Monday 26 February 2018

'Multi-Level Marketing' Warning

The following deconstructed analysis has been formulated to sharpen the critical and evaluative faculties of all unwary persons approaching 'Multi-Level Marketing' from the dangerous (subjective) point of view that it must be a business, 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.


** 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 contractees of 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' contractees 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 contractees. 

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.

David Brear (copyright 2018)

Sunday 25 February 2018

How Multilevel Marketing Companies Got the Autism Community Hooked on Essential Oils

Image result for pseudoscience

Statutory Warning

More than half a century of quantifiable evidence, proves beyond all reasonable doubt that:
  • what has become popularly-known as 'Multi-Level Marketing' (aka 'Network Marketing') is nothing more than an absurd, cultic, economic pseudo-science.
  • 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 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 rigged-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, recruitment leads, lead generation systems,' etc.).
  • Apart from an insignificant minority of exemplary shills who pretend that anyone can achieve financial freedom simply by following their unquestioning example and exactly-duplicating a step-by-step-plan, the hidden overall net-loss/churn rate for participation in so-called 'MLM income opportunities,' has always  been effectively 100%.


Image result for mother jones

How Multilevel Marketing Companies Got the Autism Community Hooked on Essential Oils 

Vague wellness language and an army of salespeople are miracle treatments for the bottom line.

By Kiera Butler

When Cheryl Walser was 19, she gave birth to her first child, Ethan. The newborn phase is hard for all young mothers, but for her it was a nightmare. Ethan cried almost constantly and rarely smiled. At 18 months, when most babies giggle, play, and begin to chat with their parents, Ethan was silent and withdrawn—he would barely make eye contact. She knew something was wrong. A few months later, a doctor confirmed her suspicions: Ethan was diagnosed with autism. “I felt incredibly alone, and so ashamed,” Walser, now 33, recalls. “I believed that I had done something to cause it, and I had no idea how to fix it.”
The next several years were a blur of doctors’ appointments, special diets, and therapy. Some of the treatments helped, but “it felt like two steps forward, three steps back,” Walser recalls. When Ethan was five, a friend invited her to an evening class she taught about so-called essential oils made by a Utah-based company called DoTerra. The friend thought the oils could help Ethan.

Walser attended and was intrigued by the little vials with romantic herbal names: vetiver, Roman chamomile, frankincense. Extracted and distilled from aromatic plants, each oil had a unique aroma that could help with specific physical and psychological problems, her friend explained. Some people applied them directly onto their bodies, like perfumes. Others used electronic diffusers to scent entire rooms. At the end of the class, Walser asked her friend which oil she should try. “She told me, ‘Think of your boy and hold this oil, and if your heart says get this oil, you should get it.’”
Walser finally settled on a $150 starter kit, plus two sample-size vials of Balance, a proprietary blend that, according to the promotional material, “promotes tranquility while bringing harmony to the mind and body, and balance to the emotions.” That night, Walser crept into Ethan’s room and rubbed the oil on her sleeping son’s feet. He woke up, and Walser explained what she was doing and gave him the bottle to smell. “Mommy, I need this,” he said. Over the next few weeks, Walser noticed improvements in her son’s behavior, so she began to experiment with other oils. As she delved deeper into DoTerra, she developed feelings of expertise. “I definitely felt that sense of empowerment, that I knew exactly what to do with it,” she recalls. Soon, she signed up with DoTerra and began selling the oils to others.
This transition from consumer to salesperson is common in the world of DoTerra, a multilevel marketing (MLM) company that works like the Tupperware parties of old: Salespeople invite friends to their homes for sales events disguised as parties or classes. They give a spiel about the product, maybe hand out a few free samples, and then offer their guests the opportunity to buy. Selling is good, but recruiting new salespeople is better: If you convince a friend to sell DoTerra products, you take a commission on every sale she makes. If she recruits her friends, you then get a cut of their sales, too. This model has done well for the company, which has gross annual revenues in excess of $1.5 billion.
Over the past five years or so, with a big assist from DoTerra and its main competitor, an MLM company called Young Living, essential oils have taken off in the autism community. Some parents I talked to told me they spend more than $200 a month on DoTerra products. On Facebook, there are dozens of essential oil groups for parents of kids on the spectrum—the group Autism, ADHD, and Essential Oils, for example, has more than 19,000 members.
Dawna Toews, an Ontario-based DoTerra saleswoman, told me she holds sales events all over the United States and Canada, where she teaches the families of children with autism how to use oils as a complementary therapy to help with some of the symptoms. “When you get an autism diagnosis for your child, you feel incredibly helpless, and you just want to be able to do something,” Toews told me. While she emphasizes that she never implies that her products can cure or treat autism, “Essential oils make parents feel empowered,” she says. It’s also a smart way to recruit salespeople: Moms who stay home to care for kids with autism are often eager to earn a little money on the side.

