident of Lee County, Alabama and a citizen of the United States. Brown is a National
33.
Defendant Aaron Decker is and was at all times relevant to the allegations in this
complaint a resident of Kent County, Michigan and a citizen of the United States. Decker is a
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34.
Defendant Susan Frank is and was at all times relevant to the allegations in this
complaint a resident of Davidson County, North Carolina and a citizen of the United States. Frank is
35.
Defendant Ramiro Armenta is and was at all times relevant to the allegations in this
complaint a resident of Will County, Illinois and a citizen of the United States. Ramiro Armenta is a
36.
Defendant Angelina Armenta is and was at all times relevant to the allegations in this
complaint a resident of Will County, Illinois and a citizen of the United States. Angelina Armenta is
37.
Defendant Alexis Adame is and was at all times relevant to the allegations in this
complaint a resident of Cook County, Illinois and a citizen of the United States. Alexis Adame is a
38.
Defendant Teresa Adame is and was at all times relevant to the allegations in this
complaint a resident of Cook County, Illinois and a citizen of the United States. Teresa Adame is a
39.
Defendant Darla DiGrandi is and was at all times relevant to the allegations in this
complaint a resident of San Diego County, California and a citizen of the United States. DiGrandi is
40.
Defendant Matt Morse is and was at all times relevant to the allegations in this
complaint a resident of Craighead County, Arkansas and a citizen of the United States. Morse is a
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41.
Defendant Matt Barrett is and was at all times relevant to the allegations in this
complaint a resident of Ingham County, Michigan and a citizen of the United States. Barrett is a
42.
Defendant Roberto Rivera is and was at all times relevant to the allegations in this
complaint a resident of Dallas County, Texas and a citizen of the United States. Rivera is a National
JURISDICTION AND VENUE
43.
Jurisdiction is proper pursuant to 28 U.S.C. § 1331 because plaintiffs bring claims
under RICO, 18 U.S.C. § 1961-1968. Pursuant to 28 U.S.C. § 1367, this Court may exercise
jurisdiction over plaintiffs’ claims under the Kentucky Consumer Protection Act, KRS Chapter 367
and other state law claims because those claims and the RICO claims form a part of the same case or
controversy under Article III.
44.
Venue is proper pursuant to 28 U.S.C. § 1391(b) because a substantial part of the
events or omissions giving rise to the plaintiffs’ claims occurred in this district. Under 18 U.S.C. §
1965(a) and (b), venue is proper for plaintiffs’ RICO claims because Fortune and other individual
defendants reside in this district, and the ends of justice require that other parties residing in any
other district be brought before the Court.
FACTS
45.
On September 11, 2000, defendant Fortune was organized as a Kentucky corporation.
46.
Since at least January 5, 2001, Fortune has been operating in Kentucky and other
47.
Fortune purports to be a lawful and legitimate company engaged in “relationship
states.
marketing,” which Fortune’s website defines as “a method of distribution that involves an estimated
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59 million people worldwide and is defined as the sale of a consumer product or service, person-toperson, away from a fixed retail location, marketed through independent sales representatives.”1 .
48.
In reality, Fortune is the founder of an enterprise that is and always has been an illegal
pyramid scheme. This enterprise will hereinafter be referred to as the Fortune Pyramid.
The Fortune Pyramid’s Basic Structure
49.
The Fortune Pyramid operates by offering prospective participants the opportunity to
become “Independent Representatives” (“IRs”) who allegedly will “have the opportunity to earn a
residual income over time by acquiring loyal customers and introducing the Fortune opportunity to
others.”2
50.
Fortune labels all individuals who participate in the Fortune Pyramid as IRs.
51.
Fortune compensates all of its IRs in accordance with what it terms a “multilevel
marketing compensation plan.” Id.
52.
The basic terms of this compensation plan are set forth in a Policies & Procedures
document produced by Fortune.
53.
From 2001 until at least July 1, 2010, Fortune utilized a Polices & Procedures
document that sets forth a compensation structure that amounts to a fraudulent and illegal pyramid
scheme, both by its very terms and by its implementation by Fortune in practice. This Policies &
Procedures document is attached as Exhibit 1.
54.
Prospective participants who meet certain basic criteria and desire to join Fortune
enter the company as either a representative or a manager. Although the Policies & Procedures
provide that one may join the Fortune Pyramid as a representative for $75, Fortune’s recruiting
presentations usually do not offer prospective participants this option and instead encourage
1
2
“What is Relationship Marketing?”, http://www.fhtm.net/relationship.aspx
“Why FHTM,” http://www.fhtm.net/whyfhtm.aspx
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participants to join as a manager, which requires the participant to pay $299. Although the Policies
& Procedures document provides that this $299 is for the purchase of an “Optional Special Services
Program,” the defendants and others high in the pyramid frequently refer to the $299 fee in other
terms. Additionally, to remain a manager, one must pay Fortune an additional $199 each year.
55.
After paying at least $299 to join, a new Fortune manager then ostensibly has the
opportunity to advance to the following higher positions within the company:
56.
A.
Qualified Representative3
A.
Regional Manager
B.
Executive Sales Manager
C.
National Sales Manager
D.
Presidential Ambassadors
The basis for promoting managers to subsequent higher positions in the company is
not success in selling products or services, but rather the recruitment and sponsorship of new Fortune
managers by the manager and those in his or her “downline” (i.e., IRs below them on the pyramid).
Fortune’s Compensation and Bonus Structure Is a Fraudulent Pyramid Scheme
57.
Under the Compensation Plan utilized by Fortune until at least July 1, 2010, IRs are
able to earn compensation from two sources: (1) bonuses for recruiting and sponsoring new
representatives; and (2) commissions from sales of products and services by themselves and by
recruits in their “downline.”
3
Fortune’s Policies & Procedures document also refers to “Qualified” Regional Managers, Executive Sales
Managers, etc. Only “Qualified” IRs are entitled to receive the bonuses and commissions to which an IR at their level
of the pyramid is entitled. However, the only distinction between being a regular Manager and a “Qualified” one is
that, to be Qualified, a manager must have purchased the requisite amount of Fortune Goods or Services described
below by the end of any given month. Thus, for simplicity’s sake, this complaint will refer to each level as simply
“Regional Manager,” “Executive Sales Manager,” etc. without using the “Qualified” label.
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58.
Fortune operates as an illegal pyramid scheme because this compensation plan affords
IRs the right to receive in return for recruiting other participants into Fortune rewards which are
unrelated to the sale of products or services to ultimate users outside of Fortune. See United States v.
Gold, 177 F.3d 472, 480 (6th Cir 1999) (quoting In re Koscot Interplanetary, Inc., 86 F.T.C. 1106,
1187 (1975)). Such a scheme is deemed inherently fraudulent under federal law. Id.
A.
Recruiting presentations by the defendants and others at the top of the Fortune
Pyramid emphasize recruitment of new representatives over the sale of products and
services to customers outside of Fortune.
59.
In recruiting presentations, the defendants and other individuals at the top of the
Fortune Pyramid, presenting official Fortune marketing materials, consistently emphasize
recruitment of new members over sales or products and services to customers outside of Fortune.
60.
For example, defendant Joel McNinch stated during a Fortune recruitment
presentation that is available online on YouTube: “When you build a group of 12 people – you
sponsor three, and help them build nine total – 12, you promote yourself to regional sales manager.
We just had a guy in Indian River, Michigan last week do it in one day.”4
61.
In the same presentation, McNinch stated, “As a regional manager, every time you go
out and personally enroll a new manager who gathers three customers, you’re going to earn a $200
bonus.” Id.
62.
McNinch described the process of earning more bonuses as more representatives are
recruited to join Fortune: “As these reps start to bring in reps, not only do you earn an override
percentage of their customers, but you earn a $100 customer acquisition bonus for every rep that’s
gathered by any of your reps. . . . $100, $100, $100 unlimited for every rep that joins.” Id.
63.
Summarizing the emphasis on recruitment, McNinch stated, “We’re not looking to
sign you up and sell you something; we’re looking for team members.” Id.
4
http://www.youtube.com/watch?v=F0sE2ID9bXo
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64.
Recruiting new IRs into the Fortune Pyramid is similarly emphasized in presentations
made by throughout the country by the individual defendants and other individuals at the top of the
Fortune Pyramid.
65.
For example, in another presentation, defendant Misenheimer said that the key to
making money in Fortune is to “get a rep, get a rep, get a rep, get a rep . . . [successful Fortune reps]
are making money, but they don’t understand what they’re doing . . . The whole thing’s about getting
the preliminary stuff out of the way, and getting to regional [sales manager] fast.”5
B.
Official Fortune training materials emphasize recruitment of new members over the
sale of products and services to actual end users outside of Fortune IR’s.
66.
Fortune provides IRs with written training materials. Each plaintiff received some
form of these materials from Fortune.
67.
These training materials clearly emphasize recruitment of new IRs, not the sale of
products and services to end users.
68.
To illustrate, the materials received by plaintiff Haslag provide a list of “Business
Building Steps,” which is attached as Exhibit 2.
69.
This list provides guidance for recruiting new managers into Fortune. It tells newly
appointed managers, “You are not trained as a sales person and you should not act like one.” It
further tells managers to tell prospective managers, “you don’t have to be a salesperson” to succeed
at Fortune.
70.
Furthermore, this list provides answers to hypothetical questions that a manager may
face in attempting to recruit new managers.
5
http://www.youtube.com/watch?v=lqLcrsXO1Hw&feature=related
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71.
One such hypothetical question is, “Is this a pyramid?” Fortune encourages
representatives to respond as follows: “No. Pyramids are illegal and I certainly wouldn’t be
involved in anything illegal. Just let me show it to you.”
72.
The Building Business steps encourage managers to quickly sign up new managers by
requesting an answer from a prospective participant within a short period of time.
C.
Bonuses paid to Fortune IRs are based upon recruiting others to join Fortune as
managers.
73.
Fortune’s compensation plan involves an elaborate set of bonuses which are
effectively the only way to earn money in Fortune and which are all tied not to real sales to outside
customers, but rather to recruitment of new IRs.
74.
An IR receives a “Quick Start Bonus” of $100 for sponsoring a manager who
acquires only three personal customer points within 60 days of the manager’s enrollment. Managers
are told that these “customers” need not be actual customers not participating in Fortune, but rather
purchases of Fortune products and services made by the manager him or herself. New managers are
encouraged to make these three purchases the same day as they join the Fortune Pyramid, thus
qualifying themselves immediately and triggering the Quick Start Bonuses to those above them on
the Fortune Pyramid. Thus, a Quick Start Bonus is compensation for recruitment and is not based on
actual product sales to end users outside of Fortune.
75.
Additionally, an IR may earn a “Quick Start Bonus Override” (“QSBO”)whenever a
manager within his or her downline receives a Quick Start Bonus. If the new manager recruited in
the downline falls on Level 2-7, the amount of the QSBO is $5. If the new manager is on Level 8,
the QSBO is $10. Within the last year, these QSBO amounts have been raised to $15 for Levels 2-7
and $20 for Level 8.
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76.
Once an IR becomes a Regional Sales Manager, he or she is eligible to receive
customer acquisition bonuses. These bonuses are based not on the acquisition of new customers, but
rather on the recruitment of new managers into the Regional Sales Manager’s downline. The
amount of the customer acquisition bonus is $100 for each new manager, to unlimited levels deep,
who enters the QRSM’s regional coded group and qualifies for a Quick Start Bonus. If 16 such new
managers enter the group, then the amount of the bonus is doubled to $200 per new manager.
77.
At the level of Executive Sales Manager and National Sales Manager, these
“customer” acquisition bonuses become more lucrative as the Executive or National Sales Manager
receives a bonus for each new manager in his or her downline that is recruited to join Fortune and
qualifies for a Quick Start Bonus.
D.
Fortune’s “Trainer Coach” Program is merely another thinly veiled means of paying
IRs for the recruitment of new IRs.
78.
Fortune also encourages new participants to pay $299 (or slightly less in some states)
to become a “Trainer Coach.” As a Trainer Coach, one purportedly will be paid $40 for the initial
training of a new manager. However, managers are not obligated to undergo such training. Many
managers are simply trained on the use of their “Fortune Back Office” and sign a form, causing the
$40.00 training fee to be paid.
79.
Trainer Coaches are required to pay an annual renewal fee of $100 to maintain their
status as Trainer Coach.
80.
As with the advancement in the ranks of manager, IRs may advance to higher levels
of trainers. A Trainer Coach who becomes a Regional Sales Manager may become a “Certified
Regional Trainer” for an additional $200. A Certified Regional Trainer, in turn, receives $80 for
training each new Trainer Coach.
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81.
Certified Trainer Coaches can become eligible to receive bonuses tied directly to the
training of new managers by any Trainer Coach in their “training downline.” However, a Certified
Trainer Coach can become eligible for these bonuses only by sponsoring four active managers who
are also Trainer Coaches.
82.
Thus, the Trainer Coach program amounts to nothing more than another means for
Fortune to push IRs to recruit new participants into the Fortune Pyramid and to receive payment
from IRs.
E.
Commissions ostensibly earned on sales of products and services are, in fact, tied to
recruitment of new managers.
83.
Although Fortune’s compensation structure allows IRs to earn commissions on the
sale of Fortune products and services by themselves and those recruited in the eight levels below
them, these commissions are relatively small compared to the bonuses that an IR can earn when new
representatives are recruited to join Fortune in his or her downline.
84.
Even this commission structure rewards recruitment, not sales to customers outside
the Fortune Pyramid, because IRs are encouraged to purchase Fortune products and services
themselves or sell them to IRs they recruit rather than to sell them to customers outside the Fortune
Pyramid.
85.
Fortune’s commission structure makes this possible by allowing IRs to earn
commissions on sales without ever actually selling anything to a customer outside the Fortune
Pyramid. In fact, prospective IRs are told while joining Fortune that they must purchase certain
products to earn their first “customer points” and therefore allow bonuses to be paid to their
sponsors.
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86.
For example, until at least April 2010, new Fortune IRs were required to purchase a
“Fortune Back Office” website that required a $20.00 setup fee and a $24.95 recurring monthly
payment. This website qualified as the IR’s first customer point/customer.
87.
Fortune’s commission structure allows IRs to earn commissions on sales of products
and services by themselves, to themselves, and by those IRs they recruit to join the company for up
to eight levels below them on the pyramid.
88.
To earn commissions on all eight levels, an IR is required to recruit and sponsor one
new manager. Thus, an IR’s ability to receive commissions on the sale of any products is tied to
recruitment of new individuals to join the Fortune Pyramid.
89.
An IR qualifies to receive commissions on sales by any IR he or she recruits
personally (Level 1) by acquiring three “active personal customers” and one “personally sponsored
Manager,” i.e., a new Fortune IR.
90.
These “active personal customers” need not be actual human beings, let alone human
beings outside of the Fortune Pyramid; rather, a product or service purchased from Fortune by the IR
him or herself qualifies as a “customer” for purposes of allowing IRs to receive commissions and
bonuses. The “customer points” assigned to each Fortune product or service determine how much of
any given Fortune product or service must be purchased to qualify as one customer.
91.
A “Customer Point Sheet” provided to new IRs explains what products or services
may be purchased to qualify as a new “customer.” As an example, the purchase of $39.99 of True
Essentials products by an IR counts as one “customer” and one “customer point.”
92.
To obtain the required three customer points, new IRs are encouraged to merely
purchase Fortune products and services themselves, rather than attempt to sell them to outsiders.
Potential IRs are frequently told at recruiting meetings that they are already paying for the types of
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products and services offered by Fortune – e.g., television, Internet service, cellular phone service,
vitamins or travel – so they should simply switch from their current service provider to a product
offered by Fortune.
93.
Although one of the three “customers” purportedly must be “other than his/her own
personal or household account”, Fortune neither tracks nor enforces this policy, and the policy itself
permits this customer to be another IR.
94.
Thus, a new Fortune IR must recruit another manager and either purchase or sell three
Fortune products or services in order to receive commissions on the products or services purchased
or sold by the manager he or she recruits (Level 1 commissions).
95.
To earn commissions on Levels 2-7, an IR must acquire five customer points, i.e.,
purchase five Fortune products or services, and sponsor two managers. There is no requirement that
these customers be actual purchasers outside of the Fortune Pyramid.
96.
To earn commissions on Level 8, an IR must acquire 10 customer points, i.e.,
purchase ten Fortune products or services, and sponsor three managers. There is no requirement that
these customers be actual purchasers outside of the Fortune Pyramid.
97.
An IR who meets the requirements for earning Level 8 commissions – i.e., one who
has purchases 10 Fortune products or services and personally sponsors three new managers – is
eligible to receive the first promotion available within Fortune, to the position of Qualified
Representative.
98.
To advance to the next level in the company, Regional Sales Manager, a Qualified
Representative must develop a minimum of 12 managers within his or her first five levels, and need
only maintain the same 10 “customer points” required to become a Qualified Representative. Thus,
22
Qualified Representatives, to advance in Fortune, have an incentive solely to recruit and to ensure
that those immediately below them recruit new managers into Fortune.
99.
During recruitment presentations, the individual defendants and others near the top of
the Fortune Pyramid encourage prospective IRs to quickly advance to the level of Regional Manager
in order to begin earning the bonuses described below.
100.
A Regional Sales Manager becomes a Qualified Regional Sales Manager merely by
maintaining the 10 “customer points” that were necessary to be promoted to Qualified
Representative and Regional Sales Manager.
101.
As set forth below in the description of Fortune’s bonus structure, the benefit of
advancing to each new level within the company is the eligibility for bonuses tied directly to the
recruitment of new managers within an IR’s downline.
102.
The next level in Fortune is Executive Sales Manager. A Regional Sales Manager
may be promoted to Executive Sales Manager by having 15 or more active personal “customer
points,” i.e., buying 15 products or services from Fortune, developing six Regional Sales Managers
within a certain range on his or her downline; and developing a minimum downline organization of
90 managers within his or her downline. Thus, advancement to ESM occurs only through
recruitment.
103.
The second-highest level in Fortune is National Sales Manager. To be promoted to
this level, an IR need not acquire any more active customers. But he or she must have six Qualified
Executive Sales Managers in a portion of her downline; 90 managers in his or her Regional Sales
Manager group, and 540 managers in his or her Executive Sales Manager group. To be a Qualified
National Sales Manager, the IR must maintain his or her 15 customer points at the end of the month.
23
104.
The highest level obtainable in Fortune is Presidential Ambassador. A Presidential
Ambassador need only have 15 personal customer points but must have three Qualified National
Sales Managers within a certain portion of his or her downline; and a downline organization of 1620
managers in his or her National Sales Manager group and a monthly income exceeding $100,000.
Presidential Ambassadors are appointed by Fortune, and, as a special bonus, they receive a share of
the revenue/profits of the entire Fortune Pyramid.
105.
Advancement in Fortune is therefore tied directly to recruitment of new managers.
As described below, the benefit of advancement in Fortune is the receipt of bonuses based on new
members who are sponsored in one’s downline. These bonuses increase based on the IR’s position
in the company, which is obtained by recruiting new representatives.
E.
Fortune misrepresents its relationships with the vendors of its products and
services.
106.
To perpetuate the fraudulent pyramid scheme described above, Fortune claims to
have special relationships with or to be a “partner” of several large major national companies whose
products and services Fortune offers.
107.
These companies include, but are not limited to, AT&T, Verizon Wireless, Sprint,
Dish Networks, General Electric Security (“GE Security”), DuPont and Home Depot. Fortune has
used the trademarks of these and other companies in marketing materials and business presentations
in order to convince prospective customers that Fortune is a legal business.
108.
In reality, Fortune does not have any sort of special relationship with these
companies. Fortune is not a “partner” with Dish Network. Rather it is a third-party independent
contractor authorized to sell Dish Network service. There are numerous other such third-party
vendors of Dish Network.6
6
See, e.g., http://www.vmcsatellite.com/red_design/program_overview.cfm.
24
109.
Counsel for Home Depot informed authorities in the state of Montana that Fortune
has no partnership or sales agreement with Home Depot.
110.
GE Security also informed Montana authorities that Fortune has no direct
relationship with GE Security or GE. Instead, Fortune purchases GE Security products from Protect
America, an authorized GE Security dealer.
111.
Fortune purchases all wireless products from Simplexity, a third-party online affiliate
program of the wireless carriers. Fortune has no direct relationship with any of the nation’s top
wireless carries.
F.
In furtherance of the illegal pyramid scheme, Fortune makes false claims about its
legitimacy and success.
112.
Defendants misrepresent that Fortune has been endorsed and/or praised by
independent third-party companies and publications. For example, defendant Joel McNinch stated
during a recruiting presentation, currently available on YouTube, “Fortune isn’t just going around
saying, ‘We’re great, we’re great.’ We’ve got third-party companies like Millionaire Blueprint, a
nationwide publication, and Success From Home magazine preaching, you guys, how well this
company’s doing.”7 In reality, upon information and belief, Fortune paid hundreds of thousands of
dollars to several publications to produce and publish articles about Fortune containing
misrepresentations about the success of the company.
These “articles” are actually paid
advertisements.
113.
Defendants have further made representations that alleged “partners” of Fortune such
as Dish Network have sent legal teams to verify the legality of Fortune’s operation. Defendants have
also made representations that former high-level government attorneys represented Fortune and
7
http://www.youtube.com/watch?v=F0sE2ID9bXo
25
ensured that it complied with the law and was legal in all 50 states. All of these representations are
false.
114.
Defendants and other individuals high in the Fortune Pyramid have made false
representations that Fortune is licensed to transact business in every state and that its compensation
structure must be approved by each state’s financial regulators before such a license is given.
115.
In an effort to add legitimacy to the Fortune Pyramid’s operations, the defendants
have made representations that well known actors, athletes, businesspersons and politicians,
including Chris Rock, Jerry Rice, Bob McDonnell, former Bank of America CEO Ken Lewis, and
Judy Hammerschmidt, were affiliated IRs with Fortune.
A list of such famous individuals
purportedly affiliated with Fortune is attached as Exhibit 3.
Unconscionable Check and Electronic Funds Transfer Fees
116.
Fortune charges a $6.00 “administrative fee” for any weekly payment made by check
to an IR. Fortune also charges $5.00 for any weekly electronic payment made by the company to an
IR.
117.
Prospective participants are not told about these fees prior to paying to join the
Fortune Pyramid, nor are they described in any marketing materials produced by Fortune
Cease and Desist Orders in North Dakota and Montana – Settlement
118.
Recognizing that the defendants operate an illegal pyramid scheme, regulators in
North Dakota and Montana have taken action against Fortune.
119.
On December 10, 2009, the North Dakota Attorney General issued a cease and desist
order against Fortune, ordering it to cease from doing business in North Dakota. The North Dakota
cease and desist order is attached as Exhibit 4.
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120.
In short, the North Dakota Attorney General alleged that, among other things,
Fortune operated as a pyramid scheme illegal under North Dakota law.
121.
On January 14, 2010, Fortune reached a settlement with the North Dakota Attorney
General in which Fortune agreed to refund any North Dakota customer the entire amount he or she
paid and to pay the Attorney General’s investigation costs and attorney’s fees. (Exhibit 5.)
122.
On March 4, 2010, the Montana Commissioner of Securities issued a cease and desist
order prohibiting Fortune from doing business in Montana and, likewise alleging that Fortune
operated as an illegal pyramid scheme. (Exhibit 6.)
123.
Fortune reached a settlement agreement with Montana requiring it to pay potentially
over $800,000, including a $100,000 fine to the state treasurer and any refunds of enrollment fees
that Montana IRs may seek. (Exhibit 7.)
124.
As part of the Montana settlement, Fortune was also required to, among other things,
train Montana IRs to emphasize the sale of products to customers outside of the Fortune Pyramid..
125.
Fortune was also required to charge only $75 for new IRs to enroll in Montana.
126.
Finally, Fortune was forced to disclose certain financial information. These Montana
disclosures are attached as Exhibit 8.
127.
