Thursday, 15 August 2019

Wall Street: Still Confused About 'Multi-Level Marketing' But Starting To Hedge Bets


Summary
Stock values of 10 of the 12 publicly traded "multi-level marketing" (MLM) companies, including Herbalife, Nuskin and Usana, have lost over a third of their value since the start of 2019.
Understanding of MLM and its "endless chain" model is lacking on Wall Street but support continued during the short selling revelations and FTC prosecution of Herbalife. This is changing.
Investor concerns focus on market saturation for recruits and law enforcement against pyramids and bribery in China and other countries. MLM is illegal in China yet MLM recruiting is rampant.
Growth or decline in MLM is the result not of product demand but of recruiting and Wall Street has made little or no inquiry into how MLM recruiting works.
Public sentiment and popular media treatment of MLM are increasingly mocking, critical and condemning. This erodes investor confidence in MLM stocks.

Vanishing Equity

The smoke has long since cleared from the fields of Herbalife where William Ackman and Carl Icahn famously did battle for five years with stock purchases, research reports, threats of lawsuits, short-squeezes, claims of pyramid fraud and cultism, claims of stock manipulation, press conferences – all chronicled in a Netflix documentary. Wall Street revealed confusion and lack of knowledge about what exactly Herbalife’s “multi-level marketing” business model is, while also asserting that it did not need to know. Profit, growth data and longevity were sufficient. Even after an investigation and prosecution of Herbalife (HLF) by the Federal Trade Commission, which verified most of Ackman’s charges, Wall Street maintained financial support or neutrality toward the “MLM” sector. This is changing.
The aggregate equity of 10 of 12 publicly-traded MLMs, including Herbalife, lost over a third of its value since the beginning of 2019. Stock values of two companies, anomalously, increased but one of them, Avon (AVP), has been in a deadly decline for several years. It spiked a bit recently on expectation of a take-over. Avon and Tupperware (TUP), once industry icons touted to challenge anyone who questioned the legitimacy of "MLM" are both in steep decline. The market capitalization of the two together is down 74% in the last five years. One publicly traded MLM, Medifast (MED), has been spiraling upward in price and remains near record high though its stock suffered a double-digit drop in the last seven months. Altogether, 12 companies have dropped 20% in aggregate value since the start of this year.
The MLM sector consists of a dozen or so publicly traded MLMs, including Herbalife, with aggregate capitalization of about $20 billion. Added to this, there are hundreds of privately-held “MLMs”, some much larger than the public ones.
Amway, the template on which all other MLMs are based, is the largest with revenues over $8 billion globally. Collectively, MLMs solicit “business opportunity” investments from tens of millions of consumers in the form of "distributorships" with related fees, training costs, and product purchases. In the USA, MLM claims to generate over $35 billion in revenue (unverified) yearly. MLMs have their own PR and lobbying organization, the Direct Selling Association, based in Washington DC.
Though MLMs sell many different products, they require a unique trade group due to their anomalous business model. This model makes the amazing claim to a non-diminishing market, without demographic and economic limits. It claims to be able to expand and enlarge its distribution channel perpetually to “infinity”. This fantastic claim undergirds its equally unfathomable promise to provide “unlimited” income potential to all consumers it solicits investment capital from, no matter when or where they are enrolled. The claim is based on the alleged capacity to expand forever, regardless of competitors, market sizes, or national economic conditions. MLM financial solicitations are not covered by Franchise rules and are exempt from the FTC's Business Opportunity Rule. No financial disclosures are required during solicitations.
If McDonalds were an MLM it would continuously sell new franchises – without providing income and cost disclosures – in every neighborhood, claiming its market for hamburgers and for franchisees “has no cap.” As its newest franchisees went out of business in droves, it would claim the “losers” did not work hard enough or were negative thinkers. If all MLMs were one tradable security, it would sell an infinite number of shares, while telling all new shareholders their capital gain potential is "unlimited" because there will always be new buyers willing to pay a higher price as new shares are issued.
The footprint of MLM on America is a heavy one. Rates of loss, measured over multiple years, come close to 100% for the newest recruits. Succumbing to MLM's great promises and then suffering a loss, as most do, can cause disruption of families, bankruptcy, interruption of education, divorce. Despite this, the workings of MLM recruiting are not studied in universities. The FTC has never done an industrywide study. MLM’s financial solicitations have never been addressed by the Consumer Financial Protection Bureau.

