August 14, 2002                                                         Contact:Lucas Hamilton

Morrison issues cease and desist order against Power of Nature pyramid scheme

      State Auditor John Morrison Tuesday issued a cease and desist order in Helena against Peter Von Berg, Charles "Butch" Palmer, Dan Nelson and Marjie Scharf for their leadership role and participation in the pyramid scheme Power of Nature. Pyramid schemes are specifically outlawed by state law.
      Power of Nature purports to sell health and beauty aids, however, its primary method of compensation requires continued recruitment of others.
      "We need to stop these programs and the people promoting them before any more Montanans lose their hard-earned money," Morrison said. "Many Montanans have been deceived into believing they are legitimate, legal programs, but they aren't and people stand to lose their money if they participate."
      The order alleges the named individuals held a recruitment meeting Aug. 6 at the Country Inn & Suites in Helena with 30 people in attendance. It alleges they held additional meetings in Helena, Bozeman and Great Falls.
      The order alleges Montana recruits were encouraged to buy into the program for $4,500. Participants pay $1,500 in cash and receive a loan from Power of Nature for $3,000. It also alleges promises were made to recruits that they could receive $20,040 if they recruit four additional members to the program.
      "Our objective is not to prevent consumers from getting ahead financially in these difficult economic times," Morrison said. "In fact, we often make financial literacy presentations and work to educate Montanans about the importance of informed saving and investing. But regardless of how these programs are pitched, the bottom line is that they are illegal."
      "We intend to stop individuals who promote and lead recruitment efforts," Morrison added.
      Persons found in violation of the law prohibiting pyramid promotional schemes could face penalties of up to $10,000 per violation and/or 10 years in prison.
      Pyramid schemes are fraudulent because the focus is on the compensation structure, rather than products. The money paid to join the program primarily is recycled to existing program participants. Continuation of the program is dependent upon new recruits. Eventually, the pool of people available for recruitment dries up and the pyramid collapses so the people on the lower pyramid tiers never get their money back, let alone make a profit.
      The individuals have 15 days to request a hearing.
      Anyone with information about the Power of Nature program should call the State Auditor's Office at 1-800-332-6148.