'FL / MLM' Thread 3

[Eyespying]

Continuing the valuable discussion of 'Forever Living' and other 'MLM/commercial' cults.

Bill Ackman Comments on Herbalife Short
Guru stock highlight
December 16, 2015 | About: HLF +0%
Herbalife (NYSE:HLF) Short

Our thesis on HLF remains unchanged. We believe that Herbalife will ultimately be subject to regulatory action or will collapse because of fundamental deterioration in its business which relies on the continual recruitment of new victims. During the quarter, the potential for regulatory action increased while business fundamentals deteriorated.

From a regulatory perspective, we view the Complaint that the FTC filed on August 17th against Vemma Nutrition Company (“Vemma”), another MLM whose structure is similar to HLF’s, as a very positive development. The preliminary injunction issued against Vemma on September 18th is likely to make Vemma’s business totally unviable and provides a template for claims the FTC could bring against Herbalife.

On October 27th, New York State Senator Jeff Klein, working with Public Advocate Letitia James and a non-profit community group called Make The Road New York, released a critical report on Herbalife titled: "The American Scheme: Herbalife's Pyramid Shakedown". Based on its hidden camera investigations of more than 60 nutrition clubs located in New York City, the report concluded that Herbalife distributors are “running an illegal pyramid scheme.” The report was supported by data from 56 victims who individually lost as much as $100,000. On December 9th, Sen. Klein held a public roundtable to advance his campaign to stop Herbalife’s deceptive tactics. Senator Klein has proposed New York State legislation that would amend the New York State General Business Law to better protect New York State residents.

Despite predictions from Herbalife supporters that regulatory investigations would end during the quarter, they appear to have intensified. The company has now spent a total of $101 million defending itself, including $11.2 million in the quarter. Expenses related to “responding to governmental inquiries” increased from $5.8 million last quarter to $7.6 million this quarter which reflects the growing intensity of ongoing investigations. Assuming Herbalife is spending about $500 per hour on lawyers, $ 7.6 million represents 15,200 hours of legal time during the quarter, or 168 hours of legal time per day, seven days per week.

Herbalife’s fundamentals continued to decline during the quarter. Notably “total members” – perhaps Herbalife’s most important operating metric – declined from 4.1 million in the second quarter to 4.0 million in third quarter indicating that Herbalife churned through at least 500,000 members as the rate of member churn exceeded Herbalife’s ability to find new victims.3 On its conference call, the company also began using a new operating metric called ‘active members,’ suggesting that Herbalife concedes that a proportion – we expect, a large proportion – of its members are inactive. In our experience, companies that change the standards by which they measure themselves do so only when the old metric shows business deterioration that they would rather not disclose.

With respect to third quarter earnings, Herbalife posted weak revenues, but was able to reduce or defer certain expenses in order to generate earnings that exceeded analyst estimates. Among other questionable add-backs, Herbalife excludes regulatory and costs to “defend its business model” from its earnings estimates despite the fact that these expenses are likely to continue. On a consolidated basis, the company reported net sales of $1.1 billion, down 12% year-over-year, which was worse than Street expectations and below management guidance. The negative variance was largely attributable to foreign exchange headwinds. Similar to last quarter, China continues to be the key driver of Herbalife’s growth. While China’s year-over-year growth was 25%, Herbalife China revenues declined 5% when compared to the previous quarter.

Notably, HLF’s South Korean market continued to show substantial deterioration in the quarter. South Korea has been one of Herbalife’s largest markets and a significant driver of the company’s revenue and earnings growth. Over the last several years, South Korea has been Herbalife’s third or fourth largest market and one of its most profitable with approximately 56% contribution margins versus 43% for the rest of the company. Beginning a year ago, Herbalife Korea began to decline. This deterioration accelerated notably this quarter, down 39% versus last year on a constant-currency basis, and down 46% on an actual basis.

While management continues to blame the decline in Korea on “changes in the business model,” to us this looks like the classic “pop-and-drop” that is pervasive in pyramid schemes, a phrase that CEO Michael Johnson previously used to describe Herbalife’s rapid growth and inevitable decline in certain geographical regions. If one is looking for obvious evidence that Herbalife is a pyramid scheme, one need only look at the massive growth and rapid decline of Herbalife’s South Korea business and compare it with Unilever or another legitimate consumer packaged goods company.

