The Chairman and CEO of 'Amway' have confessed to running a Ponzi scheme, but the 'Wall Street Journal's' finest has apparently not understood this

I previously stated that, in 1945, whilst most, contemporary mainstream commentators were unable to look beyond the ends of their noses, with a perfect sense of irony, George Orwell (1903-1950) presented fact as fiction in an insightful 'fairy story' entitled, 'Animal Farm.' He revealed that totalitarianism is merely the oppressors' fiction mistaken for fact by the oppressed. In the same universal allegory, Orwell described how, at a time of vulnerability, almost any people's dream of a future, secure, Utopian existence can be hung over the entrance to a totalitarian deception. Indeed, the words that are always banished by totalitarian deceivers are, 'totalitarian' and 'deception.' Sadly, when it comes to examining the same enduring phenomenon, albeit with an ephemeral 'American/Capitalist' label, most contemporary, mainstream commentators have again been unable to look further than the ends of their noses. However, if they followed Orwell's example, and did some serious thinking, this is the reality-inverting nightmare they would find.

Barry Chi and Holly Chen

As if to prove the validity of my statement, 'The Wall Street Journal' (owned by Rupert Murdoch's 'News Corporation') recently published an article and related video report http://online.wsj.com/article/SB10001424052970204062704577223302734609434.html, about 'Amway' in general, and Barry Chi and Holly Chen (alleged examples of ordinary humans, turned 'Amway' multi-millionaire superhumans) in particular. The article and video described a pay-through-the-nose-to-enter orgy of self-gratification attended by 1100 unquestioning 'Amway' adherents in Las Vegas, but which was conducted in Manderin Chinese to the glory of a citizen of Taiwan who spoke extensively about 'God' and who was addressed by the assembled multitude as 'Teacher' (the name which the Bible says was used to address Jesus by his Disciples)

Dennis K. Berman

In response, I contacted its author, Dennis K. Berman, by phone and then (at his request) I sent him an e-mail and attachments (February 16th, 2012), in which I gently invited him to look beyond the end of his nose and do some serious thinking:

Dennis

'The "Amway/MLM income opportunity" fraud, is perhaps the biggest self-perpetuating lie (by value) that any gang of latter-day cultic racketeers has ever peddled as the truth. Current estimates (based on "Amway's" own declared numbers of adherents and declared annual drop-out rates) reveal that more than 10 millions Americans have already been churned through "Amway"  alone, and more than 50 millions worldwide. When confronted by deluded "Amway/MLM" adherents steadfastly pretending to be earning money lawfully, it is always a good idea to look them in the eye and calmly ask them to produce quantifiable evidence (particularly, income-tax payment receipts). The critical and evaluative faculties of the most-fanatical, insolvent  "Amway" adherents do not function. They exhibit what psychologists describe as 'confirmation bias' (i.e. they will cling to any evidence, no matter how flimsy, which appears to confirm their model of reality). Such unquestioning persons are popularly referred to as Ambots. If you try to explain to Ambots that they haven't a hope of achieving their guided-Utopian dream of "total financial freedom,"  their bewildered, and often angry, reaction, is essentially identical to that of infants if you tell them that "Santa Claus" does not exist and that their parents are, therefore, liars.

I referred Dennis Berman to America's leading independent-authority on "MLM income opportunity" fraud (who has examined a mountain of data) Robert L. FitzPatrick http://pyramidschemealert.org/. Dennis Berman was also referred to previous, alarming US media coverage of the 'Amway' fraud:

http://www.youtube.com/watch?v=ot31XhgE_XE

http://www.youtube.com/watch?v=oc4-34V75SQ&feature=related

Dennis Berman did not bother to reply, so I sent him the following e-mail:

I can well-appreciate why you have not yet replied to my previous e-mail; for I (above all people) know that journalists are very busy and that cultism can be a particularly demanding, and disturbing, phenomenon for anyone to try to understand.

However, I would still be fascinated to hear what you (a leading, American, financial journalist and joint-winner of a Pulitzer Prize) now really think about the absurd, but nonetheless pernicious, cultic organization which has been generally referred to as the 'Amway' Corporation,' and which you featured in your recent article in the WSJ.

Sadly, the mere fact that 'Amway/MLM' was covered in the WSJ (even if this wasn't an entirely-flattering portrait), is a major propaganda victory, because 'Amway/MLM'  is not, never has been and never will be, a 'business,' in the traditional sense of the word.

'Amway/MLM' is, without a doubt, the reality-inverting title over the entrance to one of the most-sinister, blame-the-victim, cultic control-frauds operating in the world today. This type of organized crime is neither original nor unique. It is always designed to shut-down the critical, and evaluative, faculties of not just its victims, but also those of all casual observers (including journalists, law enforcement agents and legislators). Indeed, in my experience, the more-highly educated a casual observer of cultism is, the less-likely he/she is to want to admit that he/she can be fooled by it.

