MLM History – Scams & Red Flags

News Archives: 2001 (3rd Quarter)
July, August, September

PYRAMID SCHEME GIVES LESSONS TO MLMers AND WEB DESIGNERS
8 Sept 2001 – Non MLM web scam busted!  The Tri-West Investment Club promised a 10% return a month on investment.  Just put in at least a $1000 and you might even get a 300% return!  Bring in a new sucker and you got $15% (direct sales).  Off course Tri-West guaranteed “NO” risk!  Offshore, no taxes either!  At the request of the FBI, Costa Rica seized millions, arrested Alyn Waage (Canadian) and Website designer James Webb (US).  It is the first time, a webmaster has been nailed too!  The Ponzi scheme took “last in” money to made dividend payments to the first investors.  The SEC is handling the case and crooks being returned to U.S.  <<Ed Note>> Lessons to be learned:
 
1.  A promise of  a 10% return a month is a scam.
2.  Offshore countries will arrest and seize when the U.S. asks.
3.  Web designers can be arrested as accessories to a crime!
 
The Seven Myths
2 Sept 2001 – Richard Poe is back with a new and different book!  Go to Amazon.com and type in Richard Poe to pull it up!   A little different than his MLM Wave 3 and 4… but definately a winner.   Give it a vote of “Outstanding” to show Richard that we appreciated what he has done for the industry!!!
 
Pyramid Scheme Chief Brown Blasts WatchDog!
27 August 2001 – Jim Brown ex – prez of pyramid scheme skybomb takes a shot at the WatchDog as he slithers out the back door.  To quote Bubba Brown:
 
“One can write off the scam sites and mlm watchdogs very easily as they are usually put together by individuals who have failed miserably in the mlm industry and are using this venue as a means of self-gratification. Many use these methods to try and recruit the names they gather into their own mlm program. Integrity is an unknown word with these types.”
 
End of Quote From Bubba Brown! – Back to you Brown:
 
         1.  The WatchDog didn’t really get upset until you started terminating
                  Distributors.  Dropping income?  Terminate your distributors!
         2.  Rod Cook’s annual 1099’s as a distributor saw 7 digits while you
                  were still dreaming about it… and they were honest 7 digits!
         3.  I first wrote about you and your Admax scam in the MLM Insider
                  magazine years ago.  Nothing honest about that deal!   Why that
                Oklahoma court let you off the Criminal charges is beyond me!
         4.  I called Eli Masso 2 years ago and asked him if he was mixed up
                 in Sky Biz…  He said oh no!  He wouldn’t touch it!  I bet he
                 wishes he had stuck with that and never stepped forward
                 because of your failures and the declining revenues of SkyBomb!
         5.   I don’t belong to any MLM companies, I own franchises and
                 saved my money. Better than you will do when this mess you
                 created is over!
 
One Card Express – Prepares Screw Job!  Pyramid Scheme!
21 Aug 2001 – Help us with Viral Marketing on this!  Email this link to the world!!   One Card is pushing distributors to sign a credit card “NO CHARGE BACKS” contract before they send in an original signed credit card charge.  OHHH Yes! Of course they would prefer checks, and money orders!   <<Ed. Note>> No legitimate company that has something to sell does anything like this!  Only scam companies preparing to close thier doors!!
 
SkyBiz NOT SPRINGING BACK FAST!
RECENT EVENTS FROM THE 
DOCKET REPORT FOR CASE: 4:01cv00396
21 Aug 2001 – 205 MINUTE ORDER: by Chief Judge Terry C. Kern ORDER that the following schedule is entered for this case:Discovery ddl set for 11/30/01;
– Motions to Join/Amend by 9/21/01;
– Dispositive motion filing ddl set for 12/7/01;
– Final Exchange of witness & exhibits by 10/5/01;
– Depo. Designations by 12/7/01;
– Pretrial order ddl set for 1/30/02;
– PRETRIAL CONF set for 10:00 2/6/02;
– Prop. F/F, C/L, Briefs by 2/14/02;
– TRIAL set for 9:30 2/19/02;
– Settlement conf. requested after 9/14/01 before MJ Joyner (cc: all counsel) (cs) [Entry date 08/21/01]
<<Ed Note>>That trial date of 19 Feb 2002 is not going to do Skybiz a lot of good!  Not paying checks for that long is bad for business!
 
