LV Internet firm settles charges with Maine

Tuesday, May 16, 2000 | 10:50 a.m.

Bigsmart.com LLC, a Las Vegas-based Internet mall operator, has agreed to pay a $50,000 fine to settle charges brought by the attorney general of Maine.

In a complaint filed in Maine state court May 9, the state attorney general charged Bigsmart.com with operating a pyramid scheme in violation of that state's laws. Bigsmart was incorporated in Nevada in December 1999.

Maine had sought civil penalties of $10,000 for each violation of the state's unfair trade practices act, an injunction barring the company from operating in Maine and refunds for the 1,300 Maine residents participating in the company.

"Bigsmart called us right away and told us they wanted to settle," said Linda Conti, assistant attorney general for Maine.

The settlement calls for the payment of $50,000 in fines and fees to the Maine attorney general, plus limited refunds to Maine residents. Maine residents will be eligible to receive the full cost of the Internet "mall" purchased from Bigsmart, less any commissions paid by the company.

Bigsmart sells spaces in its Internet mall for $199.95 per year, plus a $50 activation fee. Participants ostensibly receive commissions for purchases made through their mall space from Bigsmart's product lines.

However, participants could also receive commissions from simply selling mall spaces to new participants. Bigsmart also offered an "independent distributor" position for $9.95, where commissions were derived exclusively from the sale of mall spaces.

The settlement calls for Bigsmart to stop paying commissions for the sale of mall spaces, Conti said, and to pay commissions only for retail sales.

"They did represent to us that they intend for this to be a national change, so they'll do it everywhere," Conti said. "They haven't been sued anywhere else."

Jane Femiano, senior deputy attorney general in the Nevada Bureau of Consumer Protection, said Nevada has not filed any charges against Bigsmart.

Bigsmart officials could not be reached for comment.