Wednesday, 15 June 2016

Robert FitzPatrick Explains the Big 'Herbalife (HLF)' Lie.

Spanish Prisoner: How 'Herbalife' Gets Its Money, And What The FTC Can Do About It


The FTC must stop Herbalife from systematically deceiving and harming. The FTC is inhibited by its view that "MLM" is presumed legal, even though MLM is legally undefined, unmonitored, unregulated.
The FTC's "retail-based" definition of "legal" MLMs conflicts with reality and the DSA. A DSA-backed bill in Congress would end the "retail" criterion. A new, stronger FTC approach is needed.
FTC should recognize Herbalife's primary deception in its practice of linking participants' personal purchases to their recruiting-based rewards. This is the classic Spanish Prisoner trick, also called the Nigerian Scam.
The FTC should ban all connections in Herbalife's pay plan between personal purchases and potential recruiting-based rewards. This includes banning personal purchases from being added to "group volume" quotas.
Herbalife's explanation of participant purchasing is as fantastical as the Nigerian scam stories. There is no legitimate basis for personal purchase quotas. Territories are unprotected, markets diluted, wholesale buying encouraged.
From WikipediaThe Spanish Prisoner is a confidence trick originating in the late 16th century. In its original form, the confidence trickster tells his victim that he is (or is in correspondence with) a wealthy person of high estate who has been imprisoned in Spain … The confidence trickster offers to let the (victim) put up some of the funds, with a promise of a greater pecuniary reward… Modern variants include the advance-fee scam, in particular theNigerian money transfer scam. In the Nigerian variation, a self-proclaimed relative of a deposed African dictator offers to transfer millions of ill-gotten dollars into the bank account of the victim in return for small initial payments to cover other expenses.
Now that it is a foregone conclusion - according to Herbalife's (NYSE:HLF) own pronouncements - that the FTC has indeed found something rotten in HLF, the sound and fury of absolute denial is subsiding. Reasoned proposals for restitution and remedy finally can be considered.
The FTC has been presented evidence of a wide array of wrongdoing, including a fake "business opportunity", misleading "disclosures", phony "education degrees" (as in Trump University), a bogus "sales leads" scam, recruiting centers posing as "nutrition clubs", and the documentation of nearly 100% loss rates among the millions that join at the bottom of the Herbalife "marketing" chain.
Yet, history has shown that in the bizarro realm of "multi-level marketing", remedial measures aimed at any specific practices and which require voluntary compliance or government monitoring don't work. Government fines are absorbed as business costs. Even MLMs that were shut down following prosecution quickly resuscitated in virtually identical form under new names with the same kingpin recruiters. MLMs are Hydras.
In the Herbalife case, therefore, the public interest could only be protected if the FTC identifies and prohibits fundamental elements of the company's "MLM" model that manifestly deceive and cause harm.
FTC's Self-Inflicted Dilemma
The necessity to address toxic fundamentals explains why the FTC has taken so long. The FTC has made it nearly impossible for itself to protect the public from MLM deception and harm by declaring that "multi-level marketing" is legal. It did this without establishing a legal definition of MLM and absent any monitoring or industry research to verify MLM's economic impact or prevailing marketing practices.
Unlike franchising, MLM is not only legally undefined and real-world unresearched, it is also exempt from any FTC disclosure rules. When fraud is recognized in MLM, as it often is by the FTC, SEC, and state AGs, the FTC laboriously applies its theoretical definition of MLM that is based on distributors profitably retailing products to the general public as the core "business opportunity", i.e., direct selling. It must then test the prosecuted MLM against this theory. This "complex economic analysis" of the offending MLM can take years. The approach diverts attention from FTC acknowledgment of massive consumer losses, rampant deception or from making any fact-based assessment of how MLM actually operates as an "industry".
The FTC's definition of the MLM industry, which it presumes is valid and treats as legal, starkly conflicts with Main Street reality. It also, clashes with the definition of MLM espoused by MLM's own official trade group, the Direct Selling Association. The FTC's conflict with the DSA over what MLM is ought to be a wake-up call to the FTC that it is operating on faulty premises.
If that were not enough to alert the FTC that its approach is inadequate, a current bill before Congress, HR 5230, introduced and backed by the DSA, effectively outlaws the FTC's current criterion for enforcement purposes. The proposed law would legally permit all recruiting-based rewards to be funded by "reasonable" monthly purchases made only by those inside the MLM marketing planMLM's self definition, in conflict with the FTC's definition of MLM, is based primarily on "self-purchasing" by the distributors themselves at non-negotiable contractual pricing, not on retail selling to the general public. The DSA maintains that all MLM distributors are also end-users, a first in the world of distribution.
There is, however, one other factor in the Herbalife/MLM plan that must be considered fundamental and primary and that is universally recognizable as a hallmark of fraud and a cause of the financial harm. If Herbalife's plan were stripped of this one factor, its capacity to deceive and harm would be drastically curtailed, apart from anything else the FTC might do for restitution or remedy. This factor has mostly been ignored or overlooked because analysis has been focused on other areas. In MLM pyramid scheme terms, this factor is often called the "pay-to-play" element, but it is better understood as the classic "Spanish Prisoner" trick or the ubiquitous Nigerian Scam.
Much of this essay on this pay-to-play factor is excerpted from a letter to the chairperson of the FTC, Edith Ramirez, signed by me as president of Pyramid Scheme Alert, urging the FTC to ban Herbalife's harmful pay-to-play practices. Further explanation is in the essay by attorney Douglas M. Brooks published Jan. 29, 2016, in the Seeking Alpha forum, entitled Multi-Level Marketing: A Modest Proposal.
Getting the Money
This primary fraud factor and first cause of harm is the classic trick of making a false promise of great riches (wealth beyond your wildest dreams) that requires a ransom payment (product purchases) to receive. In reality, of course, the riches do not exist (see the Herbalife income disclosure and churn rate regarding the truthfulness of its "reward" promise).
Concerning Herbalife, much legalistic attention has been focused on where HLFultimately get its money that is transferred to recruiters. Does it come mostly from purchases made by those inside the closed recruiting chain, the distributors themselves, or do those distributors get the money from their retail customers in open marketplace retail sales?
This is a valid interest for regulators, but the approach steps over the first cause of fraud, revealed in the classic Spanish Prisoner trick. The primary act of fraud is in how the scam induced payments from the victims, not how the victim got the money that was given over to the trickster. What has been hidden in plain sight are Herbalife's means and methods of getting money from consumers in the first place. It is classic Spanish Prisoner.
The Mystery of Herbalife Shoppers
Though the specific means of gaining funds has not been generally addressed, Herbalife's sales success has always been a mystery to financial analysts and sales experts. Sales companies rely on branding, advertising, convenient and efficient distribution, competitive pricing, customer service, or uniqueness or differentiation in products to stimulate sales. Some businesses, over time, can rely on the hard earned loyalty from a stable customer base, augmented by word of mouth to produce growth.
Herbalife uses none of these means. Sales force and customer turnover may be as high as 80% a year. There is no "loyal" market and no need for superior "service". Millions of people buy Herbalife products, inexplicably, in spite of the availability of the same types of goods at much lower price. Amazingly, some buy thousands of dollars of Herbalife products without having tried the goods. Herbalife buyers do no comparative shopping! And most incredibly, in order to buy, they sign onerous, restrictive contracts limiting their ability to return goods, criticize the company, negotiate pricing or to earn income from other MLMs. Then, after all that, the vast majority abruptly stops buying in less than a year. The smell of fraud is unmistakable.