From Bill Ackman (Trades, Portfolio)'s Pershing Square Holdings third quarter 2015 letter to shareholders.

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What About This One?

The Terrible Truth about Multi-Level Marketing

Dear Colleagues,

This year-end Update offers a brief overview of the state of consumer protection regarding pyramid schemes, the most common form being "multi-level marking." However, to put the various prosecutions, lawsuits, and recent outbreaks of these schemes into perspective, a wider context must be offered.

Millions of people every year are personally solicited to join a MLM or members of their family members are. Some are lured into MLM cults, in which they are led to believe that their identity, character and meaning of life depend on "success" in the MLM.

More than 99% of all who join all MLMs each year, never make a profit, though MLMs are advertised as "business opportunities." This 99% figure is verifiable from court records, public disclosures and filings with SEC.Quitting rates are from 50-80% each year.

Overall, MLMs appear to be spreading and some new groups are joining. In reality, in the USA, the larger MLMs like Amway and Herbalife are steadily declining. What looks like growth is just the futile migration of people leaving one bad experience in a MLM and moving to another one in hopes of finding the promised success, or new people joining new MLMs without realizing that they are merely clone versions of the older, declining schemes.

While this is happening, neither government regulators nor the courts are showing a willingness to stop them. The media has not investigated "MLM", though some articles feature individual MLMs, without depth. Consequently, pyramid fraud is at epidemic levels with recent inroads among students, immigrants, and military spouses.

Terrible Truth

Many consumers contact Pyramid Scheme Alert to ask if a particular MLM they or their family members are being solicited to join is a "pyramid scheme" or not. "What about this one?" is the most common question that is asked.

Here's the most important of the "terrible truths" about MLMs that we offer to these inquiries and which this Update must start with. It is that finding a "good MLM" is as certain a losing proposition as pursuing the MLM "income opportunity" is. If the business being considered is what is known as "MLM", then it is, by design and operation, a pyramid scheme.

Few people will dare to say or write this. In every news media report about any MLMs, the reporters always state, "MLM is legal and legitimate, but some are pyramid scams." Yet, they never name one MLM that serves as the model of the good ones. They never explain exactly what makes one a fraud and others not. Often, they offer red flags of pyramid schemes, like "emphasis on recruiting" or "promises of high income." But, if a consumer were to use those guides, all MLMs would be disqualified, since all MLMs emphasize recruiting over personal selling and all promise "unlimited income" based on MLM's hallmark "endlessly expanding chain." And so the cautionary advice about avoiding recruiting and high-income-promise schemes conflicts with the overriding claim that "MLM is legitimate." Both cannot be true.

In light of this reality Pyramid Scheme Alert offers people the main elements that make a business an "MLM." When those elements are dissected, they can be seen to add up to a classic pyramid scheme. For that reason, we must say, MLM itself, by its design, and how it operates and also measured by its harmful consequences, is a scam, a pyramid scheme.

Pyramid/MLM Elements

Here the main elements of all MLMs, and they match up with the main elements of a pyramid scheme. Credit for this dissection of MLM's "causal" factors goes to Dr. Jon Taylor. They include:

1. Pay to play. MLMs are never innocent parlor games. To join, one must pay money, and to remain "qualified" for the promised rewards, one must keep paying (buying "qualifying" amounts of product, paying renewal fees, etc.) Costs can go into the thousands or tens of thousands.

1. Endless chain/pyramid. All MLMs - and all pyramids - continuously transfer money from later participants to earlier ones. The last to join must find new recruits in ever-larger numbers if they are to gain the promised rewards. The transfer requires a pyramid structure with each new recruit bringing in others, setting up "levels", each larger than the one before, forming an "endless chain" that is shaped like a pyramid. MLMs organize this process into "ranks" of four or more with complex rules and pay schedule that leverage the ever-extending and ever-expanding pyramid. This structure is designed so that large numbers at the bottom must always lose in order for a few at the top to "win."

