People who were convinced to sell energy as part of a pyramid scheme can collectively sue the energy marketing company and the individuals leading it, according to a federal judge in Texas.
On January 14, 2013, Judge Kenneth Hoyt, United States District Judge in the Southern District of Texas, certified a class of more than 100,000 “Independent Associates” who bought into the “opportunity” to sell energy through Ignite, a division of Stream Energy.
For $329, independent associates of Stream Energy were allowed to enroll energy customers in select deregulated markets. The associates could also enroll other people into the sales program and profit from sales those recruits made down the pyramid. Theoretically, associates received bonuses and residual credit for any individuals who could sell in their downstream
In actuality, only a fortunate few early participants at the top of the pyramid made any significant money. A much larger number of participants never even earned back their enrollment fee.
This is the first class action against a so-called multi-level marketing program to be certified in recent years.
Andrew Kochanowski of Sommers Schwartz was appointed interim lead class counsel along with Clearman Prebeg LLP of Houston, Texas.