The disclosures reveal that a very small number of individuals at the top of the
Fortune Pyramid are making, on average, thousands of dollars per month, while the mast majority of
Fortune IRs, who are in the lower rungs of the pyramid, earn virtually nothing.
128.
For example, the disclosures show that:
A.
Nearly 30% of the active IRs earn nothing at all.
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B.
Of those IRs that do earn something, over 54% are managers on the bottom
rung of the pyramid. These managers receive an average of only $93 per month from
Fortune..
C.
National Sales Managers comprise just .38 % of the total number of paid IRs.
On average, they earn $19,865 per month in commissions.
D.
Presidential Ambassadors constitute only .07% of paid IRs. They earn an
average of $103,416 per month in commissions.
Following North Dakota and Montana, Fortune promulgates new Policies & Procedures
129.
Following the cease and desist orders and subsequent settlements in North Dakota
and Montana, Fortune has made various changes to its Policies & Procedures manual, including
significant changes to the compensation structure.
130.
The new Policies & Procedures manual became available on Fortune’s website in
July 2010.
131.
Additionally, Fortune now purports to have a team of “Legal Council” consisting of
former state attorneys general.8
132.
Fortune did not hire these individuals to its legal advisory team until May 2010.
Plaintiffs are victims of Fortune’s fraudulent schemes
133.
Each plaintiff was induced to pay money to Fortune by numerous misrepresentations,
including false claims that Fortune is a legitimate network marketing company and not an illegal
pyramid scheme.
134.
As the direct and proximate result of such misrepresentations, each plaintiff was
damaged.
8
http://www.fhtm.net/legalcouncil.aspx
28
135.
Plaintiffs were also subjected to the administrative fees for payments from Fortune
described above.
136.
Plaintiff Yvonne Day (“Day”) was recruited to join Fortune by a Fortune IR whom
Day knew and trusted. For nearly a year, this IR attempted to persuade Day to join Fortune.
137.
Before agreeing to join Fortune, Day met with a Fortune executive sales manager.
Day also was given and watched DVDs containing video presentations by defendants Paul Orberson
and Joel McNinch. In those videos, Orberson and McNinch made numerous false representations
concerning Fortune’s legitimacy and its purported relationship with entities such as Fortune
Magazine.
138.
Day agreed to join Fortune in October 2008 without completing or signing any
document that contained or referenced an arbitration clause. Day never agreed to arbitrate any
claims against Fortune.
139.
The IR who recruited Day to Fortune caused Day to become a Fortune IR by
completing all necessary documents online outside of Day’s presence using personal information
obtained from Day.
140.
As a direct result of the defendants’ promotion of and participation in the illegal
pyramid scheme described above, Day paid $299 to join Fortune.
141.
pyramid scheme described above, Day also paid $299 for the right to become a Trainer Coach for
Fortune.
142.
pyramid scheme described above, Day also paid $200 for the right to become a Certified Regional
Trainer.
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143.
Additionally, Day purchased numerous products from Fortune and suffered additional
damages.
144.
Plaintiff Leonard Haslag (“Haslag”) attended a Fortune recruitment meeting on
September 10, 2009. At this meeting, defendant Mike Misenheimer spoke.
145.
Misenheimer stated that recruiting new members into Fortune would allow
participants to earn huge amounts of money. Misenheimer claimed that prospective participants
could earn up to $80,000 per month if they joined Fortune.
146.
At this meeting, and as a result of these and other representations by Misenheimer,
Haslag completed a photocopied application to be a Fortune IR. The application did not contain an
arbitration clause and did not contain terms and conditions on the back of the document. Haslag
never agreed anywhere else to arbitrate claims against Fortune.
147.
Haslag then had second thoughts about joining Fortune and cancelled the credit card
for which he had provided Fortune with information.
148.
Haslag ultimately decided to join Fortune shortly thereafter, however, and he called
the IR who had sponsored him at the meeting to provide new credit card information.
149.
At this point, someone other than Haslag, outside of Haslag’s presence, entered
information into a website sufficient to cause Haslag to be registered as a Fortune IR.
150.
pyramid scheme described above, Haslag paid $299 to join Fortune.
151.
Plaintiff James McCormick (“McCormick”) attended a Fortune Saturday morning
business meeting, conducted by National Sales Manager – Ken Bailey, prior to agreeing to join
Fortune.
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152.
After this meeting, McCormick completed a document bearing the Fortune logo that
required him to submit his name, social security number, and credit card information for the
purchase of his first three customer points. This document did not contain any agreement to arbitrate
and did not reference arbitration or policies and procedures, in any way.
153.
McCormick has never seen any document pertaining to Fortune containing an
agreement to arbitrate.
154.
Someone other than McCormick, outside of McCormick’s presence, entered
information into a website sufficient to cause McCormick to be registered as an Fortune IR.
155.
pyramid scheme described above, McCormick paid $299 to join Fortune and was charged $100 each
month until May 2010 for various Fortune products and services.
156.
McCormick was unable to sell any Fortune products to others or to recruit anyone to
join Fortune as a manager.
157.
Plaintiff John Turner (“Turner”) attended several meetings held by persons promoting
the Fortune Pyramid.
158.
Eventually, Turner provided his social security number and credit card number by
filling out a document that required him to submit such information. This document did not contain
an agreement to arbitrate. Turner never agreed to arbitrate his claims against any of the defendants.
159.
pyramid scheme described above, Turner paid $299 to join Fortune.
160.
pyramid scheme described above, Turner paid $299 for the right to become a Trainer Coach for
Fortune.
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161.
pyramid scheme described above, Turner also paid $200 for the right to become a Certified Regional
Trainer for Fortune.
162.
Additionally, Turner purchased numerous products from Fortune and suffered
additional damages.
CLASS ACTION ALLEGATIONS
163.
This action is brought by plaintiffs as a class action pursuant to Federal Rule of Civil
Procedure 23.
164.
Plaintiffs seek relief on behalf of themselves and a nationwide class of all persons
who were Fortune independent representatives from January 2001 until present and who were
injured as a result of the defendants’ illegal pyramid schemes. The defendants, their employees, and
family members are excluded from the class.
165.
The members of the class number in the tens of thousands, making joinder of all class
members in a single action impracticable.
166.
There are common questions of law and fact common to the class, including, but not
limited to, the following:
A.
Whether the defendants operate and/or operated an illegal pyramid scheme;
B.
Whether Fortune’s IRs paid money to the defendants in exchange for (1) the
right to sell products or services and (2) the right to receive, in return for recruiting other into the
program, rewards unrelated to the sale of products or services to retail consumers not affiliated with
Fortune;
C.
Whether the defendants failed to inform plaintiffs that plaintiffs were entering
into an illegal pyramid scheme in which the overwhelming majority of participants lose money;
32
D.
Whether the defendants made materially false representations that Fortune
was legal and/or had been approved by governmental entities;
E.
Whether defendants engaged in acts of mail fraud and wire fraud in violation
F.
Whether and to what extent defendants’ conduct has injured plaintiffs and the
G.
Whether the defendants’ conduct constitutes an illegal “pyramid distribution
of RICO;
class;
plan” under KRS 367.830(4);
H.
Whether the defendants’ practice of charging a $6.00 “administrative fee” for
each payment made by check to an IR and a $5.00 “transfer fee” for any payment made
electronically to an IR are “[u]nfair, false, misleading, or deceptive acts or practices in the conduct of
any trade or commerce” under KRS 367.170 that is actionable under KRS 446.070.
167.
These and other questions of law and/or fact are common to the class and the
subclass, and predominate over any question affecting only individual class members.
168.
The plaintiffs’ claims are typical of the claims of the class and the subclass in that
plaintiffs were IRs for Fortune and lost money as a result of the pyramid scheme.
169.
The plaintiffs will fairly and adequately represent the interests of the class and the
subclass in that plaintiffs’ claims are typical of those of the class and plaintiffs’ interests are fully
aligned with those of the class. The plaintiffs have retained counsel who is experienced and skilled in
class action litigation.
170.
Class action treatment is superior to the alternatives, if any, for the fair and efficient
adjudication of the controversy alleged herein, because such treatment will permit a large number of
similarly-situated persons to prosecute their common claims in a single forum simultaneously,
33
efficiently and without unnecessary duplication of evidence, effort, and expense that numerous
individual actions would engender.
171.
The plaintiffs know of no difficulty likely to be encountered in the management of
this action that would preclude its maintenance as a class action.
CLAIMS FOR RELIEF
COUNT I: RACKETEERING ACTIVITY
IN VIOLATION OF 18 U.S.C. § 1962(C) (VERSUS ALL DEFENDANTS)
172.
Plaintiffs re-allege each of the preceding paragraphs as if fully set forth here.
173.
Each defendant is a “person” for purposes of RICO, 18 U.S.C. § 1962, because each
defendant is, and was at all relevant times, an individual or entity capable of holding legal or
beneficial interest in property.
174.
All of the defendants in this action collectively form an “enterprise” under RICO, 18
U.S.C. § 1962, in that they are a group of individuals and entities associated in fact, although not a
legal entity.
175.
In the alternative, the enterprise consisted of Fortune, which is controlled by
defendants Paul C. Orberson, Jeff Orberson, Thomas A. Mills, David Mills, Billy Stahl, and Simon
Davies.
176.
In the alternative, the Fortune Pyramid is an enterprise, in that it is an association in
fact of all defendants and others which, although not gathered under any legal entity, operates the
illegal pyramid scheme to draw new investors to Fortune.
177.
The defendants engaged in a pattern of racketeering activity by participating in a
scheme and artifice to defraud in violation of the mail and wire fraud statutes, 18 U.S.C. §§ 1341 and
1343.
34
178.
The defendants’ promotion of an illegal pyramid scheme is a per se scheme to
defraud under the mail and wire fraud statutes; thus, the defendants have committed racketeering
acts by promoting an illegal pyramid scheme by using and causing others to use the mail and by
transmitting and causing others to transmit, by means of wire in interstate commerce, writing, signs,
signals, pictures and sounds, all in furtherance of and for purposes of executing a scheme or artifice
to defraud, namely an illegal pyramid scheme.
179.
Each defendant has promoted the Fortune Pyramid. Each use of the mail or wire by
the defendants in furtherance of the Fortune Pyramid is therefore an act of racketeering.
180.
Moreover, the defendants have used false and fraudulent pretenses to deceive the
plaintiffs and the class and to thereby obtain money and property from the same. The defendants
have engaged in materially misleading statements of facts and nondisclosure of particular facts,
including:
A.
Creating the false impression that the Fortune Pyramid is legal and has been
investigated and approved by several major national companies, as well as state governments, which
purportedly would have closed Fortune permanently if it was an illegal operation.
B.
Creating the false impression that the majority of investors in the Fortune
Pyramid will profit from their investment by merely working hard.
C.
Creating the false impression that Fortune has a unique business model that is
unusually generous to investors.
D.
Creating the false impression that several magazine covers and articles used to
induce investments in the Fortune Pyramid were articles written by objective third-parties, when in
reality they were paid advertisements.
35
E.
Creating the false impression that several well known athletes, actors,
politicians and successful business people were in fact Fortune IRs and endorsed the Fortune
Pyramid;
F.
Failing to disclose that the purported success and wealth achieved by the
individual defendants through their participation in the Fortune Pyramid is no longer possible and
that Presidential Ambassadors represent only the top .07% of investors in the Fortune Pyramid who
earned any money at all.
G.
Failing to disclose that nearly 30% of active participants in the Fortune
Pyramid earn nothing at all.
181.
These and other misrepresentations at the heart of the defendants’ enterprise were
reasonably calculated to deceive a person of ordinary prudence and comprehension.
182.
Plaintiffs and the class relied on these misrepresentations.
183.
All of the defendants acted with intent to defraud.
184.
The defendants’ numerous acts of mail fraud and wire fraud amount to a pattern of
racketeering activity because they are related and continuous. The pattern consists of more than two
acts, which occurred from 2000 until present and consistently throughout that period. The predicate
acts of mail and wire fraud are related because they have had the same or similar purpose: to
convince new investors to pay to join the Fortune Pyramid by paying money to do so, and to
convince those investors to in turn recruit new investors. They have the same result: convincing
investors to join the Fortune Pyramid by paying money and having those investors recruit new ones
to do the same. They have the same participants: Fortune’s executives, Presidential Ambassadors,
and National Sales Managers, all of whom promote the Fortune Pyramid. They have the same
victims: plaintiffs and class members who were fraudulently deceived into investing in the Fortune
36
Pyramid.
Finally, they have similar methods of commission: fraudulent misrepresentations
concerning numerous aspects of Fortune’s operations made via online presentations, in-person
gatherings, and written materials. In short, the predicate acts of wire and mail fraud committed by
the defendants constitute an intricately related set of predicate acts sufficient to meet the relatedness
standard.
185.
Moreover, the predicate acts are continuous. They pose a threat of continued illegal
conduct in that the defendants continue to promote and operate the Fortune Pyramid and have
expressed their intention to continue to do so. Additionally, the predicate acts have extended over a
significant period of time – the nearly 10 years that Fortune has been in existence. The defendants’
regular business of attracting new independent representatives is conducted by ongoing mail and
wire fraud that misrepresents that Fortune is a legitimate multilevel marketing enterprise and not an
illegal pyramid scheme. Without the repeated acts of wire and mail fraud, the defendants’ fraudulent
pyramid scheme would not be in existence.
186.
As a direct and proximate result of the defendants’ acts of mail and wire fraud,
plaintiffs and the class were injured in their business and property. Each plaintiff was injured in his
or her business or property by reason of the defendants’ pattern of racketeering activity, in that
plaintiffs surrendered valuable consideration of at least $299, and in most cases much more, in order
to participate in the inherently fraudulent scheme promoted by the defendants.
187.
Each enterprise alleged above was engaged in, or affecting, interstate commerce by
reason of, at least, each of the defendants’ numerous acts or omissions constituting use of the mail or
interstate wire communication facilities in furtherance of their scheme to defraud. Additionally,
each enterprise affected interstate commerce because the members comprising it engaged in business
in several states and made use of the mail and interstate wire communication facilities in the process
37
of doing so by causing marketing and promotional materials for Fortune, as well as images, videos,
and information to be communicated through regular mail and via the Internet.
188.
Each of the defendants is employed by or associated with each enterprise above to
conduct or participate, directly or indirectly, in the conduct of the enterprise’s affairs through a
pattern of racketeering activity, i.e., conducting the affairs of, promoting, and otherwise supporting
the pyramid scheme.
189.
Specifically, defendants Paul C. Orberson, Jeff Orberson, Thomas A. Mills, David
Mills, Billy Stahl, and Simon Davies have overseen the creation of marketing materials containing
misrepresentations regarding Fortune and have authorized the Presidential Ambassadors and
National Sales Managers to direct conference calls, websites, web presentations and speeches that
contain numerous misrepresentations and that deceive people into participating in the Fortune
Pyramid.
190.
Pursuant to 19 U.S.C. § 1964, Plaintiffs are entitled to recover treble damages, costs,
and attorneys’ fees.
COUNT II: RACKETEERING ACTIVITY
IN VIOLATION OF 18 U.S.C. § 1962(A) (VERSUS ALL DEFENDANTS)
191.
192.
Revenue derived from the pattern of racketeering activity set forth above, which upon
information and belief constitutes a significant portion of the defendants’ total income, was
reinvested into the Fortune Pyramid for at least the following purposes: (1) to expand the operations
of the Fortune Pyramid through additional false and misleading advertising and promotional
materials aimed at recruiting new participants in the Fortune Pyramid; (2) to facilitate the execution
of the Fortune Pyramid; and (3) to convince existing participants in the Fortune Pyramid to recruit
new ones, resulting in harm to plaintiffs and the class.
38
193.
Plaintiffs and the class were injured in their business or property as a result of such
reinvestment into the Fortune Pyramid because they were induced, with funds used to establish new
levels of the Fortune Pyramid, to invest in Fortune
194.
Pursuant to 19 U.S.C. § 1964, plaintiffs and the class are entitled to recover treble
damages, costs, and attorneys’ fees.
COUNT III: CONSPIRACY TO COMMIT RACKETEERING ACTIVITY
IN VIOLATION OF 18 U.S.C. § 1962(D) (VERSUS ALL DEFENDANTS)
195.
196.
The defendants conspired to violate 18 U.S.C. § 1962(a) and (c) in violation of 18
U.S.C. § 1962(d).
197.
Each defendant knew about and knowingly and intentionally agreed to participate in
and promote an illegal pyramid scheme. Specifically, the defendants had a meeting of the minds on
an object and course of action, namely, to create, support, and maintain the pyramid scheme for their
own financial benefit.
198.
Each of the defendants has committee multiple overt acts in furtherance of the
unlawful objects of the pyramid scheme.
199.
The plaintiffs and the class were injured in their business or property as a result.
200.
Pursuant to 19 U.S.C. § 1964, plaintiffs and the class are entitled to recover treble
damages, costs, and attorneys’ fees.
COUNT IV: INJUNCTIVE RELIEF UNDER 18 U.S.C. § 1964(A)
AGAINST ALL DEFENDANTS
201.
202.
To prevent and restrain ongoing violations of 18 U.S.C. § 1962 by the defendants, the
Court should order the defendants to divest themselves of any interest, direct or indirect, in the
39
enterprise; impose reasonable restrictions on the future activities or investments of the enterprise,
including, but not limited to, prohibit the defendants from engaging in the same type of endeavor as
the enterprise engaged in, or order dissolution or reorganization of the enterprise.
COUNT V: KENTUCKY CONSUMER PROTECTION ACT
(PYRAMID SALES ACT)
203.
204.
The defendants established, promoted, operated, and/or participated in a pyramid
distribution plan as defined in KRS 367.830(4).
205.
Specifically, Fortune was and is a “plan, program, device, scheme, or other process
by which a participant gives consideration for the opportunity to receive compensation or things of
value in return for inducing other persons to become participants in the program.” KRS 367.830(4).
206.
By establishing, promoting, operating, and/or participating in a pyramid distribution
plan, defendants violated KRS 367.832 and KRS 367.160.
207.
Plaintiffs were damaged and suffered an ascertainable loss of money and/or property
as a direct and proximate result of these violations, entitling plaintiffs to recover such damages under
KRS 367.220 and KRS 446.070.
COUNT VI: UNLAWFUL ACTS UNDER THE
KENTUCKY CONSUMER PROTECTION ACT
208.
209.
By charging the $6.00 check fee and $5.00 electronic funds transfer fee, the
defendants have engaged in unfair, unconscionable, false, misleading, or deceptive acts or practices
in the conduct of any trade or commerce in violation of KRS 367.170.
40
210.
The plaintiffs and the class were injured by such acts or practices and thereby are
entitled to be compensated for their injury and to reasonable attorney’s fees under KRS 367.220
and 446.070.
COUNT VII: UNJUST ENRICHMENT (VERSUS FORTUNE)
211.
212.
As a result of charging check fees and electronic funds transfer fees, Fortune received
payment from plaintiffs and the class.
213.
Fortune was not entitled to obtain those payments.
214.
Fortune actually appreciated the benefits of those payments.
215.
Retention of that benefit would be inequitable.
216.
Accordingly, the plaintiffs and the class are entitled to restitution.
COUNT VIII: CONVERSION (VERSUS FORTUNE)
217.
218.
As a result of charging check fees and electronic funds transfer fees, Fortune
converted property rightfully belonging to the plaintiffs and the class.
PRAYER FOR RELIEF
219.
Plaintiffs and the class request the following relief:
A.
Certification of the class;
B.
Jury trial and judgment against the defendants;
C.
Damages in the amount of the named plaintiffs’ and the class’s financial loss
as a result of defendants’ conduct and for injury to plaintiffs’ and the class’s business and property,
all as a result of defendants’ violations of 18 U.S.C. § 1962(a),(c), and (d) and that such amount be
tripled in accordance with 18 U.S.C. § 1964(c);
41
D.
Temporary and permanent injunctive relief enjoining the defendants from
further unlawful, unfair, fraudulent, or deceptive acts, including, but not limited to, operating and
supporting the Fortune Pyramid.
E.
Restitution and disgorgement of monies;
F.
The cost and expense of suit, including reasonable attorneys’ fees, in
accordance with 18 U.S.C. § 1964(c);
G.
For general, compensatory, and exemplary damages in an amount yet to be
ascertained; and
H.
For such other damages, relief, and pre- and post-judgment interest that the
Court may deem just and proper.
DEMAND FOR A JURY TRIAL
Plaintiffs hereby demand a jury trial as provided by Rule 38 of the Federal Rules of Civil
Procedure.
Respectfully submitted,
/s/ R. Kenyon Meyer___
R. Kenyon Meyer
DINSMORE & SHOHL LLP
1400 PNC Plaza
500 West Jefferson Street
Louisville, Kentucky 40202
(502) 540-2300 (Telephone)
(502) 585-2207 (Facsimile)
[email protected]
801964_4
42
POLICIES & PROCEDURES
program guide contents
Section 1: FHTM Management
Section 2: FHTM Products and Services
Section 3: The FHTM Sales Force
A.Representative
B.Manager
C.Independent Representative
Section 4: FHTM Field Leadership
A.Qualified Representative
B.Regional Sales Manager/Qualified Regional Sales Manager
C.Executive Sales Manager/ Qualified Executive Sales Manager
D.National Sales Manager/Qualified National Sales Manager
E. Presidential Ambassadors
F. Personal Sponsorship-Monthly Maximum
Section 5: FHTM Field Training and Training Compensation
A.Trainer Coach
B.Certified Regional Trainer
C.Leadership Training Bonus
D.Deadlines for Training and Submission of Invoices
Section 6: The FHTM Optional Special Services Program
Section 7: The FHTM Compensation Plan
A.Customer Generated Usage
B.Qualified Customer
C.Commissions and the Quick Start Bonus
D.Quick Start Bonus Override
E. True Beginnings Bonus
F. First and Second Level RSM Override Bonus
Section 8: FHTM Management Bonus Program
A.Customer Acquisition Bonus
B.Annual Customer Retention Bonus
C.Double Management Customer Acquisition Bonuses
D.QRSM “EXTRA $50” Management Customer Acquisition Bonus
Section 9: Eligibility for Commissions, Overrides, and Bonuses
Section 10: Commission Reports and Payment Schedules
A. Monthly CGU Commission
B. Management CAB
C. Training Commission
D. Quick Start Bonus
E. Check and EFT charges
F. Check inquiries
Section 11: Downline Reports
policies & procedures contents
Section 1: Introduction
1.1
1.2
1.3
1.4
1.5
1.6
Policies and Compensation Plan Incorporated into IR Agreement
Purpose of Policies
Changes to the Agreement
Delays
Policies and Provisions Severable
Waiver
Section 2: Becoming an Independent Representative
2.1
2.2
2.3
2.4
2.5
Requirements to Become an Independent Representative
No Purchase Required
Registration by Online Enrollment
IR Benefits
Renewal of Your FHTM Business
Section 3: Operating A FHTM Business
3.1
3.1.1
3.2
3.2.1
3.2.2
3.2.3
3.2.4
3.3
3.4
3.5
3.5.1
3.5.2
3.5.3
3.5.4
3.6
3.6.1
3.6.2
3.6.3
3.7
3.8
3.8.1
3.8.2
3.8.3
3.9
3.10
3.11
3.12
3.13
3.14
Adherence to the FHTM Marketing and Compensation Plan
Ethics
Advertising
In General
Domain Names and e-mail Addresses
Trademarks and Copyrights
Media and Media Inquiries
Bonus Buying
Business Entities
Changes to the FHTM Business
In General
Addition of Co-Applicants
Change of Sponsor
Cancellation and Re-application
Unauthorized Claims and Actions
Indemnification
Income Claims
Savings, Rate or Product Performance Guarantees
Trade Shows, Expositions and Other Sales Forums
Conflicts of Interest
Non-Solicitation/Cross-Recruiting
Dual Participation for Promoted IRs
Downline Activity Reports
Cross–Sponsoring
Errors or Questions
Governmental Approval or Company Endorsement
Holding Applications or Orders
Identification
Income Taxes
3.15
3.16
3.16.1
3.17
3.18
3.18.1
3.18.2
3.19
3.20
3.21
3.22
3.23
3.24
3.25
3.26
3.27
3.27.1
3.28
3.28.1
3.28.2
3.29
3.30
Independent Contractor Status
Insurance
Business Pursuits Coverage
International Marketing
Adherence to Laws and Ordinances
Local Ordinances
Compliance with Federal, State, Local Laws, Military
Minors
One FHTM Business Per Representative
Actions of Household Members and Affiliated Individuals
Requests for Records
Sale, Transfer or Assignment of an FHTM Business
Separation of an FHTM Business
Slamming
Sponsoring
Stacking
Cycling
Succession
Transfer Upon Death of an IR
Transfer Upon Incapacitation of an IR
Telemarketing Techniques
Use of the FHTM Voice-Mail System
Section 4: Responsibilities of Independent Representatives
4.1
4.2
4.2.1
4.2.2
4.2.3
4.2.4
4.3
4.4
4.5
4.6
4.7
Change of Address or Telephone or Email
Continuing Development Obligations
Ongoing Training
Increased Support Responsibilities
Ongoing Sales Responsibilities
Customer Qualifications
Non-disparagement
Providing Documentation to Applicants
Reporting Policy Violations
Completion of Applications and Order Forms
Confidentiality and Nondisclosure of Proprietary Information
Section 5: Sales Requirements
5.1
5.2
5.3
5.4
Services/Product Sales
No Territorial Restrictions
Product Offerings/Terms of Service
Unauthorized Contact
continued next page
Section 6: Bonuses and Commissions
6.1
6.2
6.2.1
6.2.2
6.3
6.4
Bonus and Commission Qualifications
Deductions from Bonuses and Commissions
Downline Reports
Other Deductions
Unclaimed Commissions and Credits
Genealogy/Downline Reports
Section 7: Service Guarantees and Marketing Materials
7.1
7.2
7.3
7.4
Product Guarantee
Return of Marketing Materials by an IR
Montana Residents
Procedures for All Returns of Marketing Materials
Section 8: Dispute Resolution and Disciplinary Proceedings
8.1
8.2
8.3
8.4
8.5
Disciplinary Sanctions
Grievances and Complaints
Dispute Resolution Board
Arbitration
Governing Law, Jurisdiction and Venue
Section 9: Ordering
9.1
9.2
9.3
9.4
Purchasing FHTM Marketing Materials, Products and Services
General Ordering Policies
Shipping and Back Order Policy
Confirmation of Order
Section 10: Payment and Shipping
10.1
10.2
10.3
10.4
Insufficient Funds
Returned Checks
Restrictions on Third Party Use of Credit/ Debit Cards and Checking Account Access
Sales Tax
Section 11: Cancellation and Termination
11.1
11.2
11.3
11.4
Effect of Cancellation
Involuntary Cancellation/Termination of Agreement
Voluntary Cancellation
Non-Renewal
Section 12: Definitions
Section 13: Customer Generated Usage Commission Schedule
fhtm program guide
1. fhtm management
While in college, Jeff played basketball and the dedication
and determination he learned through the sport carries over
into the office. Jeff utilizes a levelheaded, analytic and evaluative approach to decision-making, ensuring decisions made
are the best for the company and Representatives in the
field.
