Effectively-valueless 'Herbalife' shares plunge again, after US Senator intervenes.

More than half a century of quantifiable evidence, proves beyond all reasonable doubt that what has become popularly known as 'Multi-Level Marketing' is nothing more than an absurd, cultic, economic pseudo-science hiding in plain view, and that the impressive-sounding made-up term, 'MLM,' is, therefore, part of an extensive, thought-stopping, non-traditional jargon which has been developed, and constantly-repeated, by the instigators, and associates, of various, copy-cat, major, and minor, ongoing organized crime groups (lurking 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 closed-market swindles or 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,' etc.).

No free-thinking observer now seriously disputes that the most-deluded, core-'MLM' adherents see the world only in two dimensions, 'positive vs negative.' The growing mountain of evidence shows that vast numbers of ill-informed victims have been deceived into entering this style of dissimulated cultic swindle, then, on the pretext that 'the exact duplication of a step-by-step positive plan will lead to success and limitless financial freedom,' they have been intellectually-castrated (without their fully-informed consent) so that their minds will only accept what their leaders have arbitrarily defined as 'positive,' whilst systematically excluding what these same cultic charlatans have arbitrarily defined as 'negative.' Thus, when seen only in the fake 'positive' context of: 'Business', 'Independence', 'Financial Freedom' , 'Low Risk' , 'Direct Selling', 'High Quality, Good-Value, Scientifically-Proven Products', 'Research','Development', etc. 'MLM income opportunities' can appear to be authentic. Sadly, this dangerous inversion of reality has been further confirmed by celebrity/political/scientific/corporate endorsements contained in glossy-advertising. 

Self-evidently, when the wider-picture is examined (by persons with fully-functioning critical and evaluative faculties), all two-dimensional 'MLM' propaganda forms a pattern of ongoing, major, racketeering activity, because these artificially-created, fake 'positive' contexts have actually been financed by the proceeds of crime in order to perpetrate further crime and to prevent the victims from confronting reality and complaining. 

http://www.cnbc.com/id/101313403


http://www.markey.senate.gov/imo/media/doc/2014-1-22_Johnson_Herbalife.pdf


http://www.markey.senate.gov/news/press-releases/markey-calls-for-investigation-into-herbalife-business-practices

Senator Ed Markey Calls for Investigation into Herbalife Business Practices

Lawmaker concerned nutritional supplement company could be operating outside securities law as a pyramid scheme

Washington (January 23, 2014)  After hearing serious complaints of improper pressure and financial hardship, including from a constituent in Massachusetts who lost her entire retirement savings, Senator Edward J. Markey (D-Mass) is calling for more information about the business practices of Herbalife Ltd. In letters sent today to the Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC) and to the company itself, Senator Markey queried each for more information about Herbalife’s operations.

Herbalife, which sells nutritional and weight-loss products through individual distributors, promises its sellers significant monetary compensation in the form of additional bonuses and royalties if they recruit new sellers and establish their own network of product distributors. This compensation system appears to strongly favor distributors who focus on selling to other distributors rather than the general public, a common feature of pyramid schemes. Concerns also have been expressed that Herbalife aggressively markets its business opportunities to lower-income and vulnerable communities, many of whom are at greater risk if they invest their savings in business ventures that have little potential to turn a profit. According to 2012 data from the company itself, 88 percent of product distributors received no payments from the company at all. 

One family in Norton, Massachusetts reported that it lost $130,000, including the family’s entire 401(K), investing in Herbalife. Another Massachusetts resident claimed that she was encouraged to recruit new members by approaching her family and also received pressure to spend money to buy more Herbalife products so that she could qualify as a so-called “Supervisor” in the Herbalife system. She also stated that she was encouraged to stay in the program even after she said she wanted out. 

“There is nothing nutritional about possible pyramid schemes that promise financial benefit but result in economic ruin for vulnerable families,” said Senator Markey, a member of the Commerce, Science and Transportation Committee. “Herbalife may be a purveyor of health and wellness products, but some of its distributors are suffering serious economic ill-health as a result of their involvement in the company. I have serious questions about the business practices of Herbalife and their impact on my constituents, and I look forward to receiving responses to my inquiries.”

A copy of Senator Markey’s letter to Herbalife can be found HERE. A copy of his letter to the SEC can be found HERE. A copy of his letter to the FTC can be found HERE.

