Once upon a time, there was the end of the world.

From 'The Universal Identifying Characteristics of a Cult' (David Brear, Axiom Books, 2005)

Pseudo-scientific mystification. The instigators of pernicious cults seek to overwhelm their adherents emotionally and intellectually by pretending that progressive initiation into their own superior or superhuman knowledge (coupled with total belief in its authenticity and unconditional deference to the authority of its higher initiates) will defeat a negative or adversarial force of impurity and absolute evil, and lead to future, exclusive redemption in some form of secure Utopian existence. By making total belief a prerequisite of redemption,adherents are drawn into a closed-logic trap (i.e. failure to achieve redemption is solely the fault of the individual who didn’t believe totally). Cultic pseudo-science is always essentially the same hypnotic hocus-pocus, but it can be peddled in an infinite variety of forms and combinations (‘spiritual’, ‘medical’, ‘philosophical’, ‘cosmological,’‘extraterrestrial’, ‘political’, ‘racial’, ‘mathematical’, ‘economic’, ‘New-Age’, 'magical', etc.), often with impressive, made-up, technical-sounding names. It is tailored to fit the spirit of the times and to attract a broad range of persons, but especially those open to an exclusive offer of salvation (i.e. the: sick, dissatisfied, bereaved, vanquished, disillusioned, oppressed, lonely, insecure, aimless, etc.). However, at a moment of vulnerability, anyone (no matter what their: age, sex, nationality, state of mental/ physical health, level of education, etc.) can need to believe in a non-rational, cultic pseudo-science. Typically, obedient adherents are granted ego-inflating names, and/or ranks, and/or titles, whilst non-initiates are referred to using derogatory, dehumanizing terms. Although initiation can at first appear to be reasonable and benefits achievable, cultic pseudo-science gradually becomes evermore costly and mystifying. Ultimately, it is completely incomprehensible and its claimed benefits are never quantifiable. The self-righteous euphoria and relentless enthusiasm of cult proselytizers can be highly infectious and deeply misleading. They are invariably convinced that their own salvation also depends on saving others.

Repression of all dissent. The leaders of the most-destructive cults are megalomaniacal psychopaths (i.e. suffering from a chronic mental disorder, especially when resulting in paranoid delusions of grandeur and self-righteousness, and the compulsion to pursue grandiose objectives). The unconditional deference of their deluded adherents only serves to confirm, and magnify, the leaders’ own paranoid delusions. This type of cult leader maintains an absolute monopoly of information whilst perpetrating, and/or directing, evermore heinous crimes. They sustain their activities by the imposition of arbitrary contracts and codes (secrecy, denunciation, confession,justice, punishment, etc.) within their groups, and by the use of humiliation, and/or intimidation, and/or calumny, and/or malicious prosecution (where they pose as victims), and/or sophism, and/or the infiltration of traditional culture, and/or corruption, and/or intelligence gathering and blackmail, and/or extortion, and/or physical isolation, and/or violence, and/or assassination, etc., to repress any internal or external dissent.

___________________________________________________________________________________

Although most of the world has rightly treated the matter as a huge joke, quite a number of enterprising charlatans have again been making money by presenting the mystifying lie that 'The End is Nigh' as though it is the supreme truth. However, this particularly destabilising, and highly-profitable, cultic controlling-scenario goes back to the dawn of human history; 'Doomsday' just keeps being updated and adapted to reflect the spirit of the times. 




In essence, the current version doing the rounds is that a bunch of Mayan wise men calculated, and prophesied, that Doomsday would occur today, Friday,  December, 21st, 2012. Personally, I'm not entirely sure how this typically precise and complex pseudo-scientific bull-shit has been passed off as reality, since Mayan writing has never been fully-understood and the Mayans used a different system for recording the passage of time.

http://www.bbc.co.uk/news/magazine-20712815

http://www.bbc.co.uk/news/world-20803579

http://uk.reuters.com/article/2012/12/21/oukoe-uk-maya-calendar-idUKBRE8BJ16Q20121221

In general, and for obvious reasons, the mainstream media has lumped together and ridiculed the 2012 crop of 'Doomsday' believers, but, nonetheless, there exist potentially lethal consequences. I sincerely hope that when the end of the world again fails to arrive by itself, no cult leader will attempt to fulfil his/her own prophesy.

