Whilst reading the following article, bear in mind that there is no quantifiable evidence (e.g. income tax payment receipts) proving that anyone who has a signed a contract with an 'Amway' copycat, so-called 'Multi-Level Marketing Direct Selling' company offering a so-called 'income/business opportunity,' has actually established a lawful, and commercially viable, business, in which an overall net-income has been generated (after the deduction of all start-up and operating costs) via the regular retailing of goods/services for a profit based on value and demand to members of the general public (i.e. persons who are not fellow 'MLM' contractors motivated by a false expectation of future reward). Thus, anyone claiming or implying that one penny of overall net-income, let alone life changing sums of money, can be generated lawfully by participating in a so-called 'MLM direct selling income/business opportunity,' cannot be telling the truth and will not provide any quantifiable evidence to back up his/her non-specific anecdotal statements.
Also bear in mind, that lately, what appears to be the world's largest 'Amway' copycat 'MLM' cultic racket, known as 'Tiens,' is Chinese controlled. 'Tiens' kitsch propaganda has claimed 14 millions adherents around the world, and the group's bosses have established corporate Trojan Horses in more than one hundred countries.
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I have been asked:
What exactly is China's policy on MLM?
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An article I posted five years ago, was in response to essentially the same question.
My article was entitled:
The 'Herbalife (HLF) MLM' racket has only survived in China due to regulatory ignorance and corruption.
'Why do MLMs still exist in China when MLMs are illegal there?'
In truth, this question is essentially the same as asking:
Why do frauds still exist everywhere when frauds are illegal everywhere?
In 2005, China introduced a law entitled:
'Regulation of Direct Sales and Regulation on Prohibition of Chuanxiao'
(Chuanxiao = 'Multi-Level Marketing').
This attempt at common-sense legislation was (supposedly) designed to establish a clear and unambiguous legal distinction between traditional, sustainable, single level direct selling and economically-unviable, endless-chain, pay-to-play recruitment frauds disguised as 'direct selling.'
According to certain reports, during the drafting of this legislation, representatives of some of the largest US-based so-called 'MLM' companies were consulted by Chinese government officials, but I have not bothered to verify this claim. For even if this was true and these particular officials were not corrupt, once you know how 'MLM' cultic rackets have functioned, it becomes obvious that one of the devious tactics pursued by their bosses has been to agree to comply with any form of legislation proposed by trade regulators (including attempts to ban 'MLM' rackets) in order to establish their corporate Trojan Horses around the globe.
Thus, according to the 2005 Chinese law, traditional single level, direct sales schemes in which participants can reasonably expect to earn commission by regularly selling goods/services externally to the general public (based on value and demand) are permitted in China, but (intrinsically-fraudulent) so-called 'Multi-Level Marketing income opportunity' schemes which, by design, generate no significant, or sustainable, revenue other than that deriving from their own ill-informed participants' internal purchases of goods/services (based on the false-expectation of future reward), and on the internal purchases of further ill-informed recruits (based on their false-expectation of future reward), etc. ad infinitum, are absolutely banned.
On pain of arrest or forfeiture of assets, the same Chinese law (theoretically) requires:
- all traditional, single level, direct sales companies, and their non-salaried sales agents, to operate under an annually-renewable license.
- all traditional, direct sales companies to pay-out commissions to one level only of non-salaried sales agents, and these commissions must be limited to a maximum of 30%.
- all traditional, single level, direct sales companies to provide extensive, ongoing free training for their non-salaried sales agents.
- all Chinese, non-salaried, direct sales agents not only to carry a license as proof of training and compliance with the law, but also to wear an identification badge whilst attempting to conduct sales.
Despite this legislation, in practice, unlicensed agents of 'MLM' cultic rackets have been able to enter China from the neighbouring legal jurisdictions of Taiwan and Hong Kong (where no common-sense 'MLM' banning-law has been introduced); whilst Chinese citizens have easily dodged the law by giving Taiwanese or Hong Kong addresses on their 'MLM' recruitment contracts, and by using Taiwanese or Hong Kong banks.
