THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, August 17, 1996 TAG: 9608170233
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: 55 lines
Attorneys general in 14 states have reached an agreement with Equinox International Corp., a Las Vegas-based company that has attracted complaints over the way it recruits people and sells products, the Texas attorney general's office said Friday.
``Our main concern was the income claims being made by this company,'' said Sonya Sanchez, a spokeswoman for the Texas office, which led the investigation. ``People were coming away from these (recruitment) meetings believing they would be making thousands and thousands of dollars.''
Under the agreement, the company must tell potential distributors they won't necessarily make money selling Equinox products.
Also, advertisements must be factual, the attorneys general said. Job seekers, including some in Hampton Roads, have said they thought they were interviewing for management positions instead of job opportunities.
Equinox paid the states $455,000 for costs related to the nine-month investigation. But the company admitted no wrongdoing.
``We're very pleased with the results,'' Equinox spokeswoman Sue Stitt said.
Company founder Bill Gouldd has been under the microscope before. In a 1989 civil lawsuit, the California attorney general said Gouldd operated an illegal pyramid scheme while he was a distributor for another company.
Gouldd paid $75,000 to settle the suit.
Since then, Gouldd has moved on to Equinox, which sells everything from vitamins to air filters though its more than 400 independent distributor offices.
Equinox's local arm is East Coast Solutions, off International Parkway in Virginia Beach.
Under the Equinox system, new distributors can be promoted after selling $5,000 worth of Equinox products. But they can earn more by bringing in new people, which increases their own sales volume.
People in other states told law enforcement officials they were asked to make large investments to buy their way into positions within Equinox's local sales force.
For example, if Equinox representatives need $5,000 in sales to get promoted, they might make a $5,000 investment up front, essentially purchasing the promotion.
As part of the legal agreement, Equinox may not initially sell a distributor more than $5,000 worth of merchandise unless that person can show that it has been sold.
For the next two years, the company must mail reports to the 14 attorneys general in Alabama, Florida, Illinois, Michigan, Missouri, Nebraska, Nevada, North Dakota, Ohio, New Mexico, Pennsylvania, Texas, Washington and Wisconsin.
``It is important for them to follow these guidelines,'' said Sanchez of the Texas attorney general's office.
KEYWORDS: LAWSUIT SETTLEMENT EQUINOX by CNB