The secret of understanding how any pernicious cultic group functions, is to make a conscious effort to put your ego/self-esteem to one side, then look beyond the group's Orwellian camouflage, and always describe what you find, using accurate, deconstructed language.

Dennis Berman finally sent me the following question (in large blue type):

Thanks for your note.

A quick question for you…

If you could ask questions of Amway’s chairman and CEO, what would they be?

In response, I sent Dennis Berman the following e-mail:

I think that you must realize that this is essentially the same as asking me:

If you could have asked questions of Charles Ponzi, and/or Bernie Madoff (during the fat years prior to their dramatic downfalls), what would they have been?

I'm sure you will agree that the most-fundamental identifying-criteria of all Ponzi schemes, pyramid scams, money circulation schemes, etc; is that they are all 'dissimulated closed-market swindles,' in which victims are lured (by their own instinctual desires) and fooled (by various strategies designed to shut down their critical, and evaluative, faculties) into buying infinite shares of their own finite money.

The simplest way to explain this age-old con, is to imagine 100 wide-eyed children being persuaded by a psychologically-dominant adult to place one dollar each on a table on the pretext that they can magically all have more money than they started with. Sadly, unless the recipient really does possess super-human powers, then, if the resulting 100 dollars is divided up honestly, the most that each infant contributor can hope to receive in return, is only what he/she started with.

Bearing this fully-deconstructed explanation in mind, the obvious questions that would have exposed Ponzi and Madoff as manipulative crooks, they would have simply refused to answer, probably whilst attempting to make the questioner feel guilty, or foolish, for asking them.

e.g. You could have asked Madoff:

Excluding all your own company's documentation, and that issued to its alleged 'successful investors,' what quantifiable evidence can you produce proving that your company's alleged 'permanently profitable hedge fund' has actually had any significant external source of revenue other than its own alleged 'successful investors?'

Whilst you could have asked Ponzi:

Excluding all your own company's documentation, and that issued to its alleged 'successful investors,' what quantifiable evidence can you produce proving that your company's alleged 'permanently profitable system of trading international postal coupons' has actually had any significant external source of revenue other than its own alleged 'successful investors?'

Thus, essentially the same killer question (that the real 'Amway' bosses will simply refuse to answer, probably whilst attempting to make the questioner feel guilty, or foolish, for asking.), concerns the overall total number of alleged 'successful Amway business owners' who have actually been churned through the alleged 'permanently profitable Amway/MLM income opportunity' since its instigation in 1959, and the percentage of these many millions of persons who have managed to show an overall net-profit from the operation of their alleged 'Amway businesses.'

In the most simple terms:

Exactly how many people have signed up for 'Amway' overall and exactly how many overall have got back more than they paid in?

Thus, another killer question is:

Out of all the alleged 'multi-billion dollar Amway sales around the world,' exactly what percentage have been authentic, external, retail transactions to members of the public for a profit, rather than internal transactions between the various 'Amway's' companies and the millions of alleged 'Amway business owners,' but which have been vaguely described as 'sales' in order to dissimulate the operation of a closed-market swindle from which the ill-informed ordinary contributors cannot have hoped to receive any more money than they paid in?

Thus,  the ultimate killer question to ask the 'Amway' bosses is:

Excluding all your own corporation's  documentation, and that issued to its alleged 'successful distributors,' what quantifiable evidence can you produce proving that your corporation's alleged 'permanently profitable multi-Level Marketing income opportunity' has actually had any significant external source of revenue other than its own alleged 'successful distributors?'

Being a practical sort of a guy, what I don't understand, is why on Earth weren't these obvious questions put to 'Amway's' bosses by law enforcement agents in the past, but then why on Earth weren't they put to Charles Ponzi and Bernie Madoff?

Dennis Berman again did not bother to reply to me. Without informing me, three days later, he conducted this thoughtless, 30 minute interview http://online.wsj.com/video/the-big-interview-questioning-the-amway-way/FE12F29C-D022-42B8-8ACD-16A114E0DA96.html in which, not only did he fail to ask Messrs. DeVos and Van Andel the above questions, but he actually behaved like a grinning stooge feeding scripted gag-lines to two grinning comedians. At no time did Dennis Berman challenge any unsubstantiated statement made by Messrs. DeVos and VanAndel whom he kept addressing as 'you guys.' 

