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Stream/Ignite Racketeering Litigation

Scott learned that Stream Energy and its sales arm, Ignite, were acting questionably in structuring its compensation to direct sales associates, known as “Ignite Independent Associates.” Stream Energy and Ignite called it a legitimate multilevel marketing business. Scott recognized what was not so obvious; these companies were operating a pyramid scheme he concluded violated the federal Racketeer Influenced and Corrupt Organizations Act, commonly called RICO. Stream and Ignite are not unique: many businesses make-believe they are legitimate multilevel marketing business, but they are not.

On behalf of a Texan, Scott sued Stream, Ignite and other defendants under RICO. The defendants first defended the scheme, not for its legitimacy, but that claims were subject to arbitration rather than litigation in district court. The defendants prevailed in the district court, but Scott defeated that claim before the Fifth Circuit. After some discovery, the district court certified a class, a decision now on an en banc appeal to the Fifth Circuit, appointing Scott as one of the class’ lead counsel.

The case continues.