1. Money goes to the top. Every pyramid scheme - and every MLM - sends the majority of all rewards to the very top on the multi-tiered chain. In MLM this is achieved with a "compensation plan" with complex commission formulas and rigid rules for transferring payments from "quitters" to those higher up. Net effect is 50-80% of all "rewards" go to the top 1%.

1. Rewards are based on recruiting. In a pyramid scheme, as opposed to a Ponzi, the recruits themselves must find more recruits in order to gain the promised rewards. In a Ponzi, the organizer of the scam, (e.g, Bernie Madoff), does the recruiting. In all MLMs, getting to the top of the chain, where all the money goes, requires recruiting. Recruiting is the only way to get the rewards. We have never found one MLM in which people can make sustainable profits without recruiting. We have not found a single MLM where people make money only from personal "direct selling." In fact, most of the "customers" in MLMs turn out to be only the "salespeople".

We have looked at hundreds of MLMs. They all are exhibit these same characteristics which are the basics of pyramid fraud - an "endless", multi-tiered pyramid chain, initial and ongoing payments to join the chain, constant recruiting rather than personal selling, concentration of money transferred to the top gained from recruits at the bottom. In such a plan, whether one calls it "MLM" or a "pyramid scheme", the bottom ranks of the chain, which include the great majority of all participants, will not make a profit. As they "fail" and "quit", they are replaced by new hopefuls, and so it goes.

False Question

So, the question - Which MLM is good? - is a misguided and misleading question. What is called "multi-level marketing" is merely a pyramid scheme dressed up to look like a "direct selling" business. Other kinds of pyramid schemes are dressed up as social clubs, gifting programs or investment programs. In the MLM version, participant/investors are called "salespeople" even though they recruit, not sell; most payments are laundered through product purchases by the participants that are mandated with quotas, not generated by consumer demand, and then renamed "sales". Pyramid recruiting levels are called "ranks"; rewards gained from recruiting are misleadingly called "commissions on sales" and the endless pyramid chain is called a "business structure" even though the multiple "levels" make no business sense, and with more than half the people quitting every year, the structure constantly collapses and is resurrected, and could never be "sustainable" because nothing can expand forever. MLMs are called "income opportunities", but only the top 1% or less of recruiters can ever be profitable because their "income" is depends upon the losses suffered by all the others "below" (those that join later).

Pyramid Consequences

Those four main characteristics lead to consequences in MLM. MLM's consequences are exactly the same as the pyramid scheme's consequences. For example, the top-weighted pay plan makes it impossible for the "last ones in" to be profitable. The money they generate goes to the top. There is no way to make a profit only from "direct selling" of MLM goods, because the MLM scheme keeps adding more "salespeople" in every area who buy at the same "wholesale" price as the retailers do. MLM is not, therefore, "direct selling." No one does or can make a net profit only from selling, without recruiting. Personal selling is not only impractical but is discouraged by the much larger financial incentives offered for recruiting (unlimited income, and making money while you sleep). And all this recruiting must be based on deception, since all new recruits must be promised they can make money, when in fact, 99% never do, and never could, every year. MLMs, like all pyramid schemes, are based upon deception, a calculated lie about income opportunity.

In sum, MLM, by its design requires deception and is rigged so that virtually all will lose, causing widespread harm. Deception and harm are why pyramid schemes are illegal.

For those who want to better understand why MLMs, by design, turn out to be classic pyramid schemes, based on deception and causing harm to virtually all who join, please see the audio and Q/A presentation at the Pyramid Scheme Alert site, called "What About This One?"

Robert FitzPatrick, Pres.
PYRAMID SCHEME ALERT

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MLM Cultism Update

Gradually, the Cult Reality of MLMs Is Being Recognized

In 2015, a growing number of analysts and media people have begun to understand the most dangerous and pernicious aspect of MLMs, worse than the financial losses they inflict on the public and more important than identifying MLMs as "pyramid schemes." It is the capacity of MLMs to operate cults that gain virtually total control over thousands of participants, making them the equivalent of economic slaves.

Pyramid Scheme Alert is regularly contacted by consumers alarmed and confused by the strange behavior of friends or family members that have joined MLMs. They note sudden changes in their dress, speech and attitude, obsessive recruiting, readiness to quit jobs and take on debt to pursue the MLM "opportunity" while also claiming no need for due diligence, associating only with other MLMers and abandoning or neglecting friends and family, unquestioning belief that "success" and great wealth will come soon through the MLM, a total obedience and near worship of the MLM leaders, and an adamant rejection of facts, argument or logic that question or challenge their MLM affiliation. They appear "brain washed."