However, it is common-knowledge that China is one of, if not the most, corrupt countries on Earth. Furthermore, 'MLM' racketeers have ong-since realised that the introduction of any law, which is then not enforced, has the effect of authorising the very crime which the same law apparently sought to prohibit.
The bosses of 'Herbalife' are just one of several US-based 'MLM' mobs who have been pretending to be in total compliance with the law in China, whilst bribing corrupt Chinese government officials to turn a blind eye to their copycat, hidden criminal enterprises.
Ever since instigation in 1980, 'Herbalife Ltd.' has been the legally-registered, Los Angeles-based, corporate-front for an 'Amway' copy-cat, blame-the-victim 'Multi-Level Marketing' cultic racket which, due to chronic international regulatory-failure (born of ignorance and/or corruption in the USA), has been allowed to become publicly-traded on Wall St. and to spread (with no appropriate official challenge) onto a global scale.
Only when an honest observer looks beyond the end of his/her nose, and fully-recognises the profitable criminal enterprise that the 'MLM' fairy story has been hiding, does it become obvious that every move the wealthiest 'MLM' peddlers have made (and will continue to make) fits into an overall pattern of ongoing major racketeering activity (as defined by the US federal Racketeer Influenced and Corrupt Organisations Act, 1970).
'MLM' racketeers' have all been travelling down the same dark road from which there is no turning back. Consequently, their steps can be predicted with almost 100% accuracy; for they will go to almost any lengths to sustain their hidden criminal enterprises and to avoid being held personally to account.
As explained above, mystifying so-called 'MLM Income Opportunities' shielding infinite-level rigged-market swindles (a.k.a. pyramid schemes based on peddling the crack-pot pseudo-economic theory that endless-chain recruitment + endless purchases of products/services by the recruits = endless profits for the recruits) have supposedly been recognised and banned in China. However, until 2017, the 'Herbalife' racket had been steadily gnawing its way into China right under the noses of the regulatory authorities and state-controlled media. Predictably, 'Herbalife's' bosses have been pretending that unlike everywhere else in the world, in compliance with the 2005 Chinese legislation, 'Herbalife's' Chinese subsidiary does not offer an 'MLM income Opportunity.' Indeed, in 2016, 'Herbalife's' bosses falsely-declared to the US Securites and Exchange Commission that in excess of $800 millions (around 20% of global annual revenue) was deriving legally from China (i.e. without breaching any Chinese legislation identifying, and banning so-called 'MLM' schemes, as frauds, or breaching the US federal Foreign Corrupt Practices Act).
In January 2017, to avoid any risk of being charged with withholding key-information from investors, the bosses of 'Herbalife' were obliged to declare publicly that senior employees of their Chinese subsidiary were under US federal investigation concerning acts of corruption, and that the results of this investigation could possibly have a detrimental effect of the company's share price. Typically, 'Herbalife's' bosses also announced an internal review which predictably resulted in the senior employees in question being blamed and fired and the 'policies and procedures' of 'Herbalife's' Chinese operation being 'enhanced.'
Almost 2 years later, in a Manhattan federal court, the US Dept of Justice charged two former executives of 'Herbalife' (China) with bribing Chinese officials over a ten year period, destroying material evidence and lying to the Securities and Exchange Commission.
https://www.justice.gov/opa/press-release/file/1217421/download?utm_medium=email&utm_source=govdelivery
According to the DoJ, during the period 2007-2016, at least $25 millions had flowed through 'Herbalife's' Chinese External Affairs Dept., headed by Hongwei (a.k.a. Mary) Yang (a Chinese Citizen b. 1968), to supply gifts and entertainment to Chinese government officials. Along with the (former) Managing Director of 'Herbalife's' Chinese subsidiary, the appropriately-named Yangliang (a.k.a. Jerry) Li (a Chinese Citizen b. 1968), Ms. Yang was charged with conspiracy to violate the Foreign Corrupt Practices Act. Mr. Li was also charged with perjury and destruction of records in federal investigations.
The DoJ's idictment concluded that Ms. Yang and others had bribed key Chinese government officials for the purpose of:
- obtaining direct selling licenses for 'Herbalife' in China.