World leaders should never forget that, since 1945, the human race has, in fact, possessed the means to bring about its own destruction. To date, atomic weapons have never fallen into the hands of a psychopathic cult leader, but there are certain observers of the cult phenomenon who consider that it is only a matter of time. As recently as 1995, Chizuo Matsumoto a.k.a. 'The Great Enlightened One,' made a serious attempt to obtain a nuclear device in the former Soviet Union as part of his elaborate plan to slaughter millions of his fellow Japanese citizens and trigger WWIII. Although Matsumoto's agents failed to buy atomic weapons, they did manage secretly to stockpile around 150 tons of other war materials, including chemicals to manufacture a quantity of Sarin nerve gas sufficient to kill millions of individuals. Furthermore, on the advice of certain 'religious scholars,' Japanese law enforcement agencies refused to investigate, and when the mainstream Japanese media was also given a timely-warning, a group of television journalists initially treated the 'Aum Doomsday cult,' as a huge joke. 

http://en.wikipedia.org/wiki/Shoko_Asahara

http://mlmtheamericandreammadenightmare.blogspot.fr/2012/04/anders-breivik-is-not-unique.html

http://mlmtheamericandreammadenightmare.blogspot.fr/2012/05/scholars-of-religion-or-scholars-of-new.html

http://mlmtheamericandreammadenightmare.blogspot.fr/2012/06/after-17-years-on-run-remaining-aum.html

David Brear (copyright 2012)

UBS pays $1.5 billions and dodges criminal prosecution

Well, now we've found the Higgs Bosun, we'll have to increase the difficulty ....

 Find an honest banker... 

Ouh là là... 

After confessing to committing wire-fraud and to the manipulation of key inter-bank lending rates in Europe and Asia, today, it has been announced that the Swiss bank, UBS, has avoided criminal prosecution by agreeing to pay: 

• $1.2 billions  (£740m) in combined fines to the US Department of Justice (DoJ) and the Commodities Futures Trading Commission
• £160m to the UK's Financial Services Authority (FSA)
• 59m Swiss francs (£40m) to the Swiss Financial Market Supervisory Authority

http://www.huffingtonpost.co.uk/2012/12/19/ubs-libor-scandal-940m_n_2327433.html

http://www.bbc.co.uk/news/business-20767984
http://www.bbc.co.uk/news/business-20779949

All this makes me wonder: Exactly what crimes do banksters have to commit, before they are held fully to account?

David Brear (copyright 2012)

• 
  

HSBC bosses agree to pay $1.9 billions fine and are put on probation .

http://www.bbc.co.uk/news/business-20673466
http://uk.reuters.com/article/2012/12/11/hsbc-settlement-idUKL4N09L1YE20121211?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews

UK-based HSBC bank is the biggest in Europe (by market capitalisation). It declared pre-tax profits of $12.7bn for the first half of 2012.

After an astonishing US Senate investigation (published earlier this year, 2012) concluded that  HSBC had 'been a conduit for drug kingpins and rogue nations,' the current bosses of HBSC have now announced that they have agreed to pay the US authorities a staggering $1.9 billions (the largest penalty ever imposed on a bank) to avoid facing money laundering charges. This means that although some of the most-serious financial crimes imaginable have been committed by certain corporate officers and employees and HSBC, no individual or corporate structure will face the slightest criminal charge. Although, financial penalties imposed on banks for perpetrating crimes have been described as 'fines' it would, therefore, be a far more accurate use of English to describe these payments as 'expenses.' Indeed, I am reliably informed that, since financial penalties imposed on banks reduce their profits, they are tax-deductible.

In the case of HSBC, and various other banks which continue to be caught engaged in large-scale money laundering, these jaw-dropping events are particularly baffling, since large-scale money laundering is, by its very nature, always part of a pattern of major racketeering activity (as defined by the US federal Racketeer Influenced and Corrupt Organizations Act, 1970), in that large-scale money-laundering is the process of using labyrinths of legally-registered corporate structures, generally pursuing lawful enterprises, to disguise the proceeds of ongoing major organized crime so that this money cannot be linked to unlawful enterprises. Indeed, US RICO legislation provides severe penalties ($250 000 fines and 20 years prison, per racketeering count) for all persons (including attorneys and bankers) proved to have been engaged in a pattern of ongoing major racketeering activity. Yet, predictably, RICO has not yet been invoked by US prosecutors, and the latest bosses of HSBC and their attorneys, have simply been allowed to pretend that the bank's was only guilty of having 'poor money laundering controls' which they are now in the process of reforming. Oh, and they have offered their 'apologies.'

