Whirled Musings

Across the Universe with Cosmic Connie, aka Connie L. Schmidt...or maybe just through the dung-filled streets and murky swamps of pop culture -- more specifically, the New-Age/New-Wage crowd, pop spirituality & religion, pop psychology, self(ish)-help, business babble, media silliness, & related (or occasionally unrelated) matters of consequence. Hope you're wearing boots. (By the way, the "Cosmic" bit in my moniker is IRONIC.)

Monday, July 16, 2012

Back in Time with the big sick machine

I am on the run today with "real work" deadlines, so I am just lifting most of today's post from a comment I made to a Facebook group the other day. To the few who may have read that post, I apologize for the redundancy.

On first glance, this snippet from a Time magazine article about pyramid schemes would seem to point to a real breakthrough in the battle against scammers:
Hundreds of court injunctions have been filed against pyramiders before, but they usually settle out of court or ignore the actions and set up their operations elsewhere. The SEC move against [Company A] and the California suit against [Company B] are refreshing departures. The SEC is asking not just for an injunction but also for the forfeiture of all the pyramider's profits; the suit contends that pyramiding is tantamount to selling unregistered securities. In the [Company B] case, state officials declined to settle out of court and instead pressed their suit to its conclusion. [State Judge] hopes that by establishing a precedent of stiff damages against [Company B] he may make other pyramiders reluctant to do business in California and encourage other state judges to clobber them.

The battle is far from over. Pyramid operations seem to have an irresistible attraction for people with low incomes and high expectations…. Pyramiders also have a knack for forming new companies as soon as the old ones come under fire. Despite a pending FTC cease-and-desist order and numerous state injunctions, [Company B] last week was still doing business in all 50 states and several foreign countries. Laments the SEC's [staff lawyer]: "If [Company A] flounders here, they can still rape Europe, Africa, Latin America and the Far East."

I confess. I deliberately disguised the names of the companies and players so you could fill in the names of your choice. Now I’ll dash your hopes, assuming you were moving in that direction, by telling you that this was in fact a Time capsule: an article from the July 16, 1973 issue of the magazine. That was exactly 39 years ago today. Company A was
Holiday Magic, and Company B was Bestline. Both were Amway type multi-level marketing (MLM) deals that sold overpriced products such as soaps and laundry detergents, but whose top people made the real money by selling memberships and upgrades. In return for the steep upgrade fees people got special "leadership" training.

For present and former members/affiliates of the infamous Kevin Trudeau's Global Information Network (GIN), some of this will sound awfully familiar -- with the emphasis on "awful."
The principals of Bestline and Holiday Magic were nabbed for operating illegal schemes, and yes, both the Federal Trade Commission and the Securites and Exchange Commission got involved. It was considered a real turning point in the battle against fraud. In 1973.

Now here we are, nearly 40 years later… Sigh.

Actually it was progress, of a sort: those actions back in the 1970s solidified the illegality of certain types of pyramid schemes. However,
a 1979 action by the FTC regarding Amway made it more clear that it's not an illegal scheme if there are actual products and product sales involved. But as my pal Jack said on Salty Droid's blog recently, "One man once told me that ever since [the] AmWay decision, MLM has owned the FTC." Jack's comment, as well as many other insightful remarks, appear in this post about notorious Internet marketing huckster Mike Koenigs. The post is long and so is the comments section, but it's all worth taking the time to read. Especially if you're tempted to jump out of GIN and right into someone else's scheme, hoping that this time you'll get it right.

In the long run, it appears, the main result of the FTC's actions regarding MLMs has not been to protect the consumer (except in theory) but to help build a better scam (in practice). Many of today’s marginally legal schemes -- such as GIN -- have slightly tweaked the business model to make it legal on paper… but all too often, the results are the same. Very few people make substantial money. A lot of people lose money. And of course they’re told it’s all their fault. I have seen ample evidence of this on many forums, most recently on threads in an open Facebook group called GIN v XIN, which is a place for both GIN critics and GIN defenders to speak their piece.

