'I build pyramids, man': Federal court shuts down alleged pyramid scheme selling 'healthy' mushroom coffee and freezes executives' assets
- A federal court has temporarily shut down Success By Health, which sells coffee that claims to offer health benefits from mushrooms.
- The ruling came in response to a Federal Trade Commission complaint alleging that the company is a pyramid scheme that baits "entrepreneurial consumers into a financial abyss."
- Success By Health disputes the allegations. "The company plans to vigorously contest the baseless allegations made in this case by the FTC and expects to resume its normal operations in the not too distant future," an attorney for the company told Business Insider.
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A federal court has temporarily shut down a mutli-level marketing company called Success By Health, which sells instant coffee that claims to offer health benefits from mushrooms.
The ruling this week by a federal judge in Arizona also froze the assets of the company's top executives, including its founder, James "Jay" Dwight Noland, Jr.
The decision came in response to a Federal Trade Commission complaint claiming that Nevada-based Success By Health is a "pyramid scheme" designed to enrich the company's top executives by emphasizing member recruitment over the sale of its products.
The FTC complaint calls Noland a "serial pyramid scheme promoter" and says the company's executives "bait entrepreneurial consumers into a financial abyss by telling them that they will attain 'financial freedom,' and never have to work again, if they enroll as 'Affiliates' in Defendants' Success By Health ('SBH') program and follow Noland's instructions."
David Eisenstein, an attorney for Success By Health and its executives, said the FTC's allegations are "baseless" and the company plans to dispute them.
"Success By Health was shut down and put out of business by the FTC without due process, due cause or any advance notice whatsoever," Eisenstein said in a statement to Business Insider. "The company plans to vigorously contest the baseless allegations made in this case by the FTC and expects to resume its normal operations in the not too distant future. Success By Health will then resume its exceptional service to its Affiliates and customers by delivering the quality products and opportunities for which it is known."
Millionaire workshops and a 'perpetual money and health machine'
The company's 5,000 enrollees, called affiliates, buy Success By Health products at wholesale prices and then turn around and sell them to consumers at a markup. Affiliates can earn commissions off the sales of their recruits and through minimum monthly orders from Success By Health, according to the FTC complaint.
Success By Health's products include coffees and teas called MycoCafe that contain ganoderma, a mushroom that the company's website says is "the world's number one antioxidant herb."
The company also offers trainings. Its website is currently advertising a two-day "Millionaire Workshop" led by Noland that costs about $1,000 to attend.
In videos posted to Facebook, Noland has called the business a "perpetual money and health machine" and said his past trainees have bought "Lamborghinis; Rolls Royces; Bentleys; multimillion-dollar homes in single-, double-, and triple-gated communities; [and] Bahamas trips" by listening to his advice, according to the FTC complaint.
"After accounting for the costs of the program, products, and events, enrollees lost millions of dollars," the FTC said in a statement. Meanwhile, Success by Health executives earned about $1.3 million, the complaint says.
The FTC complaint also says that Noland and his wife "fled their $1.2 million rented house for South America in October 2019" after learning that the FTC was investigating them.
'I build pyramids, man... I'm at the top'
Noland was barred through a 2002 settlement - related to a different company, called Bigsmart - from participating in pyramid schemes and making claims about potential earnings.
The FTC complaint says that in 2017, Noland referenced this order in a speech, saying, "So what we started doing instead of telling people how much we make, we just go, okay, last week, I made enough to buy that Maserati cash."
He also discussed building pyramids, though he never explicitly referenced pyramid schemes, the complaint says.
"Everything in this world is a pyramid," Noland said, according to the FTC. "Your church, pyramid. School system, pyramid. People ask me what do I do. I said I build pyramids, man. ...That's what I do. I build some little pyramids. Except I'm at the top of the ones I built."