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N.Y. targets Net bootleggers
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Alleged pyramid case settled
May 12, 1997 -
Pyramid case settled
February 24, 1997
This time he is targeting so-called get-rich-quick schemes. Vacco yesterday announced that his office has settled cases with 12 sites accused of running fraudulent online pyramid schemes. Combined, the individuals were charged about $20,000 in fines, according to his office.
"While these email solicitations typically claim that the programs they promote are legal, they are, in fact, pyramid schemes, which are prohibited in New York and many other states," Vacco said in a statement. "But instead of making thousands of dollars, as these solicitations claim, most people will lose money because these schemes are destined to fail."
The Federal Trade Commission has been going after pyramid operations for more than a year. Also described as multilevel marketing investment offers, pyramids promise members more money for each new person they bring into the plan. But those on the bottom often lose their money when the new recruit pool dries up.
In February of last year, the FTC reached a settlement with Fortuna Alliance, which allegedly collected up to $11 million from consumers, the agency said. Fortuna--which, as part of the settlement, did not admit guilt or claim innocence--said it would give full refunds to 30,000 to 40,000 consumers in 60 countries who paid to become a part of the venture.
New York also kicked off an education program to discourage surfers from joining pyramids.
Vacco has led public campaigns against alcohol sales to minors over the Net. The state attorney general also has been at the forefront of legal battles involving online and software giants such as America Online and Microsoft.
In addition, the free email service Juno said it would assist New York "in the identification of emailers who are engaged in fraud and provide subscribers with information that arms them against fraudulent email schemes."
A Juno spokesman said the company would not be turning over the identity of Juno users at the request of law enforcement. Instead, the company will be forwarding to investigators copies of spam advertising pyramid offers sent to Juno users.
Last week, the FTC also cracked down on emailers who send out fraudulent schemes. The agency announced that it had taken to court the first spammer being nabbed under its new enforcement effort. (See related story)
