FTC seeks NetForce contempt judgment + civil sanctions

Following a directive last month in their NetForce case, the FTC has filed a motion seeking a contempt judgment and compensatory civil contempt sanctions.

The FTC first sought NetForce contempt sanctions against Jay Noland mid last year.

The court
declined to initiate contempt proceedings
at the time, pending resolution of the FTC’s Success by Health pyramid case.

To obtain contempt sanctions, the FTC must not only succeed on its allegations in the Success By Health action but prove those allegations by clear-and-convincing evidence.

That case is
still playing out
pending the outcome of a filed appeal.

In the meantime with permission of the court, the FTC is again seeking contempt penalties in the NetForce case.

In their June 23rd motion, the FTC puts forth

Defendant James D. Noland, Jr., along with co-contemnors Scott Harris, Thomas Sacca, Success By Media LLC, and Success By Media Holdings Inc. violated multiple terms of this Court’s 2002 Stipulated Final Judgment and Permanent Injunction.

Until the Court imposed preliminary relief in January 2020, they ran two pyramid schemes—Success By Health (“SBH”) and VOZ Travel—using false earnings claims to bilk thousands of consumers out of $7 million.

The FTC, therefore, requests the Court find them in contempt and award civil compensatory sanctions.

The NetForce case was filed in 2000
‘against Jay Noland for making deceptive claims and promoting a pyramid scheme’
.

The FTC won the case via final order, which

bars (Noland) from certain marketing schemes, bars him from making misrepresentations related to a multi-level marketing program (“MLM”), and bars him from providing the means and instrumentalities to others to make misleading statements or omissions.

In support of their contempt motion, the FTC claims Jay Noland (right) and Scott Harris have been participating in pyramid schemes dating back to the 1990s.

Harris met Noland in the 1990s, when they each participated in their first pyramid scheme, Equinox.

A court found Equinox likely a pyramid scheme and imposed a preliminary injunction on the company.

Harris then joined Noland at Bigsmart, the pyramid scheme that gave rise to the Final Order.

Thereafter, Harris took a pyramid scheme hiatus, but continued deceptive conduct.

He became a manager of Allied Energy around 2003, then an officer in 2005 and CEO from 2011-2016.

Regulators found Allied Energy and/or Harris engaged in deceptive acts.

Harris told Noland about these orders, yet Noland put him in charge of Final Order compliance.

Three months after Harris was found to have willfully violated state law and a prior order, he became an SBM director, and in May 2019, its president, having been SBM LLC’s vice president since September 2017.

Noland and Harris boast of their pyramid proclivity.

Noland told an audience he builds pyramids and they can, too:

People ask me what do I do. I said I build pyramids, man. . . . I build some little pyramids, except I’m at the top of t

🤖 Quick Answer

What is the FTC seeking in the NetForce case motion?

Why was the previous contempt request declined?
The court previously declined to initiate contempt proceedings in the NetForce case, deciding to wait for the resolution of the FTC's Success by Health pyramid case first. That case remains pending the outcome of a filed appeal.

What authorization did the FTC obtain to proceed?
With permission of the court, the FTC obtained authorization to again seek contempt penalties in the NetForce case while the Success by Health action continues to play out through the appeals process.

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