Just one problem: There’s little published scientific evidence on the effects of DoTerra’s oils—or any essential oils—on people with autism. These products, indeed, are not regulated. And the company requires its salespeople to spend at least $100 a month on DoTerra products in order to qualify for sales commissions. According to DoTerra’s 2016 member earnings disclosure and spokeswoman Missy Larsen, one-third of the salespeople—which the company calls “wellness advocates”—earn nothing from their sales efforts.
DoTerra isn’t required by law to disclose how many of its salespeople actually losemoney, but the Federal Trade Commission has cited a 2011 investigation involving about 350 multilevel marketing companies (including DoTerra) and found that the vast majority of the salespeople for such operations end up in the red—usually because they can’t manage to sell the products they’re required to buy.
Nor are the companies obligated to tell prospective salespeople that they may come out behind. The rules probably won’t change anytime soon. The FTC cracked downon multilevel marketing firms under President Barack Obama, but President Donald Trump, who made millions of dollars as a spokesman for an MLM company, is considered more likely to ease business restrictions than tighten them.
Whether they sell or not, parents of kids with autism are often financially vulnerable thanks to health-related expenses, says Catherine Lord, director of Cornell University’s Center for Autism and the Developing Brain. Her fear is that families are blowing money on essential oils at the expense of proven treatments. “What are you not doing because you’re doing this?” she asks.
In 2014, the Food and Drug Administration put DoTerra on notice that its salespeople were violating federal law by claiming the company’s essential oils could cure or treat a wide variety of health problems—“viral infections (including ebola), bacterial infections, cancer, brain injury, autism, endometriosis, Grave’s Disease, Alzheimer’s Disease, tumor reduction, ADD/ADHD, and other conditions that are not amenable to self-diagnosis and treatment by individuals who are not medical practitioners.”
After receiving the FDA’s letter, DoTerra warned its army of more than 3 million wellness advocates to refrain from making such claims, but not all of them listened—as of last week, at least one representative was touting the company’s essential oils on Facebook for flu prevention. When asked about salespeople still making health claims, DoTerra’s Larsen responded in an email that the company is “committed to absolute compliance with the FDA and similar regulatory bodies around the world.”

