A federal court recently sided with the Federal Trade Commission, ruling that James D. Noland, Jr. illegally owned and operated two pyramid schemes—Success By Health (SBH) and VOZ Travel—in violation of the FTC Act and that Noland violated a previous federal court order barring him from pyramid schemes and from misrepresenting multilevel marketing participants’ income potential.
The FTC sued Noland (also known as Jay Noland, J.D. Noland, and J. Noland), his wife Lina Noland, Scott Harris, and Thomas Sacca, in connection with SBH in January 2020 and added charges related to VOZ Travel in September 2020. The FTC alleged that they operated the businesses as pyramid schemes, making outlandish claims that “the masses” could be making more than $1 million each month by following Noland’s system, when in fact very few consumers made any money, and most lost significant sums.
In its ruling, the U.S. District Court for the District of Arizona found that the Nolands, Harris, and Sacca violated the FTC Act by operating SBH and VOZ Travel as pyramid schemes and using false promises of “financial freedom.” In addition, the court found Harris and Sacca were aware of the order against Noland stemming from a prior FTC case, and thus, they and Noland were in contempt of that order. In its ruling, the court cited the “sheer volume of deceptive tactics and statements associated with” both SBH and VOZ Travel.
“The court’s order holding these defendants in contempt and barring them from the multilevel marketing business should send a strong message that FTC orders should not be ignored,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC will not hesitate to act with the full force of the law to protect the American public and hold recidivists accountable.”
The court also noted that Harris told an audience at one private SBH marketing event, “Is this one of those pyramid things? Hell, yeah it is. If it wasn’t, I wouldn’t be doing it. Do I look dumb enough to go get a job again?”
In addition, the court ruled that the defendants’ false claims about Noland’s own wealth in selling the pyramid schemes were “outrageous.” Noland, for example, told SBH and VOZ Travel members, “I’ve been financially free, completely time and money free since I was 36.” In fact, as the court found, at the age of 36, Noland “was living (or was about to start living) off credit cards.”
Additionally, although Noland told SBH and VOZ members he was a multi-millionaire, the court explained that “[i]n his January 2020 sworn financial statement, Noland reported he had a negative net worth.” Similarly, at a deposition in this case, “Noland was unable to identify a time he ever had a positive net worth.”
The defendants used these and other false claims to boost their promises that SBH affiliates would achieve their own financial freedom, like becoming millionaires, or having an income stream of $20,000 per month. Instead, the court found “the great majority of SBH affiliates were net losers” of money, and “the few who may have eked out a net positive outcome did not obtain anything close to the ‘financial freedom’ that was being offered.” The court, for example, found that one “top retailer” in SBH earned less from those sales “than what an individual would earn from a full-time minimum wage job.”
The court’s ruling permanently bans Noland, his wife Lina Noland, Harris and Sacca from any participation in multi-level marketing. In its ruling, the court said they “…have found themselves to be utterly incapable of operating an MLM business in a lawful manner.”
The ruling also imposes a $7.3 million judgment on Noland, Harris, and Sacca, the full amount sought by the FTC. Any amount recovered by the FTC will be used to redress consumers. The court also found that the defendants committed multiple “acts of dishonesty,” including “destroying evidence, violating court orders, giving false under-oath testimony, and taking no accountability for the misconduct after being caught.”
The FTC’s suit against SBH and VOZ Travel also named a number of corporate entities behind the two pyramid schemes; the case against those entities is ongoing. The FTC has extensive information and guidance for consumers about multi-level marketing and pyramid schemes on its website, as well as guidance for businesses.