Preposterous Claims Point to Bright Line
Almost as fantastic as ransomed aristocrats and deposed Nigerian dictators, Herbalife argues to investors and regulators that these purchases are ordinary consumer transactions. The fantastical offer of "unlimited" rewards that can only be accessed by joining the chain and purchasing product is said to have no effect on nearly all who sign and buy. Purchases are supposedly driven only by love of the high priced, unadvertised, commodity product, or, for some, to resell the products, though this alleged activity is not verified or measured.
Herbalife has sometimes argued that purchase quotas can be fulfilled by the downline's purchases, not the recruiters' own, thus making purchasing "voluntary". This is even less convincing than the story about a Nigerian dictator needing my bank account number to place his fortune. The FTC should just ask for evidence of such non-buying recruiters meeting their "volume" quotas. Spanish Prisoner ransom payments were similarly not "required"; however, access to a share of the rewards from the grateful nobleman could not be gained without payments. Buying products (ransom payments) is inextricably linked to accessing the promised Herbalife rewards.
The means used by Herbalife to generate "sales" (Spanish Prisoner payments) are the effective purchase requirements, in the form of personal purchase quotas. Therein lies the FTC's opportunity and likelihood of remedial action to identify and regulate the "bright line" of fraud in the Herbalife proposition.
Court Ruling Support
The recent federal court order against Vemma confirms effective purchase requirements as a key element of Vemma fraud and supports an FTC ban on Herbalife's pay-to-play scheme. The volume quota that can be met by personal purchasing is what the Vemma court ruling called one of the "features of Defendant's Marketing Program and bonus structure that tie bonuses primarily to recruiting and to the purchase of product principally to stay eligible for those bonuses." At Herbalife, as at Vemma, higher-level qualification for recruiting-based rewards can be gained right at the onset of participation by making a significant product purchase personally, costing hundreds or thousands of dollars.
The possibility exists - with the Vemma and Burnlounge federal court rulings serving as the most recent and relevant guidelines - for the FTC to ban theSpanish Prisoner payments from the Herbalife compensation plan as an inherently unfair and deceptive trade practice. Within Herbalife's sales and marketing plan, the FTC can and should prohibit all recruiting-based incentives, quotas or requirements upon individuals that include their personal purchasing, thus taking away Herbalife's means to unfairly and deceptively gain payments based on promises of rewards tied to "endless chain" recruiting, aka Spanish Prisoner rewards.
Suggested FTC Language
"As Herbalife offers all participants in its marketing plan the opportunity to gain payments that are facially related to unlimited and endless recruiting of new participants into the marketing plan, it may not require purchases or offer financial rewards to participants or impose financial penalties based in any way upon the level of their own personal product purchases that are related to such rewards. Personal purchases also may not be factored, positively or negatively, in the individual participant's own group volume-based rewards that are tied to recruiting new participants. Personal purchase quotas and incentives, when related to participation in the recruiting-based reward plan, constitute unfair and deceptive marketing practices."
Bright Line
That Herbalife's and other MLMs' participant purchases are effectively requiredand are tied to future recruiting rewards is obvious. Herbalife's pay plan includes specified initial purchase levels needed to establish various reward positions and periodic purchasing required for maintaining positions. The pay-to-receive recruiting-based rewards are presented as personal purchase quotas, which can be included in the recruiters' "group volume" quotas. The resulting practices of Herbalife participants making personal purchases in order to join the pay plan, prevent losing rewards or to reach higher levels of recruiting-based rewards are well documented.
No Business Defense
Apart from creating false demand or "conscripted purchasing", Herbalife cannot defend personal purchase quotas in rational and legal business terms. Herbalife provides no protected retail sales territories to any participants and no market support for retail sales activity. To the contrary, Herbalife places extraordinary obstacles against those who would seek to profitably sell its products at retail prices. With its "unlimited expansion" model, financial incentives to recruit other wholesale participants and its inherent mandate to increase the total number of participants in all areas without regard for market saturation, Herbalife fatally dilutes and undercuts a profitable retail selling opportunity for all existing participants.
personal purchase quota or the option to add personal purchases for authorization or maintenance of recruiting-based reward status, therefore, cannot be defended on retail (direct selling) business terms. It is obviously a device for inducing purchases (payments) to sustain the recruiting-based reward plan. Personal purchasing quotas fund the recruiting rewards.
No Effect on Direct Selling or Retail-Based Team Building
While preventing fraud, this proposed restriction would not interfere with anylegitimate business that Herbalife distributors might transact. An FTC restriction of personal purchase quotas, i.e., Spanish Prisoner Ransom Payments, does not, for example, inhibit purchasing by Herbalife's participants for personal retail selling, i.e., direct selling, or for any other business or personal purpose, including "self-consumption" or giving products to friends and relatives. Why they purchased or what they do with the products afterward is not monitored or verified in any event.
By itself, the restriction would also not prevent activities related to recruiting other participants into a personally organized or extended marketing "chain" on which rewards are based upon aggregate purchases. Uplines could still implore downliners to buy, however, the downliners' personal purchases, apart from helping the upline recruiter and Herbalife itself, would not benefit the buyer in any way relevant to the reward plan, except for retailing purposes.
The restriction would have the enormous consumer benefit of preventing Herbalife from inducing or effectively requiring inventory purchases for joining its devious and harmful recruiting-based reward plan (ransom reward). It would disallow and make it impossible for personal purchasing to be used to maintain a position in the plan or to increase rewards. It would prevent financial penalties (reduction in rank, lowering of commissions) related to the recruiting-based rewards for not making personal purchases. A participant's personal purchasing could not be part of that individual's own group volume that is a determinant of recruiting-based reward status.
Enforcement Challenges
Though the FTC has historically maintained that the MLM participants' "retail" sales, not the MLM participants' internal wholesale purchases, must be the main and ultimate funding source of recruiting-related rewards, no regulatory means exist for ensuring that recruiting-related rewards are actually obtained from purchases ultimately made by consumers who are not in the marketing plan.
Banning the unfair and indefensible practice of allowing or requiring personal purchases to fulfill quotas that are tied to the recruiting-based reward plan will prevent the means of "inventory loading" or continuous pay-to-play policies that induce mounting victim payments. Breaking the link between personal purchasing induced by quotas, incentives and penalties and recruiting-related rewards reduces the need for verifying or measuring retail sales that might or might not follow purchases. A clearly stated prohibition of personal purchase quotas tied to recruiting-related rewards will serve as an immediate, long-term and unequivocal deterrent.
By ending Herbalife's policy of personal quota purchasing, the FTC would free Herbalife to participate in the open market where value is fairly and openly determined and sales are based on market demand. Herbalife could still claim it has an enormous fortune waiting for those who sell its products. But no one would ever again have to pay a ransom to gain access to those fabled rewards.