A person claiming to be a GIN Inner Circle member (having paid $50,000 for the privilege) has also commented at length on
my fairly recent blog post about former True-dough front man Lenny Coldwell. This person claims to have benefited greatly from GIN membership. That comment thread begins on July 12, right here. And although the conversation began respectfully on both sides, it has regressed to the point where Mr/Ms Inner Circle is calling critics "haters" who don't want to improve their lives. I have to take responsibility for this direction, since I dialed up the snark in some of my own comments.

But back to that old Time article.
Here's a link to the piece online, though you apparently have to be a Time subscriber to read it. I actually have the print issue, as I collect vintage magazines. And I also have a more than half-finished blog post about some of the famous frauds of the 1970s. Obviously, I need to get busy.

For now, though, I want to make a point
that expands upon my "big sick machine" post from the other day. The owner of Holiday Magic, one of the companies that got nabbed by the SEC and FTC in 1973, was William Penn Patrick, who was a mentor for Glenn Turner, the subject of another upcoming blog post if I can ever get my thoughts together enough to get it finished. Shortly after Patrick was charged by the SEC with bilking some 80,000 people out of more than $250 million through Holiday Magic (not a small sum in the early 1970s), he was killed when he piloted a plane into a mountain.

But his legacy lives on. Not only was he a mentor for Turner (who eventually ended up serving prison time but apparently went right back to huckstering, though in a more low-key manner, after getting out), but Patrick also co-owned a company called
Mind Dynamics (which influenced LGAT (Large Group Awareness Training) companies est/The Forum/Landmark Forum and Lifespring. And he mentored a guy named Thomas Willhite (sometimes misspelled Wilhite), who was a Mind Dynamics instructor. Tom, along with his wife Jane Willhite, founded the LGAT company PSI Seminars in 1973. 1973 was a busy year indeed.

Here's a comment on the Rick Ross forums that might give a little more insight:

Oddly enough, Tom Willhite died in a private plane in 1983, crash ten years after the death of his mentor. Jane took over as CEO of PSI.

Today PSI Seminars remains another cog in the big sick machine, offering yet another platform for such New-Wage luminaries (and stars of The Secret) as John Assaraf, Bob Proctor, et al. More links:

There's a lot about the Willhites and PSI on the Rick Ross forums. Moreover, Jane Willhite is one of the founding members of the
Transformational Leadership Council (TLC) that provided most of the talking heads for The Secret.

Big sick machine, indeed. And it is not a new machine by any means. Its roots run deep and, of course, go much further back than the 1970s. So when former GINsiders who are now pushing new schemes admonish you to stop obsessing on GIN and Kevin Trudeau, and to quit looking in the rear-view mirror, just remember that the failure to look in the rear-view mirror is what gets a lot of people into trouble. Arguably, the failure to do a little historical research was a factor that got a lot of folks into GIN, and it is a factor that will continue to lure people into dodgy schemes long after GIN has sunk and its founder is in jail or is on to the next scheme.

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Anonymous Mark said...

I believe what could put this entire GIN concept, and if it is a scam or not, to rest is the following. If anyone has this information please share as I have not been able to find it yet.
1. Was Kevin truly part of a secret society called the brotherhood? Many people say of course not, but who REALLY knows? His brother Bob was part of GIN in the beginning only to leave later. Did he know right from the get-go it was a scam, but went along with it anyway? Or did Bob know Kevin WAS part of a secret society, but later just didn't like the way he was running things and then decided to leave?
2. Same issue with YWIYC. Bob must know if Kevin really recorded this in the Swiss Alps with an audience or not.
3. Is there really a GIN council? There is much speculation about this, but the only people who would know for sure are those close to him, again his brother Bob or maybe even Peter Wink. If they knew all along that a GIN council didn’t exist, then why did they still join GIN anyway?
I am not trying to throw Bob, Peter, or anyone else under the table. Maybe they joined knowing it was B.S., but were influenced by the potential to make money. Maybe they didn’t consider it to be “that big of a deal” at first, but changed their minds later. Its ok to make a mistake, we all do.
To me these are the fundamental things that will bring GIN down if PROVEN to be false. If Kevin was never a part of a secret society then the “teachings” are nothing more picking and choosing from various teachers, books, etc. and there is nothing “secret” about it. Many people argue that it is the way Kevin puts all that material together that adds value, but that is not what is sold. Kevin himself has marketed GIN as the “secrets” of the elite. The concept of the GIN council indicates that there are elite essentially running GIN, and that KT is the public face. If there is NO GIN council then there is no base for GIN to sit on, AT ALL.
If Kevin sold GIN as “here is how you become successful, in my opinion, based on years of research” then we would all be having a completely different discussion. We would be talking about if the teachings work, rather than if it’s a scam or not. I am sure that many people believe the teachings have changed their life, and frankly they probably have. I am not saying that what Kevin teaches isn’t beneficial to some people. Hell Tony Robbins is apparently helpful to some people, but not very many in the grand scheme of things. However, when people attend a Tony Robbins seminar they are there to learn from Tony DIRECTLY. There is no illusion that Tony got his information from a secret source, and they are there to get that Intel. In GIN, the basis for the teachings isn’t Kevin, its secrets “THEY” don’t want you to know about, with Kevin as the teacher of this information.
Kevin’s goal is to have millions of people join GIN. And it can be done if these are truly the “secrets” of the elite. But when (if) it can be proven that Kevin was not part of secret society, YWIYC was not recorded with an audience in the Swiss Alps, and the GIN council is a myth, then you will see a mass exodus from GIN. GIN would still be around for a long time, because there will always be people who are willing to purchase self-help products, but it could never be something so large, with a global impact if it’s just “Kevin’s” teachings.
I hope those who REALLY know come forward with the intel.

