Secrets of the great pyramids

John Oliver has some hilariously spot-on things to say about those pyramid schemes known as MLMs, including but not limited to the infamous Herbalife, as well as Youngevity. Here you go:

Herbalife CEO Michael O. Johnson

Granted, this was a far from comprehensive examination of the scourge of MLM, but it did cover some basic truths in a largely humorous way, without being unsympathetic to the victimized. And as Salty Droid has done in greater depth over the years, Oliver focused on the ways that some of the most economically and socially vulnerable demographics are being targeted by ubiquitous giants such as Herbalife.

I would have liked to have seen a mention of now-imprisoned serial scammer Kevin Trudeau's Global Information Network (GIN). In its glory days GIN scammed thousands of people out of millions of dollars, without even offering a tangible product that would have allowed the notorious phenomenon known as "garage qualifying" (in which participants buy their way into a certain position in the compensation plan by purchasing hundreds or thousands of dollars worth of product, which ends up unsold in their garages). The "product" for sale in the GIN MLM back in the day was a $1,000 Level One membership in GIN. But since that old GIN MLM is no longer operating at those monetary levels, I can understand why the producers would have wanted to focus on more current and higher-dollar scams.

All things considered, I think Oliver's effort is a worthy addition to the critical and cautionary content regarding MLMs. I hope it finds a wide audience.

Related on this Whirled:

• 29 April 2016: True Spanish lies: A scam in any tongue is still a scam -- Herbalife, Youngevity/Livinity and the ways they exploit Latinos
  
  
• 22 December 2013: Kevin Trudeau's pyramid continues to crumble -- The FTC declared Kevin Trudeau's Global Information Network (GIN) MLM to be an illegal pyramid scheme. (Note: The old MLM was discontinued in November 2013 but it rose again in a more modest form under GIN's new owners.)
  
  
• 9 December 2013: Tin Promises: How MLMs Can Tear Lives Apart (Part 1 of 2) -- Natch, the link to Part 2 is included.
  
  
• 16 July 2012: Back in Time with the big sick machine -- A little history, but not enough to hurt you.

Tin Promises: How MLMs Can Tear Lives Apart, Part 2 of 2

This is the conclusion of "Roger Willco's" story about his life on the fringes of multi-level marketing (MLM) culture. If you haven't read Part 1 of this story, I suggest you do so first.

Sometimes, involvement with MLM -- and the self-help/motivational/LGAT (Large Group Awareness Training) culture that both supports and is supported by MLM -- can have tragic consequences. More than finances and relationships can be decimated; sometimes, on occasion, lives can be lost. In all fairness it is not a common occurrence, but it happens enough to be noteworthy...although even one occurrence would be too much.

We've seen tragic extremes in recent years with selfish-help guru and star of The Secret James Arthur Ray (who has been covered more than once on this blog and, in much more detail, on Salty Droid's blog). And tragedies have occurred with lesser-known gurus and LGATS as well, the link in this sentence being just one example.

Disastrous consequences have been a part of LGATs ever there have been LGATs. Group such as est (later The Forum, then Landmark Forum/Landmark Education, now Landmark Worldwide) have had their share of fatalities and injuries over the years, although one has to be careful how one frames these incidents, since Landmark, somewhat like Scientology, is notoriously litigious. The 70s-style "encounter groups" that were held in venues such as Esalen also spawned their share of tragic tales. One problem then as now has been that egregiously under-qualified "leaders" have been allowed to guide vulnerable participants through grueling emotional processes, sometimes leading to traumas or even psychotic episodes that the "leaders" have been utterly unequipped to handle.

Sadly, most people don't see or acknowledge the potentially dangerous side of LGAT culture or MLMs, any more than they see or acknowledge the cultish insidiousness that Roger documented so well in Part 1 of this narrative. When tragedy strikes, some will blame the victim, and others will rationalize the incident as an aberration, perhaps an unavoidable one.

I am impressed by Roger's even-handed treatment of the story below. He blames neither LGAT nor MLM, and certainly does not blame the victim or the victim's loved ones. He acknowledges the victim's mental illness and does not blame any external factors for that illness. At the same time he is forthright about what he sees as the roles that LGAT and MLM may have played in the tragedy.