Bigger than Pop and Drop

After a favorable settlement with the FTC, negotiated by the FTC’s previous chairperson, Jon Leibowitz, who had gone directly to work for Herbalife after leaving his post at the FTC, and with Herbalife’s CEO Michael Johnson proclaiming Herbalife’s legitimacy, the stock boomed. Wall Street took the stock from its depth of $13 when the revelations seemed irrefutable, all the way up to over $60 as late as February this year. Today (Aug. 12), Herbalife stock sells for $37, a 38% drop from this year’s (2019) high. What happened to cause $3.2 billion in market capitalization to vanish in just 6 months?
Individual MLMs are famous for “pop and drop” revenue gyrations but this stock price trend is wider. Since the start of this year, Wall Street has reduced its investment in twelve publicly traded “MLMs”, in aggregate, by 20%. Thirty-six percent was withdrawn from ten of the twelve. During this same time, the S&P rose 18%. Of these ten showing the largest drop in aggregate, Avon had a large percentage gain this year, but its Aug. 1 price is 26% lower than the start of 2017 and about 70% down from five years ago. Its recent rise is partly attributed to an expectation of being acquired by a Brazilian MLM. It has already sold off its North American operations.
No market-based causes are detectable. No drastic recent change has occurred in MLM revenues. MLM enterprises have not been disrupted by technology or any AI development. Its “direct selling” model based on millions of people selling these commodity products “one-to-one” in the home has never been explained or justified in the era of dual wage-earning households, eBay, Amazon, and Costco. The industry has never verified the existence of any significant retail customer base. Its “direct selling” business model, therefore, makes no more and no less sense in 2019 than it has for decades since the Fuller Brush salesperson vanished.

