A 4th District judge Tuesday said a Utah-based multilevel marketing firm appears to be operating as a pyramid scheme and issued a memorandum that may shut the company down.
Judge Ray M. Harding granted a preliminary injunction against Family Star and its promoters preventing the company from operating until a civil case against the company is resolved. Harding said the state has shown "through pleadings and proffers that the continuance of the defendants' acts during the litigation would produce great or irreparable injury."However, the injunction does not take effect until an order prepared by the state attorney general's office is approved by Family Star's attorney and signed by Harding.
The state filed a civil suit against the company asking that it cease operations and refund money received from investors. The state says the company is a pyramid scheme. The state contends the company is violating the Utah Consumer Sales Practices Act and the Charitable Solicitations Act.
State investigators say more than 2,000 people, mostly Utah County residents, invested $19.95 in a newsletter that allowed them to sell the letter to other investors. Investors were led to believe that they could make as much as $50,000.
Family Star officials say the company offers a legitimate product and that the state is attempting to shut down the company before it completes organization. The products offered by the company include computers, cleaning products and health aids.