It was difficult for Roger to write this story; he is still processing it, still trying to make sense of it. I am grateful to him for allowing me to share the story here.

I am also grateful to Roger for wrapping up his narrative by offering some solid pointers on how you can protect yourself from well-meaning (or not so well-meaning) people in your life who may be earnestly offering you the next great opportunity to finally live the life of your dreams. It is Roger's hope -- and mine as well -- that reading his story can help you see that those golden promises these people use to lure you are all too often forged of tin. And sometimes things made of tin have sharp edges and can hurt you.

One more point, since this has been a frequent topic on this Whirled of late: If you've recently been separated, either willingly or unwillingly, from serial scammer Kevin Trudeau's Global Information Network (GIN) MLM -- which was suspended on November 30, 2013 -- and you are now even remotely tempted by the siren song of ex-GIN principals who are offering you still more golden promises (in the form of, say, a chance to get in on a private phone call about The Next Big Thing), please make it a point to read this story, and Part 1, again. And then read it again, if you have to. It will be a far better use of your time than listening in on that phone call.

Epilogue: Tin Promises
Turn Deadly
by "Roger Willco"
© 2014, all rights reserved • Used by permission

The MLM culture I experienced included a symbiosis with self-help and prosperity cults, which seem to orbit its periphery in order to exploit a population made vulnerable by its already-suspended ability to think critically. The MLM events I attended often featured motivational speakers who encouraged listeners’ involvement in these cults. The pursuit of material wealth was central to MLM’s message; and high-level distributors pushed neophytes to read books and listen to audio programs authored by cult gurus. The relationship between MLM and cults seems to be a vicious circle. MLM promotes self-help and prosperity cults, which in turn, promote MLM. Some critics refer to this unholy syndicate as "The Big Sick Machine".

In our later years together, Danni had become so consumed by her appetite for self-help and prosperity-focused books and CDs that she accumulated sizable libraries of them. Always a student, Danni did her hour-long morning fitness workouts to the accompaniment of her CDs; and our hours on the road were serenaded by her chosen gurus’ voices droning nonstop over the car stereo. Danni called it our "university on wheels"; but for me, it was a disappointing change from her delightful and well-informed commentary about the natural and man-made wonders she noticed on our travels in happier times. I’d always been fascinated by Danni’s ability to identify any crop growing in a field a half mile away, describe its growing season and the weather conditions necessary for it to flourish. When it came to nature, she was a virtual encyclopedia.

Seminar madness
Four years into our relationship, Danni decided to participate in a "personal-growth" seminar offered in a distant city by an organization her MLM associates heartily endorsed. In late-night phone calls to me while she was away, she recounted a highly regimented schedule from early morning until at least nine o’clock at night and sometimes until eleven; and that regimentation extended to meals and bathroom breaks. Much of the curriculum Danni described made sense. However, I found the absence of trained and licensed psychological counselors at the exercises involving deep personal disclosure and other challenges to emotional vulnerability disturbing.

I was also concerned about the virtual deification of the program’s leader among his followers. It was the same sort of reverence MLM participants seemed to have for their companies’ founders. After her return home, Danni began to receive CDs from the seminar’s producers through the mail. They consisted of motivational messages from their guru and his inspirational interviews with various prosperity gurus and MLM leaders.

Danni went on to attend three more seminars in the next twelve months to complete the series. Again, she described legitimate fear challenges that made sense to me. However, the schedules were highly regimented from early morning until late at night, just as they were in the first seminar.

Shortly before she attended her final seminar, I went with Danni to one of the program’s half-day introductory workshops. Throughout the workshop, I recognized the same sort of psychosocial deprogramming I’d experienced twenty years earlier in basic training at the beginning of my hitch in the U.S. Army. I saw firsthand the indignity imposed on attendees by an authoritarian facilitator—a tall, fit and stern-faced young man I’ll call "Adolf". Wearing a well-tailored grey suit and marching purposefully up and down the center aisle, he barked orders to his assistants and to us. The only things missing were shades and a flat-brimmed campaign hat tilted forward atop his shock of blond hair. I can’t recall that he cracked a smile at any point in the workshop—all in all, not my idea of a fun time.

