Students returning to college campuses this week will have to find a new energy drink — and another way to get a BMW.
Federal regulators raided the Tempe, Ariz., headquarters of Vemma, halting the operation of the energy drink distributor that used college kids to peddle the beverage, sold under the name Verve.
Vemma is an illegal pyramid scheme that “lures college students and other young adults with the prospect of getting rich” but left most of them with no profits, according to the Federal Trade Commission, which seized all the inventory and halted its operation.
Fifteen FTC agents stormed Vemma’s offices on Monday morning, sources told The Post.
A federal judge in Phoenix froze the bank accounts and real estate belonging to Vemma founder BK Boreyko, a 53-year-old entrepreneur who just last year won an “executive of the year” honor from the American Business Awards.
Boreyko got his start in multilevel marketing as a teenager working for Amway, the world’s largest multilevel marketer. Both of his parents were Amway distributors.
All of Vemma’s assets — including products in warehouses around the world — are frozen pending the outcome of a hearing set for Sept. 3.
Vemma, which had total sales of $200 million in 2013 and 2014, marketed its business opportunity to college students and young adults as an alternative to college and student debt, as The Post reported almost two years ago.
“Don’t call us a fricking pyramid scheme because we’re not,” Boreyko said at the time.
The FTC disagrees. “Rather than focusing on selling products, Vemma uses false promises of high income potential to convince consumers to pay money to join their organization,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a statement Wednesday.
It received 200 complaints about the company, sources told The Post.
Vemma told the students that for an initial investment of $600 and a mandatory minimum of $150 in product purchases per month, they could earn “$500, $5,000 or even $50,000 a month,” the FTC alleged in its complaint.
To entice young people, Vemma offered BMWs as bonuses.
Losses are inevitable, the FTC said, because Vemma rewards its salespeople for recruiting participants instead of selling products to consumers outside the network.
The aggressive move to shut down the 10-year-old company sent a chill through the MLM industry, which has been in the regulatory spotlight ever since Bill Ackman unveiled his $1 billion short on Herbalife.
Boreyko — who has a 1999 consent decree settlement with the FTC regarding a prior MLM — declined to comment.