Tuesday, 10 May 2022

How did the pernicious 'financial' fairy story entitled, 'Multi Level Marketing Income Opportunity,' get into India?


Enforcement Directorate (ED) and its Major Functions (jagranjosh.com)


Last month, Indian financial regulators, in the form of the 'Enforcement Directorate (ED),' annonced that they had seized assets totalling around $190 millions from 'Amway India Ltd.' The company ('Amway') stands accused of being the front for a vast pyramid fraud and money laundering scam totalling around $7 billions. The ED issued this brief analysis:

“It is observed that the prices of most of the products offered by the company ('Amway') are exorbitant as compared to the alternative popular products of reputed manufacturers available on the open market. Without knowing the real facts, the common gullible public is induced to become members of the company ('Amway') and purchase products at exorbitant prices. In the process, they lose their hard-earned money...”

Thus, judging by their choice of words, one assumes that these India regulators have been doing their homework and studying how the 'Amway/MLM' racket got into India in the first place.

In June 1994, representatives of the US-based ‘Amway’ bosses approached the Indian Ministry of Commerce and Industry (Dept. of Industrial Development) bearing gifts.

By steadfastly pretending affinity with officials (who, naturally, wanted to believe that all external investment creates employment), the ‘Amway’ bosses initially sought an agreement (renewable biannually) which simply paved the way for the creation a privately-controlled, unlimited-liability, commercial company, ‘Amway India Enterprises.’ As a subsidiary (entirely owned by its American parent company), the representatives of the ‘Amway’ racketeers meekly accepted that ‘Amway India Enterprises’ would be forbidden to manufacture or import. The proposed company would be permitted only to use its so-called ‘Multi-Level Marketing Business Model’ to sell products sourced from local, independent, Indian manufacturers. 

Furthermore, ‘Amway India Enterprises’ was obliged to file a separate agreement with the Reserve Bank of India, allowing the proposed subsidiary to transfer capital to, and from, its parent and, thus, act as a de facto, foreign exchange dealer.

Consequently, without any informed scrutiny, officials at the Indian Ministry of Industry, Secretariat for Industrial Approval (Foreign Collaborations II Section) rubber-stamped the application for the proposed 'Amway' company (within less than two months) on August 26th 1994.Twelve months later, 'Amway India Enterprises' was legally-registered after final approval by the Indian 'Foreign Investment Promotion Board.'

In this way, America’s contemporary version of the Trojan Horse was dragged unnoticed into India with the assistance of the country’s own na├»ve regulators. However, it lay dormant until May 5th 1998 when a network of regional offices began to be established.

Six years later, the destructive contents finally began to spill out. On August 8th 2004, the (apparently safe) original (biannual) agreement was mysteriously altered (at the request of the corporate officers of ‘Amway India Enterprises’) allowing the unregulated manufacture, and/or importation, of ‘Amway’s’ own range of effectively-unsaleable household, beauty and health products.


At no stage did Indian officials bother to apply common-sense and ask how the so-called ‘MLM Business Opportunity’ could possibly be economically-viable, and lawful, when ‘Amway’ products were now, self-evidently, several times the price of equivalent (and often superior) merchandise widely-available in traditional Indian retail outlets? Yet, implicit to the modified agreement was the understanding that ‘Amway India Enterprises’ would respect Indian law and recruit non-salaried agents who could earn commission payments from retailing products to the public. In plain language, Indian officials were deceived by the de facto agents of US-based 'MLM' racketeers.That said, it is not known what other inducements (if any) these conveniently-blind civil servants received.


The guts of above information comes from a landmark judgement given as long ago as July 19th 2007 against ‘Amway India Enterprises’ by Chief Justice G.S. Singhvi, and Justice C.V. Nagarjuna Reddy, of the High Court of Judicature, Andhra Pradesh, Hyderabad.

In 2006, the Criminal Investigations Dept. of the Hyderabad police raided, and sealed, the local offices of ‘Amway India Enterprises’ arresting various employees, following a particularly detailed complaint filed by A.V.S. Satyanarayana under the ‘Prize Chits and Money Circulation (banning) Act, 1978.’ This courageous individual confessed that he had been deceived into wasting a significant amount of time and money after having being subjected to overwhelming psychological pressure to join ‘Amway’ by two dominant men in his own social circle. Within three days of the registration of this complaint, aggressive lawyers acting for ‘Amway India Enterprises’ issued two writs against the Hyderabad CID. Typically, Amway’ posed as the innocent victim under attack. Ignoring all quantifiable evidence to the contrary, the lawyers steadfastly pretended that their employer’s ‘MLM Business Opportunity’ was entirely legal and that ‘Amway India Enterprises’ was acting with the full-approval of the Indian government. Therefore, the Andhra Pradesh police had neither reason nor authority to launch such a heavy-handed investigation, and, thus, damage, a legitimate business. At the same time, both the lawyers and corporate officers of ‘Amway India Enterprises’ tried to convince the world that Satyanarayana was a pathetic liar who had filed a malicious complaint as the result of a marital/financial dispute which had, itself, resulted in his pursuing a vendetta against members of his family who were ‘Amway Distributors.’ 

