Monday, June 11, 2007
FTC Files Suit Against BurnLounge
DIY online music store host BurnLounge is in deep water with the FTC this week, being sued by the government agency for operating an illegal investment scheme ("pyramid" scheme). Huge investors like Justin Timberlake, who plunked down $13 million for the site, may have been bamboozled, if FTC allegations are correct. Promoters for the site, former USC football stars Rob DeBoer and Todd Ellis have been two of the biggest voices for promoting BurnLounge, even recruiting USC coach Steve Spurrier, Jr. to put money into the business.
The basic premise of the FTC's suit is that BurnLounge runs a pyramid scheme, in that it pays more money to store owners for recruiting new store owners than it does for selling music. The Complaint also alleges that BurnLounge promoters misrepresented their actual earnings for investing in the company.
Source: Myrtle Beach Online