TULSA, Okla. (AP) _ The structure of a Tulsa internet company selling Web site and educational software makes it a pyramid scheme that could have bilked millions from consumers, according to testimony Tuesday in federal court.
The Federal Trade Commission is seeking a temporary injunction against Tulsa-based Skybiz.com and three affiliated Oklahoma companies accused of scheming to get up to $175 million from consumers around the world.
Associated businesses include World Service Corp., Nanci Corporation International and WorldWide Service Corp.
The companies charged $125 for a work-at-home business to sell an educational Internet software package and the opportunity to earn money by getting others to buy the packages, according to the FTC.
The agency says SkyBiz.com and the others violated federal laws by creating a pyramid scheme in which most participates made no money while those at the top of the pyramid got most of the income.
The government also accuses them of making false claims about consumers earning large incomes while failing to mention that most people would lose money.
Peter Vander Nat, an FTC economist, testified in U.S. District Court that the structure of Skybiz.com's different levels of participation for sellers makes it a pyramid scheme. He said his analysis of information supplied by the FTC showed that 87.5 percent of sellers would not get any income.
``There is a progressive concentration of income toward the top of the structure,'' he said.
But defense attorney Jim Ladners questioned the basis for Vander Nat's conclusions.
Ladners said it would be important to consider how many people bought a Web package for themselves but decided against selling them.
He asked if it would be important to consider that up to 500,000 people bought the product but did not intend to make sales.
Ladners also said the economist failed to consider refunds and get information directly from the company or its associates.
Vander Nat said analyzing the structure of the company was critical.
U.S. District Judge Terry C. Kern froze assets earlier this month and ordered the companies to stop any illegal activities until the hearing, which could last for much of the week.
The government began an investigation after complaints surfaced from consumers in the United States, Australia, Thailand, India, South Africa and other countries, FTC attorney Jim Elliot said earlier.
Elliot said the government is seeking to disband SkyBiz.com and return money to consumers.