At the end of the workshop, Adolf gave a recruiting pitch for the first seminar, complete with the fee "discounting" that is so familiar to anyone who’s experienced similar workshops. I don’t remember the claimed dollar value of the seminar; but it was in the thousands. By the time Adolf finished his spiel—"This course is worth $xx,xxx. How many of you would sign up today if we offered you this outstanding opportunity for $x,xxx?" —the fee had "dropped" to $500. Were I to observe a similar workshop today, I would recognize many clues that would suggest the organization was a cult. However, I hadn’t yet learned enough to realize I had briefly stepped into the cult netherworld.

I understand that the necessary purpose of military training is to ultimately reprogram new soldiers to follow orders without question, to overcome fear, and to make it possible for them to participate in the horrors of combat without intolerable guilt. However, I wondered what reprogramming participants in this series of self-help seminars underwent. Aaaah . . . but that was a secret.

Danni came away happy with the overall experience and with noticeable changes in her attitude—some that seemed good and some not so good. She was more self-confident; but she had also become recalcitrant in her refusal to accept any information coming from outside her cultural bubble or which countered her MLM-prescribed biases. Danni’s ability to think critically about anything coming from inside her bubble seemed to be completely wiped out. One positive was her inclusion in an accountability group, established in the first seminar. The group initially conferred by phone every week. However, that fell apart after just a few conferences. Regrettably, Danni was also $12,000 poorer for her adventure.

Start them young...
A few months later, Danni’s 17-year old son, Ethan, signed up for the first in the cult’s series of seminars—this particular one tailored to adolescents. He too came away happy that he’d attended and convinced he’d gained a lot from it.

Fast-forward four years. Ethan was doing exceptionally well in college. He was brilliant, talented, athletic, highly motivated and self-directed—much like his mother. Amid all this good news, came one piece of bad news. Ethan had begun exhibiting episodes of bizarre behavior that prompted his dad to have a psychiatrist examine him. The doctor’s diagnosis was "high-functioning schizophrenia". Ethan was never able to accept his disease; and tragically, he declined treatment.

Note: I don’t for a moment think that his years-earlier encounter with the self-help cult was the cause of his illness. Schizophrenia is an organic disease of the physical brain, not an environmentally induced disease of the intangible mind.

It wasn’t long after Ethan’s struggles came to light that Danni and I terminated our relationship. We had stayed in touch; and a year later, we were working to salvage our long-standing friendship from the wreckage of our failed relationship. I had relocated to a nearby community where I was rebuilding my life. My anger had resolved into a determination to help others avoid the devastation I’d seen victims of that industry suffer; and my motivation had turned from vengeance to compassion.

One evening, while relaxing after a day of writing and online research, I received a call from Danni. In a trembling voice, barely understandable through her agonized sobs, she told me what she could of a story that broke my heart.

The prior weekend, Ethan had been invited to help staff an initial mini-seminar sponsored by the same cult he was confident had helped him so much in the past. It was held several hundred miles from where Ethan lived, so he stayed in the local sponsor’s home.

Sometime mid-seminar Ethan phoned Danni, upset that he’d violated his obligation to participants by sharing too much about his own personal struggles. In subsequent calls to her over the next several days, he told her that he was [obsessively] studying the cult-founder’s written manifesto. Apparently, no facilitator, seminar staffer or his host realized that Ethan was in emotional crisis. They simply didn’t have the knowledge or expertise to recognize it.

After the seminar, Ethan returned to his home near the university he attended. By midweek, his continuing bizarre behavior had alarmed his long-time girlfriend. She phoned her dad, who owned the house in which they were living; and he came over to tell Ethan he’d have to find someplace else to live until he got some psychiatric help.

Danni received another call from Ethan that morning in which he told her of his unraveling situation. She was out of town for the day; but she reassured him with an invitation to move in with her until his circumstances stabilized. That call would be Ethan’s final communication with anyone in his family.