In fact, they are brainwashed. The MLM has gained cult control over these people as it does with thousands each year.

Magical Economics, Supernatural Powers

MLMs are able to gain this power over people because they are allowed by government inaction or corruption to make a fantastical and fraudulent promise to millions of people of "unlimited income" through a system that is like magic (occult) - the "endless chain." The endless chain does not exist, and it therefore cannot offer income to all, but rather only to a few at the top who perpetrate the fraud. Nevertheless, the endless chain is the main proposition of all MLMs - pay to join the chain, build a self-generating downline, and receive money from all who join (and also recruit), forever. This use of the magical "endless chain" gives the MLM a claim to have superhuman power in the eyes of some followers, the ability to produce "unlimited money." MLMs claim to offer financial salvation and they preach that working in MLM is a pathway to utopia where complete happiness and total fulfillment can be found. Where does the money that is produced actually come from? From the followers themselves, of course!

After persuading vulnerable people of this magical economic power to provide "unlimited income" for all, the MLMs employ classic tactics of all cults in order to get the victims' money and have them work for free. These include mystifying structures, pay plans and rules, a special incomprehensible vocabulary, exaltation of leaders as absolute moral authorities, separating and isolating the followers from family and friends, deceiving them, and manipulating them into seeing themselves as totally dependent on the MLM. Life is vividly and falsely depicted as a single choice between "success" in MLM (which never is gained) and a life of failure and shame. Under the control of MLM promoters, some individuals will completely bankrupt themselves and their families, committing what David Brear has termed a form of "economic suicide."

Economic Cult

Just as few people will dare say that MLMs are - by design - pyramid schemes, even fewer will admit to the reality of MLMs that MLMs are a dangerous new form of cult, an "economic cult". The MLM cult grotesquely distorts main street capitalism and achieving financial success into a radical ideology requiring blind belief and total obedience to the dear leaders. It makes financial success appear as a heaven-on-earth and presents recruiting for the MLM as the only pathway to this salvation. It perverts the work ethic and converts the idea of personal freedom into slavish subservience.

In times of personal debt, low pay, unemployment, immigration, or general financial insecurity, many people are vulnerable to MLM's cultism. MLM cults pose a real danger to individuals, like all cults do. They also pose the wider threat that that ego-maniacal MLM leaders could gain political and other forms of power, leveraging their control over thousands of people and their ill-gotten wealth.

For more information on how MLM operate as cults:

Article by Robert FitzPatrick that was published in Seeking Alpha, a financial forum.

pyramidschemealert.org/wordpress/wp-content/uploads/2015/12/MLMsasCults.pdf?utm_source=December+2015+Update&utm_campaign=December+2015+Update&utm_medium=email

The thought-provoking Blog of writer, David Brear, MLM, the American Dream Made Nightmare.

False Profits Blog on MLM cults

The national radio show episode of "This American Life" examining the MLM cult, "Wake Up Now."

www.thisamericanlife.org/radio-archives/episode/543/wake-up-now?utm_source=December+2015+Update&utm_campaign=December+2015+Update&utm_medium=email

Economic cult is a great description of it. I wince at the greed/wealth lifestyle that the MLM converts advertise.

sminkypink On the whole, I have preferred the less-catchy term, blame-the victim 'Income Opportunity/ Prosperity Gospel' cults, but the mystifying 'MLM' pseudo-science these rackets promote, is always written in essentially the same 'economic' jargon.

I believe that the term 'Economic Cult' was first published by Prof. Margaret Singer (the author of 'Cults in Our Midst').

You can see how difficult it has been for chronic victims of 'MLM /Prosperity Gospel' cults to speak out openly, because (through their own instinctual desires) they have been tricked into accepting, and promoting, a puerile fairy story of 'future endless health, prosperity, happiness, freedom, etc.,' as reality.

Cults always give their victims the illusion that they are making free-choices, but this technique itself is just one of many co-ordinated devious techniques of social, psychological and physical persuasion, employed by cults.

