WorldVentures RICO pyramid scheme class-action lawsuit filed
A class-action lawsuit that alleges WorldVentures is an illegal pyramid scheme was filed earlier this year.
This one slipped under the radar, so you’ll have to forgive the late coverage as I only found about the lawsuit yesterday.
On May 1st, 2017, Melody Yiru filed a RICO pyramid scheme lawsuit against WorldVentures.
Named defendants in the lawsuit include World Ventures, World Ventures Holdings, World Ventures Foundation, World Ventures Marketing, Michael Azcue, Wayne Nugent and Daniel Stammen.
Michael Azcue and Wayne Nugent are cited as “controlling managing-members” of the company. Daniel Stammen is cited as a “managing-member”.
In her complaint Yiru alleges that “WorldVentures is an illegal pyramid scheme”.
Yiru alleges that from 2011 to the present, she and as many as
250,000 other members of her purported class were misled about the financial structure and likelihood of financial gain from their participation (through initial and monthly membership fees) in WorldVentures’ business.
Yiru alleges that, despite what appeared to be truthful and
encouraging Annual Disclosure Statements, the only way to generate income as a Sales Representative was not through the sales of travel-related services, but through the recruitment of additional Sales Representatives.
BehindMLM reviewed WorldVentures way back in 2011 and concluded the same.
Yiru’s initial lawsuit was filed in California, alleging breaches of the California Civil Code (Endless Chain Scheme) and California Business & Professions Code (Unfair and Deceptive Practices and False Advertising).
The lawsuit also alleged RICO violations, specifically
a purported conspiracy which involved the investment of ill-gotten funds in an allegedly fraudulent enterprise.
On a personal level, Yiru alleges ‘WorldVentures represented to (her) that she would make a fortune‘.
However, Yiru did not make money as promised.
As with the case of the more than two hundred and fifty thousand WorldVentures representatives before and after her, Yiru failed.
99.7% of WorldVentures representatives average net losses of over $1000 per year, and gross revenues of $140.
No persons, except directors and secretly placed individuals into the “representative” tiers of the company, make any money.
Yiru’s proposed class-action group spans WorldVentures’ operations from May 2010 to date, although she herself only signed up in September, 2015.
The front for WorldVentures’ pyramid recruitment scheme is the sale of memberships, which provide access to discounted travel offers.
In relation to WorldVentures’ travel offers, Yiru alleges;
Signifying how the travel package is of no value, the packages are overpriced, under-inclusive, and are significantly in excess of the price a consumer can obtain (from) the equivalent track packages from almost any online competitor – Cheap Tickets, Groupon and Exepdia.
WorldVentures does not have its own travel deals. It just scouts for deals and make(s) a person pay to view them.
Turn over levels are high in each member’s downline, reflecting the nature of the scam.
That is, to make money, one has to constantly be recruiting new victims.
Backroom deals are a focus of the lawsuit, with Yiru detailing a “secret compensation plan” used to pay “chosen sales representatives”.
Some of the top representatives were paying the fees for some of their downline recruits themselves, in order to maintain a high rank and appearance of success.
WorldVentures props up its chosen sales representatives by grandfathering them into the highest rank in the company even though they have not earned it.
Indeed, there is a secret compensation plan to achieve to objectives: to make false disclosures that will show fake “outlier” information and encourage enrolled persons that they can make money when this is not true [sic].
The second purpose is to favor persons who will strategically help the company in further propping up the pyramid scheme.
Yiru cites the Norwegian regulatory ban of WorldVentures and claims its business model is “analogous” to the YTB International pyramid scheme.
Yiru’s lawsuit was initially filed in California State Court. It was then moved to federal court, initially in California and now in Texas.
A tentative trial date has been scheduled for April 17th, 2018.
On September 28th WordVentures filed a Motion to Compel Arbitration and Dismiss/Stay.
This motion is based on a clause in the WorldVentures affiliate agreement.
In response, Yiru argues
WorldVentures’ premise their arbitration petition upon the fault concept that there is a valid agreement to arbitrate.
The Fifth Circuit Court of Appeal has determined that a nearly identical arbitration policy to that at issue here, was illusory based on a pyramid scheme operator’s unilateral right to amend, and thus, such agreement was held to be unenforceable. (Torres v. SGE Management LLC).