An hour later, a friend of Danni’s, Joanne, arrived at Danni’s house to feed her menagerie of birds and cats. As she let herself into the house, she noticed Ethan sitting on the front room sofa, reading aloud from the cult guru’s manifesto as if delivering a sermon. As a puzzled Joanne wished him a good morning, Ethan, without acknowledging her greeting or saying another word, set his book on the coffee table, pulled a small-caliber revolver from his backpack and pressed its muzzle against the right side of his upper neck. Joanne, now panicked, ran back outside and to the house next door to call 9-1-1. At almost the same moment the spring-loaded screen door slammed shut with a bang behind her, she thought she also heard a second report that sounded to her like it could have been a gunshot.

Minutes later, police found Ethan, slumped onto his left side on his mother’s sofa, his legs askew and dangling to the floor. He wasn’t breathing. His book was open, face down on the coffee table—almost as if he had intended to pick it up again, and his handgun lay beside him on the sofa cushion near his empty right hand. The officers found a nearly bloodless gunshot wound just below and behind his right ear. His handgun’s deadly missile had obliterated his brainstem and Ethan had died instantly.

So ended the life of an amazing young man, full of promise, full of care for everyone whose life he touched, and loved by all who knew him. Hundreds attended Ethan’s memorial, listening to his grieving friends and brothers tearfully recount his delightful personality, his intellectual curiosity, his openness, his honesty and his ability to think outside the box.

Months later, Ethan’s closest friends and family gathered once more—this time aboard a borrowed yacht. They silently sailed on a gentle breeze into the deep waters of the ocean Ethan so loved. They ceremoniously scattered his ashes on the water’s surface, consigning his physical remains to the sea and locking their memories of him forever in their hearts.

Questions left unanswered
Ethan left no written communication explaining his decision to end his life. As is always the case, his family and friends sought some—any—explanation for his unexpected passing. Estranged from Ethan’s family and alone with my grief, I began my own analysis of what might have led to Ethan’s decision to leave a life that had become for him, too painful, for a more peaceful place.

My opinion is heavily colored by emotion and should by no means be considered anything more than that of an acknowledged layman. I’m just someone with a penchant for logic who loved Ethan and is trying to understand why he died. However the circumstances involved, from the beginning of my life with Danni to the end of Ethan’s life, lead me to conclusions which more than any other, make sense to me.

There’s no question that Ethan’s untreated psychosis was the ultimate cause of his suicide. That fact cannot be obscured by the other circumstances surrounding his death. There was nothing his family or friends could have done to prevent it. Ethan’s choice to refuse treatment was his alone. This written story is available to Danni; and if she ever reads it, I want her to understand that this reality is incontrovertible. No person on this planet—not even Danni—had the power to change Ethan’s tortured thought processes without his permission.

Beyond that all-important recognition, it seems apparent that Ethan’s final psychotic episode began while he was staffing a self-help seminar the weekend before his death. In my opinion, Ethan’s cult-related activities’ proximity in space and time to his suicide point to its contribution—at least as a triggering factor.

None of us who knew and loved Ethan could have predicted his life would end this way. Maybe he didn’t really have to die. Maybe Ethan died, in part, because of the dangerous mind-bending stress that self-help cults impose on their followers without appropriate knowledge and expertise.

The unacknowledged and deniable link between MLM and self-help cults isn’t intuitively recognizable . . . it all seemed harmless enough to me at the time. However, there’s an observable and documented connection.

MLM is allowed to flourish because agencies of our state and federal governments charged with protecting the public from fraud have abdicated their responsibility to understand and counter the economic and social tolls the MLM industry exacts from its victims. Because it flourishes, mind-control cults do as well.

Our government regulators fail to act because they are in reality us; and we as a nationwide community, choose to tolerate these predatory enterprises. Until we stop tolerating their malignant abuses, the MLM industry will continue to feed pernicious mind-control cults with ready victims. One thing is certain: The consequences of our tolerance reach far beyond the economic and social costs to victimized members of our community. The chain of contributing factors to Ethan’s suicide extends all the way to us—Americans whose love of freedom sometimes leads us to forget our responsibility to prevent exploitive abuses of our blood-bought liberty.