Robert FitzPatrick (copyright 2016)

'FLP' infiltrates Barclays -The Daily Mail starts to Investigate the 'MLM' lie.

Why IS Barclays letting pushy salesmen flog £100 diet pills in its branches? 

US-owned firms hijack community programme 

  • Salesmen from controversial health schemes setting up stalls in branches
  • Most of the firms involved are US-owned and known for pushy sales tactics
  • Barclays set up its scheme allowing small businesses to operate pop-up stands in its branches in 2014 

Salesmen from controversial health schemes are setting up stalls in Barclays branches and pouncing on people waiting to be served.
Customers are being flogged expensive face creams and diet pills — and asked to become part-time sales staff themselves.
Most of the companies involved are U.S.-owned and notorious for pushy sales tactics. 
They have hijacked a Barclays community programme that was designed to give small local businesses a cost-free way of reaching High Street shoppers.

Shopfront: Salesmen from controversial health schemes are setting up stalls in Barclays branches and pouncing on people waiting to be served
Shopfront: Salesmen from controversial health schemes are setting up stalls in Barclays branches and pouncing on people waiting to be served

The revelation has sparked concern that elderly customers who depend on branches are at risk of being targeted.
Witnesses say salesmen are telling elderly customers that the products, which include £100 diet pills, energy bars and £30 herb-infused face creams, can ease ailments such as arthritis.

Stay-at-home mothers are being told they can make an 'easy' £300 a month if they sign up to become saleswomen.
Yet most of those lured in will be unaware of the dubious health benefits of the products. And those recruited as agents can face enormous pressure to sell — and stinging costs if they fail to hit monthly targets.
Forever Living, Arbonne and Herbalife all appear to be regular fixtures in Barclays branches. They are dubbed 'multi-level marketing schemes' because they work by signing up customers to flog expensive cosmetics or health products to friends, family and neighbours.
Typically, recruits work as and when they want — as they're technically self-employed — to supplement household income. Often they're promised promotions and extra cash if they regularly sign up new sellers.
Pushy: Most of the companies involved are U.S.-owned and notorious for their sales tactics
Pushy: Most of the companies involved are U.S.-owned and notorious for their sales tactics
Critics have accused the companies of having a similar selling style to pyramid schemes — illegal businesses that promise staff rewards for enrolling others, as opposed to offering income for selling products.
Mick McAteer, founder of consumer rights organisation the Financial Inclusion Centre, says: 'It seems a real shame for Barclays' efforts to help entrepreneurs to be ruined by a failure to make the proper checks on the firms allowed to sell to customers.'
Barclays set up its scheme allowing small businesses to operate pop-up stands in its branches in 2014. You can apply to a local branch to put up a stall and the bank makes no money from the arrangement.
However, Money Mail has discovered that instead of helping local entrepreneurs, the spaces have been seized on by big overseas businesses.
Representatives of Forever Living have been spotted in Barclays in Horley, Redhill, York, Stafford and Leominster. 
The Arizona-based firm, which raked in £120 million in Britain last year, sells beauty products and health foods containing aloe vera or beeswax. Items offered in Barclays include a £109 nine-day diet kit.
The firm's 40,000 UK sales reps, known as Forever Business Owners, are charged £199.75 for a box of products when they sign up. 
Recruits say they're encouraged by senior distributors to push items on Facebook and lure in friends as it can be costly if they fail to meet monthly targets. 
Laura Jones, 39, a former distributor in the North-West, was left £1,000 out of pocket after six months working for Forever Living.
The new mother, who'd been suffering post-natal depression, was introduced to the company by a friend. She says she was told she could earn £300 a month for five hours' work a week. But she was unable to sell enough.
She says she was forced to buy the products herself to meet her manager's expectations. She says she was also told to target new mothers and online forums. Forever Living says it does not enforce sales targets.
Laura says: 'There is no way Barclays should allow Forever Living into the branch to sell. It offers a dream to the vulnerable, which turns out to be smoke and mirrors.'

Callous: The firms have hijacked a Barclays community programme that was designed to give small local businesses a cost-free way of reaching High Street shoppers
Callous: The firms have hijacked a Barclays community programme that was designed to give small local businesses a cost-free way of reaching High Street shoppers

Forever Living was criticised by the Advertising Standards Authority watchdog last year for false claims about the health benefits of its products.
Herbalife sales staff put up huge signs in branches offering 'extra cash and flexible hours' to those who sign up. A sales rep who claims to tout regularly for cosmetics firm Arbonne in Barclays says long bank queues make it easy to sell.
'I'm like the entertainment to the customers waiting — a bit like in Disneyland,' the woman, who asked not to be named, told Money Mail. 
Arbonne reps are also encouraged to recruit more staff — called in jargon 'growing their downline'. Distributors in banks are offering a pot of face cream, which is listed at £30 online, and face powder at £31.