A tell tale sign of chronic cult victims is that they always insist that they are not being controlled and they will invariably ridicule anyone suggesting that they are.

You might be interested to learn that another major 'MLM' whistleblower has recently approached me - this time, in the UK.

This new whistleblower was involved with 'Forever Living Products' and he freely-admits that he has lost everything as a result. I'm hoping to be able publish the full nightmare story of this exceptionally brave British 'FLP' victim, in the New Year.

There is a new kid on the block. Epic lyfe. The spelling makes my teeth itch.

Has anyone heard of it. It's medically backed I have been told.

There is also Flavon Max, a juice plus copycat from Poland. Its in London, now. I was offered it to cure an existing health problem, it made me so angry. My ex friend is being exploited and she cannot see it.

Eyes that radio show about wake up now was absolutely horrifying! Thank god that particular one has now shut down! I wish something would be done about all the others!

DrewsWife

'Epic Lyfe' is yet another US-based criminal racket comprising all the same old, unoriginal, 'Amway' copy-cat, Utopian, 'economic/medical,' cultic bullshit packaged as 'a completely new, perfectly legal, and ethical, business opportunity.'

I started receiving sporadic enquiries about 'Epic Lyfe' less than 12 months ago, when it first began to infect vulnerable individuals the UK.

The 'Epic Lyfe' racketeers have apparently been peddling a variation of the 'MLM / Prosperity Gospel' fairy story which (surprise surprise) involves adherents regularly handing over their cash to acquire miraculous, life-transforming 'Vapormone Products,' whilst desperately trying to recruit others to duplicate the same economically suicidal behaviour.

darceybussell - Currently, there are approximately 1400 'MLM' rackets legally-registered as commercial companies in the USA. Tackling them individually, has always been a ridiculous waste of time, because as soon as one is closed, a dozen more have appeared.

Unfortunately, there are literally thousands of greedy little parasites making money out of this ongoing criminogenic phenomenon (including, attorneys, bankers, accountants, politicians, journalists, celebrities, etc.). Obviously, it has not been in their financial interests to halt it.

Robert FitzPatrick briefly advised the makers of the US radio show featuring the 'Wake Up Now' racket. Typically, the makers of this show never contacted, or mentioned, me.

However, before the show was broadcast, and this particular 'MLM' racket shut down, a UK political researcher contacted my Blog. This person had started to look at 'MLM' cults only because one of her senior colleagues had encountered deluded 'Wake Up Now' recruiters on an American college campus and he'd realised that similar groups were operating on his own campus in the UK; particularly, 'ACN' (which has been fronted by none other than Donald Trump).

mlmtheamericandreammadenightmare.blogspot.fr/2015/07/donald-trump-fronts-acn-mlm-racket.html

I was asked about the scale of the 'MLM' problem in the UK and I directed the researcher to Mumsnet. It was at that time that I first began to post comments on Mumsnet, because I wanted to demonstrate to the researcher how some members would be freaked out by the full truth about 'MLM' cultism.

Unfortunately, the political researcher has never bothered to re-contact me.

I am looking forward to reading about the ex-flbot's experiences in the New Year.

Listened to the radio programme: scary stuff, creepy even.

Fascinating to listen to the guy who joined and, despite not making a dime (in fact paying $100 per month!) still believed he could make it big. Lovely twist when his wife was not bothered because he could spend more time with his kids.

stopfaffing - Like 'Vemma', 'Wake Up Now' became notorious because it was spreading like a wild-fire amongst debt-ridden American college students.

The media was alerted when significant numbers of Americans (including journalists) began to encounter swaggering young 'WUN' converts in their own families, boasting about their 'new lifestyle.'

About a year ago, the concerned parents of a deeply-deluded adherent contacted me wanting to know if I thought 'WUN' was a cult. Alarm bells had begun to ring when they found the 'We Are the 1%,' propaganda.

According to this link WUN has been closed down.

