|Berkshire Hathaway Vice-President, Charlie Munger.
Recently, I began to receive hundreds of page visits to this article from 2013, because Warren Buffett's closest associate and investment partner, Charlie Munger (an attorney), has finally made a public statement concerning 'Herbalife.'
At 1 minute 40 seconds in this interview clip, the Vice-President of Berkshire Hathaway, Charlie Munger, now says that Bill Ackman is 'totally right' (in judging 'Herbalife' to be the effectively-valueless, legally-registered, corporate front for a fraud). Presumably, Warren Buffett (who was sat right next to Charlie Munger) concurs with his friend's (legally-qualified) opinion?
In almost all business matters, I would not be so presumptuous as to claim more experience than Warren Buffett. However, the pernicious fairy story entitled 'MLM Income Opportunity' (which I have been studying for many years), has precious little to do with 'business' (in the traditional sense of the word) and, unfortunately, Warren Buffett still has lots of green reasons at risk preventing him from facing this reality.
How many times have I read thoughtless comments insisting that 'Multi-Level Marketing' can't be a fraud because Warren Buffett owns an 'MLM' company? In fact, I once received a particularly absurd comment from a deluded 'Amway' adherent who was completely convinced that Warren Buffett owns at least 10 'MLM' companies and that he recommends 'MLM' as 'the best way for anyone to become a millionaire.'
It is a matter of public record that Warren Buffett's company, 'Berkshire Hathaway,' owns a kitsch, but apparently innocent, 'party plan direct sales' company known as 'The Pampered Chef (PC)' which has sold the public (mainly women) a so-called 'MLM income opportunity.' However (as far as I am aware), 'The Pampered Chef' has not exhibited the universal identifying characteristics of a cult. Recently, the corporate officers of 'The Pampered Chef' were boasting annual sales of $400 millions via a sales-force of 60 000 persons.
Even if the above, precisely-worded, passage of the 'MLM Income Opportunity' fairy story was entirely accurate, 'Pampered Chef' would still be a far-from-ethical enterprise, in that its officers have been deliberately withholding key-information from the public in order to continue to exploit large numbers of non-salaried commission agents whilst, at the same time, requiring these ill-informed people to exploit their own ill-informed friends and relatives.
participants in 'The Pampered Chef MLM Income Opportunity' (i.e. persons who have signed a take-it-or-leave-it annually-renewable, contract in which they were arbitrarily-defined as 'Independent Consultants', and who have paid the $155 fixed price for the so-called 'Business Starter Kit'), can choose to make money via:
regularly organising 'Cooking Parties' at which they can sell banal products (kitchen appliances, utensils, etc.) to their friends, neighbours, relatives, etc., for a straight percentage profit (20-31%).
an escalating system of percentage commission payments on the sales of further 'Independent Consultants' whom they have recruited, and on the sales of the recruits of their recruits, etc., ad infinitum.
'Pampered Chef' participants are obliged to invest their time and to pay all the considerable, allied, operational expenses, but exactly how much of their own resources this will inevitably involve, is not disclosed to new recruits.
most participants are generally able to organise one or two 'Cooking Parties' and use their existing relationships (based on love and trust) to sell some 'Pampered Chef' products to a few supportive friends and relatives, but no participant could be reasonably expected to generate a significant, and sustainable, net-income by paying to organise these kitsch sales meetings time after time, for many years.
no common-sense limit has been set on the number of 'Pampered Chef' participants operating in any given area, whilst the participants are clearly offered incentives to be their own best customers and to recruit any other customers as competitors.
equivalent, or better quality, products to those offered by 'Pampered Chef' can be easily bought in all-manner of traditional retail outlets and On line.
all any free-thinking person (so desiring) has to do to obtain unused 'Pampered Chef' products, is go to the Internet, where there is always an unwanted mountain of the stuff going begging. (We are talking about many thousands of items listed on popular auction-Sites like e-bay each day, and at a substantial discount compared to their original fixed-price).
Thus, it seems that just as in 'Amway', 'Herbalife' , 'NuSkin', etc., a significant number of so-called 'MLM customers' have not been buying products from 'The Pampered Chef' in order to use them. On the contrary, the products might as well not have existed, because they appear to have been the classic 'MLM' wampum; the real function of which has been to launder unlawful investment payments made on the false-expectation of future reward.
Finally, the vital question of what distinguishes lawful direct selling from an unlawful pyramid scheme, was raised last weekend in public at 'Berkshire Hathaway's' annual shareholder meeting.
