MLM History – Pyramid Schemes



1998 Issue

2XP Improves – Our call for complaints on this pyramid scheme resulted in a pile of complaints. 2XP improved, now at least giving refunds on products. Marketing material? More information on refunds needed to analyze this gross pyramid scheme! Ed. Note: Faxes preferred!

ADMAX Computers Crash – Assisted by the State of Oklahoma who shut them down. The thrust was not toward retailing products but signing up people to get your own computer. Read that Pyramid Scheme Ed. Note: Rumor is that a mirror company is being set up in Dallas (another pyramid scheme). The second part is that no consumer electronic product has ever survived over two years (most six months).

AMWAY Implicated in “Flack” for Nominee for Air Force Secretary – The Senate Armed Services Committee was told that Daryl Jones pressured subordinates to buy AMWAY products. Ed. Note: They should give him a medal for entrepreneurship! P.S. His nomination ended up being rejected because of blatant lies he told the committee.

ATM Scam Ended – Including the MLM division of Western Executive Group, Reno, Nevada. The company nailed folks for $24,000 for each Automatic Teller Machine. They were promised a 17.4% return on investment. We call it a pyramid ponzi scheme. Out of 200 sold it is estimated only 20 were through the MLM division. The SEC reported only 30% of the machines were installed. Ed. Note: For those that called, say thank you! Your editor’s logic was that if the local banks weren’t jumping on the bandwagon why should you?

BeautiControl – Because of slumping sales this Dallas based company is increasing commissions to distributors. Reason given? The low unemployment rate in the U.S. (from Working Woman Magazine May 98) Ed. Note: Glad to see the unemployment rate affects someone in print besides me!

Boom for NWM the Crash of 98/99 – When the economy crashes, NWM booms because people find out their 8-5 job is fragile. Production output of American factories dropped 0.06% in June – the biggest one-month drop in 5 years! Economic growth for the 2nd quarter dropped to 1% from 5.4% the 1st quarter. We are at the end of the historical (100 years of economic tracking) 6-year expanding business cycle. Ed. Note: It is time to recruit and train in preparation for coming recruiting bonanzas! Watch Out Pyramid Schemes boom too!

Cancer Death Rates Drop Due to MLM – Not proven, but your editor’s theory is best. NWM beginning in 1932, started getting nutraceuticals, vitamins, and minerals into consumers’ bodies. It would not have happened with word of mouth marketing (I feel better). In summary there are two reasons for the drop: (1) The effect of the nutritionals sold in the past by NWM finally took effect. (2) Our pioneering and creating the rush to nutritionals in the last 10 years. Ed. Note: In a National Cancer Institute study cancer death rates dropped by 0.5% 1990 to 1995. (2) The rates of new cancer dropped 0.7% per year! Great work, keep it up! You have full permission to Quote this theory! Rod

CDI/Drivers Seat Network Hit By FTC – Two points for the FTC on this one for getting down to smaller Pyramid Scheme scams. CDI/DSN was nailed for being pyramid scheme and earnings claims. Ed Note: No doubt this was the result of Internet surfing by the FTC.

China to Open Up – AMWAY received permission to restart its mainland China operations in August. Ed Note: China’s State Council stopped all MLM activity in April because there were so many fraudulent Pyramid Schemes springing up. Mary Kay and Avon ehave also gotten the okay to restart their operations.

Diet Patches Busted $22.5 Million Worth – As we have said before, NO nonprescription patch delivering drugs or other substances through the skin has been approved by the FDA. Skin delivery patches are not considered part of herbal supplements (food nutrients). Meditrend International had $474,000 worth seized. Beco Chemical the manufacturer had $22 million worth of chemicals seized.

Dynamic One Hit by Nevada – This isn’t timely news, but what is news is that the State of Nevada filed a criminal complaint against the owner, Michael Mauna for operating a Pyramid Scheme. This is the first time Nevada has stirred in a long time! Ed. Note: What happened when Equinox was pillaging and plundering? Nevada just flat ignored them! Nevada didn’t even remotely approach this level of interest!

EXCEL Merger Details – Teleglobe will own 51.5% of the new company. The new company will retain the name Teleglobe and stay in Montreal. Excel will stay headquartered out of Dallas. Kenny Trout will remain CEO of EXCEL and President/COO of the new company.