We accept responsibility for our past mistakes... We have said we are profoundly sorry for them.' Current HSBC group CEO, Stuart Gulliver.

Somewhat belatedly, HSBC officials have recently said that they have reserved $290 millions to improve their money laundering controls and that they have taken back some 'bonuses' (payments linked to unlawful profits) paid to senior executives in the past.

HSBC has also announced that it is due to reach a similar (deferred) criminal-charge avoidance agreement with the UK's Financial Services Authority. Indeed, last month HSBC said that it had set aside $1.5 billions to pay for any settlement or fines.

This latest HBSC news followed the announcement of a similar settlement with UK-based Standard Chartered bank. Its bosses have so far agreed to pay $300m in fines for violating US sanctions.

Ironically, the regular sale to banksters of what are effectively 'Get of Jail' cards, has been described as being part of a 'crackdown on money laundering and sanctions violations being led by federal government agencies and New York state authorities,' following the release of a report by the US Senate which concluded that:

• 'HSBC in the USA had not treated its Mexican affiliate as high risk, despite the country's money laundering and drug trafficking challenges'
• 'The Mexican affiliate had transported $7billions in US bank notes to HSBC in the USA, more than any other Mexican bank, but had not considered that to be suspicious'
• 'HSBC had circumvented US safeguards designed to block transactions involving terrorists drug lords and rogue states, including allowing 25,000 transactions over 7 years without disclosing their links to Iran'
• 'HSBC had provided US dollars and banking services to some banks in Saudi Arabia despite their links to terrorist financing'
• 'In less than 4 years HSBC had cleared $290m in obviously suspicious US travellers' cheques for a Japanese bank, benefiting Russians who claimed to be in the used car business'

The report suggested that it was obvious that HSBC accounts in Mexico and the USA were being used by drug barons to launder mountains of cash. Interestingly, other qualified-observers have suggested that bank officers became blinded to reality in a desperate attempt to generate profits after making catastrophic investments in Mexico. However, the Senate report also stated that HSBC regularly dodged restrictions on dealings with Iran, North Korea and other states subject to US trade sanctions. 

Thus, HSBC bosses were more than happy to sign a 'Deferred Prosecution Agreement' in which they have effectively been placed on probation after effectively pleading guilty to a corporate-breaching of the 'US Bank Secrecy Act' and the 'Trading with the Enemy Act' as well as to committing a catalogue of money laundering offences. Yet had HSBC been indicted for any of these offences, then the US (and other) government(s) automatically would no longer have been permitted to conduct business with the bank.

Bob Werner

In a predictable move reminiscent of 'MLM Income Opportunity' racketeers, HSBC has announced that it has now bought the services a former senior US federal regulator who will work as 'Head of Financial Crime Compliance' (a post which, tellingly, did not exist previously).

 

Until recently, Bob Werner headed the US Treasury's Office of Foreign Assets Control (OFAC) - the agency responsible for enforcing US sanctions on countries including Iran.

David Brear (copyright 2012)

CNBC's Herb Greenberg red flags 'MLM' racket, 'ViSalus.'

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

In 1945, whilst most, contemporary mainstream commentators were unable to look beyond the ends of their noses, with a perfect sense of irony, George Orwell (1903-1950) presented fact as fiction in an insightful 'fairy story' entitled, 'Animal Farm.' He revealed that totalitarianism is merely the oppressors' fiction mistaken for fact by the oppressed. In the same universal allegory, Orwell described how, at a time of vulnerability, almost any people's dream of a future, secure, Utopian existence can be hung over the entrance to a totalitarian deception. Indeed, the words that are always banished by totalitarian deceivers are, 'totalitarian' and 'deception.' Sadly, when it comes to examining the same enduring phenomenon, albeit with an ephemeral 'Capitalist' label, most contemporary, mainstream commentators have again been unable to look further than the ends of their noses. However, if they followed Orwell's example, and did some serious thinking, this is the reality-inverting nightmare they would find.

According to its instigators' own strangely-familiar propaganda, 'Visalus is America's fastest growing MLM Income Opportunity.'

