June 20th, 2007, 08:59 AM
Former USC, Clemson stars among investors in BurnLounge
Former USC, Clemson stars among investors in BurnLounge
By JASON RYAN and JOSEPH PERSON -
Before making enemies with the Federal Trade Commission, Rob DeBoer tried to make as many friends as he could.
The ex-USC running back now living in Irmo claimed in training videos to have a hand in recruiting 30,000 people to BurnLounge, an online music retailer sued by the FTC this month accused of being a pyramid scheme.
DeBoer, who was sued for allegedly misrepresenting earnings from BurnLounge, promoted the New York-based company with ex-USC quarterback and Gamecock football announcer Todd Ellis — helping turn Columbia into ground zero for BurnLounge.
They hosted events in Columbia nightspots and living rooms to market BurnLounge franchises — customizable Web pages that rewarded buyers with free music or cash for selling songs or additional franchises priced between $30 and $430.
Their promotion, along with the involvement of other well-known sports personalities, created a jock-inspired network of investors across the Sunbelt, including University of Oklahoma football head coach Bob Stoops and some of the biggest names on both sides of the Clemson-South Carolina rivalry .
Ex-Clemson football coach Danny Ford and former USC running back and Heisman Trophy winner George Rogers both said they lent their names in exchange for franchises that ended making little or no money.
Those invested in BurnLounge sites included USC football head coach Steve Spurrier’s sons — one a Gamecocks assistant coach, the other a player on the team.
Other former athletes associated with BurnLounge:
• Former USC baseball player D.T. Cromer, who played in the Oakland Athletics organization with DeBoer and sells real estate in Lexington County
• Will Merritt, a former Clemson lineman who is a member of the Tigers’ broadcast team
• Kip Bouknight, a former national baseball college player of the year from USC now in the Pittsburgh Pirates’ farm system.
Bouknight and Cromer did not return calls last week. USC football team doctor Jeffrey Guy said he was recruited by Bouknight. DeBoer said Cromer was involved in BurnLounge.
Merritt said organizers trumpeted involvement of athletes and coaches when selling franchises.
Only DeBoer, who also serves as a sideline reporter during USC radio broadcasts, has been named in any known legal action. He could lose money he made from selling BurnLounge franchises.
HOW IT WORKS
Individual BurnLounge pages were marketed as an alternative to iTunes — a place to steer friends to buy music.
BurnLounge’s payments, the FTC said, are structured so that investors are rewarded much more lucratively for selling franchises instead of products — the definition of a pyramid scheme.
BurnLounge, in a statement, said, “We believe that the complaint does not reflect the reality or substance of our business, and we are working with the government to address their concerns.”
Neither BurnLounge nor the FTC have said how much the sellers nationwide have made.
DeBoer, who declined to comment for this article, said a week ago he’s done nothing wrong and will be vindicated.
Ellis, a Columbia lawyer who was not named in the suit, also stands by the company.
USC athletics director Eric Hyman said the university is reviewing the actions of those involved with BurnLounge to see if any disciplinary action is warranted.
‘SOMEBODY PUT ME IN’
This isn’t the first time former South Carolina athletes and coaches have flirted with questionable investments.
The U.S. Securities and Exchange Commission shut down and froze the assets of Atlanta-based auto title loan company Cash 4 Titles in 1999, calling it one of the largest pyramid schemes in the nation’s history.
More than 2,000 people invested $200 million with the company, including Ford, former USC receiver Robert Brooks, and former USC football coaches Brad Scott and Jim Carlen.
Former USC assistant coachturned sports agent William “Tank” Black went to prison for his role in the scheme.
Now Ford and Rogers are among the list of minor and major celebrities associated with BurnLounge, alongside the likes of Columbia’s Hootie & the Blowfish.
Ford and Rogers acknowledge they were recruited into the BurnLounge network because of their names, not their knowledge of the online music business.
Other retailers paid the introductory fee for Ford and Rogers, each said.
“Somebody put me in that thing and paid my deal,” said Ford, who had worries about a pyramid scheme. “I went to one meeting and never did anything on it. Never tried to sell it, never tried to buy anything on it, never did nothing.”
Rogers hoped BurnLounge might bring in money for his foundation, but said he never earned “one dime.” Rogers believes he was taken advantage of by the BurnLounge marketers.
“That’s one thing I didn’t like about it,” he said. “They were trying to get me involved just because of my name.”
JOIN THE CLUB
Merritt, who hosts a radio talk show with Rogers, said a mutual friend approached him about joining.
“They said something to the effect of, ‘... We’ve got coach Ford doing it. We’d like to get you involved,’” Merritt said. “I was like fine. It was a couple hundred bucks. I said, ‘Hey, worst case scenario, I lose a couple hundred bucks.’
“The checks were rolling in hot and heavy there for a while,” said Merritt who made about $10,000 by getting a “bunch of buddies” to enroll.
Besides ex-athletes, several coaches tried to make extra money in BurnLounge.
Gamecocks receivers coach Steve Spurrier Jr. invested in BurnLounge a year ago after Oklahoma coach Stoops introduced him to the concept.
“When Bob Stoops got me, he said, ‘I’ve spoken to a lawyer about this. I’ve spoken to my agent. I’ve spoken to some people to find out if this is a legitimate thing. And everything they told me, this is a legitimate (business). Put your name on it and go do it,’” said Spurrier Jr., a member of Stoops’ Sooners staff from 1999 to 2001.
An Oklahoma spokesman said last week that Stoops was on vacation and unavailable for comment.
Spurrier Jr., 35, signed up two assistant coaches and his brother, Scott, a receiver on the team. He broke even with BurnLounge, deciding to stop selling for the company two weeks ago rather than pay a yearly renewal fee.
He said the business has been considerably more lucrative for Ellis and DeBoer.
“Todd’s way at the top of that thing,” he said. “He’s making a lot.”
DeBoer said he was able to leave his job as an account executive marketing the USC athletics program for Gamecock Sports Properties.
A hearing on the FTC’s lawsuit is scheduled for June 26 in Los Angeles, where the judge will hear the FTC’s arguments for issuing an injunction to halt BurnLounge’s operations.
For as many people that jumped on board with the former jocks, at least one ex-Gamecock football player walked away.
Reed Morton, a USC kicker from 1993 to 1996 and a USC School of Law graduate, said he had doubts about how BurnLounge was making money and resisted offers to invest.
“The people I feel for the most are the fans that got involved,” he said.
“Many of them entered into this blindly at the behest of a few people they admired and trusted. I imagine right now they feel a bit embarrassed and used.”
June 20th, 2007, 09:00 AM
It should be noted that the "USC" referred to in this story is not "the real USC" but rather another university located in South Carolina, not Southern California.