We found examples of Herbalife stalls in Kendal, Leamington Spa and Richmond, North Yorkshire. Salesmen for the Los Angeles-based firm, whose sales increased by $12.6 million (£8.9 million) in Britain in 2014, were flogging jars of chocolate weight-loss powder costing £28.40 online.
U.S. watchdog the Federal Trade Commission is investigating allegations that — in the style of pyramid selling — Herbalife's profits come mainly from signing up more distributors, rather than product sales. 
The firm says distributors are not rewarded purely for recruiting staff but receive a royalty from any products these recruits sell.
Furious Barclays customers have bombarded the bank's Twitter page demanding it bans the firms. Amy Ip, from London, wrote: 'Why is there a Forever Living stand in your Camberwell branch?'
A contributor to website Mumsnet overheard a Forever Living seller in Barclays telling an elderly man that its aloe vera gel could help his arthritis.
She says: 'It's inappropriate. It gave the impression that the bank approves and endorses this scheme.'
A spokesman for Timeless Vie, which campaigns against multi-level marketing company recruitment, says: 'Barclays has a duty of financial care towards its customers and discovering they are allowing these companies space in their branches is deeply troubling.'
A Barclays spokesman says: 'Clearly, in these examples raised by Money Mail, the companies have not met our guidelines. Following a review, we will now be prioritising the scheme for local community groups to ensure they continue to benefit from the free space in branches.'
A Forever Living spokesman says the firm is not a pyramid scheme and is legal. It says it 'rewards endeavour' but those who do not thrive can leave and get their money back.
Gavin Aley, senior director for Herbalife in the UK, says: 'Herbalife has been trading in the UK for 33 years, which has helped customers to maintain a healthy lifestyle.'
An Arbonne spokesman says: 'A pyramid scheme is illegal and Arbonne does not operate such a scheme.'

Ruth Lythe (copyright Daily Mail 2016)

Thursday, 2 June 2016

'Trump University' - a criminal racket using cult-style tactics.

Court documents have revealed co-ordinated devious techniques of persuasion deployed by employees at Donald Trump's (now defunct) bogus 'Investment School' against ill-informed and vulnerable individuals.
Coercive behaviour modification techniques designed to trick individuals into believing they were making a free choice to enter an advance fee fraud (peddled as 'education courses' containing Donald Trump's exclusive secrets to obtain financial success) are included in records released during a class-action lawsuit against the so-called 'Trump University.'
Predictably, Mr Trump continues to pretend moral and intellectual authority and has flatly denied that his 'school' misled 'students.'
'Trump University Inc.' is the focus of two class-action lawsuits in San Diego, California, alleging the company defrauded victims by failing to deliver on promises to impart Mr Trump's secrets of real estate investment success. Victims say they were misled by glossy propaganda boasting that Mr Trump had personally 'hand-picked' teachers and 'overseen the curriculum.' 

Robert Guillo, retiree, with a certificate he received after paying $34,995. to attending Trump University.
Robert Guillo, received an impressive-looking piece of paper in exchange for $34 995.

In responseTrump steadfastly pretends that the majority of his customers (98%) were satisfied. He is evidently secure in the knowledge that the majority of fraud victims always remain silent in defence of their egos.

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 Gonzalo Curiel.
The documents were released following an order by US District Court Judge, Gonzalo Curiel. The judge ruled that the files were in the public interest since Mr Trump had become 'the front-runner in the Republican nomination in the 2016 presidential race.'
Classically, Trump has completely ignored his victims' suffering and  attacked the Judge as 'biased.'


In a separate civil lawsuit in New York, Attorney General, Eric Schneiderman has alleged that 'Trump University' used deceptive practices and misled students about the support they would get, but Mr Trump has again flatly denied any wrongdoing. A judge has already said the $40m action in New York should proceed to trial, but Mr Trump is appealing this ruling and has attacked Schneiderman as politically motivated.

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The so-called 'Trump University' was instigated in 2005 as a commercial enterprise under the Trump brand, peddling so-called 'courses in entrepreneurship.' However, the real extent of 'University Chairman' Mr Trump's involvement is one of the key points at issue. Until it closed in 2010, ten thousands individuals are known to have given their money to the so-called 'Trump University' and an estimated total of $40 millions was collected.

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Victims were initially lured into the trap by Mr. Trump's 'billionaire' celebrity name and image, and by  'Free Trump University Introductory Classes.' 

The released documents include so-called 'playbooks' for employees which explain how to 'close the deal' and trick victims into buying further so-called 'business seminars' at up to $34 995 (£24 288). The so-called 'playbooks' also contained precisely-worded scripts for 'Trump University' recruiters to fob off reporters. They were instructed exactly how to dress and run 'Trump University' events, as well as how to identify victims who had access to capital assets. The unsealed files included depositions from former 'Trump University' executives describing how the fraud functioned. Former recruiter, Ronald Schnackenberg wrote that he resigned in 2007, because the program used 'misleading, fraudulent and dishonest' tactics.
Mr. Trump's recruiters were to use 'the most persuasive words in the English language according to a study by the Psychology Department of Yale University: You, New, Money, Easy, Discovery, Free, Results, Health, Save, Proven, Guarantee, and Love.'
Recruiters  were to talk to potential victims in a manner designed to have a 'powerful subconscious effect' on their thinking: 'Take every opportunity to emphasize that they need to learn the Trump way for continued and growing success!'
Trump Bronze Elite ($9,995), Trump Silver Elite ($19,495), or Trump Gold Elite ($34,995).
Potential victims were asked to disclose their liquid assets to 'help the Trump sales team' determine if they could be 'buyers.'
Recruiters were told to 'collect personalized information' about victims, e.g. the 'playbooks' said, 'are they a single parent of three children that may need money for food?'
According to the so-called 'playbooks:' 
'money is never a reason for not enrolling in Trump University; if they really believe in you and your product, they will find the money. You are not doing any favor by letting someone use lack of money as an excuse.'
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Michael Sexton (left).

Extensive testimony from former 'Trump University' executives begins to uncover Mr Trump's real level of guilt. Michael Sexton, ex 'Trump University President,' said in a 2012 deposition, that Mr Trump offered 'very good and substantive input' to the program's marketing materials.

David Brear (copyright 2016) 

Saturday, 14 May 2016

'ACN' is another 'Amway' copy-cat blame-the-victim 'MLM Income Opportunity/Prosperity Gospel' cultic racket.

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'ACN'  (aka 'Benevita') is another 'Amway' copy-cat blame-the-victim 'MLM Income Opportunity/Prosperity Gospel' cultic racket.

Anyone claiming, or implying that it is possible to earn an overall net-profit lawfully from participating in the so-called ACN income opportunity, is not telling the truth. In reality the hidden, overall loss/churn rate for the so-called 'ACN opportunity' has been effectively 100%, because  the so-called 'ACN opportunity' has had no significant or sustainable source of revenue other than a never-ending chain of its own losing participants. Thus, in the UK, the so-called 'ACN opportunity' is in flagrant breach of the Fraud Act 2006, for the simple reason that its quantifiable results have been deliberately withheld from all persons signing up for it and who have inevitably wasted their time and money in the false expectation of future reward.