Founder and President: Paul Orberson: Determination and
an old fashioned work ethic are qualities that set Paul apart
and made him one of the most financially successful network marketers in the history of the industry. His genuine
sincerity and down to earth approach to networking have
enabled him to encourage well over a million individuals to work toward improving their financial futures through,
what he considers to be the best method available today, network marketing. Paul utilized his experience as a
Representative and his entrepreneurial skills to envision and
develop the ultimate vehicle for those individuals seeking to
improve their finances and lives through network marketing.
That vehicle is FHTM Hi-Tech Marketing, Inc.
Senior Executive Vice President of Marketing and Training:
Billy Stahl: Billy is a seasoned professional executive in the
network-marketing industry. He brings with him his vast
experience as a CEO, President, and COO of national networking companies, which he imparts, on a regular basis in training to Representatives nationwide. He was
instrumental in the development and expansion of the same corporation in which Mr. Orberson set records. He has been an active consultant to several extremely successful
national companies. Prior to joining the network marketing industry he was in management with General Motors
Corporation.
Chief Executive Officer: Tom Mills: Tom brings with him
years of administrative experience including responsibility for thousands of individuals; multi-million dollar budgets
and several years in network marketing. A man of integrity
and vision, Tom has assembled a top-notch staff across the
board. His eye for detail has enabled FHTM to establish
itself as a major player in the area of network marketing in
record time all while maintaining a focus on the importance
of each individual.
Chief Financial Officer: Simon Davies: Simon is a member of the Institute of Chartered Accountants in England and
Wales with over 12 years of experience within the network
marketing industry. Extensive international finance exposure
and a strong emphasis on systems and control structures
makes FHTM’s Finance department the ideal team for
Davies to lead. Davies is committed to the success of FHTM
for both the Representatives and the company as a whole.
Formerly Vice President of Finance in the United Kingdom,
Davies moved to Kentucky to fill the position of CFO at the corporate office.
Together, Paul Orberson and Tom Mills started FHTM with
the belief that they would be able to help many people
achieve their financial goals and give back to an industry that
had been so good to them. The goal of CEO, Tom Mills, is
and always has been to make FHTM the best network marketing company in the industry.
Chief Operating Officer: Jeff Orberson: One of the aspects Jeff Orberson likes most about his work at FHTM is getting to see Representatives experience some of the
achievements and freedoms he watched his father, Paul
Orberson, accomplish in the network marketing industry. Today, he is able to see the achievements of others first
hand, serving FHTM as the Director of Operations. Jeff
works with CEO Tom Mills to make management and marketing decisions on a day-to-day basis.
2 . fhtm products & services
A. Long Distance Service: Provided through Power H. Paging Service: Provided by SKYTEL. This nationally
Net Global, and others, the unique part of our long distance program is that we provide residential and small business users with 6-second incremental billing, after the first minute. This is typically reserved for very large businesses. Our rates are very competitive.
known company offers customers very competitive rates.
I. FHTM Rewards Mall: Our merchant affiliate program
is comprised of the top Internet merchants (e-tailers)
available.
B. Nutritional Product Line: No amount of wealth will
J. Office Assistant: You have the ability to communicate
make a difference if you don’t have your health. For
and promote your business to the world, quickly and
this reason, FHTM offers True EssentialsTM Nutritional
inexpensively through the world wide web.
Products. The True Essentials line
contains Joint Solutions with HATM,
K. Identashield: Identashield is ID
multivitamins for men, women, theft insurance. The plan offers
The best part of all
expense reimbursement, and is
and children, as well as daily packs
coupled with a legal plan, which
for men and women. Visit of these products and
provides nation wide access to
www.trueessentials.net for over 22,000 attorneys in all 50
more information.
services is that they
states. Members receive access to
free
and deeply discounted legal
C. Internet Service: Provided by all generate customer
FHTM utilizing the UUNET care.
internet backbone. UUNET is usage for which you
the largest internet backbone L. Home Based Security System:
are paid. Your customers
with more local access than any
Allows you to have the peace of
other company.
mind you need to feel safe in your
will enjoy the services
own home.
D. Satellite TV Service: of all of our great
Provided by Dish Network, one M. Travel FHTM: A personal travel
of the nations largest satellite
portal allows customers to book
suppliers because they
providers and winner of the J.D.
airline tickets, hotel and resort
Power award for customer service
rooms and rental cars through a
save money and
and excellence.
Travelocity Partner Network.
E. The Wireless Shop: Shop online
receive quality service.
and compare prices and availability
from the top U.S. wireless providers
and phone manufacturers. Alltel,
AT&T, Nextel, Sprint, T-Mobile and
Verizon Wireless are available, among other leading national wireless carriers.
N. Lamas Beauty: Lamas Beauty
offers state-of-the art natural,
healthy and organic beauty products, in the areas of hair
care, skin care, body care and anti-aging.
For current information on FHTM products or services,
check your Office Assistant or www.fhtm.net.
F. Choice Plans Health Care Card: Non-Insurance benefits that work! The Choice Plans health care savings
card is a low cost alternative for those without health
insurance.
G. Voice Messaging Services: Provided as a tool to keep you in touch and is a great service for you to use as
your business grows, as well as a useful product for your
customers.
3. fhtm sales force
All FHTM enrollees are known as Independent Representatives (IRs). They are independent contractors building their own
businesses. They market FHTM products and services and sponsor like-minded people who would like to do the same.
IRs receive commissions and bonuses based upon customers that purchase and use FHTM’s products and services. The
amount of success that you will enjoy is often related to the time and effort that you dedicate to working your business.
Work with your sponsor and upline and follow our Quick Start Business Plan.
A. Representative: The Representative position attracts those individuals who are primarily interested in marketing
products and services and receiving monthly residual income commissions. This position requires a $75.00 refundable application deposit, except where prohibited by law (see current Form #100.) Since Representatives do not
purchase the Optional Special Services Program they must pay for all services (i.e. downline print outs, newsletter
subscription, home office support, etc.) they may desire which will be provided to them upon receipt of their written request. A Representative cannot attend Manager training which is provided as a part of the Optional Special
Services Program. Representatives are provided with a free Starter Kit and the Policies and Procedures at the time
of enrollment. A Representative receives the same Compensation Plan commissions/bonuses and is subject to the
same policies and advancement requirements as a Manager.
B. Manager: The MANAGER position is an IR that has purchased the Optional Special Services Program which
includes additional sales materials, manuals, special training, home office support, monthly downline reports upon
request (via internet or in printed form), etc. The annual renewal fee for the Optional Special Services Program
is $199.00. A Manager may cancel the Optional Special Services Program and request a refund, in writing,
within ten (10) calendar days from the date of purchase. See Section 11.4 of Policies and Procedures.
C. Independent Representative (IR):
The Company considers all Representatives and Managers to be
“Independent Representatives.”
4. fhtm field leadership
A. Qualified Representative (QR): A Qualified
twelve (12) Managers within his or her first five (5) levels;
(ii) have ten (10) or more active personal customers; and
(iii) be approved by FHTM. The QR cannot count itself as
one (1) of the required twelve (12) Managers. RSMs are
responsible for managing downline organizations, coordinating local events and communications, developing
areas and providing assistance to all IRs.
Representative (QR) is an IR that has qualified for all commission levels in the eight (8) level compensation program. Requirements are: (i) The IR must have ten (10) or more active personal customers; and (ii) the IR must
have a minimum of three (3) personally sponsored first level Managers.
QRs will remain eligible for CGU commissions through all eight (8) levels by maintaining ten (10) or more active
personal customers on a monthly basis.
An RSM must maintain ten (10) or more active personal customers as of the last day of the month in order to be a
Qualified Regional Sales Manager (QRSM) and thereby
be eligible to receive any monthly management customer
acquisition bonuses payable for that month from his/her RSM coded group. An active QRSM is eligible to receive
a monthly management customer acquisition bonus of
$100.00 for each new Manager entering his/her RSM coded group when the newly sponsored Manager meets B. R
egional Sales Manager (RSM) / Qualified
Regional Sales Manager (QRSM): A Qualified
Representative can be promoted to Regional Sales
Manager (RSM) by meeting all of the following requirements: (i) develop a minimum downline organization of
bonus of $60.00 for each new Manager entering his/her
ESM coded group when the newly sponsored Manager
meets the requirements necessary for the payment of a
Quick Start Bonus (QSB) to his/her sponsor. In addition to
this bonus the QESM earns a 1/4% override commission
on CGU of the customers in his/her ESM coded group. A QESM that develops a QESM in his/her coded ESM
group becomes qualified for a “first generation break
away” coded customer acquisition bonus of $20.00 and a 1/4% override commission on the CGU of the customers for each new Manager that the new QESM develops
(and for whom a QSB is paid) in his/her new ESM coded
group.
When the “First Generation QESM” develops a QESM
in his/her coded ESM group and thereby becomes eligible for his/her own separate “first generation break
away” coded customer acquisition bonus, then a “second generation break away” coded customer acquisition bonus of $10.00 will be paid to the “Grandparent
QESM” for each new Manager that the “second generation QESM” develops (and for whom a QSB is paid) in
his/her new ESM coded group.
QESMs that gather and maintain five (5) True Essentials
customers will receive an additional $10 ESM Customer
Acquisition Bonus (CAB) provided they are eligible for
the basic CAB (section 8A) when two (2) TE customers
are gathered by a new IR. At least four (4) of the fifteen
(15) required customers must be customers other than
the QESM’s personal accounts (i.e., outside of the
household) in order to qualify for the additional CAB.
the requirements necessary for the payment of a Quick Start Bonus (QSB) to his/her sponsor. In addition to this bonus the QRSM earns a 1/4% override commission on CGU of the customers in his/her RSM coded group. QRSMs that gather and maintain five (5) True Essentials
customers will receive an additional $25 RSM Customer
Acquisition Bonus (CAB) when the newly-sponsored IR
gather two (2) new TE customers within the 60-day Quick
Start time period, provided they are eligible for basic
CAB (section 8A). At least four (4) of the ten (10) required
customers must be customers other than the QRSM’s
personal accounts (i.e., outside of the household) in
order to qualify for the additional CAB.
A QRSM that develops a QRSM in his/her coded RSM
away” coded customer acquisition bonus of $50.00 and a 1/4% override commission on the CGU of the customers for each new Manager that the new QRSM develops
(and for whom a QSB is paid) in his/her new RSM coded
group.
When the “First Generation QRSM” develops a QRSM in
his/her coded RSM group and thereby becomes eligible
for his/her own separate “first generation break away”
coded customer acquisition bonus, then a “second generation break away” coded customer acquisition bonus
of $10.00 will be paid to the “Grandparent QRSM” for
each new Manager that the “second generation QRSM”
develops (and for whom a QSB is paid) in his/her new
RSM coded group.
C. E
xecutive Sales Manager (ESM) / Qualified
Executive Sales Manager (QESM): A Qualified
D. National Sales Manager (NSM): A Qualified
Executive Sales Manager can be promoted to National
Sales Manager (NSM) by meeting all of the following
requirements: (i) maintain fifteen (15) or more active personal customers; (ii) develop six (6) QESMs on any
level of his/her personal ESM coded group, however,
these six (6) QESMs must be developed in two (2) or
more separate legs of the ESM coded group; (iii) have
developed a minimum downline organization of ninety
(90) Managers in RSM coded group; (iv) develop a minimum downline organization of five hundred and
forty (540) Managers in his/her ESM coded group; and (v) be approved by FHTM. An NSM must maintain fifteen (15) or more active personal customers as of the last day of the month in order
to be a Qualified National Sales Manager (QNSM) and
to be eligible to receive any monthly management customer acquisition bonuses payable for that month from
his/her NSM coded group. An active QNSM is eligible
to receive a monthly management customer acquisition
Regional Sales Manager can be promoted to Executive
Sales Manager (ESM) by meeting all of the following
requirements: (i) have fifteen (15) or more active personal customers; (ii) develop six (6) QRSMs on any level
of his/her personal RSM coded group, however, these
six (6) QRSMs must be developed in two (2) or more
separate legs of the RSM coded group; (iii) develop a
minimum downline organization of ninety (90) Managers
in his/her RSM coded group; and (iv) be approved by
FHTM. An ESM must maintain fifteen (15) or more active personal customers as of the last day of the month in order
to be a Qualified Executive Sales Manager (QESM) and
to be eligible to receive any monthly management customer acquisition bonuses payable for that month from
his/her ESM coded group. An active QESM is eligible
to receive a monthly management customer acquisition
(15) or more active personal customers as of the last day
of the month for which the Bonus Pool is payable; and (v)
be approved by FHTM. The position may also be appointed by the Executive Staff of FHTM. Appointees will have
demonstrated leadership skills deemed necessary to represent FHTM as a Presidential Ambassador.
bonus of $30.00 for each new Manager entering his/her
NSM coded group when the newly sponsored Manager
meets the requirements necessary for the payment of a
Quick Start Bonus (QSB) to his/her sponsor. In addition to
this bonus the QNSM earns a 1/2% override commission
on CGU of the customers in his/her NSM coded group.
A QNSM that develops a QNSM in his/her coded NSM
away” coded customer acquisition bonus of $10.00 and a 1/4% override commission on the CGU of the customers
for each new Manager that the new QNSM develops (and for whom a QSB is paid) in his/her new
NSM coded group.
When the “First Generation QNSM” develops a QNSM in
his/her coded NSM group and thereby becomes eligible
for his/her own separate “first generation break away”
coded customer acquisition bonus, then a “second generation break away” coded customer acquisition bonus of
$5.00 will be paid to the “Grandparent QNSM” for each
new Manager that the “second generation QNSM” develops (and for whom a QSB is paid) in his/her new NSM
coded group.
F. Personal Sponsorship-Monthly Maximum: FHTM
believes that its Marketing and Compensation Plan is
the best there is in the industry. In order to ensure that
every new Manager has the best possible opportunity to
build a successful and long-term business, FHTM believes
that it is imperative for sponsoring IRs to work closely
with all of their personally enrolled Managers until those
new Managers are trained and are capable of fully and
adequately presenting the FHTM business plan to others
on their own. As such, IRs may personally sponsor a maximum of six (6) new Mangers per calendar month. This limit
on sponsorship serves to ensure that the sponsoring IR’s
time and energy are not spread thin among too many new
Managers, thereby permitting the sponsoring IR to devote
the necessary time to each new Manager that it takes to
assist that new Manager in getting his/her business off to a
Quick Start. This in turn leads to the building of a stronger,
long-term business for all, both upline and downline.
E. Presidential Ambassadors: Presidential Ambassadors
will be determined as a portion of the Customer
Generated Usage. You must meet the following requirements to be eligible: (i) You must have met all requirements
for becoming a Qualified National Sales Manager; (ii) develop three (3) QNSMs on any level of your personal
NSM coded organization, however, these three (3) QNSMs
must be developed in two (2) or more separate legs of the
NSM coded group; (iii) develop a minimum downline organization of one thousand six hundred and twenty (1620)
Managers in your NSM coded group; (iv) maintain fifteen
5. fhtm field training & compensation
A. Trainer Coach (TC): The Trainer Coach (TC) position is a separate business and an opportunity to earn additional income.
A Trainer Coach can be an IR but it is not required. Trainer Coaches train Managers that have purchased the Optional
Special Services Program. The Trainer Coach is paid a one-time $40.00 fee for the initial training of a new Manager. Managers
are encouraged to attend and audit additional training sessions as often as desired in order to reinforce the FHTM Policies
and Procedures and business building techniques. TCs submit an invoice (Form #103) for payment for the initial training.
Submission of this invoice to FHTM by the TC serves as certification to Fortune Hi-Tech Marketing, Inc., by both the TC and
Manager, that this service was personally performed in accordance with Company approved methods by the TC submitting
the invoice for payment.
Trainer Coaches are trained by Certified Regional Trainers that have been trained and certified by FHTM’s Corporate
Trainers. The initial Trainer Coach certification fee is $299.00 ($295.00 for residents of Louisiana, Maryland, Utah and
Washington; $249.00 for residents of Maine, South Carolina and South Dakota; and $199.00 for residents of Connecticut
and North Carolina). Trainer Coaches must be re-certified annually by a Certified Regional Trainer. In order for Trainer
Coaches to maintain certified status a TC must pay an annual renewal fee of $100.00 for re-certification and training. A TC that is also a CRT pays only the re-certification fee of $100.00 as a CRT. The TC renewal fee is waived for any TC that is also a CRT. The TC has sixty (60) days to obtain re-certification training from a CRT after payment of the renewal fee.
FHTM recognizes that in an effort to provide new Managers with the training and valuable information that they need in order to successfully operate their businesses, many leaders who are also TCs, will conduct training classes immediately following a regularly scheduled formal business presentation. While this attitude is commendable, the Company does
not recommend it. The reason for this is quite simple. If any individual in attendance at the training class is not already a FHTM Manager, then the class could be viewed as a method of sponsoring/recruiting the prospect. Training is necessarily more detailed than a business presentation. As a result, the examples (both visual and verbal) that may be offered by
Trainer Coaches to explain or clarify various aspects of the Compensation Plan to trainees may not be as thoroughly disclaimed, if at all, in the classroom setting as they would be as a matter of policy in a formal business presentation setting.
As such, in no event shall anyone that is not an enrolled FHTM Manager be permitted to attend a training class. Training
classes are not a sponsorship tool and should never be used as such. If you must conduct a training class after a formal business presentation at the same location, then you should allow at least thirty (30) to forty five (45) minutes between the
end of the business presentation and the start of the training class to ensure that only enrolled Managers are in attendance. It is the duty and responsibility of the Trainer Coach conducting the class to ensure that this attendance policy is
followed at all times.
B. Certified Regional Trainer (CRT): Certified Regional Trainers are Trainer Coaches that have attained the rank of
Regional Sales Manager, have successfully completed a Certified Regional Trainer School and have been approved
by FHTM. The fee to be certified as a Certified Regional Trainer is $200.00. You must be a Trainer Coach to attend the
Certified Regional Trainer School. The requirement for completion of Certified Regional Trainer School may be completed prior to becoming a Regional Sales Manager. A CRT that has attained the rank of Regional Sales Manager can
train Trainer Coaches and receive a one-time payment of $80.00 for each Trainer Coach that is personally trained. CRTs
must attend a Certified Regional Trainer School annually to maintain certified status. The re-certification fee is $100.00.
The CRT will be paid $40.00 for re-training a Trainer Coach that has renewed and is seeking re-certification. For recertification purposes, a CRT pays only $100.00 annually. The renewal fee of $100.00 as a Trainer Coach is waived for CRTs. The
CRT has sixty (60) days to obtain re-certification training by attending CRT school after payment of the renewal fee. Every
attempt should be made to attend CRT school during the renewal month.
C. Leadership Training Bonus: FHTM pays a Leadership Training Bonus (LTB) of five ($5.00) dollars to all Managers, who are also active Trainer Coaches, that qualify for a LTB by meeting the following eligibility requirements: (i) be an
active Manager and Trainer Coach yourself ; (ii) personally sponsor and maintain four (4) active Managers who are also
active Trainer Coaches; and (iii) maintain ten (10) active personal customers. If you meet these requirements you will
receive a LTB of five ($5.00) dollars each time one of your personally sponsored active Trainer Coaches trains a new
Manager and is paid the $40.00 training fee by FHTM. RSMs or ESMs that meet the eligibility requirements to qualify to receive LTB for their personally sponsored Manager/
Trainer Coaches are also qualified to receive RSM or ESM Coded LTB of five ($5.00) dollars each time a Trainer Coach in
their applicable coded group(s) trains a new Manager and is paid the $40.00 training fee by FHTM.
Additionally, FHTM pays a Double Leadership Training Bonus (DLTB) of ten ($10.00) dollars to all Managers, who are also
active Trainer Coaches, that qualify for a DLTB by meeting the following eligibility requirements: (i) be an active Manager
and Trainer Coach yourself ; (ii) personally sponsor and maintain six (6) active Managers who are also active Trainer
Coaches; and (iii) maintain fifteen (15) active personal customers. If you meet these requirements you will receive a DLTB of
ten ($10.00) dollars each time one of your personally sponsored active Trainer Coaches trains a new Manager and is paid the $40
training fee by FHTM.
RSMs or ESMs that meet the eligibility requirements to qualify to receive DLTB for their personally sponsored Manager/
Trainer Coaches are also qualified to receive RSM or ESM Coded LTB of ten ($10.00) dollars each time a Trainer Coach in
their applicable coded group(s) trains a new Manager and is paid the $40.00 training fee by FHTM.
