The Attorney General of Washington accuses LuLaRoe of having set up an illegal "pyramid scheme" in the context of a new trial

• The state attorney general's office in Washington states in a new lawsuit that LuLaRoe is an illegal "pyramid scheme".
• The complaint, filed Wednesday, accuses LuLaRoe of having exploited an "illegal pyramid", making misleading tax returns, and encouraging her consultants to focus more on recruiting than on selling clothes to customers.
• Last December, Business Insider reported for the first time that the Washington attorney general's office was investigating LuLaRoe.

The Washington State Attorney General's Office has taken legal action against LuLaRoe, alleging that the multi-level marketing company is an illegal "pyramid scheme".

LuLaRoe CEO Mark Stidham and President DeAnne Stidham are among the defendants named in the lawsuit, which was filed Wednesday in King County Superior Court.

The lawsuit accuses LuLaRoe of exploiting an "illegal pyramid", making misleading tax returns and encouraging her consultants to focus more on recruiting than on selling clothes to customers.

"In short, LuLaRoe's business model was a pyramid scheme," says the lawsuit.

The company's marketing and sales activities, misleading income and lifestyle statements, the focus on recruitment and inventory purchases more than on consumer sales outside LuLaRoe, and Inventory loading practices ensure that the main business opportunity with LuLaRoe was recruitment.

LuLaRoe and the Stidhams did not immediately respond to requests for comment on the lawsuit.

Business Insider reported in December that the Washington attorney general's office was investigating LuLaRoe.

LuLaRoe is also facing a $ 63 million lawsuit from its main supplier, Providence Industries, which says the clothing company has not paid its bills for seven months. LuLaRoe denied the claims in the lawsuit.

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