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The parallels between the 'ACN/Benevita' fairy story, peddled as reality by  Robert Stevanovski, Greg Provenzano, and twin brothers Tony and Mike Cupisz, and the the 'Nutrilite' fairy story, originally peddled as reality by Carl F. Rehnborg, are quite remarkable. In brief, all these crooks have played the unoriginal role of ordinary men, turned super men - prepared to share their secret of unlimited health, wealth, happiness and freedom with anyone (for a price). However, this again is hardly surprising, because ‘Nutrilite Products Company Inc.’ was, after all, the prototype corporate-front for all subsequent 'Multi-Level Marketing/Prosperity Gospel Income Opportunity' rackets.

In the 1950s, 'Nutrilite' was a highly-controversial trademark owned by Carl F. Rehnborg a.k.a. 'Dr.' Rehnborg, a previously-penniless, American toothpaste-salesman (of German origin) who'd acquired a considerable fortune by reinventing himself as a historically-important, visionary-scientist, autodidactic scholar and philanthropic businessman. Lawyers from the US Food and Drug Administration Bureau of Enforcement, who successfully-challenged the authenticity of some of Rehnborg's many absurd lies in the federal courts during two decades, privately knew him to be nothing more than one of a trio of sinister quacks protected by an echelon of shyster attorneys, who’d combined, and updated, the medicine show and Ponzi-scheme to reflect the spirit of the age. However, Rehnborg was no ordinary charlatan. He almost certainly suffered from severe and inflexible Narcissistic Personality Disorder. 

Former penniless science-fiction author, turned multi-millionaire, cultic racketeer, L. Ron Hubbard, posing as a historically-important,visionary scientist and philanthropist who had discovered the secret of how ordinary humans can become healthy, wealthy happy and free super humans. Hubbard was also prepared to share this secret with anyone (for a price).
The Nutrilite Story
Tellingly, Rehnborg's own comic-book version of his life and achievements (set-down in various published documents, including a book signed by his son and heir, Sam Rehnborg), reads uncannily like the autobiography dreamt-up by 'Scientology' instigator, L. Ron Hubbard - a man who was once famously described as 'a combination of  Baron M√ľnchausen and Adolf Hitler.'

Unfortunately, just as with the followers and casual observers of Hubbard, the only information made available to the followers and casual observers of Rehnborg, has been carefully controlled.

Carl F. Rehnborg, circa 1915.
Rehnborg, Circa 1927.

Thus, to date, the world has been led to believe that Rehnborg (who was born in 1887 in St. Pitersberge, Florida) :- 

- was a noted-child-prodigy who read voraciously and who amazed his teachers with his detailed knowledge of: philosophy, religion, history, politics, astronomy, mathematics, aerodynamics, chemistry and human rights. 

- was  fluent in many languages, including Chinese. 

- was not a believer, but he studied Christianity, making a boyhood pilgrimage to Palestine and Egypt.

- had a great passion in his teen-age years - the study of planet Earth, its population, its food reserves, and the 'technology of conservation of natural products, but his first love was always the science of nutrition. 

 - was, by the tender age of 27, already a 'doctor of chemistry' who had moved to Tianjin in China to work as an accountant for an American Oil company.

- ran a shipbuilding company, before becoming the representative of the 'American Dairy Company' and, eventually, the representative of 'Colgate Products Company' in Shanghai.

 - witnessed ‘mass-starvation’ in China, before surviving a ‘siege of Shanghai’ by supplementing his diet (and that of his starving friends) with an improvised, vitamin and mineral-enriched broth made from grasses, vegetables, powdered limestone, ground-up bones and rusty nails, etc.

- sailed across the Pacific (studying its many island-cultures on the way) and landed on the West Coast of the USA, where, despite having no money, he managed to establish a 'research laboratory’ in his modest loft-apartment on California’s Balboa Island.

- selflessly dedicated 6 years of his life (1927-1934) to develop a ‘Revolutionary New Food Supplement’ to save mankind from starvation, assisted only by his dutiful young wife, Edith.

- first naively tried to give his wonderful new formula away, but the cynical world wasn’t interested, so, in 1934, he reluctantly decided to create ‘California Vitamins Inc.’ 

- moved his flourishing  ‘Business’ to a ‘Manufacturing and Processing Facility’ in Buena Park, California, and created the ‘Nutrilite Products Company Inc.’ in 1939. 

- acting in association with a ‘Network Sponsoring Company’, ‘Mytinger and Casselberry Inc.’ (to whom he’d sold ‘Exclusive Nutrilite Distribution Rights’) created the ‘World’s First Multi-Level Marketing Scheme’

- had lived the American dream, starting from nothing to become an admired and respected millionaire through ‘Helping 15 thousands fellow Americans to build their own MLM Businesses.’ 

Carl F. Rehnborg  circa 1939

Exactly like L.Ron Hubbard, scant quantifiable evidence has been produced to prove that Rehnborg was qualified (let alone expert) in anything, other than lying to vulnerable people to get their money. There is even reason to doubt that Rehnborg (who apparently did once work for 'Colgate & Co') was in China in the exact period he claimed during, and after, WWI; whilst all the other exciting episodes in his various occidental and oriental odysseys are largely anecdotal. However, the truth about Rehnborg’s convoluted ‘Rags to Riches’ American fairy story is an entirely different matter.

In 1934, Rehnborg (aged 48) legally-registered ‘California Vitamins Inc.’allegedly to manufacture and distribute what he arbitrarily defined as 'the World’s First Multi-Mineral/Multivitamin Plant-Based Food Supplement - a Unique Combination of Vitamins and Minerals in a Special Base.’  At first, this so-called ‘Health Tonic’ was brewed up, and peddled as 'Vita-6'  a.k.a. 'Vitasol,' in insignificant quantities. Consequently, it was of no particular interest to regulators.

However, anyone with an ounce of common sense could immediately tell that Rehnborg’s ‘invention’ was just another essentially-inert potion (in the absurd tradition of the medicine show); a random mixture of cheaply-procured common substances with an expensive price tag. It had probably taken Rehnborg 6 hours to concoct, not 6 years.

Aerial View of Nutrilite Products Inc. Plant

By 1939, Rehnborg had spotted the existing term, 'Nutrilites' (probably in an old scientific magazine). So he legally-changed the name of his pay-to-play game of make-believe to the technical-sounding ‘Nutrilite Products Company Inc.’ and moved his quackery onto an almost unprecedented scale. Soon, Rehnborg was legally employing dozens of white-coated workers in purpose-built industrial buildings in Buena ParkCalifornia. He also acquired an alfalfa farm near to the city of Hemet in California's San Jacinto valley, but it is unclear exactly where he suddenly found all the necessary capital to pay for these impressive sites and their modern equipment. To his followers and casual observers, Rehnborg’s activity looked like any other lawful enterprise. His staff were ordinary honest folk, to whom the truth was also unthinkable.