Emerging Wall Street Awareness

In recent years, Wall Street has, finally, accepted the reality of a distinct MLM sector. No longer are “MLMs” categorized by product or treated as modern-day, door-to-door encyclopedia sales operations. They are now categorized by unique “business model”. Because its impossible “endless chain” structure would make any income promise based on it inherently deceptive, most regulators until about 1980 treated the model as illegal. And though this sector includes very large companies and some others that are quite small by comparison, many analysts are now realizing that MLMs are all one syndicate, promoting a single dogma based on faith in the endless chain proposition. Large or small, the common need of all MLMs to uphold the “direct selling” identity, promote belief in the “unlimited income” promise, deflect pyramid scheme charges, and lobby against regulation means that whatever happens even to a small MLM can have a major impact on all others.
Beyond this general new awareness on Wall Street, I detect an emerging Wall Street interest in two key aspects that are relevant to the recent MLM sell-off. These are risk of fraud prosecution and the physical realities of saturation. These two aspects have recently coalesced in the critical and final global market of China. The qualified question I get asked repeatedly by analysts is: We are not interested in MLM legality or its effect on consumers; what we need to know are: how long will the music last, and, will the US or some other government finally crack down? With Donald Trump in office, a former MLMer himself, they recognize that MLM is currently safe from prosecution in the USA. It is mostly in China where risk of regulation exists. Other countries could also act. But China is also crucial to the saturation specter, a double threat.
The specter of global saturation is tangible and easily grasped. Amway led the way as the first international MLM and was among the first to get into China. It is by far the largest MLM in China. Before entering China in the early 1990s, Amway’s revenue languished, as geographic saturation took its toll. Then, revenue skyrocketed after Amway launched its massive recruiting program in Mainland China. But, in the last few years global revenues took a steep dive, dropping about 30%. What China gave; it took away. With 50-80% annual "attrition", the Pop and Drop pattern is offset by expanding territory or sometimes recasting under a new name or new product line, but now there is no more territory for Amway to go to. Other MLMs are following Amway’s path to Drop.
Gauging the regulatory environment in China is more complicated. After banning all direct selling in the late 90s, in 2005 China enacted the most “anti-MLM” law in the world, on paper. “MLM” is officially illegal in China. So, whereas all the MLMs in the USA say they are not pyramid schemes, in China they all say they are not MLM! Yet, as researchers from short sellers and major news organizations have verified, recruiting is rampant and creates the same mania in China as it does everywhere else. Amway’s newest millionaire “Diamonds” are mostly from China, and that kind of money cannot be gained from personal “direct” selling. Hope for MLM's promised "unlimited income" has spread among China's billion-plus population. Millions are drawn by the amazing proposition, which is described by MLM promoters as the purest form of capitalism, the American Dream in a box.
The clearly worded law that outlaws MLM recruiting in China and the widespread flouting of that law, using semantics and fig leaf modifications, create a special challenge for MLMs in China. They cannot set up a K-Street lobbying organization in China to openly influence the single-party government. Other forms of influence-buying must be carried out, e.g., sourcing supplies from favored vendors in China, giving key government officials “scholarships” to attend Harvard, as Amway did in partnership with Harvard, and building production facilities in China. The risk of being viewed as a corrupt corporate briber is very high. Nevertheless, MLM’s fortunes in China hinge on influence-buying. It would not be unrealistic to speculate that one MLM might successfully “influence” the government to enforce its law on other MLMs as saturation reaches critical points, and with billions at play on MLM stocks affected by prospects of Chinese regulation, the potential for securities abuse and manipulation also looms large.

Inexplicable “Growth” as Red Flag

While broad revenue decline related to saturation or threats of government regulation are being recognized as red flag risks in the MLM sector, Wall Street still does not inquire into the corollary risk indicator that MLMs are famous for – inexplicable rises in revenue. Explosive increases in MLM revenues are always – without exception – the result of intensified recruiting and ramped up “income opportunity” claims. Sudden rises unexplained by larger market trends or differentiation can signal impending steep drops or unfavorable attention from regulators and class action lawyers.
The scale and impact of MLM recruiting – the existential requirement for gaining revenue – is best exemplified by Primerica (PRI), a purveyor of term life insurance sold by hundreds of thousands of newly recruited “agents” who are also customers of their own products and are offered the incentive to recruit yet more “agents” for overrides. From the start of 2019 to August, Wall Street boosted Primerica’s stock almost 30%. In the latest annual report, Primerica confirms the existential reliance on recruiting:
…over the longer term, our sales volume will generally correlate to the size of the sales force.”
Consider these astounding figures from Primerica’s 10K that document the enormous scale of Primerica’s recruiting, remembering there are hundreds of other MLMs all engaging in the same relentless solicitations for their own "agents" year after year. At the start of 2014, Primerica had 95,566 “insurance licensed sales representatives.” Through 2018, a period of five years, Primerica recruited 1,276,000 (1.276 million) new recruits in the USA and Canada. At the end of the period, 130,736 were working. To increase its sales force by 35,170, it had recruited 36 times that number! MLM recruiting with such a massive attrition rate may seem a costly and unproductive activity for the MLM company but it can actually be profitable. The recruits themselves find and refer new people and each new recruit pays to gain access to the “income opportunity.” Many even pay to attend “motivation” events and annual conferences. At Primerica, those 1.276 million new recruits, over 97% of whom washed out, each paid $99 to enroll and $25 a month for the “back office online services” for as long as they remained.
For the MLM, Medifast, a seller of “meal-replacements” the stock price is down more than 12% at the beginning of August from the start of 2019. That price, however, is 170% above what it sold for at the start of 2017. Its revenues have risen steeply while its product line and business model remain largely unchanged, except to have undergone a makeover in words and names. Medifast changed the name of its MLM channel from Take Shape for Life to Optavia (pronounced Opta-Via) and created a new logo.
As it did during the Great Recession when the meal replacement market crashed and well before the logo/name make-over, Medifast is currently outperforming all other companies selling similar products - Weight Watchers, Nutrisystem and Jenny Craig – and growing far faster than its industry. Optavia meal replacements are similar to and priced about the same as the others, $300-$400 a month, but none of those other companies uses the MLM model that couples buying products with an “income opportunity.” Medifast’s recent success is directly tied to a spike in the recruiting of sales-and-recruiting contractors, called "coaches", that pay $199 and other costs to participate in the “income opportunity”. Medifast makes the connection between recruiting and revenue clear in its 10K.
“Our success in creating the OPTAVIA community, and achieving the desired results for our clients, is reflected in the growing number of active earning OPTAVIA Coaches. The total number of active earning OPTAVIA Coaches as of December 31, 2018 was 24,100.… OPTAVIA Coaches are subject to high turnover and we depend on our network of OPTAVIA Coaches to continually grow their businesses by attracting, training and motivating new OPTAVIA Coaches. We consider our number of OPTAVIA Coaches and revenue per OPTAVIA Coach to be key indicators of our financial performance and condition.
It might be assumed that Medifast’s rise in revenue and recruiting is from delivering significantly greater financial rewards to more recruits. However, Medifast’s own disclosure states that 87% of all its “coaches” in 2018 earned less than $5,000, before all purchases and business costs are deducted. 31% earned no income at all while remaining in the business more than a year, on average. It does not disclose total recruiting or attrition rates.