FTC NAILS MEGANET$ – This one probably got some good guys at the FTC in trouble with their superiors in D.C. It seems, in the past year or so, the only companies the FTC “hit” were ones they could extort (by legal means) a million $ plus. Only one or two were justified (why not a warning vs. a shut down?). Their theory seemed to be, “Hit The Big Dogs, Scare The Little Ones.” By this modus operandi the FTC turned their backs on literally 1,000’s (we counted over 1,000 last year and quit) of little Pyramid Scheme scams that rip off millions, possibly billions from the unwary. Ed. Note: Now the bureaucrats have a job surfing the Internet for Pyramid Schemes! The trouble is that unless they get to be a big Pyramid Scheme they aren’t in danger! Ouch! What a job at the FTC! Wow, how do we apply. Guess what, they are still ignoring the FAX avenues of operation that most of these scam artists use! They are missing 200 or 300 a month.

FTC Launches Pyrmid Scheme Scam Database – Law enforcement officials tasked with investigating complaints of fraud on the Internet may soon find some of their work a little easier. The FTC launched the Consumer Sentinel, a database, available through the internet to more than 150 law enforcement organizations across the US and Canada. It allows law enforcement officials access to complaints about telemarketing, direct mail and internet fraud. The database now contains over 118,000 complaints. Consumers who have access to the Internet and who want to file complaints can do so from a complaint form on the FTC web site.( Ed. Note: Now, about these Fax Scams!

Fortuna Alliance – The FTC says the 15,000+ people that asked for refunds got short changed. The court ordered these scam artists to cough up another $2.2 million!

Internet Dangerous to Good MLM Companies – The FDA, FTC, and FDA are prowling the Internet! Why? Bored bureaucrats have found they can get good PR for surfing the net and get paid for it. A distributor can post “bad claims” on a website and the company is responsible for it. An example is the FTC (not the FDA) hit a good MLM company, Trendmark recently for product claims. Ed Note: A company in Michigan will prowl the Internet for your company and forward all sites related to your company. Call!

Internet Tax Freedom Bill Stalled – S442 which would theoretically let NWMers bypass sales tax by ordering on the internet has been stalled by the National Governors Association. Many states maintain that since NWM companies have sales reps in the state, sales tax must be paid. This is called “Nexus” and applies to all companies that have agents in a state. The states want the money. This is a battle the catalog companies always fight with the states.

Internet Malls Losers – A recent study on Malls showed 84% of mall residents were unhappy with leads or sales. A mere 2% said they were happy.

Investors Dynamics Corporation – Shut down by SEC. This flaky deal sold information (don’t they all) and preached offshore tax evasion. They supposedly scammed off with $1 million.

JEWELWAY Files Chapter 11 – Quits Business – After being unfairly machine-gunned by the Federal Trade Commission. They were fined $1.5 million and had to set up a consumer redress fund of $5 million, which meant it was hard to keep up cash flow. Ed. Note: See preceding criticism of the FTC!

Melaluca Out to Lunch? – Their CEO now claims that it is not MLM. By the dictionary “Multi” means more than two. Does Melaluca pay more than 2 levels in their pay plan? MMM…

Millionaire Makers – has already split, one group is trying to set up something legal (doubtful) out of Vegas and good old Fred Verigin (legal name) is Carribean bound. Fred’s new gig is called, “The Village Where Anything is Possible” which he stole from a good man. Ed Rector copyrighted the name and story in 1980 before he died. Ed. Note: Fred is getting desperate stealing from the dead!

One Source Bit The Dust – as predicted, but a wholesale source for their products is at fax # 505-424-9622. Send a request for their price list. Persons looking to file a class action suit check on the Internet at 

Pharmex Beats FDA – The fruits at the FDA claimed that red yeast extract was not a natural product although it came from one. The reason? There is a synthetic drug that lowers cholesterol that does the same thing. The red yeast product became illegal the FDA claims when the drug came out. Fortunately, the Federal appeals court in Utah thought the FDA logic was nutty and threw out the FDA action.


Copyright © 1998 The MLM WATCHDOG

4 years ago

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