At this time, Rehnborg rechristened his potion ‘Nutrilite Double X (‘XX’Supplement.’ He now proposed to offer it as two ‘complimentary products’ in one pack -  comprising little green bottles of bright red ‘Multivitamin Capsules’ and boxes of pale-coloured ‘Multi-Mineral Tblets.’ The product was deliberately designed to look modern and scientific (like a proprietary medicine), but, tellingly, the price was fixed at just less than $20 a box (the equivalent of several hundred dollars today). Rehnborg claimed that the ‘XX’ brand-name was derived from the Roman numeral representing twenty. It should have been read as ‘double cross;’ for when the former toothpaste salesman’s pricey wampum was routinely analysed by independent chemists working for the FDA, it was discovered that (although it contained essentially what it said on the labels and was quite harmless) ‘XX Supplement’ really did mostly comprise a random mixture of cheaply-procured, common substances in which vitamins and minerals naturally occur (dried vegetable extracts: alfalfa; parsley; watercress; yeast; etc.). FDA experts later estimated that XX Supplement’  cost no more than a few cents a pack to produce. Thus, FDA lawyers must have known that Rehnborg was, in fact, using authentic pharmaceutical equipment to mass-produce a precisely-measured, harmless placebo, but labelled as a ‘Health Tonic’ (a meaningless term), and peddling it at an exorbitant mark-up (certainly, more than 1000%). This crack-pot pseudo-scientific swindle, which was tantamount to a self-styled 'alchemist' stamping a valueless amalgam of base-metals, 'Pure Gold,and selling it for the price of pure gold, could have been quickly nipped in the bud, simply by charging Rehnborg with criminal fraud. Apparently, prosecutors never considered the possibility that they might be dealing with someone with severe psychological problems whose own inflexible delusions were contagious. Instead, at first, FDA lawyers felt obliged to take no action; reasoning that, by truthfully listing the banal ingredients, but avoiding making any specific therapeutic claims, on his packaging, Rehnborg had found a loophole in federal laws concerning criminal misbranding of medicines. As result, an up-dated version of an age-old fiction was permitted to be mass-marketed as fact to an unsuspecting public. Unfortunately, the lack of any rigorous, official challenge only brought its author more credibility. Not surprisingly, a host of copy-cat 'Unique Vitamin and Mineral Health-Tonic’ scams quickly sprang up.

As WWII drew to its close, ‘Nutrilite’ had lost its novelty, so Rehnborg (who was approaching 60) had teamed-up with two respectable-looking associates, Lee S. Mytinger and William S. Casselberry (later described by FDA officials as a ‘cemetery-plot salesman’ and a ‘psychologist’). The result was ‘Mytinger and Casselberry Inc.,’ a second corporate structure peddling ‘Exclusive Commission-Agency Rights’ to ‘Distribute XX Supplement’ using (what was first defined by the company’s owners as) a ‘New Business Model.’ In theory… you could try to sell ‘XX  Supplement’ to your social contacts for a small profit, but, if you wanted to make big money, you didn’t need to sell anything… you could buy a monthly quota of ‘XX Supplement’ yourself and sign-up your social contacts to do the same… your ‘Sponsored Recruits’ would then ‘Sponsor’ their own social contacts, etc., ‘compensation’ would automatically multiply in an infinitely-expanding geometric progression

‘Mytinger and Casselberry Inc.’ offered a mind-numbing contract’ in which the ‘company’ undertook to pay its ‘Independent Distributors’ an escalating ‘monthly commission’ on the totality of their escalating ‘Business Volume’(i.e. their own regular monthly purchasesfalsely defined as sales’, added to the regular monthly purchases, falsely defined as ‘sales’, of their ‘Sponsored Recruits’, and those of the recruits of their recruits, etc. etc. ad infinitum).

In reality, the new set-up was merely the original mystifying lie with a second mystifying chapter added, but to casual observers ‘Nutrilite Products Company Inc.’ appeared to be exclusively manufacturing for, and wholesaling ‘XX Supplement’ to, ‘Mytinger and Casselberry Inc.,’ whose commission agents, in turn, appeared to be retailing it to the public for a profit. Although ‘XX Supplement’ was presented as ‘Unique,’ it mostly comprised substances which could easily be bought at a fraction of their exorbitant, assembled fixed-price, in traditional retail outlets. The product was effectively-impossible to sell to the general public for a profit on the open market. Therefore, the overwhelming majority of its final customers were merely the non-salaried agents of the second corporate structure, which itself was the sole agent of the first corporate structure. In order for them to maintain the false hope that if they signed-up further contributing participants they would automatically become rich, the participants in this dissimulated money circulation game were obliged by its rules to keep handing-over a monthly payment to Mytinger and Casselberry, to be shared with Rehnborg. From all rational points of view (medical, economic, legal, etc.), ‘XX Supplement’ might have well not existed; for it was just a convenient means of laundering illegal payments in a closed-market swindle, or pyramid scheme,  based on the crack-pot, non-rational theory thatendless-chain recruitment + endless payments by the recruits = endless profits for the recruits. New victims were supplied with a $49.50 ‘Business Kit’ (i.e. a large cardboard box stuffed with a month’s supply of ‘XX Supplement’ and a fat folder containing page after page of mind-numbing pseudo-economic/medical presentations and diagrams, and instructions in how to go about remembering, contacting and recruiting everyone they’d ever known during their lives). These presentations contained the concrete evidence which FDA lawyers could use to prosecute Rehnborg, Mytinger and Casselberry. Contributing participants were being instructed to smile, project excitement and enthusiasm, and to recite a precisely-worded script which proclaimed ‘Nutrilite XX Supplement’ to be ‘good value,’ because it could ‘cure or prevent,’ virtually any known human illness.

