Robert Fitzpatrick runs a watchdog group called Pyramid Scheme Alert. He examined the most recent income disclosure from Stream's website for The Atlanta Journal-Constitution.
He told the AJC for a story Sunday that his calculations show 90 percent of Stream's sales force lost nearly all their investments and only 0.1 percent earned substantial income.
Paul Thies, senior director of communications for Stream, denied the company is a pyramid scheme. He said Stream uses a legitimate multilevel marketing strategy and pays its sales force on their own sales as well as those of the people they recruit.
At a recent marketing event in a hotel conference room in Peachtree City, people were asked to image making as much as $2 million in a year selling natural gas for Stream Energy through the marketing company called Ignite.
A Texas lawsuit claims that Stream sells energy as cover for a sophisticated pyramid scheme designed to take money from the vast majority of sales recruits and funnel it to the top.
The Texas case has just started and Stream is vigorously defending itself. A similar lawsuit filed in Georgia by the same attorney was dismissed this year on procedural grounds.
Scott Clearman, the lawyer suing Stream, says the state's weak consumer-protection laws have left Georgians vulnerable.
The agency responsible for certifying Stream to sell natural gas, the Georgia Public Service Commission, said it is charged with protecting customers and Stream's rates and services have been similar to or better than other gas companies.
Mike Nantz, director of the PSC's consumer affairs division, said regulating the company's agreements with sales directors is the job of the Governor's Office of Consumer Protection.
The governor's consumer office said it looked at Stream at the request of the PSC.
``For all we could tell, Stream complied and was within the law,'' said spokesman Bill Cloud.
Fitzpatrick compared Stream's multilayered program to a ``chain letter.''
But Thies said the company makes clear to prospective associates that success depends on their efforts.
``It is true that a large number of people may or may not make their money back,'' Thies said. ``The business model itself does not dictate your level of success.''
Stream says its focus has always been selling a real product energy.
The company was licensed by Georgia to sell gas in 2008. But even before it was approved to market gas, Ignite directors began recruiting in the state, PSC records show. Ignite sales pitches swept through neighborhoods, churches and companies.
http://accesswdun.com/article/2010/12/234303