_______________________________________________________________________

If Senator Markey would like to understand fully what he has really become involved in here; then, rather than write to the dunces with diplomas at the SEC and FTC, and to the charlatans at 'Herbalife,' I suggest he just reads the following:  

For years, I have been openly-saying that the mystifying global labyrinth of corporate structures commonly-known as 'Herbalife,' is the deceptively-kitsch front for a highly-organized, blame the-victim, closed-market swindle, or pyramid scam, dissimulated as a so-called 'Multi-Level Marketing Income Opportunity,' and related advance fee frauds, dissimulated as so-called 'training and motivation programs.' 

Tellingly, no one has attempted to refute this accurate, deconstructed analysis - which itself predicts that any commentator with a full-understanding of the widespread financial, and psychological, abuse which has secretly been occurring behind the essentially-totalitarian 'MLM Income Opportunity' fairy story, will be systematically excluded, and/or denigrated, and/or ridiculed, by it.

Robert FitzPatrick

Although I seem to have been almost alone in publishing a clear explanation of why 'Herbalife,' and various other essentially-identical organizations, should be investigated, and prosecuted, not as wayward multi-national companies in breach of civil legislation, but as subversive fronts for an up-dated form of ongoing, major, racketeering activity (as defined by the US federal Racketeer Influenced and Corrupt Organizations Act, 1970), a significant part of my published analysis of the 'Herbalife/MLM income opportunity' racket has been in broad agreement with various other informed observers, notably Robert FitzPatrick of the Pyramid Scheme Alert and, lately, Bill Ackman of Pershing Square Capital. 

In December of 2012, Bill Ackman called the outrageous 'Herbalife/MLM Income Opportunity' bluff, and announced that he had bet $1.2 billion that the company's shares are effectively-worthless, because, although legally-registered in the USA and elswhere, 'Herbalife' is a fundamentally unlawful enterprise run by manipulative charlatans who, for decades, have been allowed to withhold key-information from the regulators and from the public, and who have never faced an intellectually-rigorous, independent inquiry.

In simple terms, Bill Ackman's central charge against the so-called 'Herbalife MLM Direct Selling Income Opportunity' is that, since common-sense, +  the available independent evidence, indicates that the scheme's revenue can only have largely derived internally from its own participants (based on their false expectation of future reward), rather than from authentic profitable external retail sales to the general public (based on value and demand), 'Herbalife' has been hiding a giant pyramid scheme in plain view, in which billions of dollars of unlawful, losing investment payments have been laundered as'sales,' simply by giving a never-ending chain of ill-informed participants banal, but over-priced products, which no rational customer would want to buy on the open-market, and which, therefore, might as well not exist.

Like all 'MLM Income Opportunity' racketeers, the 'Herbalife' mob have never said that  their company makes its profits by retailing anything directly to the general public. For decades, if challenged, they have steadfastly pretended that their company makes its money lawfully by selling its exclusive good-value products to its distributors at a discount, who then can sell these highly-desirable materials for a profit themselves, to their own customers and end-users. Amazingly, even though certain key-information would obviously reveal to regulators whether 'Herbalife' is a dissimulated pyramid fraud, the company's bosses initially responded to Bill Ackman's central charge that 'Herbalife's' profits have largely been unlawful, because they have derived from the company's own agents, by making the extraordinary claim that they have never tracked and, therefore, do not know for sure, what percentage of their company's own products sales have actually been resold by their company's distributors, but that they believed that this percentage of outside retail sales (to customers and end users) has always been significant.  

The 'Herbalife' bosses then pretended affinity with the regulators, by implying that as responsible and patriotic Americans, they were going to employ an external private company to do the job of Federal Trade Commission, and Securities and Exchange Commission, agents and, thus, save US tax-payers a fortune. 

However, the common-sense key-questions which the 'Herbalife' bosses have always avoided answering, are as follows:

Since the instigation of your company: 

• Exactly how many people overall have signed up to become so-called 'Herbalife Distributors?' 

• What percentage of these so-called 'Distibutors' have actually got back more money from the so-called 'Herbalife MLM Direct Selling Income Opportunity,' than they have invested in it?

• What possible lawful reason can you put forward for withholding full, and truthful, answers to the above questions, from regulators and the public?