William W. Goodrich
William W. Goodrich (see interview pages from 107)

Even though it wasn’t his area of responsibility, FDA Legal Counsel (1939-1971), William W. Goodrich, was probably the first senior US law enforcement agent to deduce that the innocent baby that Rehnborg, Mytinger and Casselberry had baptised a ‘New Business Model’ (later to become known as: ‘Multi-Level Marketing’) was actually the same old delinquent previously known a 'pyramid scam.’ Again, anyone with an ounce of common-sense could work out immediately that, since Rehnborg had been peddling medical alchemythe strong likelihood was that Mytinger and Casselberry were peddling economic alchemy. The sinister trio of quacks were obviously acting in association, but agents of the Food and Drug Administration and those of the Federal Trade Commission acted independently. At this time, anti-racketeering legislation did not yet exist in the USA. However, in the late 1940s, the rapidly-expanding ‘XX Supplement’ dossier was already in the hands of FTC lawyers. Apparently, prosecutors still never considered the possibility that they might be dealing with persons suffering from severe psychological problems and whose own inflexible delusions were contagious. Instead, they still felt obliged to take no action; this time reasoning that Mytinger and Casselberry appeared to have found a loophole in federal law prohibiting fraud. For even today, the fundamental identifying characteristic of all pyramid scams and Ponzi schemes, has not yet been accurately defined by legislators. As a result, another updated version of an age-old fiction was permitted to be mass-marketed as fact to an unsuspecting publicYet again, the lack of any rigorous official challenge only brought its authors more credibility. Not surprisingly, a host of copy-cat 'income opportunity' swindles (camouflaged by banal, but pricey, wampum) quickly sprang up.

By 1947, Rehnborg, Mytinger and Casselberry were steadfastly pretending  ‘15 000 Successful Distributorships in the USA,’ with ‘sales’ totalling ‘$500 000 dollars per month.’ They had also organised the production of a ‘Free’ booklet, ‘How to Get Well and Stay Well’, in which they further pretended that ‘Nutrilite Double X Supplement’ had ‘cured or greatly helped such common ailments’ as : ‘Low blood pressure, Ulcers, Mental depression, Pyorrhoea, Muscular twitching, rickets, Worry over small things, Tonsillitis, Hay Fever, Sensitivity to noise, Underweight, Easily tired, Gas in stomach, Cuts heal slowly, Faulty vision, Headache, Constipation, Anaemia Boils, Flabby tissues, Hysterical tendency, Eczema, Overweight, Faulty memory, Lack of ambition, Certain Bone conditions, Nervousness, Nosebleed, Insomnia, Allergies, Asthma, Restlessness, Bad skin colour, Poor appetite, Biliousness, Neuritis, Night blindness, Migraine, High blood pressure, Sinus trouble, Lack of concentration, Dental caries, Irregular heartbeat, Colitis, Craving for sour foods, Arthritis, Rheumatism, Neuralgia, Deafness, Subject to colds.’

Carl.F. Rehnborg circa 1947

Rhenborg now cast himself in the role of ‘Scientific Adviser’ to ‘Mytinger and Casselberry Inc.’ He toured the USA preaching the gospel to wide-eyed ‘Distributors’ - ‘for less than $20 a month’‘Nutrilite Double X Supplement’ was the ‘Answer to Man’s Search for Health.’ After both companies’ owners were approached by FDA officials and warned that they could face criminal prosecution for misbranding, the booklet was ‘revised.’ Specific therapeutic claims were supposed to be eliminated. ‘All illnesses’ suddenly became a ‘state of nonhealth’ produced by ‘chemical imbalance’.… ‘Nutrilite XX Supplement’ cured nothing, it merely ‘enabled people to Get Well and stay Well’ by themselves. However, pages 41-52 of the booklet still recounted alleged case-histories explaining that ‘Nutrilite brought relief from such ailments as diabetes, feeble mindedness, stomach pains, sneezing and weeping.’ Not surprisingly, the FDA officials were not impressed, so they finally launched a number of raids, and seizures of ‘Nutrilite XX Supplement’ and associated publications.

In 1951, after a series of lawsuits, appeals and counter suits (in which Mytinger and Casselberry hired top lawyers who portrayed their clients as American capitalist heroes being crushed by Soviet-style bureaucracy), the FDA obtained (on behalf of the people) a permanent Supreme Court injunction against ‘Mytinger and Casselberry Inc.’ preventing Distributors’ from referring to 50 publications making false claims about ‘Health Tonics and Food Supplements’ (including various ‘Revised Editions’ of ‘How to Get Well and Stay Well). FDA agents soon found that the injunction was being flouted. As a result of mounting complaints, they infiltrated the organization (as potential recruits) and recorded deluded proselytisers chanting the same cure-all mantra about ‘XX Supplement.’ Faced with more litigation and fearing that their monopoly of information might be lost, in 1954, Rehnborg, Mytinger and Casselberry hired a leading advertising agency which handled the clean-cut, but fading, Hollywood star, Alan Ladd. Along with his wife and children, Alan Ladd then briefly-featured in a kitsch 'Nutrilite' advertising campaign - published in various mainstream magazines right up until 1959.  

Alan Ladd (who secretly suffered from chronic depression and who had problems with alcohol and narcotics) was, however, soon to be air-brushed out of the 'Nutrilite' fairy story.


The charlatan-trio, 'Mytinger, Casselberry and Rehnborg,' also paid a team of Hollywood professionals to produce a 20 minute colour propaganda film, From the Ground up’ (featuring themselves as three nice ordinary American guys turned philanthropic scientists and industrialists), and they began to publish their own propaganda magazine, ‘Nutrilite News'’ (stuffed with colour photos of happy, healthy and wealthy ‘Distributors')

Amway Co-Founders Rich DeVos and Jay Van Andel (bottom row, second and third from the right, respectively) and their group of senior key agents pose with Nutrilite Founder Carl F. Rehnborg and his wife Edith Rehnborg, in front of their tour bus, 1956.
Richard DeVos and Jay Van Andel (2nd and 3rd from the right, front row), Carl F. Rehnborg (immediately behind Van Andel, second row), circa 1950.

Soon, the 'Nutrilite' show was touring the USA on a motor coach (like a 'Tent Revivalist' group).  Mytinger, Casselberry and Rehnborg had begun organizing pay-to-enter ‘Rallies and Seminars'’ (addressed by allegedly ‘Successful Christian Distributors’ like Rich De Vos and Jay Van Andel). No quantifiable evidence (in the form of audited accounts) was ever produced to prove what percentage of claimed ‘sales'’ were authentic retail transactions to the general public for a profit (based on value and demand), or how many people who’d signed a contract'’ with ‘Mytinger and Casselberry Inc.'’ had actually received an overall net-profit from the operation of what its instigators arbitrarily defined as an MLM income opportunity’. Excluding the tiny percentage of grinning shills at the top of the pyramid, the hidden, rolling insolvency/churn-rate was 100%. Since there was no significant or sustainable external revenue, participants were actually buying infinite shares in their own finite money. 