MLM Recruiting: The Black Box

Wall Street assigns MLM value and assesses its future prospects from revenue data. But the MLM revenue depends directly – existentially – on recruiting more people who recruit more people. MLM has no breakthrough technology to sell, no unique products and no price advantage. Its sales forces and its customer bases, which are often one and the same, turn over in staggering rates of attrition. Recruiting ever more people into its “income opportunity” is MLM’s core competency. The MLM “opportunity” is the real and defining product of all MLMs, not “pills, potions and lotions”, manufactured meal replacements or term life insurance.
MLM recruiting campaigns are expertly designed, coordinated, targeted, scripted and executed just as branding campaigns are for conventional companies. Branding programs are carefully studied by Wall Street analysts. Yet, in my experience and from my Wall Street consultations, I can attest that Wall Street does not have a clue how MLM recruiting works and therefore its analysts have no way to measure or anticipate risks of downturns.

Or Maybe It’s Just The Comedians

Wall Street’s pull-back on MLM stocks might not involve the insights or observations of its analysts. It’s possible that the professionals have not even taken notice of global saturation scenarios. It’s conceivable they have not read China’s anti-MLM law, looked into the regulatory climate in China or examined the risks of violating the Foreign Corrupt Practices Act.
Maybe, along with 20 million other people, they just saw the HBO John Oliver Show on YouTube in which he deconstructs the entire MLM industry in just 30 minutes and with humor, characterizes it as a scam of epic proportions. Or maybe they watched the segment of the Canadian hit comedy on Netflix, Schitt’s Creek that includes a hilarious vignette of classic MLM deception among friends and a local saturation scenario. Or they might have joined millions of others who saw Samantha Bee’s comical evisceration of MLM in which she acknowledged that just the mention of “multi-level marketing” probably makes her viewers “flinch.”
Wall Street professionals not into comedy might have been affected, along with millions of others, by the 11-segment Podcast, The Dream, that examines MLM’s strange history and extensive political influence-buying. Or if they missed all that they might be factoring into MLM stock values the effect of the upcoming series on Showtime, On Becoming a God in Central Florida, starring Kirstin Dunst as a “minimum-wage-earning water park employee who schemes her way up the ranks of Founders American Merchandise, a cultish, flag waving, multi-billion dollar pyramid scheme that drove her family to ruin.”
Robert FitzPatrck (copyright 2019)

'Beachbody' - another 'MLM' cultic racket - an ex-adherent speaks out.