Wednesday, July 18, 2012 1:18:00 PM  
Blogger Cosmic Connie said...

Mark, you brought up many of the same points -- and questions -- I have been bringing up and asking for a long time, but particularly since former loyalists such as Peter Wink split with KT. I think it is safe to assume that most of GIN's marketing is based on BS that True-dough pulled out of his a$$. But that's just me. I am willing to cut Bob T some slack, though.

Friday, July 20, 2012 4:00:00 PM  
Anonymous Anonymous said...

Could it be she's willing to cut Bot T some slack cause she's hoping to position a ghost rider deal on his book???

Things that make ya go hmmm...

People are not as naive as you paint them to be Ms Connie.

Friday, July 20, 2012 9:24:00 PM  
Blogger Cosmic Connie said...

Ms. Anon: Ghost rider? You mean a dead person who rides dead horses?

I actually PM'd Bob early on and told him I am a book editor if he needs one. He thanked me. I haven't pursued it. I don't care one way or the other because I am not exactly hurting for work right now.

More than anything I want to read Bob's story, but he does need an editor, as do the vast majority of writers, including yours truly. But for many reasons, I would actually think long and hard before I ever got involved in a project like that. I am not as conniving as you paint me to be, Ms. L (or whoever you are ;-)).

I am willing to cut Bob more slack because of the deep ambivalence I imagine he feels about Kevin as his brother. No doubt Bob and other members of the Trudeau family have benefited from Trudeau's schemes and scams for many years, and if they have done that knowing that they were involved in something unethical or even illegal, they will have to answer for that too.

Bottom line: if you're rooting around for some hidden agenda on this Whirled, you won't find it.

Saturday, July 21, 2012 9:53:00 AM  
Blogger RevRon's Rants said...

Anon - As the other half of Schmidt Kaye & Co., allow me to inform you of a very strict policy we established long ago. If EITHER of us feels uncomfortable with a specific client or project, we pass on it, even if the other person is amenable to it. And I made it clear to Connie some time back that I would not get involved in a project that appeared to have a strong basis in settling family grievances, as was my impression of the relationship between Kevin and Bob Trudeau. Because of my feelings (which Connie didn't feel to be off the mark), we agreed that we would not be working on a book with or for Bob Trudeau (and we damned sure wouldn't work with Kevin on ANYTHING).

I suggest you seek a more viable rationalization for dismissing Connie's extensive research. Your attempt to question Connie's motives and besmirch her reputation is sufficiently transparent (and ludicrous) as to be downright laughable. Much like the defense typically attempted by KT's or Dr. C's other minions or their serial pimp.

Saturday, July 21, 2012 7:54:00 PM  
Anonymous Anonymous said...

Just as a matter of interest, a few years ago, Mike Koenigs had a marketing business called Elluminati. His partner in Elluminati was Mark Hempel, who is responsible for this nonsense: http://www.wingmakers.com

Sunday, July 29, 2012 10:32:00 AM  

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