Losers in Internet Pyramid Scheme To Recoup Some of Their Losses

More than 15,000 people around the world who lost money in an Internet pyramid scheme will receive refund checks of $300 to $500 this week in a civil settlement.

The Federal Trade Commission (FTC) said that 8,894 people in the United States who participated in the Fortuna Alliance, and its successor, Fortuna II, will receive $3.1 million in refunds. Checks were mailed Monday.

People in Australia, Canada, New Zealand and almost 70 other countries also will get some money back.

The operator of the pyramid scheme, Augustine Delgado, formerly of Bellingham, Wash., wanted on a federal contempt citation, is believed to be living in the Caribbean, the FTC said.

"This recovery shows once again that pyramid schemes are a lose-lose situation," says Jodie Bernstein, director of the FTC's Bureau of Competition. "Investors get burned because pyramid schemes inevitably collapse."

Regulators said customers agreed to pay between $250 and $17,500 to join the pyramid scheme, which promised profits of more than $5,000 a month for each $250 invested as long as others enrolled in the plan.

The FTC said about 10,000 people, those who recently joined the scheme, will receive about 60 percent of their money back.

At the request of the FTC, a federal judge in Seattle froze the company's assets in May 1996. Mr. Delgado agreed in February 1997 to settle the case by refunding customer membership fees in the alliance.

Last month, the judge issued a contempt order against Delgado for failing to pay $2.2 million in refunds that the FTC said he owed. He was not charged with a crime.