'The Recovering Hunbot' is a YouTube channel.

This has recently been created by a courageous ex-'MLM' adherent who has faced the truth and who is now determined to warn the public.





https://www.youtube.com/channel/UCX8b5D9_f7vMHG1paZ74psA

Sunday, 30 June 2019

('Amway', 'ACN', 'Herbalife', 'Forever Living Products', 'NuSkin', etc.) What does the story of Jean-Claude Romand tell us about 'MLM' cultic rackets?

Jean-Claude Romand Story
Jean-Claude Romand is a real person, but the perfect character he played for 18 years, 'Dr. Romand,' never really existed, even though a significant number of people were absolutely convinced that he was real.


Frenchman, Jean-Claude Romand (b. 1954), was in the news last Week, because he has been released from prison (albeit subject to conditions) after serving 26 years for committing murder.

At first glance, there would seem to be no connection between cultic 'income opportunity' rackets and this Gallic saga of family deceit and violence, but when you dig deeper, you discover that, for an extended-period (prior to his briefly turning violent), Romand got away with posing first as a qualified physician, university lecturer and loving family-man, then as a respected and hard-working senior medical researcher for the World Health Organisation Clinic in Geneva and eventually as a confidential financial adviser (to friends and relatives), due to his exclusive access to high-yield hedge fund/investment schemes


According to various psychiatric reports, prior to 1988, Romand was, for all the world, a gentle and kindly man, but who had originally become a habitual liar as a child due to his mother suffering from anxiety. In simple terms, in order to protect his fragile mother, little Jean-Claude found that by telling her what she preferred to hear, he could keep her calm and happy. Thus, in reality, Romand's own mother-orientated version of his perfect life and outstanding achievements, gradually became an out-of-control, complex, severe and inflexible narcissistic construction of lies and half-truths, initially financed by his proud parents (who had bought him an apartment when he genuinely obtained a place at the medical school in Lyon in the early 1970s). 

In reality, Romand was not particularly gifted academically. He dropped out of his medical studies after failing to turn up for an exam at the end of his first year. Then, at the start of the following term (and for the next 12 years) he enrolled at Lyon Medical School as a first year student, but he was now only pretending to be studying. In the end, a new senior faculty member became suspicious and Romand was obliged to move on and adapt his lies accordingly. Meanwhile, Romand had persuaded his friends and family that, throughout this period, he had been successfully passing his annual medical exams in the normal way and had qualified as a doctor in 1979. For a while, he pretended to have been invited to lecture at Dijon University, but then he claimed to have become the head of the WHO's Geneva research clinic.


Jean-Claude Romand Story
Jean-Claude Romand and his wife, Florence.


  Jean-Claude Romand et son épouse Florence, au sommet de sa « gloire »/Capture d’écran France 2



In 1980, Romand got married and, by 1990, he had fathered a daughter (Caroline b. 1985) and a son (Antoine b. 1987). Throughout this period, he actually spent his 'working' days driving around near to the French border with Switzerland and occasionally visiting the WHO's public information service in Geneva - where he collected up-to-date official literature, and accessories, which he used as convincing props to support his act. Sometimes, he pretended to go on international trips, but he was actually staying in airport hotels and buying presents for his family from duty free shops.