Then this link providing information about the new company "Disrupt" which was started just after WUN closed, by WUN President Jason Elrod (virtually the same model).

stopfaffing Sadly, the depressing information on 'Behind MLM' is accurate, but this is usually what happens each time an 'MLM' front company gets closed down by regulators, and/or exposed by the media. Either the instigators register another fake 'direct selling' front company, or companies, and/or one, or more, of the shills instigate their own 'MLM' cultic racket (with another name or names). A number of the most deluded victims always get dragged along into the new elements of the fragmenting racket.

One of the identifying characteristics of cults is that their bosses employ hermetic structural mystification - creating unfathomable labyrinths of (apparently independent) legally-registered corporate fronts to prevent, and/or divert, investigation and isolate themselves from liability.

The classic case study of an 'MLM' cultic labyrinth fragmenting, is 'Amway France' in the 1980s, when (due to an avalanche of alarming media reports of fraud and cultism) an an entire 'network' of approximately 8000 French and Belgian insolvent Ambots were suddenly told that they were no longer under contract to 'Amway' and that they were now 'distributors' for an entirely new, and ethical, French company called 'le Groupement' or 'GEPM.'

At this time, to dodge further investigation, the 'Amway' racket remained legally-registered as a company in France, but it virtually halted all recruitment. The boss of 'GEPM' (an ex-'Amway Diamond' called Jean Godzich) ran exactly the same racket and even sent the profits to the same 'Amway' bosses (including, Doug Wead and Dexter Yager) in the USA. Approximately 300 000 persons were churned through the 'GEPM' racket before it too faced investigation 10 years later.

'GEPM' was bankrupted and closed in the mid 1990s, but (surprise surprise) it had morphed into yet another front company.

Similarly, 'Vemma' bosses have already instigated another 'MLM' racket right under the noses of the FTC regulators who triumphantly announced the closure their previous front company in defence of the public.

Jean Godzich was last heard of as a shill for yet another 'MLM' racket, 'Xango'. An arrest warrant was issued for Godzich in France about 8 years ago, when he was eventually convicted (in absentia) of stealing all the social funds of his 'GEPM' company (several millions Euros). This warrant has never been served, but its doubtful if Godzich was the final recipient of the cash that vanished.

The 'MLM' phenomenon is a tragicomedy and the regulators have been some of the most foolish, and impotent, participants.

By the way stopfaffing the unoriginal criminogenic/corrupt systems which 'MLM' cult bosses have all employed to continue to commit fraud and obstruct justice, are essentially the same as those which the authors of the US federal Racketeer Influenced and Corrupt Organisations Act discovered being used by the bosses of Italian American Mafia, and their syndicate of criminal associates, back in the 1950s and 60s.

Remember, for decades the boss of the FBI (J. Edgar Hoover) actually denied the existence of an organised crime syndicate in the USA. Yet virtually everyone in the USA knew that this was a lie - purely from their own experience.

Although the RICO Act (1970) is not particularly well written, the setting up of a criminogenic/ corrupt system to prevent, and/or divert, investigation and isolate the ultimate beneficiaries of the system from liability, is what is defined in the USA as being an overall pattern of Ongoing Major Racketeering Activity.

In theory (if ever anyone in power in the USA had the gumption/courage to open this stinking can of worms), under RICO, US law enforcement agencies have the authority immediately to close down every single 'MLM' racket and seize all the bosses' stolen assets, without even having to go to trial.

www.bxtimes.com/stories/2015/51/51-herbalife-2015-12-18-bx.html

On Wednesday, December 9, Senator Jeff Klein, Assemblyman Luis Sepulveda, Councilwoman Annabel Palma and Community Board 9 chairman Rogier van Vlissingen hosted a round table discussion at CB 9’s office to educate Soundview residents on the dangerous Herbalife get-rich-quick scheme.

These deceptive Herbalife Nutrition Clubs are prevalent in Hispanic communities, more specifically in immigrant communities, they charge.

According to Klein, six Herbalife Nutrition Clubs conduct business in Soundview while an additional 26 Bronx-based and 60 citywide Herbalife clubs were found to exist.

Soundview residents Francisco Payano and Maria David shared their negative experiences with Herbalife during the discussion.

Payano, who lost the $50,000 he invested in Herbalife, was with his then wife when both were approached by a woman preaching the wonders of Herbalife.

The couple was told they could make a fortune selling the Herbalife supplements, Payano recalled, and that led him and his wife to sign up as a distributor.