D. Deadlines for Training and Submission of Invoices: In order to ensure that our new Managers and Trainer Coaches
are promptly trained, FHTM highly recommends that all initial training of new Managers and/or Trainer Coaches be conducted within thirty (30) days of the enrollment of the new Manager and/or Trainer Coach. In order for a Trainer Coach
and/or Certified Regional Trainer to be paid for training a new Manager and/or Trainer Coach, such training shall have been
conducted within sixty (60) days of the enrollment of the new Manager and/or Trainer Coach. Additionally, the FHTM home
office must receive training invoices within ten (10) business days of the date upon which the training occurred. Invoices for
training that occurred out of this time frame and/or invoices received more than ten (10) business days after the training was
conducted shall not be paid except in the case of an exceptional circumstance, approved by FHTM as such after review,
that may have caused an unavoidable delay. Prompt and thorough training is a key ingredient for success!
6. fhtm optional special services program
If, prior to cancellation, the Manager has attended Manager
Training, $40.00 will be deducted from the Special Services
purchase price. The annual cost for renewal of the
Optional Special Services Program is $199.00.
The FHTM Optional Services Program is designed to assist
an enrolled Manager with special business building training, including a Manager Sales Kit, downline reports, access
to online training information and corporate home office
support. The Manager Sales Kit includes support items,
marketing materials, presentation materials, rate charts and
other sales tools to help the new Manager build a successful
business. The cost of the Optional Special Services Program
is $299.00. Managers that voluntarily cancel in writing within
ten (10) calendar days of the date of purhcase will receive
a refund of the purchase price upon return of the Manager
Sales Kit to FHTM in resalable condition within twenty (20)
calendar days of their written notice of cancellation (see
Section 11.4 of Policies and Procedures).
The Representative Services Department (859-422-7008) at the corporate office is available to assist Managers with
downline questions, commission statements, bonus reports,
and announcements made through the corporate communications system.
7. fhtm compensation plan
The FHTM Compensation Plan as delineated in this guide, represents the general compensation plan offered by the Company.
Independent Representatives of Fortune Hi-Tech Marketing, Inc. should familiarize themselves with this compensation plan.
However, FHTM may engage in promotions or offer incentives that will affect the structure of the general plan from time to time.
Independent Representatives are encouraged to seek updated information regarding current promotions on www.fhtm.net.
A. Customer Generated Usaged (CGU): Active FHTM Independent Representatives may earn from 2% to 25% of the
Customer Generated Usage (CGU) of all active personal customers. Commissions paid for our products and services may vary
slightly from the example used in the corporate business presentation, due to varying commission agreements with our providers.
(See the Commission Chart in Section 13 of the Program Guide and Policies and Procedures manual for actual commission payable).
The unilevel portion of the Compensation Plan has a one-time qualification for each level of the Compensation Plan. An IR
qualifies for the first level by acquiring three (3) active personal customers (at least one of which must be other than his/her
own personal or household account) and one (1) personally sponsored Manager. To qualify for levels two (2) through seven (7)
an IR must acquire five (5) active personal customers and personally sponsor two (2) Managers. To qualify for level eight (8) Quick Start
Bonus (QSB)
$100.00
When YOU recruit JANE
and she has (*3) personal customers, YOU receive a Quick
Start Bonus of $100.00. When
you have (3) active personal
customers and (1) first level
Manager, you will qualify to earn
commissions (CGU) on level (1).
When you sign up (5) active
customers and recruit BOB
and he has (*3) personal active
customers you will receive
a QSB and qualify to earn
commissions on levels 2-7.
When you sign up (10) active
customers and recruit MIKE
and he has (*3) personal active
customers you will receive a
QSB and qualify to earn
commissions on level (8).
*All active customers must be
signed up and become active
during your new Manager’s first 60 days from the time
the application is received by
Fortune to receive a QSB.
Level
Personal
Customers
YOU
QS
Percentage
CGU–Usage**
2%-25%
JANE: $100
BOB: $100
MIKE: $100
1/4%
$5
$5
$5
1/4%
1
$100
2
$5
3
$5
1/4%
4
$5
1/4%
5
$5
1/4%
6
$5
1/4%
7
$5
1/4%
8
$10
$5
$5
$$$$
$5
$$$$
$5
$5
$$$$
$5
5%
PLEASE NOTE: In order to
qualify for release of QSB,
QSBO and other bonus
payments, the three (3)
Select Qualified Customers
must be submitted active
within sixty (60) days of the
new Manager’s enrollment
date. If they do not become
active during this period then
no QSB or other bonuses
will be paid. It is strongly
recommended that the newly
sponsored Manager submit
more than the minimum of
three (3) customers in order
to help ensure that QSB will
be paid to the sponsoring
IR and other bonuses will
be paid to coded upline IRs.
***CGU percentages displayed in the chart are for illustrative purposes only. CGU percentages may vary dependent upon the product used by the customer. Please see Section 13 of the Program Guide and Policies and
Procedures manual for CGU percentages payable for each product/service offered.
an IR must acquire ten (10) active personal customers and personally sponsor three (3) Managers. An IR that has acquired
three (3) personal Managers and ten (10) or more active personal customers is a Qualified Representative (QR). PLEASE
NOTE that with regard to commercial long distance accounts with billed CGU in excess of $1000.00 per month the IR that
personally acquires the account receives 5% of the CGU rather than the normal 2%. In this situation the percentages paid
on the first and eighth levels are reversed and the eighth level IR will be paid 2% of the CGU for this account and the IR
personally responsible for acquiring the customer will receive 5% of the CGU for this customer.
B. Qualified Customer (QC): ): A legitimate True Essentials (Easy Ship), Lamas, HomVantage, FonVantage, Identashield,
Health Care Card, The Wireless Shop, Dish Network, or Office Assistant customer submitted in good faith by an IR that
becomes an active customer within sixty (60) days of submission to FHTM and/or the service provider. A customer that does
not remain on service (for any reason) for a minimum of ninety (90) days or three (3) complete billing cycles from the date of
initial activation by the service provider shall not be considered an “active customer” submitted in “good faith” for any purposes by the Company nor shall it be considered a Qualified Customer. Any bonuses or commissions paid on such customers
shall be subject to withholding and recovery from any IRs paid on such customers.
C. Commissions and the Quick Start Bonus (QSB): IRs are qualified to earn a customer acquisition Quick Start Bonus
(QSB) when a personally sponsored Manager acquires and submits in good faith three (3) personal Qualified Customers
within sixty (60) days of the new Manager’s enrollment date and which customers become active within sixty (60) days of the
new Manager’s enrollment date. No more than one of the three (3) customers required in order to generate this bonus may
be PNG customers.
D. Quick Start Bonus Override (QSBO): When a new Manager is sponsored on your 2nd through 8th level and the personal sponsor of that new Manager receives a Quick Start Bonus for the newly sponsored Manager, you will receive a
Quick Start Bonus Override as follows: If the new Manager falls on any of your levels 2-7, you will receive a $5.00 QSBO. If
the new Manager falls on your 8th level, you will receive a $10.00 QSBO. In order to receive this new QSBO, all you need
to do is be qualified and eligible to receive CGU, in accordance with the Compensation Plan, for each particular level.
E. True Beginnings Bonus: The True Beginnings Bonus is a $299 bonus awarded to Independent Representatives who
gather a total of ten (10) customers (five (5) of which are True Essentials customers), with at least four (4) of the ten (10)
customers being customers other than his/her personal accounts. These customers must go active within the first 60 days
after his/her new Manager start date.
8. fhtm management bonus program
A. Customer Acquisition Bonus (CAB): CAB is earned
entering the business. Only when the active customer
requirements have been met shall any CAB be paid.
Again, this active customer requirement must be maintained on a monthly basis (see Section 9 of this manual)
in order for you to remain eligible to receive CAB that
may be payable from your coded organization(s).
by IRs that have attained the positions of QRSM, QESM
or QNSM. CAB is only paid on Managers who are sponsored after you have met the qualification for the first
“coded” position of RSM. Once you are promoted and
qualified, and a newly sponsored Manager in your new
management coded group submits three (3) QCs (see
7C), you become eligible to receive CAB. The QRSM,
QESM and QNSM positions are eligible to earn bonuses
as shown:
In order to receive CAB you must acquire and maintain
on a monthly basis the requisite number of active customers and Managers required for “eligibility” at your
particular position. Although Managers will achieve
the title for any promoted position they have achieved
based upon the number of Managers in their business
(i.e. RSM, ESM, NSM) once the requisite number of
Managers has been attained, they will not be eligible to
receive nor will they be paid any CAB for new Managers
sponsored into their coded organization until ALL active
customer requirements have been met and they have
become a QRSM, QESM or QNSM. Active customer
requirements must be maintained monthly in order to
remain eligible for receipt of CAB.
A Manager that promotes to RSM shall be granted a
one-time “qualification period” to meet the requirement of gathering the ten (10) active personal customers
required to become a QRSM. The new RSM shall have
until the last day of the month following the month in
which he/she promoted to RSM to meet this requirement. It is strongly urged that the customer gathering
requirements necessary for QRSM status be met as soon
as possible (i.e. within 30 days of enrollment) for anyone
B. D
ouble Management Customer Acquisition
Bonuses: A QRSM, QESM or QNSM, may receive a
“double” Management CAB when the appropriate number of qualifying new Managers are sponsored into
their appropriate Coded Group(s) as follows:
(i) QRSMs will receive this double bonus for each qualifying new Manager entering his/her Regional Coded Group each month when a minimum of sixteen
(16) new Managers are sponsored into his/her Regional
Coded Group.
(ii) QESMs will receive this double bonus for each qualifying new Manager entering his/her Executive Coded
Group each month when a minimum of twenty-four (24)
new Managers are sponsored into his/her Executive
Coded Group.
(iii) QNSMs will receive this double bonus for each qualifying new Manager entering his/her National Coded Group each month when a minimum of forty-eight (48) new Managers are sponsored into his/her National Coded Group.
A “qualifying new Manager” for purposes of release of this double bonus is a new Manager that triggers the release of a Quick Start Bonus to his/her personal
sponsor.
B. Leadership Coded Bonus Chart
Quick Start
$100.00
Regional Sales
Manager Coded
Group*
Executive Sales
Manager Coded
Group*
†
†
National Sales
Manager Coded
Group*
†
Quick Start
Bonus
•$100 & up to 1/4%
•$60 & up to 1/4%
•$30 & up to 1/2%
(**$50 + 1/4%/$10 Breakaway)
RSM C.A.B.
(**$20 + 1/4%/$10 Breakaway)
ESM C.A.B.
(**$10 + 1/4%/$5 Breakaway)
NSM C.A.B.
Personal Customers
2%-25%
{$100+$100 &
1/ %+1/ %}*
4
4
{$100+$100+$60 &
1/ %+1/ %+1/ %}*
4
4
4
{$100+$100+$60+$30 &
1/ %+1/ %+1/ %+1/ %}*
4
4
4
2
1. 1/4%
$100
$200 & 1/2%*
$260 & 3/4%*
$290 & 1/4%*
2. 1/4%
$5
$100 & 1/2%
$160 & 3/4%
$190 & 1 1/4%
3. 1/4%
$5
$100 & 1/2%
$160 & 3/4%
$190 & 1 1/4%
4. 1/4%
$5
Presidential
$100 & 1/2%
$160 & 3/4%
$190 & 1 1/4%
5. 1/4%
$5
Ambassador
$100 & 1/2%
$160 & 3/4%
$190 & 1 1/4%
6. 1/4%
$5
$100 & 1/2%
$160 & 3/4%
$190 & 1 1/4%
7. 1/4%
$5
$100 & 1/2%
$160 & 3/4%
$190 & 1 1/4%
$10
$100 & 5 1/4%
$160 & 5 1/2%
$190 & 6%
$100 & 1/4%
$160 & 1/2%
$190 & 1%
unlimited
levels
unlimited
levels
***
unlimited
levels
***
8. 5%
9. 0%
$$$$
$$$$
* The examples assume that you sponsor a new Manager into each new Management Coded Group after you have been promoted. Each column represents the
cumulative total possible payment that can be earned for the new Managers that are sponsored into each particular new Management Coded Group after your
promotion. Bonuses are only paid if the new Managers obtain three customers (one other than themselves) within their first 60 days. **Breakaway bonuses are
paid on promotions made in your RSM, ESM and NSM coded groups. 1st Generation Breakaway is $50 + 1/4-1/2%. 2nd Generation Breakaway is a $10 bonus in
the RSM. ESM 1st Generation Breakaway is $20 + 1/4-1/2%. ESM 2nd Generation Breakaway is $10. ***This assumes that CAB is being paid on a new Manager
that is in more than one coded position.
C. Q
RSM “EXTRA $50” Management Customer
Acquisition Bonus: QRSMs may receive an “Extra
QRSMs will receive an “Extra $50” CAB (i.e. $50.00) for each
qualifying new Manager entering their Regional Coded
Group each month when a minimum of six (6)
new Managers are sponsored into their Regional Coded
Group. This bonus will be paid to QRSMs on qualifying new
Managers (1 through 15) only in the event the QRSM does
not qualify for the monthly Double QRSM CAB. It is not paid
in addition to Double QSB CAB.
$50” Management CAB when the appropriate number
of qualifying new Managers are sponsored in their
Regional Coded Group as follows.
10
9. e
ligiblity for commissions ,
overrides and bonuses
All IRs are eligible to receive commissions on their personal customers’ CGU. IRs with three (3) active personal customers
and one (1) personally sponsored first level Manager are eligible to receive downline override commissions on their first level
Manager’s customers (see Section 7 “FHTM Compensation Plan” in this manual for customer and Manager requirements for
levels 2 through 8).
In order to receive monthly Management Customer Acquisition Bonuses (CAB) for which you may qualify; you must also maintain an active eligibility status. You can accomplish this by maintaining your active customer count at or above the eligibility level required for payment of these bonuses. REMEMBER that the number of active customers required in order for you to be eligible to receive monthly CAB is: QRSM= 10+; QESM & QNSM= 15+.
Eligibility requirements must be met by the last day of the month immediately preceding the month during which the applicable bonus and/or commission payments are scheduled to be issued by FHTM. (Example: To receive payment for CAB
earned in June, which is issued on July 20th, you must have your active customer count at or above the required eligibility
level on June 30th). There is no grace period. The only exception to this rule is the one-time “qualification period” granted
to newly promoted RSMs (see Section 8 A). You will be paid for the highest level of promotion for which you are eligible.
For example: An ESM with 14 active customers on June 30th would be issued payment for CAB on July 20th only for CAB
earned as a QRSM for the month of June. No CAB would be paid that month to the ESM for any CAB that may have been
payable from the ESM coded group since the eligibility requirement for receiving QESM CAB (i.e. maintaining 15 active
personal customers) was not met on June 30.
Always maintain more than the minimum number of active customers required to ensure that you are eligible for all compensation at your level of achievement.
In the event FHTM should elect to discontinue offering the product and/or service of one of its various providers which
results in the termination of residual payments from said provider to FHTM, then and in that event, upon the effective
date of the discontinuation of any such product and/or service offering, FHTM shall not credit any customer points towards
Compensation Plan qualification /eligibility requirements for the discontinued product or service. IRs shall be required to
replace the discontinued product/customer point to remain qualified/eligible (as may be applicable) for Compensation
Plan purposes should this result in them falling below the required customer count for their level for promotion and/or 8
level CGU qualification.
Eligibility for all commissions, overrides, and bonuses ends immediately if you are terminated by FHTM or you voluntarily terminate your IR Agreement.
11
10. commissions reports & payment schedules
A. Payment of monthly CGU commission to eligible active IRs on billings of all services and products will normally occur
on or about the twentieth (20th) day of the second month following the month in which the customer was billed. This is the third month after actual usage to allow time for the customer to be billed and for receipt of payment for the
billed services.
B. Payment of monthly Management CAB to an eligible active QRSM, QESM, and/or QNSM will occur on or about the twentieth (20th) day of the month following the month in which the CAB was earned (subject to eligibility requirements).
C. Training commission checks will be issued on the first Friday following receipt of the training invoice by the
Company provided that all necessary data for identification of the newly trained Manager and Trainer Coach submitting the invoice have been received and verified by FHTM. In no event will training checks be issued prior to the expiration of ten (10) calendar days from the newly trained Manager’s date of enrollment.
D. Quick Start Bonus checks will be issued on the first Friday following the expiration of ten (10) calendar days from date of enrollment of a new Manager that has met all of the customer gathering requirements for the release of QSB payments to the sponsoring IR provided that all necessary data for identification of the new Manager, customers and sponsor have been received and verified by FHTM.
E. All payments made are subject to the check and/or EFT fees. Commission checks must be greater than or equal
to fifteen dollars ($15.00) before a check will be issued. There is a six dollar ($6.00) check charge for each check
(a $15.00 commission generates a $10.00 check). EFT payments must be equal to or greater than fifteen dollars ($15.00) to generate a transfer. There is a five dollar ($5.00) transfer fee for each EFT (a $12.00 commission will transfer as $10.00
after the EFT fee). Commissions accumulate if they are less than the above amounts until the appropriate amount is
reached. This amount is added to the next pay period.
F. All check inquiries should be made in writing and must be received by FHTM within sixty (60) days of issuance to be reissued. Any lost or missing checks that you request FHTM to reissue will be subject to a $25.00 fee and a sixty (60) day waiting period.
11. downline reports
This service is included, upon request, for all Managers
enrolled in the Optional Special Services Program. Upon
request, a downline summary report is provided monthly by way of either a paper printout (mailed) or via the internet
(email). IRs that have purchased an FHTM replicated web
page have “real time” access to their downline information
upon command. A charge of twenty five ($.25) cents per
page for paper printout reports exceeding twenty (20) pages will be deducted from the requesting IR’s commission
payment. The report contains information that is proprietary
and confidential to FHTM and the IR agrees to hold such
information private. The IR agrees to only use the information to operate and build his/her FHTM business.
A Representative that requests a downline report must pay
for this as a separate service and the fee is twenty five dollars ($25.00) per requested downline report of less than
twenty (20) pages in length. Reports in excess of twenty (20)
pages will be assessed an additional charge of twenty five
($.25) cents per page exceeding twenty (20) pages.
12
1. introduction
1.1 Policies and Compensation Plan Incorporated into Independent Representative Agreement
These Policies and Procedures, in their present form and as amended at the sole discretion of Fortune Hi-Tech Marketing,
Inc. (hereafter “FHTM” or the “Company”), are incorporated into and form an integral part of the FHTM Independent
Representative Agreement/Application (hereafter “IR Agreement”) and the Trainer Coach Agreement/Application.
Throughout these Policies, when the term “Agreement” is used, it collectively refers to the FHTM IR Application
and Agreement, the FHTM Trainer/Coach Agreement, these Policies and Procedures, and the FHTM Marketing and
Compensation Plan. These documents are incorporated by reference into the FHTM IR Agreement (all in their current form and as amended by FHTM). It is the responsibility of each Independent Representative (hereafter “IR”) to read,
understand, adhere to, and ensure that he or she is aware of and operating under the most current version of these
Policies and Procedures.
1.2 Purpose of Policies
FHTM is a direct sales company that markets to end user consumers certain services that could include, but are not limited to, nutritional products, long distance phone service, internet access, cellular phone service, satellite television service, voice messaging service, paging products and services and other useful products through its Independent Representatives. It is important to understand that your success and the success of your fellow
Independent Representatives is dependent upon the integrity of the people who market our products and services. To clearly define the relationship that exists between all IRs and FHTM, and to explicitly set a standard for ethical and acceptable business conduct, FHTM has established this agreement.
FHTM IRs are required to comply with all of the terms and conditions set forth in this agreement. FHTM may amend this
agreement at its sole discretion from time to time.
Because you may be unfamiliar with many of these standards of practice, it is very important that you read and abide by
this agreement. Please review the information in this manual carefully. It explains and governs the relationship between
you, as an independent contractor, and the Company. If you have questions regarding any policy or rule, do not hesitate
to seek an answer from FHTM.
1.3 Changes to the Agreement
Because national, provincial, territorial and local laws, as well as the business environment, periodically change, FHTM
reserves the right, at any time, to amend the Agreement and its prices in its sole and absolute discretion. By signing the IR Agreement, an IR agrees to abide by all amendments or modifications that FHTM elects to make. Amendments shall be effective upon notice to IRs that the Agreement has been modified. Notification of amendments shall be published in
official FHTM materials. The Company shall provide or make available to IRs a complete copy of the amended provisions
by one or more of the following methods: (1) posting on the Company’s official web site; (2) electronic mail (e-mail); (3)
voice mail system broadcast; or (4) inclusion in Company periodicals. Notice given via any one of the previously
listed channels will be deemed received by the IR upon posting. The continuation of an IR’s FHTM business or an IR’s
acceptance of bonus or commission payments shall constitute acceptance by an IR of any and all amendments.
1.4 Delays
FHTM shall not be responsible for delays or failures in performance of its obligations when performance is made commercially impracticable due to circumstances beyond its reasonable control. This includes, without limitation, strikes, labor difficulties, riot, war, fire, death, curtailment, cessation or interruption of FHTM’s source of supply, or government decrees
or orders.
14
1.5 Policies and Provisions Severable
If any provision of the Agreement, in its current form or as may be amended, is found to be invalid, or unenforceable for
any reason, only the invalid portion(s) of the provision shall be severed and the remaining terms and provisions shall remain
in full force and effect and shall be construed as if such invalid, or unenforceable provision never comprised a part of the
Agreement.
1.6 Waiver
The Company never gives up its right to insist on compliance with the Agreement and with the applicable laws governing
the conduct of a business. No failure of FHTM to exercise any right or power under the Agreement or to insist upon strict
compliance by an IR with any obligation or provision of the Agreement, and no custom or practice of the parties at variance
with the terms of the Agreement, shall constitute a waiver of FHTM’s right to demand exact compliance with the Agreement.
Waiver by FHTM can be affected only in writing by an authorized officer of the Company. FHTM’s waiver of any particular
breach by an IR shall not affect or impair FHTM’s rights with respect to any subsequent breach, nor shall it affect in any way
the rights or obligations of any other IR. Nor shall any delay or omission by FHTM to exercise any right arising from a breach
affect or impair FHTM’s rights as to that or any subsequent breach.
The existence of any claim or cause of action of an IR against FHTM shall not constitute a defense to FHTM’s enforcement of
any term or provision of the Agreement.
2. becoming an independent representative
2.1 Requirements to Become an Independent
Representative
A Starter Kit containing marketing materials and other important information will be provided to all new IRs upon enrollment.
To become an FHTM IR, each applicant must:
a)Be of the age of majority in his or her state or
country of residence;
b)Reside in a country in which FHTM is engaged in
doing business;
c)Provide: i: a valid Social Security or Federal Tax ID
number; ii: a date of birth.
d)Submit a fully refundable deposit (waived for IRs electing to purchase the Optional Special Services Package)
where applicable;
e)Submit a fully and properly completed (originals only—
no copies) and signed IR Application and Agreement
to FHTM; and
f) Be approved and accepted by FHTM.
2.3 Registration by Online Enrollment
The potential new IR may enroll a new Independent
Representative online by use of FHTM’s online registration process. The person making the enrollment must be
able to provide all necessary IR Agreement information for
the online enrollment. A Starter Kit or Manager Sales Kit
will be provided to the new enrollee upon receipt/verification of payment of the refundable deposit (if applicable) or
Optional Special Services Package fee by FHTM. Please refer
to your sponsor’s personal FHTM Office Assistant website
at www.fhtm.ws or other designated web address for online
enrollment assistance.
The new IR’s online enrollment authorization will be valid
for up to thirty (30) days, pending receipt and verification by
the Company of any applicable deposit/payment that may
be due. Once any applicable deposit/payment has been
received and verified at the FHTM Home Office, the new IR
Agreement will be extended to one (1) full year from the
date on which the online enrollment was accepted by FHTM.
The Company reserves the right to reject any applications
for a new Independent Representative or applications for
renewal.