Romand regularly talked about socialising with his WHO colleagues, but he convinced his wife, family and friends that certain aspects of his research were secret, and that he wanted to keep his professional and private lives as separate as possible. In this way, 'Dr.' Romand steadfastly pretended absolute moral intellectual authority whilst financing his fictional controlling-scenario by instigating a classic dissimulated (albeit small-scale) rigged-market swindle, a.k.a. Ponzi scheme. The money he stole and controlled, came from the savings accounts of his friends and family who had been led to believe that it could be invested for them advantageously outside of France (and presumably free of French tax) by himself (as a privileged UN employee).

During this period, Roman acquired a mistress who also fell for his lies and who gave him the equivalent of around $150 000 'to invest.'

In 1988, Romand's father-in-law asked to withdraw some of his own 'growing investment.' Within a few weeks, he had fallen to his death in the presence of just one witness, Jean-Claude Romand.

Romand's widowed mother-in-law now decided to sell her house and move to a smaller and cheaper apartment. Naturally, her resulting significant cash-windfall was handed to her daughter's devoted husband for him to 'invest.'

In early 1993, again faced with imminent exposure (when some of his worried 'investors' had discovered that no such 'Dr.' featured on the list of WHO staff), rather than face reality and allow himself to be held to account, Romand apparently contemplated suicide, but instead, he again turned violent.


Jean-Claude Romand Story


Romand borrowed a .22 rifle from his father and bought a silencer along with some cans of self-defence gas. He then returned to his home where he proceeded to beat Florence (aged 37) to death with a heavy rolling pin. Romand calmly slept overnight with his wife's bloodied dead body on their bed. The next morning he woke Caroline (aged 7) and Antoine (aged 5) and prepared their breakfast as though nothing had happened. After amusing them with video cartoons all day, Romand put his children to bed before shooting them both in the head (at point blank range) as they slept. 





The following evening, Romand drove to his parents home for dinner. After the meal, he calmly executed both of them with his father's rifle and even shot their dog. Later that evening, Romand arrived at his mistress' home. He had earlier arranged to pick her up, but on the way to a mysterious romantic date, he pretended that his car had broken down and that he needed her to ring for help. When she descended from the vehicle, he sprayed gas in her face and tried to strangle her. During their ensuing struggle, Romand evidently changed his mind. He gave up trying to murder her and instead wiped her tears and helped her back to his car. On the way to her home, he began begging for forgiveness and making her promise him not to tell anyone about what he'd had just done.




After apparently placating his mistress, Romand went home and sat for a while calmly watching television with his wife and children lying dead in their rooms above him. He then set fire to his home with petrol (gasoline) before swallowing an apparent overdose of sleeping tablets and laying down next to his wife's corpse. However, the tablets were later discovered to be so old that they had probably lost  most of their potency and could not have killed him 

Romand was rescued (unconscious) by firemen in the early hours of the following morning. He was rushed to hospital where, at first, he remained silent. The police assumed that he was traumatised, but soon afterwards his parents' dead bodies were discovered by his brother and his mistress interviewed. The police began to realise that Romand had meticulously planned and executed what were obviously crimes, but even though they arrested him for murder, they still couldn't figure out why a young doctor who had appeared to be such a happy, successful and respected member of the community, could have done this.

At his trial in June 1996, Romand confessed to everything. He was duly found guilty of murder and sentenced to life imprisonment with no possibility of parole for at least 22 years.

Later, the French authorities announced that Jean-Claude Romand had suffered from a severe form of Narcissistic Personality Disorder, but was not considered to be insane. It has recently been announced that prison service psychiatrists no longer consider him to represent a public danger, but the parents of Romand's late wife are outraged by the decision to release him.


L'Adversaire


Romand's
life story has been told in a book, 'The Adversary,' by Emmanuel Carrère with whom he began corresponding after his arrest. This account was later turned into a movie in 2001.


David Brear (copyright 2019)

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'Multi-Level Marketing' warning:



The following deconstructed analysis has been formulated to sharpen the critical and evaluative faculties of all unwary persons approaching so-called 'Multi-Level Marketing' from the dangerous (subjective) point of view that it must be a business/industry, rather than from the safe (purely-objective) point of view that they don't really know what it is.