The couple could not afford to rent a storefront to open a nutrition club, so his wife conducted the business from their residence.

“I tried to convince her this business was a pyramid scheme, but she was so into it,” said Payano. “I was very worried. I would have people ringing my doorbell at 5 a.m. to get shakes. This was very much affecting the life of my children and my marriage.”

Fed up, Payano gave his wife an ultimatum between him or Herbalife, but she chose the latter.

Payano filed for divorce and claims Herbalife ruined his family due to his ex-wife’s Herbalife obsession.

MN members might be interested to learn that about one month prior to the Xmas holiday, another British journalist (who has been reading these MN threads) contacted me by e-mail about 'Forever Living Products.' I replied explaining that 'FLP' was currently the most significant 'MLM' racket operating in the UK (churning in excess of 20 thousands UK citizens annually), but that its modus operendi is not at all original. In a subsequent phone conversation I was then requested to supply some background information about the history of 'MLM' in the UK, so I sent a document under my copyright (see below) to give this journalist some idea of the extraordinary nature of the scandal which the mainstream media has (to date) completely failed to uncover, let alone report.

(I'm still waiting for a reply).

According to evidence recovered by the UK government's Company Investigation Branch, between 1973 and 2006, at least one million UK and Irish citizens are known to have signed an annual contract with 'Amway UK Ltd' in which they were falsely, and arbitrarily, defined as 'Independent Business Owners.' The same investigation revealed that the hidden, overall rolling churn/insolvency rate for the so-called 'Amway MLM business/income opportunity' in Britain, was effectively 100%. It has been estimated that, over a period of 34 years, the gang of billionaire, US-based racketeers behind 'Amway UK Ltd.' unlawfully generated around $1billion by peddling their constantly-churning flock of ill-informed UK adherents countless, effectively-valueless publications, recordings, tickets to meetings, etc., on the fraudulent pretext that these 'optional materials contained exclusive secrets vital to achieving success within Amway.'

In 2007, I was given verbal assurances by officers of the Company Investigation Branch of the UK government's Ministry for Business Enterprise and Regulatory Reform that, privately, they fully-accepted that 'Amway' was the corporate-front for two vast inter-related frauds, and that once 'Amway UK Ltd.' was closed down in the interests of the public (using technical, civil insolvency procedures) a rigorous criminal inquiry into the scandal lurking behind 'Amway' would be conducted by the UK Serious Fraud Office.

During the UK government's low-level civil investigation and prosecution of 'Amway UK Ltd.,' the counterfeit 'direct selling' company was temporarily-represented by none other than the former deputy director of the UK SFO, Mr. Peter Kiernan. He, and other well-paid lawyers working for the firm of Eversheds LLP, actually tried (but failed) to persuade UK government officials to drop their civil prosecution.

In 2008, the UK government's public interest civil bankruptcy petition was declined by a UK High Court Judge, Mr. Justice Norris (on the demonstrably specious grounds that 'Amway's' attorneys had offered assurances that the company's officers had been completely unaware that some of the company's senior 'distributors' had been lying for decades about the actual results of 'MLM', but, all the same, they had expelled the guilty parties and voluntarily reformed all previously-unlawful practices). This dangerous decision was then upheld (on appeal) by 2 out of 3 Appeal Court Judges. After first accepting a large quantity of information, agents of the UK SFO then refused to conduct any criminal investigation of 'MLM income opportunity' fraud in general and of 'Amway' in particular. However, due to bad publicity, the 'Amway' fraud has been effectively-halted in the UK. Its new main-feeding ground has become Asia. Currently (every 4 years), the 'Amway' fraud is churning around one million victims in India, where its apologists have claimed that the 'Amway MLM income opportunity' has been fully-investigated in the UK and given a clean bill of health by UK government regulators and by the UK courts.

Hi eyespy!

Another journalist that has quailed at taking on the big beasts? So disappointing. If Louis Theroux can do Scientology then what's to stop someone from covering this? I fear the story just isn't grabby enough. Told in a minimising fashion, you could suggest it's just a few gullible fools parted with their pin money.