After approximately 14 minutes of sycophancy, Dennis Berman asked the 'Amway' bosses what percentage of their '$10.8 billion annual sales' are to the general public? He was first told that according to 'Amway's' own estimates, 50%, but in almost the same breath, this 50% figure was quickly qualified as referring to 'customers and end-users.'  However, again almost in the same breath, the 'Amway' bosses made the absurd claim that 100% of 'Amway sales are to customers and end-users, because Amway distributors are all customers and end users.' Given the fact that Dennis Berman had access to a perfect deconstruction of how the so-called 'Amway income opportunity' has been a closed-market swindle in which unlawful payments have been dissimulated as 'sales,' this WSJ interview would appear to be a sham designed to cover-up ongoing major racketeering activity. The video is now all over the Net, and the WSJ is being used to make it appear that the so-called 'Amway business opportunity' might have had some legal problems, but is now legitimate.

During the interview, and in his previous WSJ article, Dennis Berman made passing reference to the fact that attorneys acting for 'Amway' are currently in the process of settling a class-action lawsuit in California, but he completely failed to mention that this lawsuit was filed by Boies Flexner and Schiller LLP under the Racketeer Influenced and Corrupt Organizations Act, 1970, or that it essentially accused the 'Amway' corporation of being the front for a Ponzi scheme (dissimulated as an 'MLM income opportunity') and related advance fee frauds (dissimulated as the sale of 'Business Support Materials' or 'Tools'). Dennis Berman did, however, briefly mention that, last year, 'Amway's' attorneys offered to pay the equivalent of $155 millions to stop this California case from going to trial. I am reliably informed that a new, agreed-settlement is about to be made public within the next few weeks. 

Dennis Berman seemed to be completely unaware that, in order to avoid closure (after a protracted US Federal Trade Commission investigation) the 'Amway' bosses introduced a fake 'rule' which appeared, to casual observers, to require that 70% of all purchases by 'Amway sales people' be resold to at least 10 retail customers before 'Amway sales people' could receive commission payments. Mysteriously, 'Amway' was allowed to continue by a 1979 federal court ruling, apparently on the mistaken assumption that at least 70% of 'Amway' products would, henceforth, be retailed to the public, but the same court failed to determine what this fake '70% retail rule' actually stated or to introduce an independent mechanism to verify that it would be enforced. However, even though 'Amway's' own essentially-meaningless 'rule' very specifically did not refer to 'the public' and has never been enforced, the '7O%' criteria still established whether what 'Amway' describes as 'bonuses' are lawful payments based on external, retail sales transactions, or unlawful internal reward-payments secretly based on recruiting. i.e. if a significant majority of 'Amway's' claimed 'sales' are to the public, 'Amway' is a direct selling company, but, if a significant majority of 'Amway's' alleged 'sales' actually derive only from the recruits' own purchases, 'Amway' is a Ponzi scheme. Thus, by claiming that only 50% of 'Amway' sales are retail, the 'Amway' bosses have now foolishly admitted to running a Ponzi scheme (albeit, not in so many words). Instead, they have steadfastly pretended to be running a 'direct selling' scheme with $10.8 billions in total annual revenue deriving from independent business owners. Yet, the company's own data reveals total annual sales worldwide of just over $6 billions. In other words, the 'Amway' bosses would have us believe that their own '3 millions sales force' buys and consumes, but never sells, around half as much as the rest of the entire world buys from 'Amway.' Now, even a ten year child ought to be able to tell that this mathematically-complex, Utopian/capitalist fairytale does not add up.

In reality, believing that they were following a proven-plan to achieve 'total financial freedom,' for more than 50 years, a never-ending chain of tens of millions of temporary, active 'Amway' recruiters have been paid net-loss 'bonuses' on their own monthly purchases of effectively-unsaleable 'Amway' wampum. When they have abandoned this closed-market swindle, almost all of them have never bought from 'Amway' again. Thus, only a fool, or a stooge, would accept that 'billions of dollars of purchases' and 'sales' made by all the tens of millions of constantly-churning  'Amway' recruits have been based solely on 'value'  and  'demand', as Messrs. VanAndel and DeVos told the wide-eyed Dennis Berman. Indeed, in the recent lawsuit brought by high-level 'Amway' adherents, the plaintiffs submitted a sworn affidavit stating that 'Amway' products were sold almost entirely to the 'distributors' and never retailed. They also produced an internal 'Amway' study of 2006 which revealed that retail sales to the public were actually less than 4%. In other words, by lying to Dennis Berman about the legality of their enterprise,  Doug DeVos and Steve Van Andel have actually used the on-line version of  'The Wall Street Journal' to commit wire fraud. 

As if to prove his complicity with the bosses of the 'Amway' mob, Dennis Berman now does not want to talk to anyone rigorously-challenging the authenticity of his so-called 'Big Interview' with Doug Devos and Steve Van Andel.


David Brear (copyright 2012)