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More than half a century of quantifiable evidence proves beyond all reasonable doubt that:


  • the widely-misunderstood phenomenon that has become popularly-known as 'Multi-Level Marketing' (a.k.a. 'Network Marketing') is nothing more than an absurd, non-rational,  cultic, economic pseudo-science maliciously-designed to lure unwary persons into de facto servitude, dissociate them from external reality and not only steal their money, but also deceive them into unconsciously acting the role of bait to lure other unwary persons (particularly their friends and family members) into the same trap. 
  • the impressive-sounding made-up jargon term, 'MLM,' is therefore, the misleading title for an enticing structured-scenario of control which has been developed, and constantly acted out as  reality, by the instigators, and associates, of various copy-cat, major and minor, ongoing organised crime groups (hiding behind labyrinths of legally-registered corporate structures) to shut-down the critical, and evaluative, faculties of victims, and of casual observers, in order to perpetrate, and dissimulate, a series of blame-the-victim 'Long Cons*'  - comprising self-perpetuating rigged-market swindles**, a.k.a. pyramid scams (dressed up as 'legitimate direct selling income opportunites') and related advance-fee frauds (dressed up as 'legitimate: training and motivation, self-betterment, programs, recruitment leads, lead generation systems,' etc.).
  • Apart from an insignificant minority of shills (whose leading-role in the 'Long Con' has been to pretend that anyone can achieve financial freedom simply by following their unquestioning example and exactly-duplicating a step-by-step-plan of recruitment and self-consumption)the hidden overall net-loss/churn rate for participation in so-called 'MLM income opportunities,' has always been effectively 100%.
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*A 'Long Con' is a form of fraud maliciously designed to exploit victims' existing beliefs and instinctual desires and make them falsely-believe that they are exercising a completely free-choice. 'Long Cons' comprise an enticing structured-scenario of control acted out as reality over an extended period. Like theatrical plays, 'Long Cons' are written, directed and produced. They involve leading players and supporting players as well as props, sets, extras, costumes, script, etc. The hidden objective of 'Long Cons' is to convince unwary persons that fiction is fact and fact is fiction, progressively cutting them off from external reality. In this way, victims begin unconsciously to play along with the controlling-scenario and (in the false-expectation of future reward) large sums of money or valuables can be stolen from them. Classically, the victims of 'Long Cons' can become deluded to such an extent that they will abandon their education, jobs, careers, etc., empty their bank accounts, and/or beg, steal, borrow from friends, family members, etc.




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** The enticing structured-scenario of control fundamental to all 'rigged-market swindles' is that people can earn income by first contributing their own money to participate in a profitable commercial opportunity, but which is secretly an economically-unviable fake due to the fact that the (alleged) opportunity has been rigged so that it generates no significant, or sustainable, revenue other than that deriving from its own ill-informed participants. For more than 50 years, 'Multi-Level Marketing' racketeers have been allowed to dissimulate rigged-market swindles by offering endless-chains of victims various banal, but over-priced, products, and/or services, in exchange for unlawful losing-investment payments, on the pretext that 'MLM' products/services can then be regularly re-sold for a profit in significant quantities via expanding networks of distributors. However, since 'MLM' products/services cannot be regularly re-sold to the general public for a profit in significant quantities (based on value and demand), 'MLM' participants have, in fact, been peddled infinite shares of their own finite money (in the false expectation of future reward). 

Thus, in 'MLM' rackets, the innocent looking products/sevices' function has been to hide what is really occurring - i.e The operation of an unlawful, intrinsically fraudulent, rigged-market where effectively no non-salaried (transient) participant can generate an overall net-profit, because, unknown to the non-salaried (transient) participants, the market is in a permanent state of collapse and requires its non-salaried (transient) participants to keep finding further (temporary) de facto slaves to sustain the enticing illusion of stability and viability.

