A 4th Circuit judge Wednesday said there is probable cause to believe a Pleasant Grove woman operated a pyramid scheme, and bound her over for arraignment.
After hearing testimony in a preliminary hearing for Sally Ann Hall, 45, Judge John Backlund ordered Hall to appear May 17 in 4th District Court for arraignment on five counts of operating a pyramid scheme, all third-degree felonies.Charges were filed March 21 against Hall and seven others for their promotion of Family Star, a multilevel marketing firm. The charges stem from an investigation into the company's operations by the State Division of Investigations.
At Wednesday's hearing, Deputy County Attorney Jim Taylor played a videotape of a Family Star presentation to possible investors given by Hall. Scott Mann, an investigator with the Division of Investigations, testified that he obtained the tape from a person who approached him about becoming involved in Family Star.
Hall, who represented herself, objected to the tape being shown, claiming it violated her Fifth Amendment rights. Backlund overruled, saying the Fifth Amendment protects a person from giving self-incriminating testimony.
"That's not what is happening here," Backlund said.
On the tape, Hall described Family Star as a simple multilevel marketing company that operates on "efficient teamwork effort." She said the company consisted of five levels and investors moved from one level to another depending on the number of people they signed up. To become a member of the first company, investors had to buy a newsletter for $19.95.
Several times during the tape Hall said investors would purchase products. However, she said she could not reveal the names of the companies or the products because negotiations with the companies were ongoing.
"Just trust me, you'll be purchasing products, that's what makes it legal," Hall told possible investors on the tape.
Mann testified that he attended five of Family Star's promotional meetings between Jan. 29 and Feb. 6. He said he never heard any discussion about buying products independent from signing people up. According to his calculations, he said a person would have to sign up 37,800,000 people to reach the fifth level.
In a move rarely seen at preliminary hearings, Hall called J. Blaine Rupp, a co-defendant in the case, to testify. Backlund told Hall that he has only seen the defense present evidence during a preliminary hearing once in eight years as a judge. He also told Rupp that his testimony could be used against him during his hearing.
Despite Backlund's warnings, Rupp testified that he was never told that he would receive money for signing up others. He said there was no enrollment fee, that the $19.95 was to purchase a newsletter. He said the numbers presented by Mann were incorrect and that he was told he could purchase products without being a member of Family Star.
"I'm excited about the products, I have them in my home," Rupp said.
However, on cross-examination Rupp said he never saw many of the products or a catalog describing the products.
In his closing statement Taylor said the company generated money solely by introducing people into the program.
"It is a clear and simple pyramid scheme, disguised by attaching a product to it," he said.
Hall said no complaints have been received from investors and none of the money received has been spent. She said the company was designed to sell products but had not finished negotiations with the providing companies.
In March, 4th District Judge Ray M. Harding issued a restraining order preventing Family Star from operating.