2.2 No Purchase Required
No person is required to purchase FHTM products, services or marketing materials, or to pay any charge or fee to
become an IR. However, each IR must submit a fully refundable deposit (except where prohibited by law) to FHTM with
his or her IR Application and Agreement. The deposit shall
be refunded upon receipt of written request upon the termination (voluntary or involuntary) of an IR’s Agreement. If any applicable deposit/payment required is not received
within the temporary thirty (30) day time period, the temporary authorization shall expire and the IR Application and
Agreement shall automatically terminate. Additionally, in the
15
2.5 Renewal of Your FHTM Business
event that the deposit/payment is dishonored for any reason, the new IR shall be immediately terminated by FHTM
and any sums that may have been paid to the new IR, the
new IR’s sponsor and/or upline shall be subject to recovery
by the Company by way of either withholding same from
any sums in the possession of the Company that are payable
to any such party and/or withholding same from any future
sums that may become payable to any such party and/or by
any other method provided by law.
The term of the IR Agreement and Trainer Coach
Agreement is one (1) year from the date of its acceptance by
FHTM. Managers must renew their Optional Special Services
Agreement and/or Trainer Coach Agreement each year by
paying an annual renewal fee of $199.00 for the Optional
Special Services Package and $100.00 for the Trainer Coach
position (if applicable) on or before the last day of the anniversary month of their IR Agreement and/or Trainer Coach
Agreement, as may be applicable. If the renewal fee is not
paid on or before the last day of the anniversary month of
the current term of the IR Agreement and/or Trainer Coach
Agreement, then the applicable Agreement will be terminated. A Manager that elects not to renew the Optional Special
Services Package may renew as a Representative only, by submitting a written request to FHTM requesting that the
renewal status be changed from Manager to Representative.
Such request must be received by FHTM prior to the expiration of the applicable renewal period and be accompanied
by a $75.00 deposit except for residents of states where the
deposit is waived by law. (For example, if the anniversary date
of either an IR Agreement or Trainer Coach Agreement is
January 15, 2008, the renewal payment will be due on or
before January 31, 2008) Renewal notices will be mailed during the month immediately preceding the month in
which the renewal payment is due.
In the event of the online enrollment of a business entity, all
requirements contained in Section 4.4 below, shall also be
complied with as set forth therein.
2.4 IR Benefits
Once an IR Application and Agreement has been accepted by FHTM, the benefits of the Marketing and Compensation
Plan and the IR Agreement are available to the new IR. These benefits include the right to:
a)Market FHTM products and services, in accordance
with the terms of the
FHTM Marketing and Compensation Plan;
b)Participate in the FHTM Marketing and Compensation
Plan (receive bonuses and commissions, if eligible);
c) Acquire customers for FHTM’s products and services
and sponsor other individuals (IRs) into the FHTM
business and thereby build a marketing organization and progress through the FHTM Marketing and
Compensation Plan;
d)Receive periodic FHTM literature and other FHTM
communications;
e)Participate in FHTM-sponsored support, service,
training, motivational and recognition functions, upon
payment of appropriate charges, if applicable (i.e.
purchase of the Optional Special Services Package);
and
f) Participate in promotional and incentive contests and
programs sponsored by FHTM for its IRs.
Please Note: TCs that are also CRTs only renew for the CRT position, which includes the renewal of the TC position.
A separate notice will be sent to CRTs when the renewal is
due or this renewal fee may be paid at the same time as the
Optional Special Services renewal. If you choose to renew at
the same time, this will not affect the CRT anniversary date
for re-certification purposes. The anniversary date will not
change.
There is no renewal fee for those IRs who have not purchased the Optional Special Services Package. However,
they must notify FHTM annually, in writing, of their desire
to continue to participate as a Representative. If they do
not, their position shall be terminated. Representatives will
receive an annual renewal notice from the Company.
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3. operating an fhtm business
3.1 Adherence to the FHTM Marketing and Compensation Plan
IRs must adhere to the terms of the FHTM Marketing and Compensation Plan as set forth in official FHTM literature. IRs shall
not offer the FHTM opportunity through, or in combination with, any other system, program, or method of marketing other
than that specifically set forth in official FHTM literature. IRs shall not require or encourage other current or prospective customers or IRs to participate in FHTM in any manner that varies from the program as set forth in official FHTM literature. IRs shall not require or encourage other current or prospective customers or IRs to execute any agreement or contract other
than official FHTM agreements and contracts in order to become an FHTM customer or IR. Similarly, IRs shall not require or
encourage other current or prospective customers or IRs to make any purchase from, or payment to, any individual or other
entity to participate in the FHTM Marketing and Compensation Plan other than those purchases or payments identified as recommended in official FHTM literature.
FHTM reserves the right to limit or disallow any marketing activities that cast negative aspersions on the integrity, truthfulness,
and/or reputation of Fortune Hi-Tech Marketing, Inc.
.1.1: Ethics
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FHTM conducts business in an ethical and credible manner and requires its Representatives to deal ethically with their customers, with each other and with the company. FHTM permits no unethical or illegal activity and will intercede when
such behavior may exist. FHTM reserves the right to use its best judgment in deciding whether certain Representative activities are unethical. Furthermore, FHTM may use its own discretion in determining the appropriate course of action. If FHTM determines that unethical activities may exist, then it reserves the right to suspend or terminate the Independent
Representative position and withhold all commissions and payments of any kind. Under no circumstances would an
Independent Representative who is terminated for unethical or illegal activity be entitled to a refund of their original purchase fee, nor are they entitled to sell or transfer their position. Examples of unethical or illegal activity include, but are not limited to:
1. Forging a signature on any document or application.
2. Making false or misleading representations of any kind including, but not limited to, misrepresentations about FHTM
products and services or the FHTM Compensation Plan.
3. Depositing checks made payable to FHTM into personal accounts instead of immediately forwarding them to FHTM.
4. Spreading false or misleading remarks or rumors with malicious intent that may disparage FHTM, FHTM employees, or another FHTM Independent Representative.
5. Any unauthorized use of FHTM’s name, trademarks or copyrighted material (i.e. reproducing FHTM’s forms, business
cards, etc.).
6. Violation of any federal, state or local laws or regulations.
7. Violation of any FHTM Policy or Procedure.
8. Co-marketing of any other business, product, service, seminar or program in conjunction with the FHTM opportunity. This
limitation applies to all promotional activities including, but not limited to, marketing materials, events, presentations, verbal
solicitations, etc.
9. Purchasing a product or submitting a customer with the intent to discontinue use of the product for the purpose of triggering commissions and bonuses.
3.2 Advertising
.2.1: In General
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All IRs shall safeguard and promote the good reputation of FHTM and its products and services. The marketing and promotion of FHTM, the Marketing and Compensation Plan, and FHTM products and services shall be consistent with the
public interest, and must avoid all discourteous, deceptive, misleading, unethical or immoral conduct or practices.
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To promote both the products and services, and the tremendous opportunity FHTM offers, IRs shall only use the marketing
materials and support materials produced by or at the direction of FHTM. FHTM has carefully designed its products, product labels, Marketing and Compensation Plan, and promotional materials to ensure that each aspect of FHTM is fair, truthful, substantiated, and complies with the vast and complex legal requirements of federal and state laws. Accordingly, IRs
shall not produce their own literature, advertisements, marketing materials and promotional materials, or internet site/web
pages to offer the FHTM Opportunity and/or products and services. If an IR desires to advertise to promote his or her business, he or she may do so only through the Company approved advertisements that may be found in the “Corporate Tools” section on the “Secure Console” of www.fhtm.net.
Except as provided in this section, IRs shall not use or transmit unsolicited faxes, mass e-mail distribution, unsolicited e-mail, or “spamming” relative to the operation of their FHTM businesses. The terms “unsolicited faxes” and “unsolicited e-mail”
mean the transmission via telephone facsimile or electronic mail, respectively, of any material or information advertising or promoting FHTM, its products, its compensation plan or any other aspect of the Company which is transmitted to any person, except that these terms do not include a fax or e-mail: (a) to any person with that person’s prior express invitation or permission; or (b) to any person with whom the IR has an established business or personal relationship. The term “established business or personal relationship” means a prior or existing relationship formed by a voluntary two-way communication between an IR and a person, on the basis of: (i) an inquiry, application, purchase or transaction by the person regarding products offered by such IR; or (ii) a personal or familial relationship, which relationship has not been previously terminated by either party. If an IR desires to utilize an internet web page to promote his or her business, he or she may do so only through the
Company’s official web site or by use of the approved FHTM Self-Replicating Web Page, using only official FHTM templates. Further, IRs that use the FHTM replicated web page shall not link from it to any other site that is not affiliated with
and/or approved by FHTM nor shall they advertise any other products, services or businesses on the site without the express
written approval of FHTM. The failure to adhere to this policy constitutes a material breach of these Policies and Procedures,
which may result in sanctions, including termination, at the sole discretion of FHTM.
3.2.2: Domain Names and E-mail Addresses
IRs shall not use or attempt to register any of FHTM’s trade names, trademarks, service names, service marks, product names,
the Company’s name, or any derivative thereof, for any internet domain name. Nor shall IRs incorporate or attempt to incorporate any of FHTM’s trade names, trademarks, service names, service marks, product names, the Company’s name, or any
derivative thereof, into any electronic mail address.
3.2.3: Trademarks and Copyrights
FHTM will not allow the use of its trade names, trademarks, designs, or symbols by any person, including an FHTM IR, without
its prior, written permission. IRs may not produce for sale or distribution any recorded Company events and speeches without
written permission from FHTM nor may IRs reproduce for sale or for personal use any recording of Company produced audio or videotape presentations. Further, IRs shall not reproduce or use the marks of any of FHTM’s product or service providers except as expressly authorized in writing by FHTM. The limited license that FHTM has been granted by
each of its service providers for use and reproduction of their various logos and marks does not extend to its IRs.
3.2.4: Media and Media Inquiries
IRs shall not respond to media inquiries regarding FHTM, its products or services, or their independent FHTM business without the express written consent and permission of FHTM. All inquiries by any type of media must be immediately referred
to FHTM’s Representative Services Department. This policy is designed to ensure that accurate and consistent information is
provided to the public as well as a proper public image. 18
3.3 Bonus Buying
“Bonus buying” includes, but is not limited to: (a) the sponsorship/enrollment of individuals or business entities without the
consent and/or knowledge of and/or execution of an IR Application and Agreement by such individuals or business entities; (b) the fraudulent sponsorship/enrollment of an individual or business entity as an IR or customer; (c) the sponsorship/enrollment or attempted sponsorship/enrollment of non-existent individuals or business entities as IRs or customers (“phantoms”);
(d) the use of a credit/debit card, check or other negotiable instrument by or on behalf of an IR or customer when the IR or
customer is not the account holder of such credit/debit card, check or instrument; (e) the purchase of products and/or services
from downline IRs; (f) the placement, distribution, or allocation of customer accounts to other FHTM IRs having the effect of
increasing compensation to that IR; (g) use of a pre-paid credit card in the submission of a customer; (h) the submission of an
unauthorized request for service of an individual’s or business entity’s telephone or internet service provider (“slamming”) and/
or any other service or product marketed by FHTM; or (i) any occurrence or pattern of activity that, in the sole and absolute
discretion of FHTM, constitutes Bonus buying in detriment to FHTM’s welfare or integrity. Bonus buying constitutes a material
breach of these Policies and Procedures, is strictly and absolutely prohibited and shall result in immediate termination.
3.4 Business Entities
A corporation, partnership or trust (collectively referred to in this section as a “business entity”) may apply to be an FHTM IR
by submitting its Certificate of Incorporation, Partnership Agreement or trust documents and Internal Revenue Service “letter
of notice” assigning the entity’s Employer Identification Number (these documents are collectively referred to as the “Entity
Documents”) to FHTM, along with any additional information FHTM may request regarding the identity of the individuals with
a beneficial interest in any such business entities. A FHTM business may change its status under the same sponsor from an
individual to a partnership, corporation or trust or from one type of business entity to another. There is a $25.00 administrative
fee for each change requested, which must be included with the written request and the completed new IR Application and
Agreement on behalf of the business entity. The new IR Application form must be signed by all of the shareholders, officers, directors, partners, trustees and trust beneficiaries or their legal representatives. Members of the business entity are
jointly and severally liable for any indebtedness or other obligation of the business entity to FHTM.
All shareholders, directors, officers, partners and beneficiaries shall be identified by Social Security number, name and address
and cannot hold another IR position except as otherwise specifically permitted herein. One of these individuals shall be listed
on the IR Agreement as the primary contact person for the entity. This individual shall also supply his/her social security number on the IR Agreement. Until such time as FHTM receives all required entity documents, the FHTM business shall be listed
under the name and social security number of the individual designated as the entity’s contact person. If any of the required
entity documents are not provided, in writing, to the Company within thirty (30) days of a new enrollment and/or change of status, the position will be terminated (or remain in the name of the contact person if requested in writing) and any sums paid as a
result of said entity’s new enrollment shall be recovered by withholdings made pursuant to these Policies.
3.5 Changes to the FHTM Business
.5.1: In General
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Each IR must immediately notify FHTM, in writing, of all changes to the information contained on his or her IR Application
and Agreement. IRs may modify their existing IR Agreement (i.e., change Social Security number to Federal I.D. number, or
change the form of ownership from an individual proprietorship to a business entity owned by the IR) by submitting a written request, a properly executed IR Application and Agreement, and appropriate supporting documentation as may be
required and/or requested by the Company from time to time. Changes shall be processed only once per year. All changes
must be submitted by November 30 to become effective on January 1 of the following year. FHTM reserves the right to approve or disapprove any IR’s choice of business names, formation of partnerships, corporations and trusts, for tax, estate planning and liability purposes. If FHTM approves such a change by the IR, the organization’s
name and the names of the principals of the organization must appear on the Independent Representative Agreement
along with a Social Security Number or Federal Tax Identification Number. Any request for a change in the name or a change in the Social Security Number or Tax Identification Number of the
Independent Representative status is subject to a written agreement, signed by all parties involved, submitted to and
approved by FHTM. FHTM reserves the right to verify all authorizations prior to making changes. In the absence of any agreement or notification, FHTM will only recognize the individual whose Social Security Number was originally listed on the Independent Representative Agreement. Please note that FHTM will only continue to service the Independent
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Representative who remains listed in our computer system. FHTM reserves the right to intercede in disputes and if it is
determined that unethical activity exists, the status may be suspended and/or terminated.
There is a $25.00 administrative fee for each change requested (other than changes of address or contact numbers), which
must be included with the written request and the completed new IR Application and Agreement, if applicable.
3.5.2: Addition of Co-Applicants
When adding a co-applicant (either an individual or a business entity) to an existing FHTM business, the Company requires
both a written request as well as a new properly completed IR Application and Agreement that complies with the requirements and restrictions of Section 3.1 and contains the signatures of both the applicant and the co-applicant. To prevent the
circumvention of Section 4.23 (regarding transfers and assignments of FHTM business), the original applicant must remain
as a party to the original IR Application and Agreement. If the original IR wants to terminate his or her relationship with the
Company, he or she must transfer or assign his or her business in accordance with Section 4.23. If this process is not followed, the business shall be terminated upon the withdrawal of the original IR. All bonus and commission checks will be
sent to the address of record of the original IR. There is a $25.00 administrative fee for each change requested, which must
be included with the written request and the completed new IR Application and Agreement. FHTM may, at its discretion,
require witnessed and notarized documents before implementing any changes to an FHTM business. Please allow thirty (30)
days after the receipt of the request by FHTM for processing. The new co-applicant shall be responsible for obtaining and
paying for his/her own Manager Sales Kit (or other necessary materials) and shall be responsible for attending and paying
for his/her own training, if the original IR has already attended training. If there is a change to a business entity, the IR must comply with all requirements of Section 3.4 above before the change will be
accepted by FHTM. If these requirements are not fulfilled within thirty (30) days of the change, the position will be terminated.
Please Note: the modifications to the original IR position permitted within the scope of this Section do not include a
change of sponsorship. Changes of sponsorship shall not be permitted and are addressed in Section 4.5.3, below.
3.5.3: Change of Sponsor
To protect the integrity of all marketing organizations and safeguard the hard work of all IRs, FHTM prohibits any changes
in sponsorship (except as set forth in Section 4.5.4, below). Maintaining the integrity of sponsorship is critical for the success
of every IR and marketing organization. Accordingly, the transfer of an FHTM IR’s business from one sponsor to another
may, in the sole discretion of the Company, only be permitted in an instance in which clear and convincing proof of fraudulent inducement or unethical sponsoring has been established based upon documentation submitted to the Company.
ALL requests for change of sponsorship shall be submitted in writing to the Representative Services Department,
within thirty (30) days of the complaining IR’s execution of the original IR Agreement and shall include the reason(s) for the
requested change of sponsor. In cases involving fraudulent inducement or unethical sponsoring, an IR may request that he
or she be transferred to another organization with his or her entire marketing organization intact. All requests for transfer
alleging fraudulent enrollment practices shall be evaluated on a case by case basis. Written documentation in support of any such request shall be required by the Company, in all cases, before any review of the claim will commence.
3.5.4: Cancellation and Re-application
An IR may legitimately change organizations by voluntarily canceling, in writing, his or her FHTM business and remaining inactive (i.e., no sales of FHTM products or services, no sponsoring, no attendance at any FHTM functions, participation in any
other form of Manager activity, or operation of any other FHTM business) for six (6) full calendar months following the voluntary
cancellation. Following the mandatory six (6) month period of inactivity, the former IR may reapply under a new sponsor.
Former IRs that re-enroll with the company under a new sponsor shall not qualify as a “new Manager” for purposes of releasing Quick Start Bonuses (QSB), or any monthly bonuses of any type, to their new sponsor or their new coded upline.
Additionally, re-enrolling IRs shall not count toward their new sponsor’s Manager total for promotion purposes (i.e. Manager to RSM; RSM to ESM...). However, any new downline organization they create after re-enrolling shall count for such purposes for
their new sponsors. Active customers shall not be moved from the previous IR position to the new IR position.
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3.6 Unauthorized Claims and Actions
3.6.1: Indemnification
An IR is solely responsible for all of his or her verbal and written statements made regarding FHTM products, services, and the Marketing and Compensation Plan which are not expressly contained in official FHTM materials. IRs agree to
indemnify FHTM and FHTM’s directors, officers, employees, and agents, and hold them harmless from any and all liability including judgements, civil penalties, refunds, attorney fees, court costs, or lost business incurred by FHTM as a
result of the IR’s unauthorized representations or actions. This provision shall survive the termination of the IR Agreement.
3.6.2: Income Claims
The Federal Trade Commission and several states have laws or regulations that regulate or even prohibit certain types of
income claims and testimonials made by persons engaged in network marketing. Because FHTM IRs do not have the information necessary to comply with the legal requirements for making income claims, an IR, when presenting or discussing the
FHTM opportunity or Marketing and Compensation Plan to a prospective IR, must not make income projections, income
claims, or disclose his or her FHTM income (including the showing of checks, copies of checks, bank statements, or tax
records, etc.). 3.6.3: Savings, Rate or Product Performance Guarantees
FHTM strictly prohibits Independent Representatives from making any claims or guarantees related to savings, rates or
product performance, whether expressed or implied. This limitation extends to both written and verbal communications and
applies to hypothetical savings calculations as well. Independent Representatives may not make any references to specific
or numerical savings guarantees, or any similar claims relating to product performance, whether expressed or implied, with
respect to FHTM’s products and services. For example, it is a policy violation to use verbiage such as “FHTM can save you
up to 30% on your long distance bills.” An example of acceptable verbiage is “Most customers of the major long distance
carriers will save on their monthly bills with FHTM’s Long Distance service.”
3.7 Trade Shows, Expositions and Other Sales Forums
IRs may display and/or sell FHTM products or services at trade shows and professional expositions. This privilege is restricted
to the display or sale of telecom or technology products only. Before submitting a deposit to the event promoter, IRs must contact the Representative Services Department to request a Special Events Participation form (this form and a letter containing instructions for completion is also available for downloading in the “Corporate Tools” section of the “Secure Console” at
www.fhtm.net.) and conditional approval, as FHTM’s policy is to authorize only one FHTM business per event. Final approval
will be granted to the first IR who submits a completed Special Events Participation form, a copy of the contract signed by
both the IR and the event official, and a receipt indicating that a deposit for the booth has been paid. Approval is given only
for the event specified. Any requests to participate in future events must again be submitted to the Representative Services
Department. FHTM further reserves the right to refuse authorization to participate at any function which it does not deem a
suitable forum for the promotion of its products, services, or the FHTM opportunity. Approval will not be given for swap meets,
garage sales, flea markets or farmer’s markets, as these events are not conducive to the professional image FHTM wishes to
portray.
3.8 Conflicts of Interest
3.8.1: Non-Solicitation/Cross-Recruiting
Subject to certain restrictions on dual participation, including those in section 4.8.2, FHTM IRs may participate in other
direct selling or network marketing or multilevel marketing ventures (collectively “network marketing”), and IRs may engage
in selling activities related to non-FHTM products and services if they desire to do so. However, this right is subject to certain limitations. If an IR elects to participate in another network marketing opportunity, in order to avoid conflicts of interest and loyalties, IRs are prohibited from Unauthorized Cross-Recruiting, which includes the following:
a) During the term of this agreement, any actual or attempted recruitment or enrollment of FHTM Customers or IRs for
other network marketing business ventures, either directly or through a third party. This includes, but is not limited to,
presenting or assisting in the presentation of other network marketing business ventures to any FHTM Customer or IR, or
implicitly or explicitly encouraging any FHTM Customer or IR to join other business ventures. Because there is an extreme
likelihood that conflicts will arise if an IR operates two network marketing programs, it is the IR’s responsibility
to first determine whether a prospect is an FHTM Customer or IR before recruiting or enrolling the prospect for another
network business venture.
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b) For a period of six (6) months following the cancellation or termination of an IR’s Agreement, the former IR may not
recruit any FHTM IR or customer for another network marketing program.
c) Producing or offering any literature, tapes or promotional material of any nature for another network marketing
business which is used by the IR or any third person to recruit FHTM Customers or IRs for that business venture;
d) Selling, offering to sell, or promoting any competing non-FHTM products or services to FHTM Customers or IRs.
Any product or services in the same generic category as an FHTM product or service is deemed to be competing.
e) Offering FHTM products or services, or promoting the FHTM Marketing and Compensation Plan, in conjunction with
any non-FHTM products, services, business plan, opportunity, or incentive; or
f) Offering any non-FHTM products, services, business plan, opportunity, or incentive at any FHTM meeting, seminar,
launch, convention, or other FHTM function, or immediately following such event (i.e. any “bait and switch” methods).
3.8.2:
Dual Participation for Promoted IRs
IRs promoted to the level of Regional Sales Manager or higher within the FHTM Compensation Plan may not participate in
any other network marketing or multi-level marketing ventures. Such dual participation will be deemed a material breach of
these Policies and Procedures and will be grounds for termination.
3.8.3:
Downline Activity Reports
Downline Activity Reports are available monthly to Managers (i.e. those IRs that have purchased the Optional Special
Services Program), upon request, via email or in printed form. They are also available to Managers that have subscribed to
FHTM’s replicable web page upon demand. Access through FHTM’s replicated web pages and/or “Back Office” to online
Downline Activity Reports is password protected. Representatives that want to obtain a copy of their Downline Activity
Report must send a written request to Representative Services along with any associated fee to obtain a copy. All Downline
Activity Reports and the information contained therein are confidential and constitute proprietary information and business
trade secrets belonging to FHTM. Downline Activity Reports are provided to IRs in strictest confidence and are made available to IRs for the sole purpose of assisting IRs in working with their respective Downline Organizations in the development
of their FHTM business. IRs should use their Downline Activity Reports to assist, motivate, and train their downline IRs. The IR and FHTM agree that, but for this agreement of confidentiality and nondisclosure, FHTM would not provide
Downline Activity Reports to the IR. An IR shall not, on his or her own behalf, or on behalf of any other person, partnership,
association, corporation or other business entity:
a) Directly or indirectly disclose any information contained in any Downline Activity Report to any third party;
b) Directly or indirectly disclose his or her password or other user access code to his or her Downline Activity Report;
c) Use the information to compete with FHTM or for any purpose other than promoting his or her FHTM business;
d) Recruit or solicit any IR or customer of FHTM listed on any report, or in any manner attempt to influence or induce any
IR or customer of FHTM, to alter their business relationship with FHTM; or
e) Use or disclose to any person, partnership, association, corporation, or other entity any information contained in any
Downline Activity Report.