In any case, DoTerra salespeople have found a clever workaround. Instead of explicitly touting the oils’ ability to treat autism, salespeople need only share their personal experiences, telling potential customers about, say, the time vetiver helped their child sit through math class, or how a special blend prompted little Billy to hug Grandma for the first time. This sort of anecdotal marketing worries Jeremy Veenstra-VanderWeele, an autism specialist and professor of psychiatry at Columbia University’s medical school. “People sharing their own stories—that does not really tell us much about whether a treatment works,” he says. In fact, there’s no “biological plausibility” for how an essential oil would improve autism symptoms. 
Why, then, are so many parents of children on the spectrum convinced that essential oils help? One reason is that they seem like they should, Cornell’s Lord told me. Many children with autism react strongly to loud noises, unusual textures, and strong tastes and smells, she points out, so it’s understandable parents would seek out treatments involving the senses. Lord says she knows several families who have tried essential oils, as well as an occupational therapist who uses them in her practice.
A confounding factor is that parents often attribute any progress they see in their child to specific treatments they’re using at the time. So if, for example, your nonverbal kid starts talking a few days after a treatment with an essential oil, it’s tempting to connect those events. But Veenstra-VanderWeele points out that autism is incredibly complex; rarely does any single treatment yield major improvements. “Kids continue to develop whether or not they have a developmental disorder, and their progress also can be uneven,” he says. “That can make it difficult to assess treatments.”
The existing research on sensory-based treatments for autism—massage, music therapy, “environmental enrichment,” and so on—is extremely limited, says Amy Sue Weitlauf, a childhood autism specialist at Vanderbilt University. In a 2017 review of such therapies, she and her colleagues found that while a few methods yielded “modest short-term” results, such as improved motor skills or cognition, long-term data was inconsistent or lacking. Weitlauf, who has scoured the science literature, told me she isn’t aware of any robust peer-reviewed research on essential oils and autism. DoTerra’s Larsen claims in her email that there are “somewhere in the neighborhood of ten thousand peer-reviewed studies speaking to [essential oils’] benefits in supporting and promoting various markers of health”—but she wasn’t allowed to point me toward any evidence specifically related to essential oils and autism.
DoTerra maintains that it educates its sales force on the rules around health claims. “If a non-compliant claim is found we ask that it be removed, if the claims continue DoTerra terminates the non-compliant account,” Larsen wrote. She implied, however, that DoTerra can’t possibly police all the members of its independent sales force.
And yet the company courts the autism community independently. For example, it recently funded a new autism center at Utah Valley University, including a “sensory garden” that features the plants used in its oils. “Aromatic plants will be a beautiful addition to the space and will provide an uplifting, powerful experience for children and families, while also representing what DoTerra does,” reads a press release.
Some high-profile wellness gurus beloved in the autism community have connections with DoTerra. Take “Dr.” Josh Axe, a naturopath who used to sell DoTerra and now peddles his own line of oils. In the “autism natural treatments” section of his website, Axe claims that “Vetiver essential oil has proven to balance brain waves, lavender oil can calm the body and frankincense oil supports neurological development.”
After the FDA cautioned DoTerra against making unfounded health claims, the company quietly began to market its products using more scientific language. On a spiffy new website called Source to You, customers can read about DoTerra’s complicated distillation process and its medical advisory board. In August, the company announced plans for a major build-out, including a 39,500-square-foot medical clinic at its Utah headquarters “where we can validate the medical benefits of oils with modern medicine.” (By next year, the company projects it will have nearly 3,000 regular employees.)

The FDA’s admonition certainly hasn’t discouraged DoTerra reps from marketing heavily to the autism community. Toews, the Ontario saleswoman who regularly hosts DoTerra events, including ones specifically focused on autism, at one point achieved DoTerra’s ultra-elite Blue Diamond level, which according to company disclosures means she had hundreds of salespeople working under her and pulled in about $450,000 a year.
Some Republican legislators are trying to relax the rules multilevel marketing companies must adhere to. In the past, the FTC has found that companies that get the majority of their income by recruiting new sales reps—as opposed to from sales of the end product to consumers—are illegal pyramid schemes. (There is no indication the FTC has investigated DoTerra.) But Rep. John Moolenaar (R-Mich.) has proposed changes that would shield MLMs from investigation by the FTC so long as the companies don’t require salespeople to buy excessive inventory, and so long as they offer to buy back a portion of the product a sales rep cannot sell.
One DoTerra saleswoman in Utah told me she had heard the company may soon be allowed to tout its products as medical treatments again. “We still can’t make health claims, but it’s changing,” she said. “The Trump administration is much more lax about this.”
That’s speculation, of course. But in a way, it doesn’t matter whether the rules change, because the feds can’t touch DoTerra’s most powerful sales tool: the personal testimonial. Last year, Walser told me, she attended a session at DoTerra’s annual convention where a speaker talked about a nonverbal child who called his mother “mommy” for the first time after receiving daily applications of frankincense.
Walser loves sharing these kinds of stories. She has even produced a series of YouTube videos aimed at her fellow parents in the autism community. “I just go back to how I felt—it was this really helpless feeling,” she says. “I want other parents to have hope.”

