South Dakota Company Investigated
(Pierre) – A joint investigation by the South Dakota Attorney General’s Office and the Department of Commerce and Regulation has led to a cease and desist order against a South Dakota corporation. The cease and desist order against Humanitarian Effort, Inc. was issued by the South Dakota Division of Securities to prohibit the company from continuing its business practices.
Humanitarian Effort is a business opportunity company. It has been promoting and offering multi-level marketing business plans nationwide. The marketing plans involve recruiting individuals to solicit donations to nonprofit organizations. In order to participate in the marketing plan, a minimum investment of $150 per month is required. Fifty percent of all donations made by an agent’s down-line go to the agents as commission, ten percent goes to Humanitarian Effort, and the remaining 40 percent goes to a designated charitable organization.
“Multi-level marketing is a term we hear a lot from companies trying to disguise a pyramid scheme. And based on the information we have so far, it appears that Humanitarian Effort could be an illegal pyramid,” said Chief Deputy Attorney General Larry Long.
Pyramid schemes focus on the exchange of money and the recruitment of new members. To become a member, each person must “donate” a given amount of money to senior members of the group. To see a return on that money, the new members must then recruit more people to “donate” more money.
“Pyramids are a scam and destined for failure,” said Long. “Once the market is saturated and there is no one left to recruit, the pyramid collapses and folks at the bottom of the pyramid lose everything. Not only will they lose their money, but they could also face federal and state charges.”
The Attorney General’s Office and the South Dakota Department of Commerce and Regulation will continue to investigate Humanitarian Effort.
For more information contact the Division of Securities at 1-605-773-4823 or the Consumer Protection Division of the Attorney General’s Office at 1-800-300-1986.
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