The scandalous rise and amazing fall of 'Nu Skin.'

Regular readers of this Blog will know that I am not what you might call a fan of the media in general, and of the American media in particular. Indeed, I have already introduced many articles on this Blog with the following thought-provoking denunciation: 

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 '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.

As if to prove the validity of the above statement, with the 2012 US Presidential election just days away, no contemporary mainstream commentator has confronted the self-evident truth that the Republican Party's upstanding 'Mormon' candidate, Mitt Romney, has been duped, and bought, by the bosses of various totalitarian cults/major organized crime groups, dissimulated behind the reality-inverting fairy story that these are 'multi-billion dollar MLM/direct selling companies offering the public a viable income opportunity.' 

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Peter Elkind

A few months ago, I was informed that Peter Elkind, an Editor of 'Fortune' magazine (who specializes in the investigation of corporate fraud), was writing a piece on 'Nu Skin.' At the same time, I was also told that Mr Elkind had been given my contact details, but I never heard from him.

I have to say that the only things which I previously knew about Mr. Elkind's work were that he co-wrote a best-selling book on 'Enron' entitled,  'The Smartest Guys in the Room' (Penguin USA, 2003), and that a documentary film, based on this book, was nominated for an Academy Award in 2005. 

Readers of this Blog will no doubt remember that 'Enron' was the name for a labyrinth of hundreds of legally-registered (apparently independent) corporate structures. This reality-inverting fairy story was progressively elaborated (with the well-paid assistance of an army of accountants, attorneys, brokers, bankers, public relations experts, etc.) to hide the more-simple truth of titanic trading losses, from regulators and investors. In this way, a small gang of greedy little economic alchemists (who imagined themselves to be far-smarter than the rest of us), were allowed to spend years living the high-life, posing as infallible American businessmen/women whilst peddling effectively-valueless pieces of paper, labelled 'Enron Shares,' at ever-increasing prices, before they bailed out knowing that their multi-billion dollar bubble was about to burst. 

Thus, a far more appropriate sub-title for Mr. Elkind's book would have been : 'The scandalous rise and amazing fall of Enron.'

The following hype, which is on from the cover of 'The Smartest Guys in the Room,' gives a good idea of Mr. Elkind's populist approach:

'Until the Spring of 2001, the Houston energy giant Enron epitomized the triumph of the new economy. Feared by rivals, worshipped by investors, Enron seemingly could do no wrong. Its profits rose every quarter; its stock price surged ever upward; its leaders were hailed as visionaries.

Then a young Fortune writer named Bethany McLean wrote and article posing a simple question - How, exactly, does Enron make its money? - and the company's house of cards began to collapse. Though other business scandals would follow, none has had the shattering effect of Enron's bankruptcy, which caused Americans to lose faith in a system that rewarded top insiders with millions of dollars while small investors, including many Enron employees, lost everything.

Despite enormous media coverage of Enron, the definitive story of its astonishing rise and fall comes alive for the first time in this gripping narrative by McLean and her Fortune colleague Peter Elkind. Drawing on a wide range of private documents and well-placed sources, many of them exclusive, McLean and Elkind lead you behind closed doors and deep into Enron's past, to pierce the veil of secrecy that has surrounded the company's inner workings and corrupt culture.

The Smartest Guys in the Room is fundamentally a human drama - of people drunk on their own success, people so ambitious, so certain of their own brilliance, so fuelled by greed and hubris that they believed they could fool the world. The book explores the motives, thoughts, and secret fears of a fascinating array of characters, including:

Ken Lay, the genial but clueless CEO who revealed in the trappings of his office but ducked the responsibilities. From the earliest days of Enron, his weakness allowed greedy lieutenants to run amok.

Jeff Skilling, the brooding, mercurial genius who was the architect of Enron's greatest triumphs - and its ultimate disgrace. "I am Enron," he once boasted. As the company unravelled, so did Skilling.

Rebecca Mark, the glamorous It girl of Enron International who raced around the globe in high style and battled Skilling for control of the company.

Andy Fastow, the brutally ambitious, deeply insecure whiz kid. Inside Enron his colleagues marvelled at how his complex schemes allowed the company to scam Wall Street - not realizing that he was secretly scamming Enron.

Ken Rice, the Midwestern farm boy who was seduced by Enron's fast-money culture and who cashed in while hyping a high-tech business that didn't exist.

Cliff Baxter, the manic deal maker and Skilling confidant who resented Fastow's murky self-dealing. "He's a goddamn master criminal," Baxter would rail.

No matter how much (or how little) you already know about Enron, the revelations in The Smartest Guys in the Room will shock you. You'll witness the astonishing extent to which Enron's business was an illusion. You'll meet the enigmatic Enron executive who seemed interested in only two things: money and strip clubs. You'll learn the truth about the California power crisis. You'll see how much Wall Street knew about Enron's shenanigans and why the Street chose to look the other way. You'll learn the dirty secrets that Merill Lynch, Citigroup, and J.P. Morgan Chase have kept out of the headlines to this day.

Just as Watergate was the defining political story of our time, so Enron is the biggest business story of our time. And just as All the President's Men was the one Watergate book that gave readers the full story, with all the drama and nuance, The Smartest Guys in the Room is the one book you have to read to understand this amazing business saga.'

In comparison to the shock horror of the above, Peter Elkind's somewhat damp-squib of an article, 'Nu Skin and the Short Sellers,' has now been published in 'Fortune' magazine (this time, co-written by Doris Burke); for, although it beggars belief, the obvious question which 'Fortune's' Bethany McLean posed in 2001:  'How, exactly, does Enron make its money?,'  does not yet appear to have been put to the bosses of the 'Nu Skin' mob by Mr. Elkind or his latest associate. http://management.fortune.cnn.com/2012/10/26/nu-skin-short-sellers/. Similarly, neither Mr. Elkind, nor his latest associate, appear to have interviewed any victim of the 'Nu Skin' racket. 

David Einhorn

Mr. Elkind does, however, begin to report that, earlier this year, a variation of the obvious question: How, exactly, do 'MLM' companies make their money?, was put (in public) to the bosses of 'Herbalife' by short-seller, David Einhorn, and that, as a result of their inability to offer an intelligible reply, the fraudulently-inflated market-price of the effectively-valueless pieces of paper labelled, 'Herbalife and Nu Skin shares,' started to deflate.  

David Brear (copyright 2012)