Mother Jones 
Kiera Butler  (copyright 2018)

Saturday 24 February 2018

The 'Scientology' mob's Ponzi scheme (apparently) instigated by Reed Slatkin.

I've been asked if I could re-post my analysis of Reed Slatkin's 'Long Con.' 

Reed Slatkin is an example of a deeply-deluded individual who was both victim and perpetrator of a 'Long Con.'

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 that is 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 empty their bank accounts, and/or borrow from: friends, family members, etc.

Reed Elliot Slatkin (2003)

When I first started my Blog, I was contacted by a former adherent of ‘Scientology’ who told me that, several years previously, he had fallen victim to a 'Long Con' ostensibly run out of Santa Barbara California by Reed Elliot Slatkin (1949-2015), a ‘Minister of the Church of Scientology.’  

I was directed to

Reed Slatkin (circa 1995)
Reed Slatkin (circa 1980)

Somewhere around 1985-1986, Reed Slatkin (then aged 36, and whose involvement with ‘Scientology’ already stretched back 24 years) began illegally to acquire control over a capital sum which he eventually would pretend totalled almost $600 millionsThis was achieved by him posing as an ordinary man turned infallible capitalist superman – a wise ‘Investment Club Manager’ who (guided by the ‘ethics and spiritual technology' of his ‘religion’) always returned substantial annual profits (around 25%) for his ‘Club Members,’ no matter what the overall trading conditions were. 

Many of Slatkin’s victims were wealthy, low-level ‘Scientology’ initiates programmed to defer unconditionally to the imaginary moral and intellectual authority of high-level initiates; others were well-heeled Hollywood types.

Unfortunately, exactly like Bernie Madoff, Slatkin was nothing more than an economic alchemist - a once-penniless nobody: turned self-proclaimed financial guru who, despite the huge amount of cash he handled for (ultimately) 800+ listed ‘investors,’ was not even registered with the US Securities and Exchange Commission. Unlike Madoff, at first Slatkin completed trades, but these were generally disastrous and his losses quickly grew to monumental proportions. For while, Slatkin did not display the trappings of wealth. Many of the failing ‘partner’ companies which he recklessly continued to pour his victims’ money into, were created and run by his fellow core-‘Scientologists’ (some of whom had previous convictions for fraud ).  

This tragicomic aspect of the Slatkin saga immediately put me in mind of Mel Brooks’ 1968 comedy film, ‘The Producers,’ in which the two central characters, ‘Max Bialystok’ and ‘Leo Bloom,’ run a 'Long Con' by staging a financially-suicidal 'Nazi'-themed Broadway musical (‘Springtime for Hitler’) in order to cheat their elderly (mostly Jewish widow) ‘investors.’

Image result for reed slatkin

During 15 years, Slatkin and his family were extensively promoted by 'Scientology' propaganda as a glowing example of the limitless prosperity, freedom, health and happiness which unquestioning adherence to the 'Church' brings. 

Meanwhile, Slatkin succeeded in maintaining an absolute monopoly of information about his criminal enterprise - issuing countless fake ‘account statements’ and actually paying out what he arbitrarily defined as profits’ to privileged investors’ by using authentic cash taken from fresh victims. In total, Slatkin paid  $279 millions to a group of persons who (on paper) had originally given him a total of only $128 millions to invest. In this way, between January 1st 1986 and April 30th 2001, Slatkin passed more than $151 millions of stolen funds to 75 (apparently independent) persons many of whom were core-‘Scientologists.’ A second (slightly larger) group pocketed $44 millions. If we just take one example, Joel Kreiner, ‘Scientology’s’ primary tax attorney, received a whopping $5 866 583. 