In the case of 'ViSalus,' back in August of this year, CNBC's Senior Stocks Commentator, Herb Greenberg, began to look beyond the end of his nose and do some serious thinking. http://www.cnbc.com/id/48764222 . However, now he is not alone. 

http://www.sirf-online.org/2012/11/the-infernal-machine-from-powder-to-dust/

________________________________________________________________________

When it comes to initial public offerings, the only thing worse than a seemingly get-rich-quick deal is a seemingly get-rich-quick deal involving what appears to be a business that promotes a way to get-rich (quick or otherwise).

Enter FVA Ventures, better known as ViSalus, which like its rival, Herbalife , is a multi-level marketer of weight-loss shakes and nutritional supplements that also offers the dream of striking it rich. 

The difference is that ViSalus, which is being spun off of publicly traded candle marketer Blyth, has turned in explosive growth over the past year with a story that on the surface looks, well, almost too good to be true (which almost always is a big red flag).  

Consider that:

• Sales in the first six months of the year up an astonishing 450 percent to $326 million.

• Customer count in the same period up 500 percent to 1.2 million.

• Distributor count (they call them, aptly enough, “promoters”) jumped 300 percent to 114,000.

• Gross margin: 71 percent.

Impressive until you dig deeper into the company’s IPO filing and other resources.

Among the notable concerns:

Like any multi-level marketer, ViSalus walks what appears to me, based on the my read of the comany’s filing, to be a controversial line between legal direct selling and pyramid scheme. In a lengthy risk disclosure in its prospectus about the risks associated with regulatory oversight by the Federal Trade Commission, ViSalus says that “we do not believe that we are subject to laws regulating pyramid schemes,” but warns that “there is a risk that a governmental agency or court could disagree with our assessment...”

It seems from reading the company’s prospectus that the guts of the company’s business model is distributor recruitment. In its simplest form, ViSalus is in the business of selling product to distributors. The distributors, in turn, “earn commissions based on sales of the product,” the company says. But it adds that purchases “include those made by customers our individual promoters have enrolled, as well as purchases of our products by individual promoters in their down-line sales organizations and customers enrolled by such individual promoters.”

As with any multi-level marketer, ViSalus appears to have a hard time hanging onto distributors. The company doesn't disclose its distributor failure or turnover rate, but it does acknowledge in its prospectus that its “marketing system depends upon the successful recruitment, retention and motivation of a large number of individual promoters to offset frequent turnover.” (Emphasis mine.)

To lure distributors, ViSalus touts on its website “the path to prosperity,” while independent distributor sites directly promote “financial freedom.” The ultimate goal, according to ViSalus’s website, is to become a “crown ambassador,” which leads to a “a cool $1,000,000 bonus check.”

Along the way, the company says, a distributor who becomes a “regional director”becomes eligible for the “Bimmer Club,” which means ViSalus will pay a monthly BMW lease. “Over 10,000 people have already qualified for a ViSalus BMW!” the company’s website says. “Somebody new qualifies every 40 minutes!”

(Fine print: Don’t earn enough commissions in any month and “ViSalus reserves the right to recover your BMW Bonus for that month.”)

The payouts are real. For the first six months commissions equaled 48 percent of sales compared with 38 percent for Herbalife. However, with a relatively short track record raised an obvious question for investors: Is such a high payout rate, which has been a draw to distributors, sustainable?

 Herb Greenberg (CNBC Senior Stocks Commentator)

Who (in their right mind) would buy a goalkeeper who once played for 'Goldman Sachs?'

In my experience, if it is suggested that dangerous charlatans have always been much-closer to us than we like to think, the average person is convinced that such an idea is absurd. Indeed, many times, I've been told that it just can't be possible for educated adults to fall for something as obvious as 'MLM' fraud. Sadly, at a time of vulnerability, anyone can need to believe in 'salvation.'

Bearing the above statement in mind, no one (including our current crop of world leaders) seriously disputes that it was the unfettered-greed of a minority of charlatan banksters, coupled with the abject failure of regulators to hold these pin-striped saboteurs to account, which triggered the current world economic crisis. Unfortunately, our leaders don't seem to have yet realized that, it was at similar times of mass-vulnerability that previous generations failed to recognize the most-obvious of charlatans and widely-accepted them as authentic saviours.