Even though Bill Ackman has laid aces on the table and gone all-in financially, to date, the 'Herbalife' bosses and their remaining billionaire Wall St. supporter, Carl Icahn, have raised the stakes, whilst steadfastly refusing voluntarily to reveal their own empty hand and accusing Bill Ackman of cheating. However, the only novel attempt to maintain the multi-billion dollar 'Herbalife' bluff, comprised the bosses of the organization steadfastly pretending that they are also holding an ace. In reality, this dramatic new card was of their own manufacture and to their own devious design, because the 'Herbalife' bosses paid the Nielsen company to conduct a far-from-intellectually-rigorous survey into the ultimate source of 'Herbalife's' recent revenue, but only in the USA.

'The Nielsen study found that 87 percent of the 349 respondents (out of 10,525 total respondents) who purchased Herbalife products for personal use in the past three months self-reported that they did not purchase it from the company as a distributor.'

http://www.dailyfinance.com/2013/06/11/herbalife-announces-results-of-study-on-distributo/

Thus, last year, the 'Herbalife' Ministry of Truth  triumphantly announced that Nielsen has conducted a study of 10 525 adult consumers, of whom 349 said that they had purchased 'Herbalife' products during the last 3 months, and of this 349, 87% (around 300) declared themselves not to be 'Herbalife Distributors.' Based on these figures, Nielsen apparently managed to extrapolate that 3.3% of the entire adult population of the USA, some 7.9 million people, bought 'Herbalife' products during the last 3 months, and that the majority of these purchases were made by legitimate end users.

To date, it has never been publicly disclosed how much 'Herbalife' paid Nielsen to produce this survey. Nonetheless, to casual observers, when spun by the 'Herbalife' Ministry of Truth, it all sounds quite impressive; that is, until you consider that, even by 'Herbalife's' own admission, a staggering 13% of the people who apparently said yes, they had bought 'Herbalife' products in the last 3 months, did not confirm that they were not 'Herbalife Distributors,' whilst  the bosses of the 'Herbalife' racket were still boasting 550 thousands 'Distributors' in the USA. However, when put under pressure, they have previously confessed that the average, annual drop-out rate for their scheme is way above 50%, yet according to their other previous contradictory claims, over the decades this never-ending recruitment chain (already comprising millions of transient persons) didn't actually comprise 'Distributors' at all; for the 'Herbalife' bosses once suddenly said whoops, they'd 'mis-spoke,' the overwhelming majority of all these millions of so-called 'Direct Sellers' (who for more than 30 years have always been clearly described in millions of the company's own take-it-or-leave-it annual 'Distributor Contracts' as, 'Independent Business Owners') should have really been described as millions of 'Discount Customers.'

Thus, no matter what thought-stopping bull-shit is used to cover-up all these millions of transient 'Herbalife customer /distributors,' given the fact that the acknowledged overall, hidden drop-out rate for them, has been effectively 100%, where have all these other many millions of  loyal 'Herbalife' customers (whom the Nielsen survey suddenly claims to have discovered infesting every State of the Union) been regularly buying their 'Herbalife' products from, and what prices have they been paying?

Since Bill Ackman's $1.2 billion 'Herbalife' short-selling bet was made public, I've talked to numerous people who have been sat at the table as participants or spectators. In private, all of  them have agreed with my description of 'Herbalife' as a cult, but publicly they have deliberately avoided using the 'C' word.

In reality, the 'Herbalife' racket is neither original nor unique and, consequently, it cannot be fully-understood in isolation.

The original 'MLM income opportunity racketeer,' Carl F. Rehnborg (1887-1973), posing as a historically-important, visionary-scientist, autodidactic scholar and multi-millionaire, philanthropic businessman/saviour who helped thousands of people to start their own business.

http://en.wikipedia.org/wiki/Mark_R._Hughes

The above, Orwellian propaganda video (which employs covert hypnosis, ego-destruction, Neuro-Linguistic Programming etc.) features various exemplary schills acting out a scritpted scenario of control in which they once were like 'dirty' and 'miserable' little rats trapped on a treadmill in a form of Hell (i.e. the world of traditional employment), but after exactly duplicating a 'Proven Step-By-Step System,' they have achieved redemption as superhumans in the miraculous 'Herbalife' Utopia, where no one works, but everyone is healthy, wealthy, happy and free.... 

..... and also drives a Ferrari, and/or a Hummer, and/or a Bentley, and/or a Porsche!