FTC GOES AFTER BIG SMART DISTRIBUTORS!
12 Aug 2001 – New change!  Are you a top promoter for a “Shaky” company?  The final Hit in FTC vs. Bigsmart (phoney web Malls) is that distributors got hit too!  First, the Owners (Mark and Harry Tahiliani) forked out $5 million for consumer redress.  The President, Richard Slaback, was hit for $38,000 for redress and can’t do MLM for 7 years.  OK. So far so good.   But… now the FTC has also gone after top distributors (promoters) Darrin Eps (Texas) and Edward Lamont (Pennsylvania) former Equinox hustlers.  The FTC banned them from MLM for life! <<Ed. Note>> Look for a movement toward this model by the government! In the past it was rare that distributors promoting a company was hit!  It appears that the FTC is starting to make examples of Distributors!
 
World Record Scam (non MLM)
12 Aug 2001 – In what may be a world record, Chinese Investigators arrested five suspects in China’s biggest web rip off scam ever… they  sucked in $28.25 million dollars! Posing as an ad seller, people were sold on clicking on ads on the company’s website.   No money paid… sounds like most Internet surf programs!  To collect money all they had to do was buy a membership card for $46.  <<Ed. Note>> Wow!  That was over 56 million people taken in!  The WatchDog declares that this is the largest number of individuals scammed by one source EVER!!
 
Caution: Debit Cards & VOIP
Debit Cards
11 Aug 2001 – There is a lot of flak out there about MPI/ One Card Express and other Debit Cards.  Here are some basic facts.   Debit cards are about to become VERY common in the U.S.   They have been a commodity in Europe for years.   MC and Visa have “held back” on Debit cards because Credit Cards are such a “cash cow.”   This is now changing.  <<Ed. Note>>  Anyone looking at a long term income opportunity should not base it on a “POP” service or product that is soon to be a commodity item.
 
One World Online Croaks
6 July 2001 – One Word Online out of Utah helps prove that the Internet will not tolerate older compensation plans.  It also helped prove our long going theory that going public too early in an MLM company’s life is a detriment.  <<Ed. Note>> Glenn Turner called me two years ago to evaluate this for him when they started up.  I told him “Fat Chance” of survival.  Glenn dropped out of working with them but others didn’t listen to him!
 
Skybiz terminates distributor based on hearsay then steals property (website)! 
5 July 2001 – <<Ed Note>> Skybiz terminated one of their leaders without a hearing or any type of proceedure which comes under the heading of rude, crude and unsociable!  Then they stole his website he had paid for in advance, by turning it off.   Uhhhh… lets see. Like most MLM’s Skybiz by their “Contract”  (yes, those things you sign when you join a company is a contract).  They can legally take away his income (not morally).   But a service he paid for in advance?  Damaging the distributors intellectual property stored on that website? I don’t think so@!#$@!#$!@#
 
Voice Over Internet Long Distance (VOIP)
10 Aug 2001 – There is a lot of hype on Voice Over Internet Long Distance.  Here is the truth.  Voice packets with current hardware becomes scattered and you don’t obtain high quality transmission.  Yes, the new VOIP protocol standards make for good Internet voice transmission.  Here though is what is really happening:
 
The “Routers” (hardware)  that “runs” the Internet and sends the voice packets have to be changed.  Not one, or even a 100 will work if changed.  We are talking about a $15-20 billion dollar requirement to do the entire Internet.  This includes server farms, and backbone transfer points. In short the entire Internet.  <<Ed. Note>>  Guess what?  There is no money in changing routers for these Internet providers.  They won’t be paid anything for laying out mega bucks. It will be years before there is a major change in Internet routers (Internet 2 or 3).  Meantime you can bet that if you are invited to a “perfect” call over the Internet it is a fraud!
 
Florida Rates Top Ten Scams!! 
Telephone fraud, Direct Mail and Mail Order scams, Telemarketing scams, Scholarship scams, Internet or “dot-con” fraud, Travel scams, Motor Vehicle sales and repairs, Home Contractor scams, Credit Repair, and Identity theft. <<Ed. Note>> Please be so kind as to note that “Pyramid” schemes (often negative to good MLM reputations) were not listed!  Source: The Federal Trade Commission’s Bureau of Consumer Protection
 
Streamline Sucks ?
The FTC certainly says so.  The FTC busted Streamline for both earnings and products!   Yes- A first ever!   No other company has ever had this lowly distinction!   Streamline was doing ads (or their distributors – same, same according to the law!! ) with Making $60-100k.  That is a No – No!  In addition they had “comfrey” in thier products which has been linked with liver damage!    Six months ago the FDA wanted to pull it and for the first time (on a nutritional) EVER, the Nutritional Organizations (NNFA, CBH, etc) agreed with the FDA.  Slam!  One Big Hit!   <<Ed Note>>  “Bout time”
 
Carruba Complaints Pile Up!
Last spring we put out a warning about these guys and their offshore pyramid education deal.  Now the complaints are rolling in and piling up about money in zero out.  Real incompetant!  Can’t even get the Ponzi portion of a pyramid right.   The Penn State AG thinks so too!  Plus several other AG’s hot on them.   <<Ed Note>> If it is offshore and will make you good money it is automatically suspect!  If the government can’t touch them – neither can you dummy!
 