Well into this period, by chance, Slatkin became involved in the launch of a truly successful company, the Internet service provider, 'EarthLink Inc.' Sadly, this fluke only served to enhance his unwarranted reputation as a shrewd businessman on the cutting edge of technology. Thus, drawing more victims into his pay-to-play game of make-believe. Even though Slatkin's initial $75 000 investment in 'Earthlink' soon leapt to more the $100 millions (when the company went public), this did not cover, and wasn't connected to, his other trading losses. Evidently, 1986-2001, no agent of law enforcement ever asked Slatkin the one blindingly-obvious question which would have immediately revealed what he was doing:

'Excluding your own documentation, what quantifiable evidence can you produce to prove that your alleged investment fund has had any significant or sustainable source of revenue other than its own alleged investors?'

By the spring of 2001, the flow of fresh cash seemed to be finally drying up. A few victims had begun to smell a rat when Slatkin (who couldn't pay them their fictitious ‘profits,’ let alone refund their so-called 'investments') began behaving strangely and stalling for time. He was now escorted by an echelon of aggressive bodyguards. One of Slatkin's victims who had handed over $15 millions, lost patience and filed suit. As a result, part of Slatkin's assets were frozen. By this stage,no one believed his lies and (bombarded with more lawsuits and demands for payment), he filed for bankruptcy.

It turned out that the SEC had been investigating Slatkin off and on since 1997 (because he wasn't registered with SEC), but officials had swallowed his comic-book lies, and documents, and failed to take any decisive action. They'd been led to believe that Slatkin was in the process of closing his business.

It wasn't until later in 2001, that the SEC finally strolled in - filing a civil enforcement action, freezing Slatkin’s remaining assets. Simultaneously, the FBI and IRS executed criminal search warrants and immediately discovered that Slatkin’s miraculous, ever-growing ‘investment fund’ was indeed a classic Ponzi scheme, without any significant or sustainable source of external revenue other than its victims. By this late stage, the bogus business was in deficit to the tune of $255 millions. Furthermore, the FBI found that Slatkin had gone to the most extraordinary lengths - including the creation of a fictitious Swiss bank, NAA Financial,’ - to conceal the truth, obstruct, and/or divert, the limp SEC investigation and continue to commit fraud.

In October 2001, a major article appeared in 'Esquire Magazine.' This revealed that when Slatkin had previously been interviewed by SEC lawyers, much to their amazement, in response to a standard question about his educational/professional qualifications (or rather lack of qualifications), he calmy explained that he was a 'Certified Dianetics Auditor' and he treated them to a deeply-mystifying, extended-lecture on his ‘Scientology Beliefs and Ethics,’ recounting his 38 years in ‘Scientology.’ 

This remarkable testimony included how Slatkin:

- (as a 14 year old boy in 1963) was recruited into the organisation by his uncle, after the sudden death (by suicide) of his father.

L. Ron Hubbard playing the Lord of Saint Hill Manor

- (before graduating from High-School) travelled to the UK to study ‘Spiritual Technology’ at Saint Hill Manor under L. Ron Hubbard himself.

- (in his late teens) was involved in the setting up of Hubbard’s ‘Sea Organization’  in Scotland, but was deported from the UK, and his passport confiscated, when the UK Minister for Health declared ‘Scientology’ to be a public danger.

During his SEC deposition, Slatkin (without the slightest embarrassment) proudly recited from the comic-book ‘Scientology’ fiction as though it was fact; demonstrating that he was still the deluded de facto agent of its authors. However, during his trial (more than 2 years later) his lawyer stated that it had taken a while to ‘deprogram’ his client, but now Slatkin accepted that he’d  been acting under the influence of ‘Scientology.’