The current governor of the Bank of Canada and Chairman of the G20's 'Financial Stability Board,' is Canadian, Mark Joseph Carney (b. 1965).  He has lately been heralded by the current British Chancellor of the Exchequer, George Osborne, and Prime Minister, David Cameron,  as a nothing less than an economic saviour. Consequently, Mr. Carney is due to take up the office of Governor of the Bank of England, July 1st, 2013. He will be the first foreign-born holder of this office and it has been announced that Mr. Carney will receive an annual salary (financed by UK tax-payers) approaching US$1 million (approximately double the remuneration of his predecessor).

Prior to his becoming Governor of the Bank of Canada, Mr. Carney spent 13 years with Goldman Sachs in its London, Tokyo, New York and Toronto offices. During this time he occupied the positions of:

Joint-head of Sovereign Risk
Executive Director, Emerging Debt Capital Markets
Managing Director, Investment Banking.

Whilst with Goldman Sachs, Mr. Carney worked on South Africa's post-apartheid venture into international bond markets. 

Mr. Carney was involved in Goldman Sachs' controversial role in the 1998 Russian financial crisis. At this time, whilst employees of Goldman Sachs were acting as advisers to Russia, other agents of the bank were quietly placing massive bets against the country's capacity to repay its debt. To put this into context, imagine the 1998 Russian financial crisis as a rigged sporting event.

Ironically, Mr. Carney is a former (reserve) goalkeeper for the Harvard University ice hockey team. 

David Brear (copyright 2012)

When will a morally-courageous US leader make a stand and restore the rule of law in respect of 'MLM Income Opportunity' racketeers?

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

In 1945, whilst most, contemporary mainstream commentators were unable to look beyond the ends of their noses, with a perfect sense of irony, Eric Arthur Blair a.k.a. George Orwell (1903-1950) presented fact as fiction in an insightful 'fairy story' entitled, 'Animal Farm.' He revealed that totalitarianism is merely the oppressors' Utopian fiction mistaken for fact by the oppressed.

In the same universal allegory, Orwell described how, at a time of vulnerability, almost any people's dream of a future, secure, Utopian existence can be hung over the entrance to a totalitarian deception. Indeed, the words that are always banished by totalitarian deceivers are, 'totalitarian' and 'deception.'

All 'MLM Distributors' are equal, 
but some 'MLM Distributors' are more equal than others.

Sadly, when it comes to examining the same enduring phenomenon, albeit with an ephemeral 'American Capitalist' label, most contemporary, mainstream commentators have again been unable to look further than the ends of their noses. However, if they followed Orwell's example, and did some serious thinking, this is the reality-inverting nightmare they would find.

As if to prove the validity of the above statement, during the 2000 US Presidential election campaign of George W. Bush, the mainstream US media collectively-failed to notice, let alone report, the extensive infiltration of the Republican party by sanctimonious bosses of various, dissimulated, major organized crime groups/ 'Prosperity Gospel' cults, who have all become fabulously wealthy by peddling so-called 'MLM Income Opportunities'. 

At that time, the American republic's 'MLM' axis of internal enemies poured millions of stolen dollars into Republican coffers and, in return, bought effective immunity from prosecution. 'MLM' mobs expanded their pernicious racketeering activity into China with US government help. As a direct result of this unprecedented corruption of the US administration and failure of American law enforcement, and media, to pursue (timely) rigorous investigations of ongoing major organized crime, millions of ill-informed persons around the world were deceived into believing that unviable, and unlawful, fake 'direct selling schemes' (i.e. without a significant source of revenue other than an endless-chain of losing participants), are viable and lawful. When the global economy crashed in 2008, many more vulnerable persons around the world fell for a particularly-cruel 'Recession Proof' adaptation of the original 'MLM Income Opportunity' fairy story. 

During the most-recent US Presidential election, the US mainstream media timidly began to ask questions about Mitt Romney's alarming connections with 'MLM' mobs, particularly those instigated by persons claiming to be pious practitioners of the 'Mormon religion.'

Sadly, no one in the mainstream media has yet asked the key common-sense question:

When will a morally-courageous US leader make a stand and restore the rule of law in respect of blame-the-victim 'MLM Income Opportunity' racketeers?