Upon demand by the Company, any current or former IR will return the original and all copies of Downline Activity Reports
to the Company.
FHTM shall not release any customer and/or IR information to any member of an IR’s upline (except for the information
contained on the Downline Activity Report) without the express written consent of the IR. Telephone information will be
released if the IR has so indicated that this is permissible on the IR Application at the time of enrollment.
FHTM shall not release any customer and/or IR information to any member of an IR’s upline (except for the information contained on the Downline Activity Report). Telephone information will be released if the IR has so indicated that this is permissible on the IR Application at the time of enrollment.
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3.9 Cross-Sponsoring
Actual or attempted cross sponsoring is strictly prohibited. “Cross sponsoring” is defined as the enrollment of an individual or
business entity already having a current IR Agreement on file with FHTM, or has had such an agreement within the preceding
six (6) calendar months, within a different line of sponsorship, or encouraging an IR to voluntarily cancel and re-enroll at a later
date. The use of a spouse or relative’s name, trade names, DBAs, assumed names, corporations, partnerships, trusts, federal ID
numbers, or fictitious ID numbers to circumvent this policy is prohibited. IRs shall not demean, discredit or defame other FHTM
IRs in an attempt to entice another IR to become part of the first IR’s marketing organization. This policy shall not prohibit the transfer of an FHTM business in accordance with Section 4.23.
3.10 Errors or Questions
If an IR has questions about or believes any errors have been made regarding commissions, bonuses, Downline Activity
Reports, or charges, the IR must notify FHTM in writing within thirty (30) days of the date of the purported error or incident in
question. FHTM will not be responsible for any errors, omissions or problems not reported to it within thirty (30) days.
3.11 Governmental Approval or Endorsement
Neither federal nor state regulatory agencies or officials approve or endorse any direct selling or network marketing companies or programs. Therefore, IRs shall not represent or imply that FHTM or its Marketing and Compensation Plan have been
“approved,” “endorsed” or otherwise sanctioned by any government agency. Likewise, FHTM does not endorse or recommend any company or other method of operating a network marketing business that is not contained in official FHTM literature. This includes, but is not limited to, “lead” generating services, recruiting services, mass internet marketing
techniques and other similar activities.
3.12 Holding Applications or Orders
IRs SHALL NOT manipulate enrollments of new applicants and purchases of products or services for any reason. All IR
Applications and Agreements, and product or service orders must be delivered to FHTM within forty eight (48) hours from the
time they are signed by an IR or placed by a customer, respectively. Violation of this section is strictly prohibited and shall be
deemed a material breach of these Policies and the Agreement.
3.13 Identification
All IRs are required to provide their Social Security Number or a Federal Employer Identification Number, their driver’s license or state issued ID Number, and their date of birth to FHTM on the IR Application and Agreement. Upon enrollment, the
Company will provide a unique Representative ID Number to the IR. An IR may use this number or his or her Social Security
Number or Federal Employer Identification Number to place orders and track commissions and bonuses. The use of a fictitious
or inaccurate Social Security Number, Federal Employer I.D. Number, driver’s license number, state issued I.D. Number, or
date of birth is prohibited. Such prohibited use will be deemed a material breech of these policies and the Agreement.
3.14 Income Taxes
Independent Representatives are not considered employees for purposes of the Social Security Act, the Federal
Unemployment Tax Act, Federal Income Tax laws or any other laws governing employees. It is the Independent
Representative’s responsibility to make self-employment and income tax payments as required by law. As such, FHTM does not
deduct any taxes from any commission and/or payments. It is the Independent Representative’s responsibility to provide FHTM
with the proper Social Security Number or Taxpayer Identification Number. If the information that is provided is incorrect or if
the Internal Revenue Service notifies FHTM that the information does not match their records then FHTM shall withold backup
withholdings as prescribed by IRS regulations until the matter is resolved.
Every year, FHTM will provide IRS Form 1099 MISC (Non-employee Compensation) earnings statement to each U.S. resident
who falls into one of the following categories:
a) Had earnings of over $600.00 in the previous calendar year; or
b)Made purchases during the previous calendar year in excess of $5,000.00.
Each IR is responsible for paying local, state and federal taxes on any income generated as an Independent Representative.
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3.15 Independent Contractor Status
IRs are independent contractors, and are not purchasers of a franchise or a business opportunity. The Agreement between
FHTM and its IRs does not create an employer/employee relationship, agency, partnership, or joint venture between the
Company and the IR. IRs shall not be treated as an employee for any purpose whatsoever, including but not limited to his or
her services or for Federal or State tax purposes. All IRs are responsible for paying local, state, and federal taxes due from all
compensation earned as an IR of the Company. The IR has no authority (expressed or implied), to bind the Company to any
obligation. Each IR shall establish his or her own goals, hours, and methods of sale, so long as he or she complies with the
terms of the IR Agreement, these Policies and Procedures, and applicable laws.
.15.1: Trademarks and Copyrights
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The name of FHTM and other names as may be adopted by FHTM are proprietary trade names, trademarks and service
marks of FHTM. As such, these marks are of great value to FHTM and are supplied to IRs for their use only in an expressly
authorized manner. Use of FHTM name on any item not produced by the Company is prohibited except as follows:
IR’s Name; Independent FHTM Representative; Fortune Hi-Tech MarketingTM.
All IRs may list themselves as an “Independent Representative” in the white or yellow pages of the telephone directory
under their own name. No IR may place telephone directory display ads using FHTM’s name(s) or logo(s), or the logo(s) of any of FHTM’s products or services. IRs may not answer the telephone by saying “FHTM”, “Fortune Hi-Tech Marketing,
Inc.”, “Fortune Hi-Tech Incorporated”, or in any other manner that would lead the caller to believe that he or she has
reached corporate offices of FHTM.
3.16 Insurance
You may wish to arrange insurance coverage for your business. It is unlikely that either your homeowner’s insurance policy or your automobile insurance policy covers business-related injuries, or the theft of or damage to inventory or business equipment. Contact your insurance agent with any questions you may have to make certain that your property is protected. The Company will not answer any insurance related questions.
3.17 International Marketing
Because of critical legal and tax considerations, including: compliance with foreign laws regarding the approval, registration or licensure of products or services; protection of intellectual property; compliance with customs, tax, and immigration laws;
compliance with direct selling laws; product and income representations; and literature content and language requirements,
FHTM must limit the resale of FHTM products and services, and the presentation of the FHTM business to prospective customers and IRs located within the United States at this time. Moreover, allowing a few IRs to conduct business in markets
not yet opened by FHTM would violate the concept of affording every IR the equal opportunity to expand internationally.
FHTM products or marketing materials cannot be shipped into or sold in any foreign country. IRs may sell, give, transfer, or distribute FHTM products or marketing materials only in the United States. In addition, no IR may, in any unauthorized country:
(a) conduct sales, enrollment or training meetings; (b) enroll or attempt to enroll potential customers or IRs; or (c) conduct any
other activity for the purpose of selling FHTM products, establishing a marketing organization, or promoting the FHTM business.
3.18 Adherence to Laws and Ordinances
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.18.1: Local Ordinances
Many cities and counties have laws regulating certain home-based businesses. In some cases these ordinances may be
applicable to IRs. IRs must obey those laws that apply to them. 3.18.2: Compliance With Federal, State, Local Laws, Military
IRs shall comply with all federal, state, and local laws and regulations in the conduct of their businesses. IRs should never
enter or conduct meetings on military bases, installations, or government-operated facilities without first contacting any such
facility to obtain prior permission for entry. IRs must obtain any necessary information on requirements and/or restrictions
for doing so. If special permits or licenses are required, the IR shall apply for same in his/her individual capacity as an IR, and shall forward a copy of this information to the Compliance Department.
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3.19 Minors
A person who is recognized as a minor in his/her state or country of residence may not be an FHTM IR. IRs shall not enroll or
recruit minors into the FHTM program.
3.20 One FHTM Business Per Representative
An IR may operate or have an ownership interest, legal or equitable, as a sole proprietorship, partner, shareholder, trustee, or
beneficiary, in only one (1) FHTM business. No individual may have, operate or receive compensation from more than one (1)
FHTM business.
In order to maintain the integrity of the FHTM Marketing and Compensation Plan, husbands and wives or common-law couples (collectively “spouses”) regardless of whether one or both are signatories to an IR Application and Agreement, may
not own or operate separate FHTM businesses, either individually or jointly, nor may they participate directly or indirectly (as a shareholder, partner, trustee, trust beneficiary, or any other legal or equitable ownership) in the ownership or management of another FHTM business in any form.
In cases where two (2) IRs marry or in cases of an IR receiving an interest in another business through inheritance, the IR will be
permitted to choose which business he or she will operate. The remaining business will be frozen.
3.21 Actions of Household Members and Affiliated Individuals
If any member of an IR’s immediate household engages in any activity which, if performed by the IR, would violate any provision of the Agreement, such activity will be deemed a violation by the IR and FHTM may take disciplinary action pursuant to these Policies and Procedures against the IR. Similarly, if any individual associated in any way with a corporation,
partnership, trust or other business entity (collectively “affiliated individual”) violates the Agreement, such action(s) will be
deemed a violation by the business entity, and FHTM may take disciplinary action against the business entity.
3.22 Requests for Records
Any request from an IR for earning reports, additional copies of invoices, applications, downline activity reports, or other
records will require an administrative fee of $25.00 plus $1.00 per page per copy. The request must be made in writing and
payment received prior to requested records being provided to the IR. This fee covers the expense of mailing and time
required to research files and make copies of records.
This fee does not apply to replacement of a lost or misplaced Form 1099. One duplicate copy of Form 1099 will be provided at
no cost. Any additional copies will be subject to the administrative fees referenced above.
3.23 Sale, Transfer or Assignment of an FHTM Business
Although an FHTM business is a privately owned and independently operated business, the sale, transfer or assignment of an
FHTM business is subject to certain limitations for protection of the integrity of the downline organization. If an IR wishes to
sell his or her FHTM business, the following criteria shall be satisfied:
a)Protection of the existing line of sponsorship must always be maintained so that the FHTM business continues to be
operated in that line of sponsorship.
b)The buyer or transferee must be (or must become) a qualified FHTM IR. If the new owner is not already an FHTM IR then
the new owner must, within thirty (30) days of the transfer of ownership, attend Manager Training, Trainer/Coach Training
and, if applicable, Certified Regional Trainer’s School (as scheduled). The new owner shall be required to pay the appropriate fee for any such training. (It is also the responsibility of the buyer to obtain up to date materials and literature from the
Company at his/her own expense.) If the buyer is an active FHTM IR, he or she must first terminate his or her existing FHTM
business simultaneously with the purchase, transfer, assignment or acquisition of any interest in the new FHTM business. No
changes in line of sponsorship can result from the sale or transfer of an FHTM business. If the
prospective buyer, transferee or assignee is an active FHTM IR, the sale, transfer or assignment cannot result in a change
of sponsorship of the buyer, transferee or assignee. If such a sale, transfer or assignment will result in a change of the
buyer’s, transferee’s or assignee’s sponsor, then the provisions of Section 4.5.4 of these Policies and Procedures shall be
applicable and the six (6) month inactivity period shall be imposed upon the buyer, transferee or assignee before the sale,
transfer or assignment may be finally concluded.
c) Before the sale, transfer or assignment can be finalized and approved by FHTM, any debt obligations the selling IR has
with FHTM must be satisfied.
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d)The selling IR must be in good standing and not in violation of any of the terms of the Agreement in order to be eligible
to sell, transfer or assign an FHTM business. A business that has been terminated may not be sold, transferred or assigned.
e) The sale, transfer or assignment will be finally approved by FHTM upon receipt of all required documents, including but
not limited to, associated fees, a fully completed Transfer of Business form, IR Agreement and/or Trainer Coach Agreement,
as applicable. Said approval will not be unreasonably withheld.
f) Before the new owner of a Trainer Coach position will be allowed to train Managers for compensation, the new Trainer
Coach must be trained by a Certified Regional Trainer that has been pre-approved by FHTM.
Prior to selling an FHTM business, the selling IR must notify FHTM Representative Services Department of his or her intent
to sell the FHTM business, complete all applicable FHTM Transfer of Business/Sale Documents, and pay any applicable fees
imposed by FHTM for the transfer/sale of the business, currently $200.00.
3.24 Separation of an FHTM Business
FHTM IRs sometimes operate their FHTM businesses as husband-wife partnerships, regular partnerships, corporations, trusts or
other business entities. At such time as a marriage may end in divorce or a business entity may dissolve, arrangements must be
made to assure that any separation or division of the business is accomplished so as not to adversely affect the interests and
income of other businesses up or down the line of sponsorship. If the separating parties fail to provide for the best interests of
other IRs and the Company, FHTM will involuntarily terminate the IR Agreement.
During the pendency of divorce or business entity dissolution, the parties must adopt one of the following methods of
operation:
a)One of the parties may, with consent of the other(s), operate the FHTM business pursuant to an assignment, in
writing, whereby the relinquishing spouse, shareholders, partners or trustees authorize FHTM to deal directly and
solely with the other spouse or non-relinquishing shareholder, partner or trustee.
b)The parties may continue to operate the FHTM business jointly on a “business-as-usual” basis, whereupon all
compensation paid by FHTM will continue to be paid as designated in the original IR Agreement or in the name of
the business entity, to be divided as the parties may independently agree between themselves.
c)Should each of the parties wish to continue participation in FHTM separately, they may elect to freeze their original
position and begin two (2) new positions under the sponsor of the original (frozen) position. Downline IRs will not be
“moved” or “re-coded” to either of the new positions. All applicable fees and costs associated with the enrollment
process of a new Manager position shall be required for each new position. This includes, but is not limited to, the
purchase price of the Optional Special Services Package.
Under no circumstances will the Downline Organization of divorcing spouses or a dissolving business entity be divided.
Similarly, under no circumstances will FHTM split commission and bonus checks between divorcing spouses or members of
dissolving entities. FHTM will recognize only one Downline Organization and will issue only one commission check per FHTM
business per commission cycle. Commission checks shall always be issued to the same individual or business entity. In the
event that parties to a divorce or dissolution proceeding are unable to resolve a dispute over the disposition of commissions
and ownership of the business, the IR Agreement shall be involuntarily terminated. If a former spouse or a former business
entity affiliate has completely relinquished all rights in their original FHTM business, in writing, they are thereafter free to enroll
under any sponsor of their choosing, so long as they meet the waiting period requirements set forth in Section 4.5.4. In such
case, however, the former spouse or partner shall have no rights to any IRs in their former organization or to any former customer. They must develop the new business in the same manner, as would any other new IR and carefully avoid violations of Section 3.9, herein.
3.25 Slamming
Slamming is defined as the switching or transfer of a third party’s long distance or internet service to another carrier without
authorization. Slamming is absolutely prohibited. If an IR “slams” any third party, he or she shall be liable to, and indemnify,
FHTM for any fines FHTM incurs as a result of the complaint (including fees imposed by any governmental agencies), any fee
or charges associated with returning the third party to its original long distance carrier, reimbursement of the outstanding long
distance charges of the slammed third party, any attorney’s fees incurred by FHTM, as well as all of the sanctions available pursuant to Section 8.1.
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The unauthorized switching or transfer of a third party’s existing service to an FHTM service shall result in termination. “Existing
service” shall include, but not be limited to, any service that may be marketed by FHTM through its Independent Managers (e.g.
long distance service, Internet, cellular, paging).
3.26 Sponsoring
All active IRs in good standing have the right to sponsor and enroll others, in good faith, into FHTM. Each prospective IR has the
ultimate right to choose his or her own Sponsoring IR. If two IRs claim to be the Sponsoring IR of the same new IR, the Company
shall regard the first application received by the Company as controlling.
IRs may personally sponsor a maximum of six (6) new Mangers per calendar month. This limit on sponsorship serves to ensure
that the sponsoring IR’s time and energy are not spread thin among too many new Managers, thereby permitting the sponsoring
IR to devote the necessary time to each new Manager that is required to assist that new Manager in beginning his/her new business. This in turn leads to the building of a stronger, long term business for all, both upline and downline.
Since the IR and Trainer Coach positions are two (2) separate and distinct businesses, an individual may initially elect to enroll
in FHTM in one or both capacities. In order to prevent the potential for multiple sponsorship claims of the same individual (i.e.
have a different sponsor in each capacity) an individual who elects to initially enroll in FHTM in only one such capacity (i.e. IR
or TC) and subsequently decides to enroll in the other capacity as well, must do so under the original sponsor and the position
shall fall under the same business coded group of that sponsor. An IR or Trainer Coach may not hold a position in the sponsor’s
Manager’s business group and subsequently be sponsored in a higher coded group (e.g. RSM, ESM, etc.).
3.27 Stacking
The term “stacking” includes: (a) the failure to transmit to FHTM, and/or the holding of an IR Application and Agreement or
Service Request Form in excess of (forty eight) 48 hours after its execution; (b) the placement or manipulation of Independent
Representative Applications and Agreements and/or Service Request Forms for the purpose of maximizing compensation pursuant to FHTM’s Marketing and Compensation Plan; or (c) paying for new customers and/or IRs for the purpose of maximizing compensation pursuant to FHTM’s Marketing and Compensation Plan. Stacking constitutes a material breach of these Policies and
Procedures and is strictly and absolutely prohibited.
3.27.1: Cycling
The term “cycling” refers to the practice in which the original Sponsoring IR re-sponsors former IRs (those that have voluntarily terminated their businesses or whose businesses have been cancelled) thereby moving them from their original
management coded organization into a new management coded organization under the Sponsoring IR or a pattern of conduct
whereby it is evident that former nominally active IRs are being re-enrolled between downline organizations for the purposes of
generating bonus payments. Although IRs that have voluntarily cancelled their businesses in accordance with Section 4.5.4 of
these Policies are free to re-join the business under a new sponsor, they are not free to re-join the business under their former
sponsor in a different management coded organization of their sponsor’s organization. If a former IR rejoins under his/her former sponsor, the IR’s former position in the Sponsoring IR’s organization will be re-activated as of the date of re-application
and the former IR will be returned to his/her previous position in the Sponsoring IR’s organization. Attempts to circumvent this policy through the use of a fictitious name, the name of a spouse, child or relative, trade names,
DBAs, assumed names, corporations, partnerships, trusts, fictitious ID numbers and/or any other methods of avoidance to circumvent this policy are strictly and absolutely prohibited and shall be considered a material breach of the Agreement.
3.28 Succession
Upon the death or incapacitation of an IR, his or her business may be passed to his or her heirs-at-law or devisees. Appropriate
legal documentation must be submitted to the Company to ensure the transfer is proper. Accordingly, an IR should consult an
attorney to assist with the preparation of a Will or other testamentary instrument. Whenever an FHTM business is transferred by a
Will or other testamentary process, the beneficiary acquires the right to collect all bonuses and commissions of the deceased IR’s
marketing organization provided the following qualifications are met. The successor(s) must:
a)Execute a new IR Agreement and complete a Transfer of Business form;
b)Comply with terms and provisions of the Agreement; and
c)Meet all of the qualifications for the deceased IR’s status.
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Bonus and commission checks of an FHTM business transferred pursuant to this section will be paid in a single check to the
devisee. The devisee must provide FHTM with an “address of record” to which all bonus and commission checks will be sent.
If the business is bequeathed to joint devisees, they must form a business entity and acquire a federal taxpayer identification
number. FHTM will issue all bonus and commission checks and one IRS (INTERNAL REVENUE SERVICE) Form 1099 to the business entity. The new IRs must attend training at their own expense for all applicable positions for which they are qualified
in order to remain eligible to receive bonuses or commissions.
3.28.1: Transfer Upon Death of an IR
To effect a testamentary transfer of an FHTM business, the successor must provide the following to FHTM: (1) an original
death certificate; (2) a notarized copy of the will or other instrument establishing the successor’s right to the FHTM business;
(3) appropriate documentation from a Court of competent jurisdiction approving the transfer; and (4) a completed and executed IR Agreement and Transfer of Business form. The new IRs must attend training at their own expense for all applicable
positions for which they are qualified. In the event that no testamentary disposition has been made of the business it shall
be terminated immediately upon the receipt of notice by FHTM of the IR’s death. Further, if a position is not renewed, as may
become necessary, during any period in which a successor in interest may be awaiting a final Court Order or disposition of the
deceased IR’s estate, the position shall be terminated. It is the sole responsibility of any person claiming successor’s rights in a
business to renew the position and notify FHTM of any changes necessary to transfer the business.
3.28.2: Transfer Upon Incapacitation of an IR
To effect a transfer of an FHTM business because of incapacity, the successor must provide the following to FHTM: (1) a notarized copy of an appointment as guardian and/or trustee; (2) a notarized copy of the trust document or other legal documentation establishing the guardian/trustee’s right to administer the FHTM business; and (3) a completed IR
Agreement and Transfer of Business form executed by the guardian/trustee.
3.29 Telemarketing Techniques
The use of any automated telephone solicitation equipment or “boiler-room” telemarketing operations in connection with the
marketing or promotion of FHTM, its products, services or the FHTM business plan is strictly prohibited.
3.30 Use of the FHTM Voice-Mail System
FHTM utilizes voice-messaging systems for use in communicating with enrolled IRs. This system is also a tool to communicate
with your downline, to promote the sale of FHTM products and services and the FHTM business plan. Under no circumstances
shall an active IR use the FHTM voice-mail system to promote the sale of any non-FHTM products or services, any non-FHTM
program or opportunity or to disparage any FHTM IR or Fortune Hi-Tech Marketing, Inc.
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4. responsibilities of ir s
4.1 Change of Address or Telephone
knowledge with lesser-experienced IRs within their organization. 4.2.3: Ongoing Sales Responsibilities
Regardless of their level of achievement, IRs have an ongoing obligation to continue to personally promote
sales of FHTM’s services or products through the generation of new customers and through servicing their existing customers. Additionally, in the event that
FHTM elects to discontinue offering the product and/or
service of one of its various providers which results in the
termination of residual payments from said provider to
FHTM, then and in that event, upon the effective date of the discontinuation of any such product and/or service
offering, FHTM shall not credit any customer points for
Compensation Plan qualification/eligibility requirements
for the discontinued product or service. IRs shall be
required to replace the discontinued product customer
point to remain qualified/ eligible (as may be applicable)
for Compensation Plan purposes.
4.2.4: Customer Qualifications
CABs, commissions and the advancement to earned
levels in the Compensation Plan are based on the
acquisition of active, billing customers. Each service
order must contain the name and ID Number of the
Independent Representative that acquired the customer.
Representatives are prohibited from entering the name
or ID Number of another Independent Representative or
signing service orders in the name of another Representative. Representatives are
responsible for the validity of the orders of all customers
that appear on their Personal Customer List. Therefore, IRs are encouraged to routinely review their customer
lists to ensure that only customers that they have personally enrolled are appearing on the customer list. If an IR
finds that a customer appears on their customer list that
they have not personally enrolled, they must contact
Representative Services immediately.
Establishing customer accounts for the purposes of qualifications when the customer does not intend to
use the service or when the customer is not aware that
such an account has been established is unethical and is
subject to disciplinary action up to and including termination. FHTM reserves the right to remove these customers from the IR’s customer list if unethical activities occurred
and during any review. Customers that cancel service with FHTM or its providers and those that do not use To ensure timely delivery of support materials and commission checks, it is important that FHTM’s files are current. Street addresses are required for shipping since
many carriers will not or cannot deliver to a post office
box. IRs planning to move should send their new address,
telephone numbers and email addresses to FHTM’s corporate offices to the attention of the Representative Services
Department. To guarantee proper delivery, a minimum two
(2) weeks advance notice must be provided to FHTM of all changes. The address on file is also used for legal advice.
