CHARLOTTE, N.C. -- Montana Securities regulators have dropped a temporary cease and desist order against Concord-based ACN Inc., but regulators say they will still pursue fines and refunds, charging that ACN is a "pyramid scheme."
Deputy Securities Commissioner Lynne Egan says the cease and desist order never prohibited ACN from doing business in Montana but rather put the company on notice to abide by Montana law.
ACN Executive Vice President Dave Merriman has said the case is the result of a "big misunderstanding" of the company's business model and the company hopes to resolve the case.
ACN held an international training session at Time Warner Arena in downtown Charlotte last weekend, hosting an estimated 20,000 independent sales reps and headlined by Donald Trump. Trump placed ACN's video phone dubbed the Iris 5000 on the NBC program "Celebrity Apprentice."
The company offers the video phone for $129.99 and signs up sales reps for $499 each.
Montana Securities lawyers claim in legal filings that the only way for sales reps to be compensated is to recruit other participants to sell a service that is "not usable in Montana." Merriman says the allegation is a misinterpretation of the company's own data.
Montana officials say the video phone is not usable in most of Montana because very little of the state has high-speed broadband Internet access and ACN sells phone service over the Internet. Merriman says customers have the option of purchasing DSL service through ACN and using the video phone over DSL.
Montana is pursuing fines and refunds by presenting its case before a hearing officer, a lawyer agreed upon by both parties to hear the case.
A telephone conference call has been set for Wednesday, Oct. 6, to schedule a hearing in the case.