Ironically, it was ‘Amway India Enterprise’s’ own malicious writs which brought the company under the rigorous scrutiny of the Andhra Pradesh High Court. Simply by applying common-sense, Chief Justice Singhvi and Justice Reddy were immediately able to see that the ‘Amway MLM’ fairy story is far too good to be true. Then, by ignoring the scripted-lies of ‘Amway’s’ attorneys, and by concentrating on the compelling testimony of the victim (backed up by documentary evidence), they deduced that the so-called ‘MLM Income Opportunity’ is in breach of Indian legislation. Despite the mystifying, linguistic and mathematical complexity of ‘Amway’s’ corporate camouflage, de facto agents of the company actually propagate the self-gratifying delusion that limitless prosperity can eventually be obtained without any further effort simply by regularly purchasing products and recruiting others to do the same, etc., ad infinitum. As a consequence, the two writs were dismissed, and the High Court of Andhra Pradesh ordered that the Hyderabad Criminal Investigation Dept. should be allowed to continue to follow whatever procedures are permitted by law to hold the corporate officers of ‘Amway India Enterprises’ to account.

Until this recent announcement by the Enforcement Directorate, and despite the boss of 'Amway India Enterprises,' and two other corporate officers, being arrested for, and charged with, fraud in the Indian State of Kerala in 2013, the pernicious 'MLM Income Opportunity' fairy story has continued to infect India, whilst India legislators have continued to be approached by the representatives of US-based 'MLM' racketeers who, obviously, have not wished to have their real activities rigorously investigated by independent Indian law enforcement agents.


David Brear (copyright 2012)




Friday, 6 May 2022

'Advocare,' another 'Amway' copy-cat blame-the-victim 'MLM' cultic racket, has been partly exposed by the US Federal Trade Commission.

Two years ago, the US Federal Trade Commission strolled into action and successfully went after 'Advocare,' and its bosses, for being a front for a pyramid scam dissimulated as a 'Multi-Level Marketing Direct Selling Income Opportunity.'




Affiliations (advocare.com)

For years, 'Advocare' propaganda had boasted that the company was an 'Award-winning member of the Direct Selling Association'. 

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'AdvoCare is an award-winning member of the Direct Selling Association (DSA), which represents companies offering entrepreneurial opportunities to independent sellers to market and sell products and services. To protect the more than 20 million Americans involved in direct selling, the DSA instituted the Code of Ethics, a robust series of policies holding member companies to the highest standard of excellence. AdvoCare strongly adheres to the DSA Code of Ethics., demonstrating our commitment to the highest ethical business practices to protect our Independent Distributors and consumers, and was recognized as a participant in the DSA Code of Ethics Communications Initiative.'

______________________________________________________________________

Evidently, the so-called 'Direct Selling Association' must have been part of the racket, whilst the FTC has just released the following statement concerning refunds to 224 000 victims of 'Advocare' (and the so-called 'DSA'), but despite decades of quantifiable evidence to contrary, FTC officials evidently continue to believe that 'Multi-Level Marketing' is an economically viable and legal form of 'business.'

This again begs the common-sense question: have FTC officials been stupid, and/or corrupt?

David Brear (copyright 2022)

_________________________________________________________________________

FTC sends $149 million in refunds to people harmed in alleged AdvoCare pyramid scheme | Federal Trade Commission


The FTC is returning more than $149 million to people who lost money to AdvoCare International, a former multi-level marketer that the FTC says operated a pyramid scheme disguised as a business opportunity and swindled hundreds of thousands of people who signed up to be distributors of its health-and-wellness products.

The FTC sued Texas-based AdvoCare, its former CEO, and its top promoters in 2019, alleging the defendants deceived people into believing they could earn unlimited income, attain financial freedom, and quit their regular jobs by becoming distributors for the company. In reality, the FTC alleged, the vast majority of AdvoCare distributors either earned no money or lost money.

According to the lawsuit, AdvoCare’s compensation plan required distributors to buy thousands of dollars’ worth of AdvoCare products to be eligible for cash bonuses and other rewards and, in classic pyramid scheme style, compensated the distributors for bringing new recruits into the business, rather than for selling products to customers.

Image
Did you lose money to AdvoCare? Starting May 5, 2022: Check your mail or PayPal account about a refund

To recruit people, the FTC alleged, the defendants told distributors to make exaggerated claims about how much money ordinary people could make — as much as hundreds of thousands or millions of dollars a year. The FTC alleged that distributors were told to create emotional narratives about how they gained financial success through AdvoCare and to instill fear in potential recruits that they would suffer from regrets later if they declined to invest in AdvoCare.