The self-proclaimed 'Herbalife' saviour.

              Another 'Elmer Gantry'   

The parallels between the aburd 'Herbalife' fairy story, originally peddled as reality by Mark Hughes (and currently by Michael Johnson and his criminal associates) and the the absurd 'Nutrilite' fairy story, originally peddled as reality by Carl F. Rehnborg (and currently by the De Vos and Van Andel clans and their criminal associates), are quite remarkable. In brief, these sanctimonious copy-cat charlatans (escorted by echelons of shyster attorneys) have played the unoriginal role of ordinary poor men, turned visionary supermen saviours - prepared to share their step-by-step secret of unlimited health, wealth, happiness and freedom with anyone (for a price). However, this is hardly surprising, because ‘Nutrilite Products Company Inc.’  was, after all, the prototype corporate-front for all subsequent 'Multi-Level Marketing Income Opportunity' cultic rackets.

In many respects, it doesn't matter in the slightest what made-up label is fixed over the entrance to a cultic racket. Totalitarianism itself is enduring, its camouflage is ephemeral. 'Herbalife' boss, Michael Johnson (who has been described as 'the highest paid CEO in the USA'), has lately been receiving more than $80 millions annually from the 'Herbalife' racket. History proves that cult bosses feed off the unconditional deference of their deluded adherents. Consequently, no matter what damning evidence has been produced, they have continued to pretend moral and intellectual authority, and gone to almost any lengths not to be held to account.

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

Former penniless science-fiction author, turned multi-millionaire, cultic racketeer, L. Ron Hubbard, a.k.a. 'Dr'Hubbard, posing as a historically-important,visionary scientist and philanthropist who had discovered the secret of how ordinary humans can become healthy, wealthy, happy and free super humans. Hubbard was also prepared to share this step-by-step secret with anyone (for a price).

Tellingly, Rehnborg's own comic-book version of his life and achievements (set-down in various published documents, including a book signed by his son and heir, Sam Rehnborg), reads uncannily like the autobiography dreamt-up by 'Scientology' instigator, L. Ron Hubbard - a man who was once famously described as 'a combination of  Baron Münchausen and Adolf Hitler.'

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

Carl F. Rehnborg circa 1915

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

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

- was  fluent in many languages, including Chinese. 

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

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

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

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

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

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

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

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

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

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

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

Carl F. Rehnborg  circa 1936

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

  

In 1934, Rehnborg (aged 48) created ‘California Vitamins Inc.’, allegedly to manufacture and distribute what he arbitrarily defined as 'the World’s First Multi-Mineral/Multivitamin Plant-Based Food Supplement - a Unique Combination of Vitamins and Minerals in a Special Base.’ At first, this so-called ‘Health Tonic’ was brewed up, and peddled as 'Vita-6'  a.k.a. 'Vitasol, in insignificant quantities. Consequently, it was of no particular interest to regulators. However, anyone with an ounce of common-sense could immediately tell that Rehnborg’s ‘invention’ was just another essentially-inert potion (in the absurd tradition of the medicine show); a random mixture of cheaply-procured common substances with an expensive price tag. It had probably taken Rehnborg 6 hours to concoct, not 6 years.

By 1939, Rehnborg had spotted the existing term, 'Nutrilites' (probably, in an old Popular Science magazine). So he legally-changed the name of his pay-through-the-nose-to-play game of make-believe to the technical-sounding ‘Nutrilite Products Company Inc.’ and moved his quackery onto an almost unprecedented scale. 

Soon, Rehnborg was legally employing dozens of white-coated workers in purpose-built industrial buildings in Buena Park, California. He also acquired an alfalfa farm near to the city of Hemet in California's San Jacinto valley, but it is unclear exactly where he suddenly found all the necessary capital to pay for these impressive sites and their modern equipment. To his followers and casual observers, Rehnborg’s activity looked like any other lawful enterprise. His staff were ordinary honest folk, to whom the truth was also unthinkable. 

