Valley energy drink company temporarily shut down for operating - MEREDITHAZ

Valley energy drink company temporarily shut down for operating a pyramid scheme

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PHOENIX (CBS5) -

The Federal Trade Commission has temporarily shut down Vemma Nutrition, an Arizona-based dietary supplement and energy drink company.

The FTC said Wednesday that Vemma Nutrition was operating a pyramid scheme that promised college students riches if they sold its nutritional drinks, but most ended up losing money.

CBS Investigator Morgan Loew reported back in May that parents of college students had been criticizing the company for turning kids away from college.

[READ: Parents complain: Drink company turning kids away from college]

Back in May, Loew spoke to student Todd Searle, who had tried working for Vemma.

“A lot of young people were successful at it, so I figured if these kids could do it, why not me?” Searle said. “If you're a 21-year-old and you see another 21-year-old roll up in a Ferrari, yeah, you're going to think, ‘I can do this. I'm going to work at it.'"

Searle said he initially made money after following the strategy he learned from his Vemma mentor. It encourages recruits to contact their friends, family and other members of their social circles and sell to them, or more importantly, recruit them to join the company.

But it was that strategy that Searle said ultimately cost personal relationships with family and friends and caused him to walk away from Vemma.

“It's the destruction of relationships. I felt like you push so hard on some of your closest friends that you grew up with, or even family members, that you end up souring relationships. Some of them don't ever talk to you the same.” Searle said.

The consumer protection agency said that Vemma told recruits that they could make as much as $50,000 per week selling its nutritional beverage Vemma, energy drink Verge or protein shake Bod-e. An initial investment of $600 was paid for products and business tools and $150 in Vemma products had to be bought each month to receive bonuses. The FTC said Vemma provided little help on how to sell its products and instead rewarded them for recruiting more people.

CBS 5 Investigates even sent two employees with hidden cameras to two of the company's recruiting events.

Vemma earned $200 million a year in 2013 and 2014, according to the FTC.

A representative from Vemma, which is based in Tempe, Arizona, did not immediately respond to a request for comment.

A federal court in Arizona temporarily seized the company's assets. Products on Vemma's website could not be bought Wednesday. The website said that products were "temporarily unavailable at this time."

In the complaint, the FTC said Vemma employees visited college campuses and told students that selling the beverages was an alternative to a regular job. Its marketing materials features young people in luxury vehicles, jets and yachts, the FTC said.

Chris and Heidi Powell, two married stars from ABC's reality show "Extreme Weight Loss," appear in promotional videos and packaging of weight-loss drink Bod-e. Representatives of the Powells and ABC did not immediately respond to a request for comment.

Along with the company, Vemma CEO Benson Boreyko is also named as a defendant in the complaint, as is Vemma promoter Tom Alkazin and his wife Bethany Alkazin. 

[READ: Entire statement from Vemma to CBS 5, which includes our questions and the company's answers (PDF)

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