Under a landmark settlement, AdvoCare and its former CEO were banned from multi-level marketing. AdvoCare is the largest company to be banned from multi-level marketing due to an FTC law enforcement action.

As a result of the settlement, the FTC is sending payments to more than 224,000 people who lost money to the alleged scheme. The payments are being distributed by PayPal and by check.

  • If you get a PayPal payment, please accept it within 30 days. If you don't have a PayPal account and would prefer to get a check, call 1-855-744-1802.
  • If you get a check, please cash it within 90 days.
  • Visit the AdvoCare Refunds page for more information. The refund administrator, Analytics, is available at 1-855-744-1802 if you have questions.
  • Find answers to common questions about FTC refund payments on our Refund Program FAQ page

One thing to know: The FTC never requires people to pay money or provide account information to get a refund or to cash a refund check.

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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 (including FTC officials) 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.

_________________________________________________________________________


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%.
________________________________________________________________________

*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 persons under contract to 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' contractors 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 persons. 

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 decades


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 for not working hard enough. 


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 2022)

Monday, 2 May 2022

'MLM' to be banned as money laundering in India? Robert FitzPatrick examines the powerful new case against 'Amway' in India.

 

Financial regulators in India have charged the Amway Corporation with a financial crime: running a $7 billion “money laundering” scam. Amway’s “multi-level marketing” enterprise is described as “pyramid fraud in the guise of direct selling.”

This charge breaks new ground in law enforcement of “multi-level marketing.” By presenting another way to describe the MLM phenomenon, as a form of money laundering, it makes an important contribution to removing MLM’s disguises and exposing what MLM actually is. 

The USA – and most other countries are pressured to follow suit – regulates MLM primarily as a “business” proposition, distinct from investment and financial offerings. Victims are classified as “buyers” and “distributors” in a “direct selling” business. Though 99% of consumers who invest in MLM’s financial proposition lose money, year in and year out, US regulators attribute the losses to the “market”, not fraud and describe the consumers as “losers in the market” and “business failures,” not victims.

As a “sales business”, when an MLM is (rarely) prosecuted, the charge of “pyramid scheme” is reduced in gravity from criminal fraud to merely an “unfair and deceptive act in or affecting  commerce.” The pyramid scheme is treated as “commerce.” Often the prosecutions lead only to “settlements” with promises by MLMs to change behavior (which is not enforced).  

Laundered “Commissions” and “Profits” Transferred to USA

Indian authorities define Amway’s pyramid scheme in financial terms, claiming it illegally obtained $7 billion from the people of India and then laundered much of that money. The “business” identity is only a front.  In reality, the “sales commissions”, the regulators say, are payments to recruiters who help facilitate the pyramid fraud. The “profits” claimed by Amway owners are part of the ill-gotten money, re-labeled in commercial terms for laundering money and transferring it out of the country.

Beyond “profit” and direct “commissions” to recruiters, the “laundering” also includes payments from millions of Indian consumers to US-based recruiting ring-leaders for “motivation”, marketing and related costs. India’s Enforcement Directorate charges that twenty-eight percent (28%) of the $7 billion Amway took out of India was laundered as payments to recruiters. The ED press release named two of Amway’s most notorious recruiting operations, Britt Worldwide and Network Twenty One.

India’s Enforcement Directorate (ED) a federal law enforcement agency that brought the case provisionally attached Amway assets worth $190 million, about 40% of the company’s current annual revenue in India. About $90 million of the assets is cash spread among 36 bank accounts. The rest are in buildings, real estate and inventory.

MLM: Money Laundering Machine

“Money laundering” (a term reputedly originated with the American gangster Al Capone who used local laundromats to disguise and transfer money illegally gained from selling alcohol) is a criminal operation, masquerading as normal business. Its purpose is to disguise and then provide access to money obtained from criminal activity. Accessing the money directly from the criminal activity creates an investigative pathway to the criminals for law enforcement. Money laundering not only shields the criminal activity but also enables criminals to access the dirty money without detection. Drug trafficking, mafia “businesses” or terrorist activities are frequently cited as criminal money sources needing to “launder” their ill-gotten funds.

“Shell” companies, gambling and front businesses are often noted as examples of money laundering enterprises but, arguably, banks are the world’s main money launderers. Among the top banks involved in money laundering prosecutions or publicized investigations include Citibank, Wachovia (now part of Wells Fargo), HSBC, Deutsche Bank and Goldman Sachs. Often bank executives claim to be unaware of the funds’ illicit sources or, when revealed, blame their “compliance” departments for ineptitude. 

