A United States federal court this week sided with the Federal Trade Commission in banning the operations of two multi-level marketing (MLM) businesses, one of which was selling mushroom-infused coffee products in what federal officials described as a pyramid scheme.
The Federal Trade Commission originally filed a 2020 complaint against a company by the name of Success By Health (SBH) and its executives, owner Jay Noland, his wife Lina Noland, Scott Harris and Thomas Sacca. The agency later added a second company by the name VOZ Travel to the complaint.
SBH’s flagship product was a line of instant coffee products under the brand name “MycoCafe.” The coffee product offered caffeine alongside mushroom-derived additives with purported “functional” or health benefits. The manufacturer of the coffee product was not named in the FTC complaint.
The agency argued that the executives were operating a pyramid scheme that made “outlandish claims” that individuals following Jay Noland’s SBH system could achieve “financial freedom” and earn $1 million a month. In reality, “very few consumers made any money, and most lost significant sums,” according to the FTC.
In the case’s most recent ruling, a U.S. District Court for the District of Arizona sided with the FTC’s requests to shut down the businesses and prevent the owners from engaging in future MLMs. The operators were also found to be in contempt of a previous court order that barred Nolan from operating pyramid schemes.
The court also issued a $7.3 million judgement against the defendants, whereby any recovered money by the FTC will be used to redress consumers.
In its ruling, the court 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?”
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Nick Brown is the editor of Daily Coffee News by Roast Magazine.