4.2 Continuing Development Obligations
4.2.1: Ongoing Training
Any IR who sponsors another IR into FHTM must perform a bona fide assistance and/or training (TRAINER/
COACHES ONLY CAN TRAIN AN IR THAT PURCHASES
THE OPTIONAL SPECIAL SERVICES PROGRAM) function
to ensure that his or her downline is properly operating
his or her FHTM business. IRs must have ongoing contact and communication with the IRs in their Downline
Organizations.
Examples of such contact and communication may
include, but are not limited to: newsletters, written correspondence, personal meetings, telephone contact,
voice mail, electronic mail, and the accompaniment
of downline IRs to FHTM meetings, training sessions,
and other functions. Upline IRs are also responsible to
motivate and assist new IRs in obtaining knowledge of
FHTM services and products, effective sales techniques,
the FHTM Marketing and Compensation Plan, and
compliance with Company Policies and Procedures.
Communication with and the training of downline IRs
must not, however, violate Section 4.2 (regarding the
development of self-produced marketing materials and
promotional materials). IRs must monitor the IRs in their
Downline Organizations to ensure that downline IRs do
not make improper service, product or business claims,
or engage in any illegal or inappropriate conduct. Upon
request, every IR should be able to provide documented
evidence to FHTM of his or her ongoing fulfillment of the
responsibilities of a sponsoring IR. 4.2.2: Increased Support Responsibilities
As IRs progress through the various levels of leadership,
they will become more experienced in sales techniques,
services, products, knowledge and understanding of the
FHTM program. They will be called upon to share this
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Additionally, the Company shall not be liable for any amount
overpaid/charged or bank fees incurred or assessed that
result from the error(s) of an IR, applicant or customer when
using the online sign up process. In particular, the Company
shall not be liable for, nor shall it reimburse any costs associated with or incurred as a result of multiple submissions of the same new IR Application or order. You should
only submit an online sign up one time and then only after
checking to ensure that all information that has been input
is correct. If an application is submitted more than one time,
even though as a result of unintended error, it will result
in funds being charged against the listed bank account for
each erroneous submission. If there is a problem with the initial submission, contact Representative Services for assistance. Do not re-submit the application. Be careful, it is your responsibility.
the service will not count as “active customers” for qualification purposes.
4.3 Nondisparagement
FHTM wants to provide its IRs with the best products,
Compensation Plan and service in the industry. Accordingly,
we value your constructive criticisms and comments. All such comments should be submitted in writing to the
Representative Services Department. Remember, to best serve you, we must hear from you! While FHTM welcomes
constructive input, negative comments and remarks made
in the field by IRs about the Company, its services/products,
or Compensation Plan serve no purpose other than to sour
the enthusiasm of other FHTM IRs. For this reason, and to
set the proper example for their downline, IRs must not disparage FHTM, other FHTM IRs, FHTM’s services/products,
the Marketing and Compensation Plan, or FHTM’s directors,
officers, or employees. The disparagement of FHTM, other
FHTM IRs, FHTM’s services/products, the Marketing and
Compensation Plan, or FHTM’s directors, officers, or employees constitutes a material breach of these Policies and Procedures and shall result in termination.
4.7 Confidentiality and Nondisclosure of
Proprietary Information
During the term of the relationship, the Independent
Representative may receive information or data constituting a trade secret or confidential information of FHTM and/or
its carrier/supplier/service provider(s) in which event, the
Independent Representative shall treat such trade secret
or confidential information as strictly confidential and
wholly owned by FHTM as applicable. No Independent
Representative may, for any reason, nor in any manner,
directly or indirectly use, sell, lend, lease, distribute, license,
give, transfer, disclose, disseminate, reproduce or otherwise
communicate any such item of information or data to any
person or entity for any purpose other than as authorized by FHTM in writing. The definition of “confidential information” shall mean proprietary and confidential data or information of FHTM or its carrier/supplier/service
provider(s) which is not publicly known or available to the
Independent Representative or the competitors of FHTM or its carrier/supplier/service provider(s).
“Confidential information” also includes without limitation,
information regarding FHTM or its carrier/supplier/service
provider(s), Independent Representatives, customers or prospective customers, marketing methods, business and technical plans, product information and pricing. The definition
of “confidential information” includes “trade secrets” which
shall mean that portion of confidential information which
constitutes trade secrets as defined by applicable law and
including, without limitation, confidential computer programs,
software, designs, processes, procedures, formulas and
improvements, whether copyrightable or not.
4.4 Providing Documentation to Applicants
IRs must provide the most current version of these Policies
and Procedures and the Compensation Plan to individuals whom they are sponsoring as IRs before the applicant
signs an IR Agreement. Additional copies of Policies and
Procedures can be obtained from FHTM.
4.5 Reporting Policy Violations
IRs observing a policy violation by another IR should submit a written report of the violation directly to the attention of
the FHTM Compliance Department. Details of the incidents
such as dates, number of occurrences, persons involved and
any supporting documentation should be included in the
report. In most instances, the Compliance Department cannot and will not initiate action in the absence of a written
report documenting the alleged violation.
4.6 Completion of Applications and Order Forms
All IRs are solely responsible for accurately completing any
IR/ TC Applications and/or product order forms that they
submit to the Company. This includes both paper forms as
well as online sign ups. The Company shall not be responsible for any delays caused by incomplete, inaccurate or illegible information provided by an IR or customer. IRs must use
the utmost care when completing all applications and orders
to avoid any errors. If qualification deadlines for eligibility to
receive commissions and/or bonuses are missed as a result
of errors of this nature, they shall not be paid. The Company
shall not accept or recognize for any purpose a new IR/TC
enrollment or customer order submission until ALL required
information is completed accurately and submitted in its
entirety.
Independent Representatives must use their best efforts to
preserve all confidential Information until it becomes generally available to the public or FHTM agrees in writing that
such information may be disclosed or is otherwise no longer
deemed to be confidential. Independent Representatives
must not, without prior consent and approval of FHTM,
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On a periodic basis, FHTM will supply data processing information and reports to the IR, which will provide information to the Representative concerning the IR’s organization, product purchases and product mix.
Independent Representatives agree that such information
is proprietary and confidential to FHTM and is transmitted
to the IR in confidence. The IR agrees that he or she will not
disclose such information, directly or indirectly, to any third
party nor use the information to compete with FHTM in any
manner. The IR and FHTM agree that, but for this agreement
of confidentiality and nondisclosure, FHTM would not provide
the above confidential information to the IR.
either for their own position or as a consultant, distributor, Independent Representative, partner or owner of any
other firm, partnership or corporation, whether in network
marketing or any other kind of business, directly or indirectly
solicit, divert, take away or interfere with any of the business,
employees, customers, Independent Representatives or distributors, trade or patronage of FHTM, its carriers/
suppliers/service provider(s) or its affiliated entities. Violation
of this covenant and condition will result in forfeiture of all
Independent Representative rights, including all current and
future commissions, bonuses and payments of any kind.
5. sales requirements
5.1 Services/Product Sales
The FHTM Marketing and Compensation Plan is based upon the sale of FHTM products and services to end user consumers. IRs
must fulfill personal sales requirements (as well as meet all other requirements or responsibilities set forth in the Agreement) to
be qualified and/or eligible for bonuses, commissions and advancement to higher levels of achievement within the Marketing
and Compensation Plan. All IRs should satisfy the following sales requirements:
a)At least 70% of an IR’s total personal sales volume should be sold to End User Consumer Active Customers; and
b)IRs should attempt to acquire at least three new customers every month.
5.2 No Territorial Restrictions
There are no exclusive territories granted to any IR by FHTM. IRs may enroll customers or sponsor IRs in any area in which
FHTM is authorized to do business.
5.3 Product Offerings/Terms of Service
FHTM and its carriers/suppliers/product and service provider(s) have the sole right to accept or reject orders for products and
services, to establish and change without notice, the prices of such products and services as well as to establish the terms
and conditions of their offering. FHTM and its carriers/suppliers/product and service provider(s) may also discontinue offering or selling any product or service, without liability or obligation to FHTM or its Independent Representatives. Independent
Representatives may only offer and sell services and products in accordance with rates, terms and conditions established by
FHTM, any regulatory agency or its carriers/suppliers/product and service provider(s). All sales representations and activities
must be in full compliance with all applicable laws and regulations. Independent Representatives may only use those means of marketing and selling of services and products that are solely acceptable to FHTM and its carriers/suppliers/product and service provider(s).
5.4 Unauthorized Contact
Under no circumstances, is an Independent Representative permitted to directly contact any carrier/supplier/service provider(s)
with whom FHTM contracts, unless it is in specific relation to a personal account they may currently have with said provider. In
the event that your customer is experiencing difficulties with a specific provider, please inform your customer to directly contact FHTM or the appropriate provider of service to resolve the matter.
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6. bonuses and commissions
6.1 Bonus and Commission Qualifications
6.3 Unclaimed Commissions and Credits
An IR must be active and in compliance with the Agreement
to qualify for bonuses and commissions. So long as an IR
complies with the terms of the Agreement, FHTM shall
pay to such IR any commissions for which the IR is eligible
as they are earned in accordance with the Marketing and
Compensation Plan. An IR that is paid by check will be
charged a $6.00 administrative fee per issued paper check or a $5.00 fee per EFT check. The minimum amount for
which FHTM will issue a check is $10.00. If an IR’s bonuses
and commissions do not equal or exceed $15.00 ($10.00 plus the $5.00 fee), the Company will hold and accrue the
commissions and bonuses until they total at least $15.00. A check will be issued once $15.00 or more in commissions
and/or bonuses have accrued.
IRs that have elected to receive payment of the commissions
and bonuses by check must deposit or cash commission and bonus checks within six (6) months from their date of
issuance. A check that remains uncashed after six (6) months will be voided and a “stop payment” order entered with the Company’s financial institution. After a check has been
voided, FHTM will attempt to notify an IR who has an
uncashed check by sending a written notice to his or her
last known address identifying the amount of the check and
advising that the IR can request that the check be reissued.
There shall be a $20.00 charge for reissuing a check and a
$10.00 administrative fee charged for the notice that is sent
to the IR. In addition to those fees, the IR shall be responsible for any charge assessed to the Company by its financial
institution for issuance of the “stop payment” order on the
check. All of these sums shall be deducted from the balance
due to the IR at the time the check is re-issued. All funds
that remain unclaimed/uncashed after twelve (12) months
from the date of issuance shall be deemed forfeited by the
IR and retained by the Company.
An IR that is paid by EFT (electronic funds transfer) is charged
a $5.00 bank transfer fee and will receive the EFT when
accrued bonuses and/or commissions total $15.00 or more.
6.2 Deductions from Bonuses or Commissions
6.2.1 FHTM will deduct from all bonus and commission
checks a data processing fee of $.25 per page for all
pages in excess of twenty (20) pages for printed downline
genealogy reports sent to IRs. 6.2.2 Additionally, FHTM shall deduct and/or withhold
from any sums that may become due or payable to an IR
the following:
a) Any sums that may be owed to the Company by the
IR for purchases made from the Company by the IR;
b) Any sums that may be owed to the Company by the
IR for dishonored instruments and/or credit/debit card
payments (including any applicable fees assessed either
against or by the Company) that were payable from the
IR to the Company;
c) Any sums that were overpaid and/or paid in error to
the IR by the Company in the event that the Company
learns, subsequent to having issued any such payment,
that the IR was ineligible (for any reason) to receive such
payment at the time it was issued by the Company (even
if paid as a result of actions of downline IRs);
d) Any sums ordered to be withheld by the Compliance
Department as a result of violations of the Agreement in
accordance with Section 9 hereof; and
e) Any other sums that may be owed by the IR to the
Company for any reason.
6.4 Genealogy/Downline Reports
All information provided by FHTM in online or printed genealogy reports, including but not limited to personal and
downline customer volume (or any part thereof), downline
sponsoring activity, and commissions payable is believed
to be accurate and reliable. Nevertheless, due to various
factors including the inherent possibility of human and
mechanical error; the accuracy, completeness, and timeliness of orders; denial of credit card and electronic check
payments; returned products; canceled services; credit card
and electronic check charge-backs; the information is not
guaranteed by FHTM or any persons creating or transmitting
the information.
All genealogy report information is provided “as is”
without warranties, express or implied, or representations of any kind whatsoever. In particular but without
limitation there shall be no warranties of merchantability,
fitness for a particular use, or non-infringement.
To the fullest extent permissible under applicable law,
FHTM and/or other persons creating or transmitting the
information will in no event be liable to any IR or anyone
else for any direct, indirect, consequential, incidental,
special or punitive damages that arise out of the use or
access to genealogy report information (including but
not limited to lost profits, bonuses, or commissions, loss
of opportunity, and damages that may result from
32
inaccuracy, imcompleteness, inconvenience, delay, or
loss of the use of the information), even if FHTM or other
persons creating of transmitting the information shall
have been advised of the possibility of such damages.
To the fullest extent permitted by law, FHTM or other
persons creating or transmitting the information shall
have no responsibility or liability to you or anyone else
under any tort, contract, negligence, strict liability,
products liability or other theory with respect to any
subject matter of this agreement or terms and conditions
related thereto.
Access to and use of FHTM’s online or printed genealogy
services and the information received thereby is at your own
risk. All such information is provided to you “as is.” If you
are dissatisfied with the genealogy information, your sole
and exclusive remedy is to discontinue use of and access to
FHTM’s online or genealogy services.
7. service guarantees & marketing materials
7.1 Product Guarantee
FHTM does not offer any product guarantee or warranty. If any product guarantee is made it will only be made by the individual suppliers of any products and services offered through the FHTM Marketing Plan. FHTM does not maintain an inventory of products that may be offered and is only a marketing Company offering the products of its various suppliers. If a customer or IR has a question regarding a warrantee or guaranty, he or she must contact the manufacturer, supplier, and/or
vendor of the product or service marketed by FHTM and FHTM IRs.
7.2 Return of Marketing Materials by IRs
Upon cancellation of an IR’s Agreement, the IR may return current marketing materials for a refund if he or she is unable to
sell or use the merchandise. An IR may only return marketing materials purchased by him or her that are in resalable condition.
Upon receipt of the marketing materials, the IR will be reimbursed 90% of the net cost of the original purchase price(s), less
shipping charges. If the purchases were made through a credit card, the refund will be credited back to the same account. The
Company shall deduct from the reimbursement paid to the IR any sums that may be due to FHTM at the time of cancellation
as the result of the previous purchase of any such items.
7.3 Montana Residents
A Montana resident may cancel his or her IR Agreement within fifteen (15) days from the date of enrollment, and may return his
or her starter kit for a full refund within such time period.
7.4 Procedures for All Returns of Marketing Materials
The following procedures apply to all returns for refund or repurchase of marketing materials:
a)All merchandise must be returned, in resalable condition, by the IR who purchased it directly from FHTM.
b)All products to be returned must have a Return Authorization Number, which will be obtained by calling the
Representative Services Department. This Return Authorization Number must be written on each carton returned.
c)The return is accompanied by:
1. A completed and signed Consumer Return Form;
2. A copy of the original dated retail sales receipt; and
3. The unused portion of the product in its original container.
d)Proper shipping carton(s) and packing materials are to be used in packaging the product(s) returned for replacement, and
the best and most economical means of shipping is suggested. All returns must be shipped to FHTM, shipping pre-paid.
FHTM does not accept shipping-collect packages. The risk of loss in shipping for returned product shall be on the IR. If
returned product is not received by the Company’s Distribution Center, it is the responsibility of the IR to trace the shipment.
No refund or replacement of marketing materials will be made if the conditions of these rules are not met.
33
8. d
ispute resolution and
disciplinary proceedings
8.1 Disciplinary Sanctions
Department will review the written grievance presented
to first determine, in its sole discretion, whether or not
any review or action is warranted. In the event that it is
determined that a review is warranted an attempt will then
be made to resolve the matter with the parties. If it is not
resolved, it will be referred to the Dispute Resolution Board
for acceptance or rejection, final review and determination.
Violation of the Agreement, these Policies and Procedures, or any illegal, fraudulent, deceptive or unethical business conduct by an IR may result, at FHTM’s discretion, in one or more of the following corrective measures:
a)Issuance of a written warning or admonition;
b) Requiring the IR to take immediate corrective measures;
c)Imposition of a fine, which may be withheld from bonus
and commission checks;
d)Loss of rights to one or more bonus and commission
checks;
e)FHTM may withhold from an IR all or part of the IR’s
bonuses and commissions during the period that FHTM
is investigating any conduct allegedly in violation of the
Agreement. If an IR’s business is canceled for disciplinary
reasons, the IR shall not be entitled to recover any
commissions withheld during the investigation period;
f) Suspension of the individual’s IR Agreement for one
or more pay periods;
g)Involuntary termination of the offender’s IR Agreement;
h)Any other measure expressly allowed within any provision of the Agreement or which FHTM deems practicable
to implement and appropriate to equitably resolve injuries
caused partially or exclusively by the IR’s policy violation
or contractual breach;
i) In situations deemed appropriate by FHTM, the
Company may institute legal proceedings for monetary
and/or equitable relief.
8.3 Dispute Resolution Board
The purpose of the Dispute Resolution Board (DRB) is to (1) review appeals of disciplinary sanctions; and (2) review
unresolved grievances between FHTM IRs. After the response
or settlement instituted by the Compliance Department
has been denied or otherwise remains unresolved, the
Dispute Resolution Board reviews evidence, deliberates, and
responds to current outstanding issues on a collective basis.
An IR may submit a written request for a telephonic or in-
person hearing within seven (7) business days from the date
of: (1) the written notice by FHTM of disciplinary action; or (2)
the written decision of the Compliance Department regarding disputes between IRs. All communication with FHTM and
the IR seeking resolution of a dispute shall be in writing.
It is within the DRB’s sole discretion whether a claim is accepted for review. If the DRB agrees to review the matter, it shall
schedule a hearing within twenty one (21) days of the receipt
of the IR’s written request. If a hearing is not requested,
none shall be held. All evidence (e.g., documents, exhibits,
etc.) that an IR desires to have considered by the DRB must
be submitted to FHTM with the original request for a hearing. The IR shall bear all of the expenses related to his or
her attendance and the attendance of any witnesses he or
she desires to be present at the hearing. The decision of the
Dispute Resolution Board shall be final and subject to no further review. During the pendency of the claim before the
DRB, the IR waives his or her right to pursue arbitration or
any other remedy.
8.2 Grievances and Complaints
When an IR has a grievance or complaint with another IR
regarding any practice or conduct in relationship to their
respective FHTM businesses, the complaining IR shall first
report the problem to his or her Sponsor or upline Regional
Sales Manager who shall review the matter and try to resolve
it with the other party’s upline sponsor or RSM. If the matter cannot be resolved and the parties want the Company
to review the matter, it shall be reported in writing to the
Compliance Department at the Company. Telephone complaints will not be addressed or accepted. FHTM considers
these to be very serious matters and as such requires all
grievances or complaints, for which a review is requested, to
be made in writing and signed by the initiating IR before a
review of the matter will be undertaken. Telephone calls or
emails are not sufficient for this purpose. The Compliance
Following issuance of a disciplinary sanction by the
Compliance Department, the disciplined IR may appeal the
sanction to the Dispute Resolution Board (“DRB”). The IR’s
appeal shall be in writing and received by the Company within fifteen (15) calendar days from the date of FHTM’s
termination notice or sanction notice. If the appeal is not
received by FHTM within the fifteen (15) day period, the
34
sanction or termination, as the case may be, shall be final.
The IR shall submit all supporting documentation with his or
her appeal correspondence. If the IR files a timely appeal of
termination or a sanction imposed, the DRB will review and
reconsider the sanction or termination, consider any other
appropriate action, and notify the IR in writing of its decision.
ing/direct selling industry, selected from the panel, which
the American Arbitration Panel provides. Each party to the
arbitration shall be responsible for its own costs and expenses of arbitration, including legal and filing fees. The decision
of the arbitrator shall be final and binding on the parties and
may, if necessary, be reduced to a judgment in any court of
competent jurisdiction. This agreement to arbitrate shall survive any termination or expiration of the Agreement.
8.4 Arbitration
Any controversy or claim arising out of or relating to the
Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association
under its Commercial Arbitration Rules, and judgment on
the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. If an IR files a claim or
counterclaim against FHTM, he or she may only do so on an
individual basis and not with any other IR or as part of a class
or consolidated action. IRs waive all rights to trial by jury
or to any court. All arbitration proceedings shall be held in
the City of Lexington, Fayette County, Kentucky, unless the
laws of the state in which an IR resides expressly require the
application of its laws, in which case the arbitration shall be
held in the capital of that state. The parties shall be entitled
to all discovery rights allowed under the Federal Rules of
Civil Procedure. No other aspects of the Federal Rules of
Civil Procedure shall be applicable to arbitration. There shall
be one arbitrator, an attorney at law, who shall have expertise in business law transactions with a strong preference
being an attorney knowledgeable in the multi-level market-
Nothing in these Policies and Procedures shall prevent FHTM from applying to and obtaining from any court having
jurisdiction a writ of attachment, a temporary injunction, preliminary injunction, permanent injunction or any other relief
available to safeguard and protect FHTM’s interest prior to,
during or following the filing of any arbitration or other proceeding or pending the rendition of a decision or award in
connection with any arbitration or other proceeding.
8.5 Governing Law, Jurisdiction and Venue
Jurisdiction and venue of any matter not subject to arbitration shall reside in Fayette County, State of Kentucky unless
the laws of the state in which an IR resides expressly require
the application of its laws, in which case that state’s law
shall govern all issues related to jurisdiction and venue. The
Federal Arbitration Act shall govern all matters relating to
arbitration. The laws of the State of Kentucky shall govern
all other matters relating to or arising from the Agreement
unless the laws of the state in which an IR resides expressly
require the application of its laws.
9. ordering
9.1 Purchasing FHTM Marketing Materials, Products and Services
Each IR should purchase his or her marketing materials, products and services directly from FHTM. If an IR purchases these items
from another IR or any other source, FHTM shall not be responsible for the contents, condition, or value of any such marketing
materials or products nor will any such marketing materials or products be subject to return and/or refund by FHTM.
9.2 General Ordering Policies On mail orders with invalid or incorrect payment, FHTM will attempt to contact the IR by phone and/or mail to try to obtain
another payment. If these attempts are unsuccessful after five (5) business days the order will be returned unprocessed. No
C.O.D. orders will be accepted. FHTM maintains no minimum order requirements. Orders for products and marketing materials may be combined.
9.3 Shipping and Back Order Policy
FHTM attempts to ship products within two (2) business days from the date on which it receives an order. FHTM will expeditiously ship any part of an order currently in stock. If, however, an ordered item is out of stock, it will be placed on back
order and sent when FHTM receives additional inventory. FHTM will notify Managers if items are back-ordered and are not
expected to ship within thirty (30) calendar days from the date of the order. An estimated shipping date will also be provided.
Back ordered items may be canceled upon an IR’s request. IRs may request a refund, credit on account, or replacement merchandise for canceled back orders.
35
9.4 Confirmation of Order
An IR and/or recipient of an order must confirm that the product received matches the product listed on the shipping
invoice, and is free of damage. Failure to notify FHTM of any shipping discrepancy or damage within thirty (30) calendar
days of shipment will cancel an IR’s right to request a correction.
10. payment and shipping
10.1 Insufficient Funds
Company. Any attempt to circumvent this policy is strictly prohibited and shall be considered a material breach of these Policies and may result in immediate termination of
any/all IRs and/or customers involved.
It is the responsibility of each IR to ensure that there are sufficient funds or credit available in his or her account to
cover any Direct Shipment order. FHTM will not contact IRs in regard to orders canceled due to insufficient funds or credit.