Pyramid and Money Launderer All in One

In the case of Amway in India, the regulators treat the criminal enterprise generating the funds and the one laundering the funds asone and the same: Amway. Seen this way, MLM is a fully integrated Money Laundering Machine. This analysis may confuse consumers accustomed to conventional descriptions in which the money-generating criminal enterprise and the money-laundering enterprise are related in transactions but are separate entities. Regarding the Amway case in India, confusion is expressed in these questions:

  • What is the illegal source of money that Amway in India is “laundering”? 
  • In engaging in money laundering, how is Amway operating differently from other MLMs in India or elsewhere that are not prosecuted?

India’s case of “money laundering” against Amway does not charge that Amway is in any way different from hundreds of other “multi-level marketing” companies. The fact that Amway’s core business is functionally identical with hundreds of other “MLM” companies is clarified by India-based financial writer and consumer advocate, Sucheta Dalal in an insightful article in MoneyLife, entitled, “Will Action on Amway Lead to a Crackdown on Thousands of Chain-money Schemes Operating with Impunity across India?” The article is also presented in a podcast video on YouTube.



The Indian regulators also do not argue that Amway, as a money-launderer, is working with any other enterprise. Rather, Amway’s own business is both the source of illegal money and money laundering mechanism (MLM), all in one. The false identity of “direct selling” is a front for conducting a pyramid swindle that brings in the billions in ill-gotten gains. The false claim to be a “legitimate direct selling business” is how the money is laundered and made accessible to the perpetrators and accomplices.

Financial Crime Enforcement vs. Consumer Protection

The Enforcement Directorate of India is a financial crimes agency, not a “consumer protection” agency as the US Federal Trade Commission (FTC) is that “regulates” MLM in America. The FTC officially treats Amway’s operation as “legitimate business”, a form of “direct selling.” The FTC has not investigated Amway in over 40 years. 

The counterpart to India’s Enforcement Directorate in the USA is Financial Crimes Enforcement Network (FinCEN), a division of the US Treasury Department. FinCEN can refer cases for criminal prosecution, but does not bring criminal charges itself.  FinCEN has never taken an action against any MLM or investigated one for “money laundering.” The immediate past director of FINCEN is Kenneth A. Blanco. Blanco left FinCEN last year to work for Citibank, a global bank that recently paid hundreds of millions to settle charges of laundering Mexican drug cartel money.

The Enforcement Directorate (ED) in India looked at the same operational facts (paying recruiters and transferring money) and financial consequences of Amway (99% annual loss rates) as regulators have done in America.

Breaking new ground in law enforcement, the Indian authorities recognized that MLM’s fraudulent pyramid proposition and the massive losses suffered by its victims get “washed” away when the recruiting payments are treated as “commissions” and the money transferred to owners as “profit.” They stripped away the fake identity of “direct selling” to reveal the pyramid scam. They identified the billions transferred to Amway’s US owners and US-led recruiters – “ropers” in con artist parlance – as laundered dirty money, not “commercial” revenue.

USA-Sponsored, Protected and Promoted 

Amway came into India in 1993, one of the later non-Communist countries that Amway entered. Amway expanded beyond the USA in the 1970s and is now in over 100 countries. Amway claims to have total annual revenues of more than $8 billion. 

A 1979 decision by the Federal Trade Commission that Amway was “not a pyramid scheme” created “legitimacy” for all MLMs in the USA. This extraordinary regulatory reversal – any “endless chain” scheme was routinely viewed as illegal prior to 1979 – occurred just as MLM-supporter Ronald Reagan became president. Reagan’s Secretary of State, Alexander Haig joined Amway as paid consultant to aid Amway’s expansion into other countries, eventually to India. Another former US Sec. of State, Madeleine Albright, worked also as an international promoter of MLM, reportedly getting over $10 million for services to Herbalife.

From 1979 forward, Amway and similar “multi-level marketing” companies have been protected and promoted in countries around the world by the US State Dept. and the Dept. of Commerce, directly aiding MLM in entering new countries and defending against local law enforcement. 

Independent studies by non-profits and some government regulators have repeatedly shown that over 99% of all Amway recruits never gain a profit. Amway has been sued for deception and pyramid fraud in class action lawsuits brought by victims in the USA and Canada. It was prosecuted by federal regulators for pyramid fraud in the USA and UK. In each situation, it either promised to reform or paid millions to “settle” the cases. Though Amway and other MLMs are repeatedly accused, sued or prosecuted for operating pyramid schemes, as is now occurring in India, the FTC has never clarified in 40 years the legal dividing line between “MLM” and illegal pyramid schemes.


Robert FitzPatrick (copyright 2022)


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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.

_________________________________________________________________________


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%.
________________________________________________________________________

*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 persons under contract to 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' contractors 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 persons. 

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 decades


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 for not working hard enough. 


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 2022)