I do wonder why the journalist won't run the story? Maybe it would ruin his career? I can guarantee that as he is reading this thread so are many other people and 'forever failures' too, me being one of them.

I look forward to hearing about the the high up FLP guy. I do hope he's doing ok.

lazycoo Happy New year!

Far worse than well-intentioned journalists who start to enter the 'MLM' labyrinth, but then write nothing, are the ones who spend time interviewing people like Robert FitzPatrick and me, but then only mis-report fragments of our multi-dimensional, thought-provoking, evidence-based research and analysis, alongside thought-stopping elements of the anecdotal, two-dimensional 'MLM' fairy story.

The problem is that the 'MLM Dream' fairy story is easy to report, but the explanation of the cultic nightmare lurking behind it, takes a great deal of thought before anyone can report it accurately.

'MLM' cultic racketeers have always largely-controlled, and ritualised, the terms in which their dissimulated criminal enterprises have been discussed, and described, in the media.

For 20 years, I've been trying to introduce the common-sense method of using only accurate deconstructed terms to explain the nightmare lurking behind 'MLM Dream' jargon. Sadly, few people have taken much notice of me, but I still keep trying. However, I'm very encouraged by the common-sense understanding of 'MLM' cultism which all the MN members on these threads keep displaying. I am hoping that at least one of these MN members is a mainstream journalist.

I'd give the journalist a chance, they might just have had a couple of weeks off, or they might still be gathering info.

rayofhope - It's a chicken and egg situation. All journalists who start to look at 'MLM' and who contact me, want me to put them in touch with victims and whistleblowers, but few victims and whistleblowers want to speak to journalists until other victims and whistleblowers come forward. As you know, some 'MLM' victims remain very confused and illogically keep insisting that they were involved in a 'business,' whilst journalists seldom ask the right questions.

The 'FLP' victim/whistleblower who has lately approached me, and who is more than willing to tell his nightmare story, has not yet told me what level he reached in the pyramid, but he has already declared that 'FLP' cost him everything and that it has taken him several years to recover.

He seems to be fine now and very determined to expose the truth to protect others. I'm hoping to post an article soon.

darceybussell - Perhaps I'm wrong, but I personally don't think that this particular UK journalist will want to return to the 'MLM' story, but it might get passed on.

There has only ever been one acceptable series of articles published about 'MLM' in a UK mainstream magazine, and that was more than 20 years ago.

skepdic.com/timeout.html

The author of these articles, 'Time Out' News Editor, 'Tony Thompson,' had had a painful personal experience with a loved-one who fell for the 'Amway' fairy story.

One unintended effect that these articles had, was to give the bosses of 'Amway' the opportunity to co-opt the self-styled British 'cult specialist,' Graham Baldwin as an 'adviser.' Tony Thompson's article warned them that potential victims were approaching Mr. Baldwin.

Mr. Baldwin (whom I've met) is a absurd (unqualified) charlatan who has preyed on vulnerable cult victims whom he refers to as 'clients .' He tells everyone (particularly journalists) that he was once a 'University Chaplain' (a meaningless title) as well as a 'member of British Army (or sometimes, Military) Intelligence.' This latter claim, is a puerile, narcissistic lie.

In turn, Baldwin then co-opted another self-styled British 'cult specialist,' Ian Howarth as an adviser.

For more than 10 years, all British victims and relatives who contacted Messrs. Baldwin and Howarth about 'Amway,' were actually speaking to paid agents of the cult. It's difficult to know how many potential 'Amway' whistleblowers were silenced by this subversive tactic.

Mr. Baldwin is now apparently gravely ill and no longer active, but Mr Howarth still runs his own legally-registered charity, 'The Cult Information Centre.' I don't think he remains on the 'Amway' payroll, but he does remain subject to his 'Amway' employment contract. In other words, he will never tell the truth.

Lots of enlightening and terrifying information on this and the bot watch thread. Everyone who has contributed should be applauded for sharing the info they've learned, especially when it comes from direct experience.

the mumsnet community is getting much more savvy when it comes to mlm lies lets hope we can spread that further.

Keep up the good work eye. With so many people being churned through these mlm's, more and more will come looking for answers and closure and will hopefully end up reading on here and realise it's not their fault. They were set up to fail, they didn't do anything wrong.