David Brear (copyright 2012)

____________________________________________________________________________________

Robert FitzPatrick of Pyramid Scheme Alert, courageously reports the following and, at the same time, Robert's 'Special News' demonstrates that he has not lost his sense of humour:

http://campaign.r20.constantcontact.com/render?llr=7rspqdcab&v=001BowwB-ubI_EvWD4wecYdderh1IQDOl4RxT2QhC1S6G-dZd0Q7b3fo0ny5sYx5LxLY7aKavcW3uwprrjMA-QO9cvOeKxM54FYHseVd8U0YTiTUQsprZ5AIg%3D%3D

With this year's defeat of the MLM/pyramid standard-bearer, the media exposure of MLM efforts to block regulation, and the election to the Senate of Elizabeth Warren, the organizer of the new Consumer Financial Protection Bureau, the political protection of MLM could end. Pyramid fraud investigations and prosecutions could be renewed as they were in the mid-1990s.  

• Harper's Magazine: ("Pyramid Insurance") Documented influence-buying by MLMs and its lobbyist, the Direct Selling Association, of state Attorney's General and state legislators. It also showed the close ties to the Romney campaign by MLM companies and the Super Pacs they use to funnel money. 
• Salon.com: ("Billionaire Romney Donor Uses Threats to Silence Critics") Documented the contributions and high level campaign position of the president of the MLM, Melaleuca, with the Romney campaign.
• Mother Jones: ("Mitt Romney's Biggest Backers: Pyramid Schemers?") this famous investigative magazine was the first to report secret multi-million dollar contributions of Nu Skin officials to Romney, connecting also Romney's connections to Nu Skin through the Mormon church and winter Olympics sponsorships.  
• Whistle-blower: the ex-husband of a Nu Skin founder documented the political lobbying, fund raising, and close ties of top Nu Skin officials to Romney.
• Washington Post and Huffington Post: documented secret $2 million donation by Nu Skin executive Steve Lund to Romney,  their  Mormon connections and past financial ties through the Utah winter Olympics. 
• Fortune Magazine: documented Money/Mormon ties between Romney and Nu Skin. The article publicized the lavish and profligate lifestyles of Nu Skin's Mormon leaders. The article showed how Nu Skin's stock rise has produced millions in profits for Nu Skin insiders and attracted interest of short-sellers who suspect the income may be ill-gotten. 
• New York Times: ("For Romney, Ties That Bind") Columnist Joe Nocera detailed the close ties between candidate Romney and the MLM, Nu Skin.
  Nocera wrote, "Lund, the third co-founder (of Nu Skin), has donated $3 million to Restore Our Future, the "super-PAC" that is backing Romney. "Mitt Romney is a pretty close friend," Lund told (Fortune Magazine writer) Elkind. "We have been in his house many times. He and Ann had Thanksgiving at our house one year."
  Nocera also made the connection between MLM's political/financial influence and the flip-flop by FTC that exempted MLMs from requirements to make financial disclosures to consumers they solicit money from.
  
  
  Special News: Not yet reported in the mainstream press, Pyramid Scheme Alert has uncovered the extensive advisory role of multi-level marketing consultant and guru, Dr. Lasdwun N. Luzes in the Mitt Romney presidential campaign. Dr. Luzes is a popular speaker at Amway meetings, a lobbyist for the Direct Selling Association and a fervent anti-regulation spokesman.
  Between 2001 and 2008, during the George W. Bush administration, Dr. Luzes had extraordinary political influence in Washington. He personally persuaded the United States Federal Trade Commission (FTC) to virtually stop all enforcement of laws against pyramid selling schemes. He pointed out that, even though millions of consumers lose money in MLMs, anti-fraud law enforcement was unnecessary since few people complain publicly.
  
  However, with the election of Barack Obama in 2008, Dr. Luzes' career appeared to have ended in disrepute. According to the Wall Street Journal, it was Dr. Luzes who had persuaded Phil Gramm of Texas, presidential candidate John McCaine's top economic advisor, that Americans who complained about the loss of their jobs were just "whiners" and that the Recession was "only mental." 
  
  In this latest election cycle, as a highly paid consultant to Mitt Romney, Dr. Luzes fatefully informed Mr. Romney that 47% of Americans are just "quitters and losers."  

• ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ One of the country's top legal experts on MLM, former Asst. Attorney General of Wisconsin, Bruce Craig, has written a provocative article on the widely read forum, Seeking Alpha, that challenges MLM's main legal defense: retail sales (even if the retail sales are undocumented). Bruce Craig successfully prosecuted Amway during his tenure as Asst. AG. He was featured onCBS 60 Minutes. He has continued to examine the legal issues around the multi-level marketing business, and he has alerted the FTC to red flags of pervasive MLM fraud. In his article, "An Investor's Guide to Identifying Pyramid Schemes," Bruce Craig goes to the core of the case that multi-level marketing employs fraud -  the MLM "sales" rely upon a fraudulent "endless chain" income promise. He cites and analyzes the relevant court decisions that clearly outlaw endless chain financial propositions as "inherently" fraudulent. Craig also notes that several state statutes outlaw "endless chain" income propositions regardless of the presence of some retail sales. (See the statutes of NC, WI, CA, ME, VT, and PR) Bruce Craig points to an obvious fact that goes beyond legal technicalities. It is that  whether the MLM "downliners" have some retail customers or not, the endless chain income promise made to the recruiters cannot be fulfilled except to those who get in early.  He also addresses the tragic role of the FTC in allowing endless chain "direct selling" schemes to operate with impunity and how that policy has contributed to confusion and harm to the public. For a further discussion of the inherent fraudulence of the "endless chain" financial propositions made by MLM companies see the following resources: False Profits Blog:  "Have I Got a Deal For You: The Endless Chain Offer" Comprehensive Look at Legitimacy and Legality of Multi-level Marketing by Jon Taylor, Ph.D.: The Case (For And) Against Multi-Level Marketing  Article by Bruce Craig that Challenges Legality of MLM's that are based on "endess chain" income promises: An Investor's Guide to Identifying Pyramid Schemes