At this time, Rehnborg rechristened his potion ‘Nutrilite Double X (‘XX’) Supplement.’ He now proposed to offer it as two ‘complimentary products’ in one pack -  comprising little green bottles of bright red ‘Multivitamin Capsules’ and pale-coloured ‘Multi-Mineral Pills.’ The product was deliberately designed to look modern and scientific (like a proprietary medicine), but, tellingly, the price was fixed at just less than $20 a box (the equivalent of several hundred dollars today). Rehnborg claimed that the ‘XX’ brand-name was derived from the Roman numeral representing twenty. It should have been read as ‘double cross;’ for when the former toothpaste salesman’s pricey wampum was routinely analysed by independent chemists working for the FDA, it was discovered that (although it contained essentially what it said on the labels and was quite harmless) ‘XX Supplement’ really did mostly comprise a random mixture of cheaply-procured, common substances (dried vegetable extracts: alfalfa; parsley; watercress; yeast; etc.). FDA experts later estimated that ‘XX Supplement’  cost no more than a few cents a pack to produce.

Thus, FDA lawyers must have known that Rehnborg was, in fact, using authentic pharmaceutical equipment to mass-produce a precisely-measured, harmless placebo, but labelled as a ‘Health Tonic’ (a meaningless term), and peddling it at an exorbitant mark-up (certainly, more than 1000%). This crack-pot pseudo-scientific swindle, which was tantamount to a self-styled 'alchemist' stamping a valueless amalgam of base-metals, 'Pure Gold,' and selling it for the price of pure gold, could have been quickly nipped in the bud, simply by charging Rehnborg with criminal fraud. Apparently, prosecutors never considered the possibility that they might be dealing with someone with severe psychological problems whose own inflexible delusions were contagious. Instead, at first, FDA lawyers felt obliged to take no action; reasoning that, by truthfully listing the banal ingredients, but avoiding making any specific therapeutic claims, on his packaging, Rehnborg had found a loophole in federal laws concerning criminal misbranding of medicines. As result, an up-dated version of an age-old fiction was permitted to be mass-marketed as fact to an unsuspecting public. Unfortunately, the lack of any rigorous, official challenge only brought its author more credibility. Not surprisingly, a host of copy-cat'Unique Vitamin and Mineral Health-Tonic’ scams quickly sprang up.

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

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

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









These ostensibly 'commercial' presentations contained the concrete evidence which FDA lawyers could use to prosecute Rehnborg, Mytinger and Casselberry. Contributing participants were being instructed to smile, project excitement and enthusiasm, and to recite a precisely-worded script which proclaimed ‘Nutrilite XX Supplement’ to be ‘good value,’ because it could ‘cure or prevent,’ virtually any known human illness.

William H. Goodrich

Interview with William W. Goodrich, Office of General Counsel, 1939 - 1971

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

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

Carl.F. Rehnborg circa 1950

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

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

 

The charlatan-trio, 'Mytinger, Casselberry and Rhenborg,' also paid a team of Hollywood professionals to produce a 20 minute colour propaganda film, ‘From the Ground up’ (featuring themselves as three nice ordinary American guys turned philanthropic scientists and industrialists), and they began to publish their own propaganda magazine, ‘Nutrilite News’ (stuffed with colour photos of happy, healthy and wealthy ‘Distributors’). Soon, they were organizing ‘Rallies and Seminars’ (addressed by ‘Successful Christian Distributors’ like Rich De Vos and Jay Van Andel). No quantifiable evidence (in the form of audited accounts) was ever produced to prove what percentage of claimed ‘sales’ were authentic retail transactions to the public for a profit, or how many people who’d signed a ‘contract’ with ‘Mytinger and Casselberry Inc.’ had actually received an overall net-profit from the operation of what its instigators arbitrarily defined as an ‘MLM income opportunity’. Excluding the tiny percentage of grinning schills at the top of the pyramid, the hidden, rolling insolvency/churn-rate was 100%. Since there was no significant or sustainable external revenue, participants were actually buying infinite shares in their own finite money. 

          Jay VanAndel                                                             Richard DeVos

circa 1960

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

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

 



Readers will observe that almost ever single thought-stopping technique present in the 'Herbalife'racket, has also been present in the 'Nutrilite' racket. Yesterday's clean-cut Hollywood stars, have been replaced by today's beautiful sports stars. 

Down the centuries, in essence, the dramatic 'before and after' ritual imagery used by quacks to ensnare the gullible, never changes

Unfortunately, the bosses of 'Herbalife' and 'Amway' are far from being the only cultic racketers to have employed co-ordinated devious techniques of persuasion (including association with celebrities and opinion makers), in order to commit fraud and prevent their victims from facing reality.

David Brear (copyright 2014)