April 2002, confronted with reality, Slatkin had given himself up to the authorities.

On September 2nd 2003, after pleading guilty to mail fraud, wire fraud, money laundering and obstructing justice, Slatkin was sentenced (by California Judge, Magaret Morrow), to serve 14 years in a federal prison. Although ‘Scientology’s’ attorneys subsequently maintained that Slatkin’s explanation of his behaviour was rejected out of hand by Judge Morrow, she actually felt obliged to state before sentencing that:

‘The Court does not discount the importance of the Church (‘Scientology’) in his (Slatkin's) life and that it colored his judgement.’

During the trial, and sentencing, a claque of  Scientologists’ in civilian dress had queued to be first into the courtroom. They all smirked and sneered and giggled in unison, acting as though Slatkin’s attorney was a crazy conspiracy theorist, each time he had made the slightest reference to his client being programmed. A highly-convenient witness (and long-time ‘Scientologist’) Daniel W. Jacobs (b. 1946), testified (under oath) that Slatkin had met with him in a restaurant in 2001 and openly boasted about  having:-

- millions of dollars stashed away in gold, art works, etc.
- a plan to ‘implicate Scientology.’

Jacobs (who described himself as a ‘financial consultant’) had, in fact, made a prior agreement with the prosecution. In return for his co-operation and guilty plea, he would receive a derisory 4 month prison sentence for conspiracy to obstruct the SEC investigation. Jacobs admitted that, for 12 months, he had posed as a representative of Slatkin’s fictitious Swiss Brokerage.’ He had assisted in the production of fake ‘Swiss account statements’ and the running of fake ‘Swiss telephone numbers,’ all of which were designed to fool victims and regulators into believing that a reputable overseas financial institution held hundreds of millions of dollars of missing cash. Tellingly, Slatkin’s alleged stash has never been traced, and (in direct contradiction to Jacob’s statement) the quantifiable evidence proved that Slatkin had paid $1.7 million of his ill-gotten gains directly to Scientology’ front-groups, and that he had facilitated the channelling (via favoured ‘investors’ who were ‘Scientologists’) of an unspecified amount of stolen money to corporate structures affiliated to ‘Scientology.’ Indeed, in November 2008, it was reported that a ‘Scientology’ attorney, David Schindler, had ‘negotiated a compromise’ with Alexander Pilmer, an attorney acting for Slatkin’s bankruptcy trustee, R. Nodd Nielson, in which ‘Scientology’ agreed to pay back $3.5 millions to victims. After being in receipt of bundles of cash for 15 years (apparently in total ignorance that it was stolen), the leadership of ‘Scientology’ suddenly pronounced the ‘Excommunication’ of Slatkin, and all the many references to him as a glowing example of a ‘Scientology’ success story, were removed from the organization’s propaganda. 

To date, no further investigation has been pursued against the leadership of ‘Scientlogy’ by the US authorities regarding this affair. The buck stopped with Slatkin and five associates, even if the bucks didn’t. 

60% of what Slatkin stole, has never been returned to his victims.


I’d like to thank Robert Fitzpatrick (President of Pyramid Scheme Alert) for drawing my attention to the fact that Ms. Joan 'Jodie' Bernstein (Director of Consumer Protection at the Federal Trade Commission, 1997-2002) was solicited by the St. Louis-based law firm, Bryan Cave LLP, and that (in her new, much more highly-paid capacity) she then enthusiastically lied to her former colleagues at the FTC on behalf of the bosses of ‘Amway’ cultic racket - arguing that there was no need for government regulation of her client in particular, and of ‘Multi-Level Marketing’ in general.