- preventing investigations into 'Herbalifes' real activities in China.
- suppressing negative coverage of 'Herbalife' by state-controlled Chinese media.
As far as I'm aware, the identities of the recipients of the 'Herbalife' bribes have not been fully-disclosed, except in the DoJ indictment it seems that one is referred to as the Deputy Director of the AIC (the Chinese equivalent of the FTC).
When you read the indictment, you also discover that federal prosecutors had access to incriminating audio recordings of conversations (dating back years) which the 'Herbalife' executives had with the officials whom they bribed.
Indeed the content of the indictment begs many questions:
- who exactly gathered this evidence in China?
- why was this evidence not acted on sooner?
- how did this evidence find its way to US federal prosecutors?
- what has happened to the two Chinese 'Herbalife' executives and where are they?
- what has happened to the various corrupt central, and provincial, Chinese government officials whom the 'Herbalife' mob bribed?
- what has happened to the wives and adult children of the corrupt Chinese officials who also received bribes and who were, therefore, party to the conspiracy?
- how much money have the 'Herbalife' mob removed from China unlawfully?
- have the Chinese authorities sought to recoup this stolen money?
- will Bill Ackman be re-appearing in the 'Herbalife' saga, because during his failed attempt to short-sell 'Herbalife,' the company's declared annual revenues are now known to have been false - as a significant % of them were secretly being stolen in China, and 'Herbalife's' share-value was, therefore, being propped-up by what is now officially-recognised as being a hidden criminal enterprise.
One would have to be pretty stupid, and/or corrupt, not to deduce that Ms. Yang and Mr. Li cannot have been acting independently, because every devious crime they committed was ultimately to the financial benefit of 'Herbalife's' bosses. Indeed, every devious crime that these expendable little corporate soldiers committed in China must have been at the direction of 'Herablife's' generals in the USA - fitting perfectly into a pattern of overall major racketeering activity (as defined by the US federal RICO Act, 1970).
I've said it before and I'll say it again: in respect of 'MLM' cultic racketeering, you can fool some of the people all of the time and all of the people some of the time, but you can't fool all of the people all of the time (with the notable exception of the flock of amoral dunces with law diplomas temporarily holding down low-paid jobs with US federal government agencies).
Again, to avoid any risk of being charged with withholding key-information from investors, the bosses of 'Herbalife' have lately been obliged to declare publicly that $123 millions has been reserved to settle all these outstanding matters with the SEC and DoJ. However, what 'Herbalife's' attorneys are actually in the process of negotiating with SEC and DoJ attorneys, is not yet clear.
Furthermore, as far as I'm aware, as Chinese citizens Ms. Yang and Mr. Li, along with the various unamed key Chinese government officials whom they bribed (by order of 'Herbalife's' American bosses), all risk being executed (if convicted of serious corruption under Chinese law). However, it is not clear whether any of them have yet been charged with any crime by the Chinese authorities or where Ms. Yang and Mr Li are.
The questions here are absolutely endless, but no journalist seems to be very interested. To date, the way these serious matters have been reported by the media, has been typically limp and misleading.
David Brear (copyright 2020)
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Today, October 17th. 2025, with 'MLM' pitchman, Donald Trump, again sat in the Oval Office (but now apparently in total control of the US Dept. of Justice and the US Federal Bureau of Investigations), the situation concerning US-based 'MLM' cultic racketeering has lately reached unprecedented levels of horror and farce. For there is no way that any criminal investigation, let alone a criminal prosecution, of any aspect of this historically significant criminogenic phenomenon would be allowed to proceed.
David Brear (copyright 2025)
What do you think can be done to stop MLM cults?
ReplyDeleteAnonymous, the Big 'MLM' Lie has been allowed to grow to such a vast scale, that the only way for any honest government to stop it, would be to tell the truth about it. This is a fake 'business/income opportunity,' and the rest of the racket can only function, because 'MLM' victims cannot make any money, and the more they lose: the more they are told that it is entirely their own fault, and that they must continue no matter what the cost.
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