Michigan WatchDog Tired?
One of our favorite and most accurate watchdogs the Michigan AG Office is evidently taking the summer off.  For the 3rd month in a row the report from this fine state only listed Franchises as being busted.
 
Lexxus  on Rocky Road?
15 July 2001 –  Lexxus with their women’s orgasm creme is a smash hit.  The company behind the product is unknown.  They owe taxes to Feds (not good).  They paid off back sales tax to States(good).   The comp plan was shaky ( It did promote front end loading above the $600 biz opp level – that got fixed)  and pay outs were dropping in the Binary.   Waiting for updates!!     <<Ed. Note>>  If you are in Lexxus save me some of he audio tapes “Screaming Women Don’t Lie!”    It will be a collectors item for the MLM library!
 
New Lead Concept!
11 July 2001 – Leads being auctioned off!  Cool concept!  Let’s hope it booms and brings down the cost of leads!  <<Ed Note>> Not an endorsement, however, we are always looking for new things to help recruiters!   See:
http://www.mlmleadauction.com
 
Fed’s Handcuff The Crowes!
9 July 2001 – Gold Unlimited!  Gold Coin sales!  Postal Fraud trial in Kentucky Federal Court back in 1996 convicted the Owners to 10 years in Club Fed.  Owners David and Martha Crowe declined to show up for jail!  Since then they have been on the lam.  “America’s Most Wanted” TV show recently featured them.  Florida Keys trailer park neighbors blew the whistle ($10,000 reward) and the Feds showed up with handcuffs.
<<Ed Note>> Well I guess now the Federal Marshall assigned to tracking them, will quit making his  friendly routine calls to see if I have heard anything about them!  Shucks!
 
Update To SkyBiz Notes
9 July 2001 – Skybiz Federal Court Pyramid Hearing won’t produce much!  That is unless SB digs up a lot of customers fast!   <<Ed Note>> Too bad they did not get experienced lawyers familiar with negotiating with the FTC like David Esenstein, Paul Greenburg or Scott Warren.  Experience Counts when your distributor base is ready to leave and the Government has your money frozen! See (Article: February 1998) Don’t Kid Yourself, It’s War Out There And, You’re Next!! 
 
Handtech Dies:    As The WatchDog Predicted!
3 July 2001 – On July 3rd 2001, Handtech regretfully announced that it has ceased all operations.  Despite strong support and acceptance from industry partners, full-time and part-time Solution Providers, and the loyal efforts of a talented team, Handtech was not able to raise sufficient capital to continue operations. It is unfortunate that today’s economic environment is not supportive of new business models such as Handtech.
 
First it was Mentor Network,  The Peoples Network (TPN) and many others selling education services.  Handtech used an antique compensation plan, sold hardware with no margins, and tried to sell software education.
<<Ed. Note>>  Legal = Yes!   Bad Model = Yes!   Good Intent = Yes!   Failure Prediction 2 years ago = 98.6%   No Pyramid Activity or front loadng.  Sorry to see them go – they should have sold templated websites instead of hosting!
 
ALIVE Isn’t!
July 2001 – Alive International has agreed to sell most of its assets to Arkansas based ForMor.  Alive was staggering along with it’s old compensation plan.  Bets are Alive stockholders will approve the deal!  For a paltry $175k ForMor gets offices in Toronto and a depleted database.  Smart move!  This is the 4th failing company acquisition made by ForMor.  Others: Market One, Sea of Life and Ideal Solutions.
<<Ed. Note>> Now the question is does ForMor have to send recall letters since the U.S. Government is saying such are to be sent to distributors on products… some requiring recalls?
 
CHANGES Sold Again!!
July 2001 – Changes sold by Twinlabs for $4.4 million!  After declining sales, Changes International has been sold to GoldShield out of the U.K.  They also own Golden Pride and Achievers Unlimited.
<<Ed Note>> Harry Hersey Jr., Director of the MLM side of Goldshield, will be President.  Good Luck
 
NFLI (Nutrition For Life International) Sold… BUT The Same
July 2001 – The stockholders of NFLI (actually Advanced Nutritionals) signed off on the $10 million sale of  NFLI to Everest International.  <<Ed. Note>> Top distributors that are WatchDog reporters report that this is a happy marriage (not the usual doubt level that normally occurs).
6 months ago

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