It will probably come as no surprise to readers to learn that Bryan Cave LLP has also defended Reed Slatkin. Indeed, the late Mr. Gerald Boltz (a former Securities Exchange Commission Administrator) was also solicited by Bryan Cave LLP, and (in his new, much more highly-paid capacity) he then enthusiastically lied to his former colleagues at the SEC on behalf of Reed Slatkin, arguing (at the beginning of 2000) that there was no need to file a civil enforcement action to  freeze his client’s remaining assets.

In 2003, it was reported that Reed Slatkin’s bankruptcy trustee, R. Todd Neilson (a former FBI agent) had complained to US Bankruptcy Judge, Robert Riblet, that Gerald Boltz and his associates at Bryan Cave LLP had deliberately mishandled Slatkin’s case and, thus, permitted hundreds of individuals to continue to lose their money. Neilson argued that Boltz (as a former top SEC lawyer) should have immediately deduced that Slatkin was running a Ponzi scheme, but (inexplicably) he did not.

Bryan Cave LLP subsequently filed a ‘tentative settlement’ with the US Bankruptcy Court, in which the law firm denied any wrongdoing, but (all the same) offered to pay Slatkin’s trust $650 thousands to be distributed to its creditors. Limply, Bryan Cave LLP (a firm that promotes itself as being expert in financial fraud) posed as a wide-eyed victim totally deceived by Slatkin’s fake documentation. In any event, Gerald Boltz’ amoral defence was that, as Slatkin’s counsel, his duty was to his client: not to his client’s ‘investors.’

Bennetta Slaughter

For a while, in another obvious attempt to obstruct justice, a 'Scientology' agent called Bennetta Slaughter, tried to create a fake association to 'represent Slatkin's investors' Immediately after his trial, Slatkin’s mystifying labyrinth of lies was so vast that it was still in process of being partially dismantled by Alexander Pilmer, the attorney acting for R. Todd Neilson. At this time, hundreds of Slatkin’s (ultimate) victims were owed around $240 millions, and more than 200 lawsuits had been filed to recover money from corporate structures and individuals who had profited directly from Slatkin’s crimes. However, Pilmer was also in negotiation with attorneys acting for another (even more-mystifying) labyrinth of lies. The leadership of ‘Scientology’ had profited indirectly from Slatkin’s crimes - receiving an unspecified number of payments (arbitrarily defined as ‘donations’) via an unspecified number of corporate structures (arbitrarily defined as ‘non-profit-making organisations’) and from around 75 individuals who headed the list of 'Scientologists' who had profited directly. For obvious reasons, Pilmer requested that all these ‘donations’ to ‘Scientology Groups’(allegedly totalling many tens of millions of dollars) should be immediately declared and returned. After 5 years of wrangling, ‘Scientology’ coughed up a mere $3.5 millions, but this included $1.7 millions that Slatkin ‘donated’ himself.

To this day, it is not known exactly how much of the unlawful profits from the Slatkin 'Long Con' ended up with the leadership of 'Scientology.'

However, many obvious questions have (apparently) never been asked by law enforcement agents - principally:

Since, out of the group of core-‘Scientologists’ who (over a period of 15 years) were proved to have received a total of $151 millions stolen by Slatkin (arbitrarily defined asprofits on investments’ ), a significant number were from the so-called ‘Sea Organisation’ who are paid just $50 per week, where exactly did certain pious members of this poor ‘Scientology Religious Order’ suddenly acquire the odd quarter of a millions dollars (in cash) to ‘invest’ with Slatkin in the first place?

Reed Slatkin
Reed Slatkin 2013

It has been variously reported on Sites which monitor 'Scientology,' that Reed Slatkin died of a heart attack in either 2013 or 2015 and that this has been confirmed by his ex-wife and verified with official records. For some mysterious reason, it seems that the death of one of history's largest Ponzi schemers has never been reported by the mainstream media.

According to Wikipedia, Slatkin died June 23rd, 2015 aged 66.

Again, Wikipedia gives no reference to any mainstream media report of Slatkin's death.

David Brear (copyright 2018)