ALBANY, N.Y. -- New York Attorney General Robert Abrams Monday demanded that a nationwide 'buying club' -- which he called an 'illegal, multi-million dollar pyramid scheme' -- be shut down.
Abrams sued Consumer's Buyline Inc., of Clifton Park, N.Y., in state Supreme Court in Albany, asking that the court order the company to halt its operations and pay back money it has collected.
Abrams said CBI had convinced more than 200,000 people around the country to send it $270 each to enroll in Purchase Power, a Texas-based buying club that obtains goods and services at discount prices.
But he said only $14 from each customer went to Purchase Power. The rest, he said, went to 'commissions,' starting at $3 a month, paid to members who had persuaded others to join.
CBI claimed members could earn as much as $30,000 a month in 'found income -- walkaway income, money that just keeps spilling into your wallet no matter what you're doing,' by signing up new members who in turn sign up other new members, Abrams said.
At least half a million dollars had gone to the three Clifton Park residents who operate the business despite CBI's advertised claims that its officers are not paid, Abrams said.
Abrams said CBI President Keith Raniere, who claims in ads to have the 'world's third highest IQ,' Secretary Pamela Cafritz, and Treasurer Karen Unterreiner had made $500,000 from the operation.
All three live in Clifton Park, about 20 miles north of Albany.
'While the organizers of Consumer's Buyline already have reaped hundreds of thousands of dollars for themselves, we can safely predict that thousands of participants will be left empty-handed,' Abrams said.
'The emphasis in CBI is clearly not the sale of a product, but on recruiting new organizational rows to boost membership,' Abrams said. 'Indeed, the only product in CBI is membership.'
Nancy Connell, a spokeswoman for Abrams, said Abrams is not calling Purchase Power an illegitimate business. She said Purchase Power is a 'going concern' that unlike CBI offers a catalogue of goods and services that may be bought.