Alleged victims of pyramid scheme to share $20 million
Monday, March 24th 2003, 12:00 am
News On 6
WASHINGTON (AP) -- Operators of what the government contended was an illegal pyramid scheme have agreed to refund $20 million to investors, the Federal Trade Commission announced Monday.
The money will go to those who lost money after investing in SkyBiz, an Internet-based operation in Tulsa, Okla. The out-of-court settlement was reached in January, shortly before the case was to have gone to trial, and anounced formally on Monday.
A court-appointed receiver will send e-mails to consumers eligible to collect refunds, commission lawyer Jim Elliott said.
The companies involved and their officials did not admit breaking any laws but were ordered not to engage in similar practices.
SkyBiz, which the FTC said did business in 190 countries, charged participants $125 to buy an educational software package and the opportunity to earn money by recruiting others to buy. The government called the arrangement a classic pyramid scheme, and said more than 96 percent of investors lost money.
When the indictment was announced last June, Howard Beales, director of the FTC's consumer protection bureau, called SkyBiz "one of the biggest pyramid schemes we've seen." Consumers around the world lost $182 million, according to the settlement.
Those named in the suit were SkyBiz.com, World Service Corp., Nanci Corp. International, WorldWide Service Corp. and several individuals. One individual, Stephen McCullough, refused to settle and is to go to trial next month in U.S. District Court in Tulsa.
The government claimed that SkyBiz used several marketing techniques, including presentations, seminars, teleconferences and the Internet to promote investors' chances to make thousands of dollars a week by recruiting people to buy the software package.