Warren Buffett was asked by a concerned 'Berkshire Hathaway' shareholder if Bill Ackman’s $1.2 billions short-selling bet that 'Herbalife' is an effectively-valueless company hiding a cruel fraud, will have a detrimental effect on 'The Pampered Chef?,' and if Warren Buffett considers Bill Ackman's analysis of 'Herbalife' as a fraud, to be accurate?
Given his iconic status as the shrewdest investor in the world, and considering the irrefutable facts that:
the 'Herbalife' racketeers have steadfastly pretended that their business is based on selling products to thousands and thousands and thousands of 'end users,'
the bosses of various other members of the so-called 'DSA' (which were subsequently closed-down by the FTC as pyramid frauds) also shared the same extensive, and precisely-worded, thought stopping 'commercial' jargon which they employed steadfastly to pretend that their 'businesses' were based on 'selling products' to thousands and thousands and thousands of 'end users,'
Warren Buffett's strangely-familiar and precisely-worded, responses to his shareholder's questions, demonstrate a staggering lack of knowledge of what actually constitutes economically-viable (and therefore, lawful) direct selling, and reveals the considerable risk he has taken (in this state of blissful ignorance) with his shareholders' money. Self-evidently, when the 'Herbalife' racket is finally closed-down as a pyramid fraud, whomsoever is left holding 'The Pampered Chef,' will also be in deep trouble.
Warren Buffett said:
'I have never looked at a Herbalife annual report and I do not know about its operation... Pampered Chef’s business is based on selling to the end user, and we have thousands and thousands and thousands of parties every week where people who are actually going to use the product buy from somebody. We are not making the money by loading up people and then having them leave the sales force…That should be the distinguishing characteristic if I were regulating the industry.'
Readers will observe that Warren Buffett very pointedly did not say that according to FTC guidelines, for any direct selling income opportunity to be lawful, it must involve its participants regularly retailing an overwhelming majority of products which they have bought from the sponsors (at least 70%) to the general public.
Warren Buffett merely repeated part of the so-called 'Direct Selling Association's' effectively-meaningless'definition of direct selling,' i.e. 'selling to end users,' which has been specifically worded in such a vague way, that it can be taken to mean participants in 'MLM' schemes themselves.
WARREN BUFFET'S NAME HAS BEEN HABITUALLY USED TO COMMIT WIRE FRAUD, because, for decades, effectively 100% of so-called 'Multi-Level Marketing Distributors' have been unable regularly to retail a significant quantity of fixed-price products, and/or services, to the general public for a profit, and have failed to generate an overall net-income from their so-called 'home-based businesses.'
- What percentage of 'Pampered Chef ' recruits have actually remained with your company for more than: 1 year? 3 years? 5 years?
- What has been the average annual drop-out rate for 'Pampered Chef' recruits?
- Apart from the $155 'Business Starter-Kit,' what is the approximate amount of additional money that 'Pampered Chef' recruits have been required to find, to finance their first 12 months, non-salaried activities on behalf of your company.
- 'Pampered Chef's' corporate officers have recently claimed 'a sales-force of 60 000,' but since your company's instigation, how many different persons in total have bought their own 'Pampered Chef Independent Consultancy' from it, and, by extrapolation, what is the overall vanishing-rate for these so-called 'Businesses?'
- What lawful, and/or ethical, reason can you put forward to explain why the key-information contained in the answers to the above questions has been withheld by your company from prospective 'Pampered Chef' recruits?
- Why is the Internet loaded with unused 'Pampered Chef ' inventory for sale?'
- Hand on heart, would you personally recommend joining any so-called 'MLM income opportunity' (including 'The Pampered Chef'), as a viable and ethical means for ordinary people to earn extra income?
- Again, hand on heart, what would be your personal reaction if a member of your own family announced that he/she had signed up with 'Herbalife?'
- When you made your public statements relating to 'Pampered Chef' and 'Herbalife' at the recent 'Berkshire Hathaway' shareholders' meeting, were you aware that numerous, unsecured, Micro-Finance loans have been made to immigrants, and other poor persons, in the USA, via the'Grameen Bank' (an institution which you were responsible for bringing to Omaha), in order that these vulnerable borrowers could start so-called 'MLM Businesses?'
- Before you made your investment in 'The Pampered Chef', had you actually seen any quantifiable evidence proving that more than 70% of 'Pampered Chef's' claimed 'multi-million dollar sale's' have been authentic external retail sales to members of the general public (based on value and demand)?
- Even if, as you claim, the (demonstrably-unethical) activities of the 'The Pampered Chef' are not (technically) unlawful in the USA, are you aware that, due to your acquisition of this member of the so-called 'Direct Selling Association,' your name and iconic status have been habitually-used by 'MLM Income Opportunity' racketeers, and their propagandists, in order to commit fraud and to obstruct justice all over the globe?