In the alternative, this action should not be ordered to arbitration because WorldVentures (has) not established a valid agreement, many of the factual allegations in the Complaint are outside of the scope of the arbitration provision, the policy is unconscionable, and the individual defendants are not legally entitled to compel arbitration.
As of November 22nd, Yiru and WorldVentures were going back and forth over a Motion to Strike a portion of the appendix in support of the arbitration motion.
A decision on any of the motions has yet to be made. Stay tuned…
Update 30th September 2018 – On September 11th Yiru’s Motion to Strike was denied.
The same day an order was made staying the case pending the outcome of arbitration between the parties.
Update 27th October 2019 – After over a year of arbitration, a joint-motion was filed to reopen the case on October 11th.
As of October 15th Melody Yiru’s case has been reopened.
Just another glamorous “hotel discounts” ponzi scheme.
This one smelled like a Ponzi all the way and I never looked closely at it.
There’s a guy near me living in a mansion made from his income at this company… so like all Ponzis there are some big winners and of course most are losers.
Ponzi isn’t the same as pyramid, although most MLM Ponzi schemes are also pyramid schemes.
(Ozedit: Offtopic derail attempts and abuse removed)
Oz, really? Tell me what is “not” a pyramid? Maybe cliche’, but what sales organization or organizational structure is not pyramid shaped?
Why don’t we try and make our condemning posts remotely intelligent?
An MLM company being a pyramid scheme has nothing to do with the shape of its organizational structure.
How about you don’t be a dumbass?
Spot the difference ???
This should definitely be pushed especially now that reps have not been paid what is owed to them for 4 months… where does it make that ok?
I know I may sound like a supporter, but it would only be considered a ponzi scheme if they were moving other people’s money around to other investors.
This club’s income is based on membership dues, and people actually have to sell the product of travel in the form of memberships to get anywhere.
If it was solely based off of representatives and there was no product, or good one at that, then it would have already fallen apart.
When people actually go on the trips, they stay members. However, it is easier to speculate rather than to see it for what it is.
I have friends who worked their way up the old fashioned way and it has taken them several years.
Why? Because since their compensation plan for residual income is based on certain amounts of people to be on the Down line, it’s only when they reach a certain point that they make any residual income.
Now residual income is different than one time bonuses and team bonuses. There are different ways of getting paid.
Now, it’s indesputable that there are higher ups who aren’t doing things honestly, but that doesn’t mean many others who are successful in this business are doing the same thing. Everyone has the same chance.
If this was an illegal pyramid scheme, then the only way to make it would be to recruit more reps. But the only way you get paid in this company is by memberships and sales volume.
You can add as many people on your team as you want, and that is the advantage of the comp plan. But the product backs it up. The trips are real. So are the savings.
To people who want to travel, it’s a good way to set money aside to travel to great places and be treated exceptionally well.
There are many people who were misinformed, and to that there is no dispute and I feel bad that it happened that way for those people.
However, usually the ones who start the lawsuits are the ones who had a disagreement with someone higher up and then started bad mouthing the company.
Or from people who wanted a free trip and an immediate refund. Everyone knows after a certain point you don’t get refunded for your car that you had past 30 days since you bought it.
So how is it any different for this?
Main thing to take away:
1. They have a good product.
2. Because of their product, it is not an illegal organization.
The biggest misconception people have about multi level marketing companies is that because significant long term payment depends on the number of memberships sold within your network (not reps. You don’t get paid for reps), it’s deemed unfair. But it’s not a job. It’s a business. It’s an investment. And you would be spending way less on this business than any other start up business.
It costs over a million dollars to buy a restaurant chain. An LLC costs about 200 dollars a year to maintain. You wouldn’t be spending that much to start with world ventures.
That’s the business side. The membership is just you signing up to have access to the trips and the additional perks of the package that come with it, which are legitimate services made available to the member.
Like I said, I’m well aware of what some of the higher ups do, but I’ve witnessed people rise to the top by going in without complaining and just doing the work.
Funny how people deem it illegal because they didn’t get paid like they thought they should, but never did any work.
Go on trips and see them for yourself. Then tell others what you experienced. They join and invite their friends.
If they don’t want to be in the business, they don’t have to. They can just enjoy the membership.
The ones who force the business side without showing the membership are idiots and give the company a bad name.
The comp plan does say that .01% make over 1 million. You have to understand how many independent reps there are.