  Evidence and Red Flags! The Need for Renewed Regulation and Law Enforcement of MLM "Business Opportunity" Schemes       ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ In 2012, there have been several publicized events that indicate pervasive fraud in the multi-level marketing field and call out for a new and comprehensive investigation of this industry by regulators at the FTC, SEC, state Attorneys General and the new Consumer Financial Protection Bureau (CFPB): In September , the MLM diet company Medifast (MED), agreed to pay $3.5 million to settle FTC charges of false product claims. These fines are for violating an earlier order to cease and desist from making unsupported weight loss claims. Despite its promotional use of references to doctors and "clients", most of this company's revenue is gained from ordinary low calorie packaged food sold by non-medical sales representatives in a multi-level marketing scheme. The MLM, Nu Skin, has also been previously served with a FTC cease and desist order for making false weight loss claims.    In August, the fastest growing MLM in the country was prosecuted and shut down by the SEC for fraud. Zeek Rewards was charged with running a pyramid scheme. Showing the power and reach of such MLM frauds, in just 18 months, Zeek enrolled one million consumer investors, taking in $600 million in revenue. For months, the internet buzzed with exciting testimonials of participants about high income gained in the Zeek MLM. Adding to its appeal, the attorney who provided "compliance training" to Zeek's doomed consumer investors is a prominent member of the Direct Selling Association and a recipient of a DSA award for aiding MLM companies in avoiding or escaping prosecution by the FTC, SEC and state attorneys general. Add to those events... The MLM, Visalus Sciences, that also sells diet products and is a subsidiary of the MLM, Blyth Industry (BTH), suddenly began to show 500% growth, caused largely by a massive recruitment drive based on promises of income and that drew thousands of income-seeking consumers from other MLM companies.  Leveraging its extraordinary revenue growth, Blyth announced a $175 million stock offering to the public (IPO). Prominent and respected business news media figures raised red flag warnings about this investment offering, noting that "In its simplest form, ViSalus is in the business of selling product to distributors."  Blyth then abruptly and inexplicably, withdrew the stock offer. Blyth Industry stock plunged 20% in one day. In the following quarter, sales, recruiting and revenue of Visalus declined.  Last May, hedge fund manager David Einhorn famously asked a few seemingly innocuous questions about Herbalife's (HLF) business model during an investor call, and a $2 billion equity flight ensued over night. The damage extended beyond Herbalife to Nu Skin (NUS) and to a lesser extent Usana (USNA). This equity flight was reportedly based upon investor concerns of possible illegal practices, based on unsustainable recruiting of consumer/investors and deceptive income claims.  More events related to questions and claims about MLM fraud... In 2011, a Belgian court ruled that Herbalife (HLF), one of the oldest and largest MLM companies based in the USA, is an illegal pyramid scheme. In 2012, Amway, considered the prototypical model of all other multi-level marketing companies, agreed to pay up to $150 million in refunds and restitution in a pyramid scheme class action lawsuit brought by distributors. In 2007, the UK government sued Amway and sought to close the company in that country, due to the government data showing that 99% of all UK residents in Amway had never earned a profit in 30 years. The August, 2008 pyramid scheme prosecution of the publicly traded MLM, Your Travel Biz.com (YTBLA), by the California Attorney General destroyed YTB's shareholder value.  YTB had grown to the 7th largest travel agency in the country. Your Travel Biz.com was a member of the Direct Selling Association, which gave the MLM's business model and practices its seal of approval under the "code of ethics".  This year, a lawsuit and other efforts by a founder of Nu Skin (NUS) to stop publication of a whistle-blower book were halted by a Utah court that ruled that the writer is free to publicly claim that Nu Skin is a "pyramid scheme." The filing of SLAPP lawsuits by MLM companies against consumers, writers and analysts that call their legitimacy into question is becoming a common pattern. A 2012 report by Citron Research asserted that Nu Skin is using the multi-tiered MLM pay plan in China where it is banned and risks losing its license in China, placing billions of investor dollars at risk. Citron also wrote an open letter to the FDA asking the FDA to look at Nu Skin's product that Nu Skin claims "reset youth gene clusters."     The new convert to MLM, Avon, is under investigation in China on bribery charges and violations of the Foreign Corrupt Practices Act. Avon modified its business plan in 2005 to increase MLM incentives for is salespeople to recruit more salespeople.  NPR and other media are questioning the legitimacy of the "business opportunity" sold by multi-level marketer, Mary Kay. The examination was prompted by a 2012 Harper's Magazine cover story featured the MLM, Mary Kay. in which the author went undercover as a MK sales rep. She characterized MK as a "pink pyramid scheme" that is basing its revenues on pushing inventory on newly recruited salespeople.   The Main Street Bubble: By promising high income to millions of people   based on money they would get from future investors, MLM artificially inflates consumer investments and the value of the companies. Without enough future investors, the individual consumer's investment in MLM "distributorships" is virtually worthless.  If the individual investor doesn't recruit enough new investors,  the bubble collapses - for the individuals. If the scheme can replace the "losers", it can re-inflate and repeat the cycle, month after month.   Hedge funds and even rich and famous individuals have become involved in MLMs that were prosecuted by government authorities. The wife of ex-CEO of Bank of America became a prominent recruiter of the MLM, Fortune High Tech Marketing. This company  was prosecuted by regulators in several states. Donald Trump has hyped the MLM, ACN, that was also charged with pyramiding  by one state as well as in Canada.

  Newsletter/Conference Looks at MLM as a "Financial Product"  ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ TJ Strategies, a higher education and consumer finance policy newsletter that is read widely by investors, advocates, and policymakers, recently hosted a roundtable discussion that included discussion of possible new scrutiny of the multi-level marketing industry. The event was the semiannual "Higher Education and Consumer Finance Policy Conference", held November 15 in Washington, DC. In the afternoon session entitled, "The Outlook for Consumer Protection Policy" a panel of experts and analysts discussed, among other subjects, the potential of multi-level marketing being regulated by the new Consumer Financial Protection Bureau (CFPB) for selling a "financial product", i.e., work-at-home "distributorships." Boston-based attorney Douglas Brooks participated as an invited member of the panel. He is a nationally recognized expert on multi-level marketing, franchises and "business opportunity" offerings. Douglas Brooks brought successful class action lawsuits against the multi-level marketing companies, Herbalife and Nu Skin, winning millions of dollars in restitution for victims who invested as "distributors." Others invited to participate on the panel included, Jonah Crane, the Financial Services Aide to Senator Chuck Schumer; Matthew Lapinski,  from the law firm, SNR Denton; Ed Mierzwinski, Federal Consumer Program Director and Senior Fellow,U.S. PIRG; and a Staffer from the Office of Senator Elect Elizabeth Warren. The Washington, DC panel of government leaders, policy analysts and news media marks a growing new interest in regulation of multi-level marketing and the negative economic impact of MLM companies on consumers. More information is available from the conference host, T. J. Strategies