Meanwhile an insignificant (permanent) minority direct the 'Long Con' - raking in vast profits by selling into the rigged-market and by controlling/withholding all key-information concerning the rigged-market's actual catastrophic, ever-shifting results from its never-ending chain of (temporary) de facto slaves.

Although cure-all pills potions and vitamin/dietary supplements, household and beauty, products have been most-prevalent, it is possible to use any product, and/or service, to dissimulate a rigged-market swindle. There are even some 'MLM' rackets that have been hidden behind well-known traditional brands (albeit offered at fixed high prices). Some 'MLM' rackets have included 'cash-back/discount shopping cards, travel products, insurance, energy/communications services' and 'crypto-currencies' in their controlling scenarios.

No matter what bedazzling product/service has been dangled as bait, in 'MLM' rackets, there has been no significant or sustainable source of revenue other than never-ending chains of contractees of the 'MLM' front companies. These front-companies always pretend that their products/services are high quality and reasonably-priced and that for anyone prepared to put in some effort, the products/services can be sold on for a profit via expanding networks of distributors based on value and demand. In reality, the underlying reason why it has mainly only been (transient) 'MLM' contractees who have bought the various products /services (and not the general public) is because they have been tricked into unconsciously playing along with the controlling scenario which constantly says that via regular self-consumption and the recruitment of others to do the same, etc. ad infinitum, anyone can receive a future (unlimited) reward.

I've been examining the 'MLM' phenomenon for around 20 years. During this time, I've yet to find one so-called 'MLM' company that has voluntarily made key-information available to the public concerning the quantifiable results of its so-called 'income opportunity'.

Part of the key-information that all 'MLM' bosses seek to hide concerns the overall number of persons who have signed contracts since the front companies were instigated and the retention rates of these contractees. 

When rigorously investigated, the overall hidden net-loss churn rates for so-called 'MLM income opportunites' has turned out to have been effectively 100%. Thus, anyone claiming (or implying) that it is possible for anyone to make a penny of net-profit, let alone a living, in an 'MLM,' cannot be telling the truth and will not provide quantifiable evidence to back up his/her anecdotal claims.






Although a significant number of 'MLM' front-companies (like 'Vemma', 'Fortune Hi-Tech Marketing', 'Wake Up Now') have been shut-down by commercial regulators, some of the biggest 'MLM' rackets (like 'Amway' ,'Herbalife', Forever Living Products' ) have continued to hide in plain sight whilst secretly churning tens of millions of losing participants over décades.







The quantifiable results of the self-perpetuating global 'Long Con' known as 'Multi Level Marketing,' have been fiendishly hidden by convincing victims that they are 'Independent Business Owners' and that any losses they incurred, must have been entirely their own fault. 




Blog readers should observe how (in the above linked-videos) chronic victims of 'MLM' cults are incapable of describing what they were subjected to in accurate terms. Even though they are no longer physically playing along with the 'Long Con's' controlling-scenario, they unconsciously continue to think, and speak, using the jargon-laced 'MLM' script - illogically describing themselves as 'Distributors.' 

Chronic victims of blame-the-victim cultic rackets who have managed to escape and confront the ego-destroying reality that they’ve been systematically deceived and exploited, are invariably destitute and dissociated from all their previous social contacts. For years afterwards, recovering cult victims can suffer from psychological problems (which are also generally indicative of the victims of abuse):

depression; overwhelming feelings (guilt, grief, shame, fear, anger, embarrassment, etc.); dependency/ inability to make decisions; retarded psychological/ intellectual development; suicidal thoughts; panic/ anxiety attacks; extreme identity confusion; Post-Traumatic Stress Disorder; insomnia/ nightmares; eating disorders; psychosomatic illness, fear of forming intimate relationships; inability to trust; etc.  


David Brear (copyright 2019)