FTC: Xango has a “Vemma-like marketing program” (Tom Alkazin)
The battle between the FTC and Tom Alkazin continues, with the latest filing from the FTC seeing Xango dragged into the feud.
After the FTC shut down Vemma for being a pyramid scheme last year, Alkazin went on to join Xango.
Commenting on a response filing by the FTC yesterday, BehindMLM pointed out incidental similarities between Xango and Vemma’s compensation plans.
BehindMLM reviewed Xango in 2013 and identified, among other things, a focus on affiliate autoship recruitment.
The same issue was a major consideration in the FTC’s shutdown of Vemma.
In their response filing the FTC claimed that if Alkazin was not subject to a preliminary injunction, that he would engage in “deceptive income claims and pyramid marketing” with “a different (MLM) company”.
Alkazin appears to have since left Xango, however the reason for his departure is unclear.
A new motion by the FTC now asks for permission to file additional evidence against Alkazin, pertaining to his brief time at Xango.
The FTC filing leaves a question mark over whether Tom Alkazin is still in Xango unclear.
The regulator cites their June 9th deposition of Alkazin, during which
Alkazin testified that he was still an active Vemma affiliate, and that he did not hold any “positions” or “ownership” interest” in any other multi-level marketing company.
The FTC stop short of claiming Alkazin is still in Xango, but state
subsequent to the filing of the reply (July 22nd), it came to the FTC counsel’s attention that there was evidence that Alkazin was promoting Xango.
The present-continuous tense used is ambiguous.
Nonetheless, the evidence the FTC has collected is from earlier this year. The latest exhibit is a March 21 Facebook posting
that promoted a “Thirty2Earning” conference call.
The call was to feature Alkazin and what appeared to be Xango affiliates.
The FTC want to submit the Facebook posting, as well as a January 12th, 2016 Xango live-stream featuring Alkazin, as evidence of Alkazin promoting Xango.
This, the FTC alleges, is important because the evidence
shows that Alkazin was actively involved in promoting Xango, an MLM with business characteristics similar to Vemma’s business model, as of January 2016.
Alkazin was still doing presentations with Xango affiliates as of March 2016.
Xango offers mangosteen products, as well as “the opportunity for a happier, healthy, wealthier life.”
Xango describes its business opportunity as offering “limitless potential for a personal business” and, if desired, the opportunity for a “full-fledged lifestyle upgrade.”
The Xango compensation plan seems to require distributors to have a personal “Automatic Delivery Program” (“ADP”) order in place to qualify for some bonuses.
The “PowerStart” bonus appears to specifically reward distributors for recruiting new distributors.
While the above might sound like a preamble for an FTC shutdown of Xango, the FTC do stress that they draw ‘no conclusions as to the legality of the Xango program‘.
However, given Alkazin’s history of participating in Vemma’s pyramid scheme and making deceptive income claims about Vemma’s business opportunity, his involvement with a Vemma-like marketing program poses potential economic harm to consumers and warrants the Court’s placing him under an injunction to prevent future consumer harm.
No, you’re not reading that wrong. The FTC just alleged that participation in Xango’s MLM opportunity “poses potential economic harm to consumers”.
Whether the FTC will or are investigating Xango is unclear.
Sounds like they’ve done at least a preliminary examination of Xango’s business model however, and found it to contain the same compliance issues Vemma’s did.
Pending the outcome of the FTC’s litigation against Vemma, I’d be very surprised if action wasn’t taken against Xango at some point.
Regarding Tom Alkazin’s involvement in Xango, a decision on whether the FTC will be permitted to submit the proposed exhibits has yet to be made.
Footnote: Our thanks to Don@ASDUpdates for providing a copy of the FTC’s “Motion to Supplement Preliminary Injunction Record and To File Physical Exhibit” (filed July 26th).