 Richard DeVos                                                    Jay Van Andel

Circa 1950
circa 1965

In 1959, when it seemed that ‘Mytinger and Casselberry/Nutrilite Products Inc.’ might finally be shut down (under the ‘Federal Food, Drug and Cosmetic Act 3381-3383’, rather than anti-fraud legislation) De Vos and Van Andel hid behind familiar, patriotic words and images stolen from contemporary popular culture. They created the ‘American Way Association’ - the first of what was to become a shoal of red, white and blue herrings.

Previously, the two up-and-coming charlatans, Mytinger and Casselberry, gravitated towards the established (but ageing) Rehnborg, and vice versa. Rehnborg seems to have reflected the pair's own narcissistic delusions as reality and behaved as though they were important businessmen/psychologists, whilst the pair treated him as though he really was an important and respected scientist/ philanthropic businessman. This was the point at which'Nutrilite Inc.' (a legally-registered, and industrialized, pseudo-scientific swindle), began to transform into a highly-organized, self-perpetuating, blame-the-victim 'Prosperity Gospel' cultic racket - tailor-made to fit the existing beliefs and instinctual desires of a broad range of people - peddling a perversion of the 'American Dream' whilst giving victims the illusion that they were making free choices. 

Evidently, US law enforcement agents never fully-understood that Rehnborg, Mytinger, Casselberry, DeVos, Van Andel and their close-associates, were dangerous manipulators who magnified each others' narcissistic delusions. The longer they went unchallenged: the more adherents they ensnared and the more-capital they acquired. The more capital they acquired: the easier it became to deceive more adherents and the more severe, and inflexible, their own delusions became. Sadly, and exactly like L. Ron Hubbard, the more convinced of their importance Rehnborg, Mytinger, Casselberry, DeVos and Van Andel became: the more convincing they became.

On September 6th 1949 (along with Michael Pacetti), two, clean-cut, hitherto-unremarkable USAAF veterans of Dutch Protestant origin, Richard DeVos (aged 23) and Jay Van Andel (aged 25), registered the ‘Ja-Ri Corporation.’ However, throughout the 1950s, this (apparently independent) company was the agent of both Nutrilite Products Company Inc.' and of  'Mytinger and Casselberry Inc.'

The two Pentacostalists, DeVos and Van Andel spent ten years perfecting their own sanctimonious 'MLM' act, before finally setting up a copy-cat 'income opportunity' racket.

 'Amway' frst operated as an affinity fraud targetting the flag-waving adherents of Evangelical Churches in the Bible Belt. Most early 'Amway' adherents were already trained to defer systematically to the moral and intellectual authority of their pastors - so De Vos and Van Andel simply dressed up, and behaved, exactly likerespectable Church pastors. They taught their male followers to duplicate their clean-cut example. Thus, alcohol, cigarettes and even beards were forbidden. Amway men had to wear a suit and tie, whilst Amwaywomen were forbidden to wear pants or anything too sexy. Indeed, until relatively recently, 'Amway Network Leaders' were commonly referred to as 'Black Hats.'

The classic movie, 'Elmer Gantry' (released in 1960), was written and directed by Richard Brooks and is loosely-based on a novel of 1927 by the Nobel prize-winning author, Sinclair LewisIn the Movie, 'Gantry' (played by Burt Lancaster) is a grinning charlatan in a loud suit - a hard-drinking whore-chasing travelling-salesman, who, for sexual and financial motives, attaches himself to the beautiful 'Sister Sharon' (played by Jean Simmons), the focus of a profitable 'Tent Revivalist' group working the Bible-Belt during Prohibition (1920-1933). 'Elmer Gantry' keeps his grin, but he dons a sombre suit and black hat, and is reborn as 'Brother Gantry' 'Charismatic Preacher' and 'Moral Crusader'. He soon discovers that he has the power to create mass-hysteria, and reap tens of thousands of dollars, by manipulating individuals' existing beliefs and instinctual desires. At a key-moment in the movie, a Protestant Minister (bedazzled by 'Brother Gantry's' offer to fill his church coffers) abandons the traditional Christian message and proclaims: 'Business is business, that's the American Way'.

Perhaps it's just a coincidence, but at almost exactly the time that the
 American Way Association' 
first appeared, ‘Elmer Gantry' was playing to packed movie-theatres all over America.

Initially (and with an irony that is close to exquisite), in order to dodge being drawn into the ongoing FDA investigation of 'Nutrilite,' De Vos and Van Andel got rid of the pills and potions and now laundered all the unlawful investment payments into their copy-cat, dissimulated, closed-market swindle, behind the claim that they were selling a laundry detergent  (i.e. banal, but effectively-unsaleable, non-'medicinal' pseudo-scientific wampum of their own fabrication). Again, the updated snake oil stain remover was deliberately designed to look modern and scientific, whilst De Vos and Van Andel grinned from ear as they too steadfastly pretended that these strangely-familiar, cheaply-procured mixtures of common substances, were all-American, exclusive, good-value and unique.


The original 'Nutrilite' lie was progressively-absorbed back into the spin-off 'Amway' (aka 'Quixtar') lie, 1972-1994, where it still is peddled as the truth.

Only after the 'MLM' virus had spread to almost every State of the Union, did the US Federal Trade Commission finally make a half-hearted attempt to close-down 'Amway.' After receiving a significant number of complaints,  FTC prosecutors, advised by specialist economists, recognised that what they were faced with, was not a direct selling scheme, but as a classic pyramid scam, without a significant or sustainable source of revenue other than its own victims, but hidden behind a smokescreen of products. However, after years of investigations and hearings, in 1979, a naive, and/or corrupt, federal judge ruled that although 'Amway' had previously been massively in breach of the law and would have to pay fines, the company would be allowed to continue to trade. This was because the judge accepted the latest unbelievable chapter of the 'MLM' fairy story. i.e. That 'Amway' s owners were respectable Christian businessmen who were vehemently opposed to  pyramid schemes and that, consequently, they had stopped fixing prices and introduced their own rules which would, henceforth, oblige the members of 'Amway's' sales force to sell at least 70% (by value) of the products which they had bought wholesale from the company, to at least 10 customers, before they could receive commission paymentsAmazingly, no independent, common-sense mechanism was created to ensure that this latest twist in the fairy story was true, and that 'Amway' would now be in compliance with the law.

Not surprisingly, this tragicomic judgement was seen as an open-invitation to thieve, and, consequently, a whole host of 'Amway' copy-cat 'MLM' rackets soon began to appear.   
More than 30 years later, the so-called 'Direct Selling Association,' is a demonstrable lie financed and controlled by the bosses of a classic, organized crime syndicate.

David Brear (copyright 2016)