10.4 Sales Taxes
It is the responsibility of the IR to be aware of and comply with all regulations regarding applicable sales taxes.
Remission of any sales taxes owed is the sole responsibility
of the IR. FHTM is not responsible for any non-remission of
applicable sales taxes.
10.2 Returned Checks
All checks returned by an IR’s bank for insufficient funds
may, at FHTM’s option, be re-submitted for payment. A
$25.00 returned check fee shall be charged to the account
of the IR. After receiving a returned check from an IR, all
future orders shall be paid by Credit Card, money order or
cashier’s check. Any outstanding balance owed to FHTM by an IR for NSF checks and returned check fees shall be
withheld from subsequent bonus and commission checks.
The taxability of products and sales tax rates differ by state.
Additionally, an increasing number of local taxes (county
and city) are being initiated throughout the country. It is the
responsibility of each IR to know what products are taxable
and at what rate. If you have questions regarding taxability
and rates, contact your state or local department of revenue
for assistance.
10.3 Restrictions on Third Party Use of Credit
Cards and Checking Account Access
IRs shall not permit other IRs or customers to use his or her
credit/debit card or permit debits to their banking, checking
accounts…to enroll new IRs or to make purchases from the
11. inactivity and cancellation
11.1 Effect of Cancellation
So long as an IR remains active and complies with the terms of the IR Agreement and these Policies and Procedures, FHTM
shall pay to such IR any commissions for which the IR is eligible as they are earned in accordance with the Marketing and
Compensation Plan. An IR’s bonuses and commissions constitute the entire consideration for the IR’s efforts in generating
sales and all activities related to generating sales (including building a downline organization). Following an IR’s non-renewal of
his or her IR Agreement, or voluntary or involuntary cancellation/termination of his or her IR Agreement (all of these methods
are collectively referred to as “cancellation”), the former IR shall have no right, title, claim or interest to the marketing organization which he or she operated, or any commission or bonus from the sales generated by the organization.
An IR whose business is canceled and/or terminated shall permanently lose all rights as an IR. This includes the right to sell
FHTM products and services and the right to receive future commissions, bonuses, or other income resulting from the sales
and other activities of the IR’s former downline sales organization. In the event of cancellation, IRs agree to waive all rights 36
they may have, including but not limited to property rights, to their former downline organization and to any bonuses, commissions, or other remuneration derived from the sales and other activities from his or her former downline organization.
Further the former IR shall not be permitted to sell, transfer or assign the business to another.
The former IR shall not hold himself or herself out as an FHTM IR and shall not have the right to sell FHTM products or services. An IR whose IR Agreement is canceled shall receive commissions and bonuses only for the last full pay period he or she
was active prior to cancellation (less any amounts owed to the Company at the time of cancellation and/or withheld during an
investigation preceding an involuntary cancellation).
11.2 Involuntary Cancellation/Termination of Agreement
An IR’s violation of any of the terms of the Agreement, including any amendments that may be made by FHTM in its sole
discretion, may result in any of the sanctions listed in Section 9.1, including the involuntary cancellation/ termination of his or her
IR Agreement. Cancellation/Termination shall be effective on the date on which written notice is mailed, return receipt requested,
to the IR’s last known address, or when the IR receives actual notice of termination/cancellation, whichever occurs first.
FHTM expressly reserves the right to terminate all IR Agreements upon thirty (30) days written notice in the event that it elects
to: (1) cease business operations; (2) dissolve as a corporate entity; or (3) terminate distribution of its products and services via
the FHTM Marketing and Compensation Plan or network marketing/multi-level marketing/direct selling methods.
11.3 Voluntary Cancellation
A participant in this network-marketing plan has a right to cancel at any time, regardless of reason. Cancellation shall be submitted in writing to the Company at its principal business address. The written notice must include the IR’s signature, printed name, address, and IR I.D. Number.
If a new Manager and/or Trainer Coach voluntarily cancels within ten (10) calendar days of the date of execution of the initial
application, a full refund of the cost of the Optional Special Services Package and/or Trainer Coach fee will be made if the canceling Manager and/or Trainer Coach has not attended a Manager and/or Trainer Coach training class and returns the
Manager’s Kit and/or Trainer Coach Kit to FHTM’s corporate office (in its original condition) within twenty (20) calendar days of
the notice of cancellation.
If the canceling Manager and/or Trainer Coach has attended a Manager and/or Trainer Coach Training class, the fee(s) paid
by FHTM to the Trainer Coach/Certified Regional Trainer that conducted the applicable training (currently $40.00 and $80.00
respectively) class(es) shall be deducted from any sums to be refunded. If a Manager’s Kit and/or Trainer Coach Kit has been
shipped by FHTM to the canceling Manager and/or Trainer Coach, the then current cost of the applicable Kit shall be deducted
from any sums to be refunded if the Kit(s) is not returned in its original condition to FHTM’s corporate office within twenty (20)
calendar days of the notice of cancellation.
11.4 Non-renewal
An IR may also voluntarily cancel his or her IR Agreement by failing to renew the Agreement and paying any applicable fee(s)
annually.
37
12. definitions
Active Customer: A customer that personally purchases Commissionable Products/Services: All FHTM products and services on which commissions and bonuses are paid. Starter Kits, training, FHTM replicable web page,
supplies and marketing materials are not commissionable
products.
an FHTM product or subscribes to and pays for an FHTM
service that generates billed CGU (Customer Generated
Usage) during the subject calendar billing month and is recognized by FHTM’s product or service provider as an
active customer/account in its system. A customer that does
not remain on service (for any reason) for a minimum of ninety (90) days or three (3) complete billing cycles from the date of initial activation by the service provider shall not be
considered an “active customer” submitted in “good faith”
for any purposes by the Company. Any bonuses or commissions paid on such customers shall be subject to withholding
and recovery from any IRs paid on such customers.
Company/FHTM: The terms “Company” and/or “FHTM”
as used throughout the Agreement means Fortune Hi-Tech
Marketing, Inc.
Downline: See “Marketing Organization” below.
Downline Activity Report (Genealogy Report):
A monthly report generated by FHTM that provides critical
data relating to the identities of IRs, sales information, and
enrollment activity of each IR’s Marketing Organization. This
report contains confidential and trade secret information
which is proprietary to FHTM.
Active IR: An IR who has not cancelled or been terminated and satisfies the minimum customer acquisition
requirements, as set forth in the FHTM Marketing and
Compensation Plan, to ensure that he or she is eligible to
receive bonuses and/or commissions.
Downline Leg: Each one of the individuals enrolled Active Rank: The term “active rank” refers the current immediately underneath you and their respective marketing
organizations represents one “leg” in your marketing organization.
rank of an IR, as determined by the FHTM Marketing and Compensation Plan, for any calendar month. To be considered “active” relative to a particular rank, an IR must meet the qualification criteria set forth in the FHTM
Marketing and Compensation Plan for his or her respective
rank. (See the definition of “Rank” below.)
End User Consumer/Customer: A person who purchases
FHTM products or services for the purpose of personal use
rather than for resale to someone else.
Agreement: The contract between the Company and each IR includes the IR Application and Agreement, the
FHTM Policies and Procedures, the FHTM Marketing and Compensation Plan, the Business Entity Form and
Trainer Coach Application and Agreement (where appropriate) and any other documents FHTM may deem appropriate
from time to time in the future, all in their current form and
as amended by FHTM in its sole discretion. These documents are collectively referred to as the “Agreement.”
Good Faith: An IR owes a duty of honesty and fair dealing to both FHTM and fellow IRs in all matters related to the operation of an FHTM business. This includes, but is
not limited to, the submission of all documentation required
by the Company in accordance with its stated Policies
and Procedures. Submission of any documentation to the
Company in an effort to maximize and/or manipulate the
compensation plan is strictly prohibited and shall result in
appropriate disciplinary sanctions as set forth in the Policies
and Procedures.
Cancellation: The termination of an IR’s business.
Immediate Household: Heads of household, common-
Cancellation may be either voluntary, involuntary, or through non-renewal.
law spouses and dependent family members residing in the same dwelling.
Commission Check: All payments of commissions or
Level: The layers of downline customers and IRs in a bonuses to IRs by FHTM in any form offered by FHTM,
including but not limited to, printed check, electronic funds transfer or direct deposit to debit card.
particular IR’s Marketing Organization. This term refers to the relationship of an IR relative to a particular upline IR,
determined by the number of IRs between them who are
related by sponsorship. For example, if A sponsors B, who
sponsors C, who sponsors D, who sponsors E, then E is on A’s fourth level.
38
Marketing Organization: The customers and IRs Resalable: Marketing materials shall be deemed sponsored below a particular IR.
to an end user consumer for personal use.
“resalable” if each of the following elements is satisfied: 1) they are unopened and unused; 2) packaging and labeling have not been altered or damaged; 3) the product and packaging are in a condition such that it is a commercially reasonable practice within the trade to sell the merchandise at full price; 4) products are returned to FHTM within one year from the date of purchase; 5) the product expiration date has not elapsed; and 6) the product contains current FHTM literature, marketing
materials and labeling. Any merchandise that is clearly identified at the time of sale as non-returnable, discontinued, or
as a seasonal item, shall not be resalable.
Qualified Customer: A legitimate customer submitted in
Sponsor: An IR who enrolls a customer or another IR good faith by an IR that becomes an active customer within
sixty (60) days of submission to FHTM and/or the service provider. A customer that does not remain on service (for any reason) for a minimum of ninety (90) days or three (3)
complete billing cycles from the date of initial activation by the service provider shall not be considered an “active customer” submitted in “good faith” for any purposes by the Company nor shall it be considered a Qualified
Customer. Any bonuses or commissions paid on such customers shall be subject to withholding and recovery from any IRs paid on such customers.
into the Company, and is listed as the Sponsor on the
Representative Application and Agreement and/or customer
agreement. The act of enrolling others and training them to
become IRs is called “sponsoring.”
Manager: An IR that has purchased the Optional Special
Services Package.
Official FHTM Material: Literature, audio or videotapes,
compact discs, files, and other materials developed, printed,
published and distributed by or at the direction of FHTM to IRs.
Personal Production: Sale of products and/or services Starter Kit: A selection of FHTM training materials and
business support literature that each new IR receives. The
Manager Starter Kit is provided to Managers as a part of the
Optional Special Services Package. An alternative Starter Kit is provided at no cost to Representatives that have not purchased the Optional Special Services Package.
Rank: The “title” that an IR has achieved pursuant to the FHTM Marketing and Compensation Plan.
Upline: This term refers to the IR or Managers above a particular IR in a sponsorship line up to the Company.
Conversely stated, it is the line of sponsors that links any particular IR to the Company.
Recruit: For purposes of FHTM’s Conflict of Interest Policy (Section 4.8), the term “recruit” means actual or
attempted solicitation, enrollment, encouragement, or effort to influence in any other way, either directly or through a third party, another FHTM IR or customer to enroll or participate in another multilevel marketing, network marketing or direct sales opportunity. This conduct constitutes recruiting even if the IR’s actions are in response
to an inquiry made by another IR or customer.
39
Qualified Executive Sales Manager (QESM):
TITLES: All are Independent Representatives (IR)
ESM that has met all customer/sponsorship requirements to be eligible to receive all ESM level income.*
National Sales Manager (NSM): Third leadership promotion level.*
Representative: Entry level position that pays a $75.00
refundable deposit.
Manager: An IR that purchases the Optional Special
Services Package.
Regional Sales Manager (RSM): First leadership promotion level.*
Qualified National Sales Manager (QNSM):
NSM that has met all customer/sponsorship requirements to be eligible to receive all NSM level income.*
* See Compensation Plan for promotion, qualification and
monthly eligibility requirements.
Qualified Regional Sales Manager (QRSM):
RSM that has met all customer/sponsorship requirements to be eligible to receive all RSM level income.* Executive Sales Manager (ESM): Second leadership
promotion level.*
40
13. c
ustomer generated usage
commission schedule
CGU COMMISSIONS(1)
Level
True
Essentials
(2)
Lamas
Beauty
(2)
Dish
The
Wireless
Shop (3)
Health
Care Card
(4)
Magazine.
com
FHTM
Travel
(site)
FHTM Travel
(purchases)
(5)
Long
Distance
(6)
GE Home
Security
Ingrid
Personal
Customer
up to 25%
up to 25%
$0.80
$1.00
up to 20%
4.00%
2.00%
60.00%
2.00%
$0.90
2.00%
Manager Level 1
0.25%
0.25%
$0.08
$0.05
0.25%
0.50%
0.25%
0.25%
0.25%
$0.03
0.25%
Manager Level 2
0.25%
0.25%
$0.08
$0.05
0.25%
0.50%
0.25%
0.25%
0.25%
$0.03
0.25%
Manager Level 3
0.25%
0.25%
$0.08
$0.05
0.25%
0.50%
0.25%
0.25%
0.25%
$0.03
0.25%
Manager Level 4
0.25%
0.25%
$0.08
$0.05
0.25%
0.50%
0.25%
0.25%
0.25%
$0.03
0.25%
Manager Level 5
0.25%
0.25%
$0.08
$0.05
0.25%
0.50%
0.25%
0.25%
0.25%
$0.03
0.25%
Manager Level 6
0.25%
0.25%
$0.08
$0.05
0.25%
0.50%
0.25%
0.25%
0.25%
$0.03
0.25%
Manager Level 7
0.25%
0.25%
$0.08
$0.05
0.25%
0.50%
0.25%
0.25%
0.25%
$0.03
0.25%
Manager Level 8
5.00%
5.00%
$1.59
$0.50
5.00%
10.00%
5.00%
5.00%
5.00%
$0.03
5.00%
RSM Code
0.25%
0.25%
$0.08
$0.05
0.25%
0.50%
0.25%
0.25%
0.25%
$0.03
0.25%
RSM Breakaway
0.25%
0.25%
$0.08
$0.05
0.25%
0.50%
0.25%
0.25%
0.25%
$0.03
0.25%
ESM Code
0.25%
0.25%
$0.08
$0.05
0.25%
0.50%
0.25%
0.25%
0.25%
$0.03
0.25%
ESM Breakaway
0.25%
0.25%
$0.08
$0.05
0.25%
0.50%
0.25%
0.25%
0.25%
$0.03
0.25%
NSM Code
0.05%
0.05%
$0.15
$0.10
0.50%
1.00%
0.05%
0.05%
0.05%
$0.05
0.05%
NSM Breakaway
0.25%
0.25%
$0.08
$0.05
0.25%
0.50%
0.25%
0.25%
0.25%
$0.03
0.25%
(1) CGU payable is reduced in varying percentages by the providers from 100% of billable CGU to allow for the “bad debt” liability they
may assume and may vary from provider to provider. (For example, CGU paid for long distance usage is based upon 95% of 100% of
the actual amount of CGU billed to the customer.
(2) True Essential and Lamas product orders offer Representatives the option to choose between receiving standard commission and customer points, or 25% CGU and no customer points (You Choose CGU option). This option is available up to 72 hours following the placement of the order, and a Representative must make the selection of the You Choose CGU option through their Back Office. If no choice is made within the 72 hour window, the option defaults to the receipt of standard commission and customer points.
(3) CGU paid for The Wireless Shop customers is paid per contract by listed dollar amount.
(4) Health Care Card commission is dependent upon the number of personal customers a Representative has in a given month. If a Rep has ten (10) or more personal customers, the commission is 20%. If a Rep has fewer than ten (10), commission is 2%.
(5) The commission paid out on booked travel is dependent upon the amount of commission received by FHTM for the sale. A Representative with travel booked on their personal level will then receive 60% of the commission received by FHTM; not 60% of the total sale. The amount of commission received by FHTM varies.
(6) The commission structure listed for long distance is also the standard commission for the following products and services: Identashield, Go Solo, Office Assistant, Choice Plans RX, IT Please, Skytel and Fortune TV.
41
From the Sports world:
1. Art Monk - NFL, Hall of Fame, 16 seasons, Redskins, Jets, Eagles
2. Bob Lily - NFL Great, Hall of Fame, 14 seasons, Cowboys
3. Cullen Jones - Olympic gold medal swimmer
4. Darrell Green - NFL, Hall of Fame, 20 seasons, Redskins
5. Doug Herbert - Owner/Driver Snap-On Tools Top Fuel Dragster
6. Evander Holyfield - heavyweight boxing champion (joined October '09)
7. Phil Ford - former NBA and UNC basketball star
8. George Andrie - NFL Great, 10 seasons, Cowboys
9. Jerry Rice - NFL great, 20 seasons, 49ers, Raiders, Seahawks
10. Mitch Stott - 2003 IHRA Pro Modified World Champion and first Pro Mod Five
Second Doorslammer
11. Rondell Jones - 5 seasons NFL, Broncos, Ravens
12. Stacy Compton - Veteran of NASCAR's NEXTEL CUP and Craftsman Truck Series
13. Steve Corker - Top Sportsman, 2008 World Champion Drag Racing IHRA
14. Terrence Metcalf - 7 seasons NFL, Bears
15. Vic Jones - 7 seasons NFL, Buccaneers, Lions
Entertainment superstars:
1. Barbara McKay - former morning talk show host
2. Barbara Palacios - Former Miss Universe and Venezuelan TV show host, Minister of
Tourism of Venezuela
3. Brian Sexton - Radio voice of the Jacksonville Jaguars with CBS47 & FOX30 TV
4. Chris Rock - comedian, actor joined in September '09
5. Stefania Fernandez - Miss Universe 2009
Business World:
1. Donna Lewis - Wife of Ken Lewis, President and CEO of Bank of America
2. Jack Cotton - Owner of the chain of Scotsman Convenience, Dairy Queens, and
Blimpi's
3. Jerry Fallwell, Jr - Attorney and Chancellor of Liberty University
4. Mel Graham - One of the Carolinas leading real estate developers.
5. Pat Rogers - Owner of numerous Harley Davidson and car dealership
6. Rai Glover - Former VP at Bank of America
7. Wendell Murphy - NC's 2nd wealthiest individual. The Ray Kroc of the Pork Industry..
8. Woodson Gardner - Who's Who of Luxury Realty, Featured in Forbes
Former Politicians:
1. Bob McDonnell - Newly elected Governor of Virginia and former Virginia Attorney
General
2. Jim Miles - Former Secretary of State of South Carolina
3. Judy Hammerschmidt - Former Asst. Attorney General in Reagan Administration
4. Patrick O. Gottschalk - Virginia Secretary of Commerce
5. Pat McCrory - Former Mayor of Charlotte, NC and gubernatorial candidate
6. Mike Rose - Senator of SC
7. Tom Gallagher - Chief Financial Officer for State of Florida
MONTANA DISCLOSURE STATEMENT
MONTHLY COMMISSION PAYMENTS (U.S. DOLLARS)
Independent
Representative
Position
% of Paid
Independent
Representatives
Per Month
Low
High
Average
Manager
54.26%
$15
$1,827
Regional Sales
Manager
Executive Sales
Manager
National Sales
Manager
40.55%
$15
4.74%
Presidential
Ambassador
Annualized
Income
Per Paid
Representative
Average
Total Months
in FHTM
$93
$1,116
9.2
$10,235
$256
$3,072
15.6
$15
$44,688
$2,627
$31,524
37.3
0.38%
$17
$88,634
$19,856
$238,272
63.5
0.07%
$18,939
$285,700
$103,416
$1,240,992
77.8
The income statistics shown above are for all Fortune Hi-Tech Marketing, Inc. (FHTM) Independent Representatives who
qualified to receive commissions and bonuses during the 12-month reporting period of January 23, 2009 through
January 20, 2010. Average monthly payment is based only on months that Representatives received payment. A paid
Independent Representative (IR) is an IR who earned at least one commission or bonus payment during the reporting
period. During the reporting period 71.85% of Independent Representatives earned at least one commission or bonus
payment.
The earnings of the FHTM Independent Representatives in the above chart are not necessarily representative of the
income, if any, that a FHTM Independent Representative can or will earn through his or her participation in the FHTM
Compensation Plan. These figures should not be considered as guarantees or projections of your actual earnings or
profits. A FHTM Independent Representative’s success depends upon and requires successful sales efforts, hard work,
leadership and teamwork.
FHTM was built on a foundation of honesty, respect and responsibility. We have a strong commitment to ethics and
require that our Independent Representatives follow the FHTM Policies and Procedures, the FHTM Code of Ethics, as
well as the DSA Code of Ethics. Whether you are just being introduced to FHTM or you are already an IR, you can rest
assured that this organization believes in integrity, opportunity and a strong work ethic.
FHTM strives to conduct business in compliance with the standards established by government agencies and the direct
sales industry. Whether you decide to become an FHTM Independent Representative or not, you should protect yourself from involvement with pyramid schemes. A pyramid scheme is a fraudulent, non-sustainable business model in
which vested members are promised large profits without selling products or services and are compensated based
primarily on the recruitment of new members. As an FHTM Independent Representative, successful sales efforts and
hard work are required. In order to be eligible for bonuses, all Montana Representatives must maintain records of
onward customer sales to non-participants and submit those records to FHTM on a monthly basis.
MONTANA DISCLOSURE STATEMENT
In Montana, a participant or entity affiliated with FHTM may not represent that FHTM is licensed, registered, sanctioned
by, approved or endorsed as to its sales plan or operation.
The Federal Trade Commission and several states have laws or regulations that regulate or even prohibit certain types
of income claims and testimonials made by persons engaged in network marketing. When presenting or discussing the
FHTM opportunity or Marketing and Compensation Plan to a prospective Independent Representative, an Independent
Representative must not make income projections or disclose his or her FHTM income (including the showing of checks,
copies of checks, bank statements, or tax records, etc.). The Fortune Hi-Tech Marketing, Inc. Income Disclosure Statement (IDS) is provided to convey accurate information regarding income that is earned by FHTM Independent Representatives. All prospective Representatives should be made aware of the IDS and provided access to it. The IDS must
be acknowledged and presented to prospective Representatives anytime the Compensation Plan is discussed, or any
type of income claim is made. Copies of the IDS may be printed without charge from the company website at
www.fhtm.net.
Income claims include:
1.
2.
3.
4.
5.
Statements of Earnings, both average and non-average
Statements of Earning Ranges
Income Testimonials
Lifestyle Claims
Hypothetical Claims
An example of an earnings statement includes “Our top Representative makes X dollars per month.” An example of an
earning range statement is “We have Regional Sales Managers making anywhere from X dollars per month to X dollars
per month.”
Lifestyle Claims include statements, pictures, and other references to large homes, vehicles, vacations, or other items
inferring wealth derived from the FHTM business model. References to achieving dreams, use of the term “opportunity” or similar words, and use of terms similar to “having it all” or “living a better life,” all are categorized as Lifestyle
Claims. Also, claims such as “I made more after 6 months with FHTM than I made at my job,” or “I became debt free
due to my FHTM business,” or “My spouse is now able to stay at home with our children” are considered Lifestyle
Claims.
Hypothetical Claims are projections made to create a picture of what could happen if you become a FHTM Independent
Representative. These assumptions are used to show what compensation may be earned with hypothetical numbers.
These projections include:
1.
2.
3.
4.
The number of customers gathered
The number of customers accumulated by the downline
The number of Representatives sponsored
The number of downline Representatives accumulated
Information Specific to Montana:
a.
b.
c.
d.
e.
f.
All individuals joining FHTM as a participant have at least 15 days to cancel their participation in the sales plan or
operation.
If a participant terminates participation in FHTM’s sales plan, they are entitled to the repurchase, at not less than
90% of the amount paid by the participant, of any currently marketable goods or services sold to the participant
within 12 months of the request that have not been resold or consumed by the participant.
All new FHTM participants must complete a training session prior to actively participating in FHTM’s sales plan
operation.
All Montana FHTM participants must maintain records of onward customer sales and submit those records to
FHTM on a monthly basis.
The fee to participate in FHTM shall not exceed $75.
No commission or bonuses will be paid on the recruitment of new participants into FHTM’s sales plan or operation.

Read the suit against Fortune - Lexington Herald

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