A federal judge has ordered Midvale-based Investors Dynamics Corp. to cease operations temporarily following allegations by the Securities and Exchange Commission of business fraud.
U.S. District Judge David Sam entered the order, agreed upon by both parties, in response to SEC complaints against the company and its president, Steven L. Down.The commission filed allegations of business fraud against the multilevel marketing company on March 12.
As a provision of the restraining order, the company also was ordered not to destroy any of its product information or financial records.
Sam scheduled a hearing April 16.
In the complaint, SEC attorneys accuse Investors Dynamics of projecting exaggerated earnings and failing to inform potential investors of market saturation.
"Latecomers to the pyramid might not realize the same returns received by prior members," the complaint states.
But IDC member David Down, the brother of the corporation's president, said it is incorrect to refer to the company as a "pyramid" organization because that implies the company has participated in an illegal marketing scheme.
Company advocates say the claims of fraud are erroneous and are merely the results of complaints levied by disgruntled investors who were unsuccessful because of their own lack of effort.
In its manual, IDC's mission statement reads: "The mission of Investors Dynamics Corporation is to provide you the secrets of the wealthy and help you achieve wealth and security. It is the center for the most powerful financial information available in America today."
Defense attorney Nick Hales would not comment and IDC officials sent company members notices advising them not to speak to the news media.