Over 500,000. 77% did not receive anything. Why? Because many of them are new. That income disclosure had to snap the entire picture of what happened that year, including people who did absolutely nothing to even attempt earning anything.
I know because I have talked to those people. It’s disgraceful that you don’t take that into account. How about an updated income disclosure?
1. Access to discounts is not a valid MLM product.
2. Every modern pyramid scheme has a product.
Norwegian authorities have already revealed World Ventures operates as a pyramid scheme globally. The vast majority of “memberships” are purchased by affiliates (defacto recruitment commissions), with retail being negligible.
Stop making excuses for scammers, it’s disgraceful.
Hey, how about we try that again, this time without your embellishment of the facts ???
77% of over 500,000 World Ventures members did not receive anything during the 12 month period.
That’s all potential members need to know and why income disclosures exist – no slimy sales pitch
OZ The product isn’t a discount. The product is the trip. The company uses capitol to purchase each individual trip. If no one takes the trip, the company takes a loss.
All of your startup money (As a customer) is given back to you as travel credit as well as money to take off an actual hotel. If you make use of it it Will have value
My cousin just got me 5 days at an all inclusive Dominican Resort for $300. Cant beat that with a stick
No it isn’t. WorldVentures don’t sell trips, they sell access to discounts.
WorldVentures affiliate fees have nothing to do with traveling.
Or just do what most WorldVentures affiliates do, take a token trip every now and again for marketing purposes and make money on recruitment.
Like what you’re doing for your “cousin”.
Norwegian regulators revealed 75% of WorldVentures members are also affiliates. If there was actual consistent retail value that figure would be much higher.
It’s always the cry babies or non members that seems to talk shit or make this company look bad.
I have been a member for 2 years and also a Rep if you don’t go out there and show this to people how the hell are you going to make money?
You have to put the dam work in! First of all when you enroll 4 people you waive your fees and have free access to the great deals they have.
we also have access to the Pocones without having to buy a 30,000 villa also the rovia bucks you receive for shopping online, and the points you get to apply them to get discounted merchandise and travel.
this company offers a lot of great things.
(Ozedit: Offtopic derail attempts removed)
Victims aren’t crybabies and yes, typically scammers doing the scamming don’t complain about the scams they’re in.
Oh I dunno, by selling travel services to retail customers? Isn’t that what WorldVentures is supposed to be about?
And there’s the problem. You’re recruiting affiliates, who get paid to recruit affiliates, who get paid to recruit affiliates.
This is an MLM pyramid scheme business model as it all but ignores retail.
And before you chime in with what’s theoretically possible, the Norway investigation already confirmed retail activity within WorldVentures company-wide is negligible.
Finally if you wish to rant about the government in an attempt to justify your pyramid scheme, do it elsewhere.
IRT lil yayo….What a lying scammer.
You personify the scum WV rep.
You know very well that the Get 4 Pay No More plan was cancelled by WV in April of 2018 (yet you post your lies in May 2018).
Are you still using that lie to sign up new reps, KNOWING IT’S A LIE???
WV can no longer afford to not charge the monthly.
The churn is too great as people are coming to their senses and are dropping out at unprecedented numbers, as they can see they are getting ripped off.
The trips are terrible now that vendors aren’t providing services since WV refuses to pay them.
Bankruptcy is coming soon. WV CAN’T EVEN PAY THEIR REPS!!!!
Article updated with news of stay and arbitration.
World Ventures attempted to debit my account after I had closed my business dealings with them. they were successful recently and i have made several attempts to contact someone in their billing department with no success.
I am furious with this company because my account would have had to be hacked in order for them to gain access (2 years after the fact too!)
Is there anyone that can assist in this matter?
Probably whoever you have your account with.
some of you missed the whole point of a pyramid scheme. the reason why pyramid schemes are problematic is because of how the company generate the income.
In other normal MLM businesses, profits are generated from sales of services and/or products, and then distributed through a pyramid structure. Without a pyramid structure the business can still operate, but just in a different way.
But for pyramid schemes, the income is generated from membership fees, and is distributed among the pyramid of members. There is no actual product / service. If you take away the pyramid scheme, the business would collapse because there is no income/profits that would otherwise sustain the operation.
Not exclusively. An MLM company in which the primary source of revenue is affiliates/distributor purchases is still a pyramid scheme.
This is true irrespective of whether retail is possible and/or if nothing is paid on direct recruitment.
Ref: Vemma, Herbalife.