That is why I’m making this very private story public. It’s a story my conscience won’t permit me to leave untold. I’ve changed the names of victims, kept undisclosed the identity of perpetrators and altered details of Ethan’s suicide to protect the privacy of innocent people who’ve already suffered far too much.

However, this story couldn’t be more real. The tragedy of what happened to Ethan and Danni, and the pain Ethan’s family and friends suffered at having to tell him "goodbye" much too soon doesn’t have to be a complete and total waste. If their story can help persuade a reluctant public to put an end to the MLM deceptions that all too often entice our innocent neighbors onto a disastrous path, at least some good can come of it.

The path begins with glittering golden promises. However, it’s also a path which at least 99% of the time leads to financial loss . . . a path which if followed farther, leads to financial and social ruin, revealing the golden promises of MLM as counterfeits made of tin . . . and a path which can end in devastation. In Ethan’s case, those tin promises were ultimately deadly. Maybe Ethan didn’t have to die . . . but he did; and from where I stand, it looks very much like we, as an unenlightened community, let it happen.

Peace … Out [Ethan’s favorite sign-off]

"It’s not that we can’t do something about it . . . it’s just that we haven’t." — Salty Droid

Protect Yourself: How Being Tough
Can Keep You Out of Trouble

As long as "caveat emptor" remains the public’s only effective protection from business-opportunity fraud, there is one protective solution available to individual consumers. It’s amazingly simple and fair to all concerned, it’s perfectly legal and it’s part of the due diligence aspiring entrepreneurs in any other setting exercise when contemplating a business proposition.

Here’s the technique: Simply state to the seller at the outset of their pitch that as a condition of doing business with them, you need to see a true copy of their most recent income tax filing for the business into which they’re inviting your participation. If their tax form—usually an IRS schedule C—showing their net (taxable) profit—line 31on Schedule C—is positive, the proposition may merit further investigation, although you’re not necessarily safe. If on the other hand, line 31 indicates a net loss, you’d be wise to assume that you too would sustain net losses in the same business.

Unquestionably, this is a difficult demand to make on a friend or family member—the persons most likely to offer you a home-based business opportunity. They will probably tell you in all honesty that they haven’t been in business long enough to make a profit. That’s OK. Just ask to see the same documentation from the person directly above them in their upline. Keep going until someone up the line is able to produce a qualified document. Only three in every thousand MLM distributors make a net profit; and chances are, you’ll get a flat refusal before you get to someone who can show bona fide proof of profitability.

Deceptive business-opportunity sellers will make up all kinds of excuses for refusing to cooperate. Nevertheless, if you are persistent in your demand for valid proof of profitability, their excuses won’t sway you; and malevolent sellers will look for another mark somewhere else.

Cautions:

1. Don’t accept substitute documentation. The penalties for filing fraudulent income tax returns are sufficient to give you some assurance of a filed IRS document’s legitimacy.
2. If at any point you’re told that having a home-based business allows them (and you) a way to write off ANY non-business related expenses, walk away. The person who’s giving you that information is committing tax fraud. Would you really want to be in business with someone of that ilk?
3. Don’t allow yourself to be drawn into a conversation with anyone in your prospector’s upline until your demand is met and you’ve actually seen the document. Most often, that third person has specific expertise in deceptive tactics that will dissuade you from true due diligence so they can close the sale. Don’t allow it under any circumstances!
4. Before you sign anything, require your prospector to provide you with a certified photocopy of the IRS document they show you as proof of their business’ profitability that you can retain for your records. This gives you written documentation of fraud if it turns out your prospector sold you a bill of goods.
5. Finally, don’t be drawn into ANY proposition that promises quick or easy material wealth, a fast track to emotional health or to success in any aspect of life. It’s safest to assume those propositions are fraudulent and predatory. I can’t say there are no exceptions. However, I can honestly say that I’ve never encountered one.

* * * * *

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Tin Promises: How MLMs Can Tear Lives Apart, Part 1 of 2

For nearly a year and a half I have devoted an inordinate amount of time and blog space to the ongoing saga of currently jailed serial scammer Kevin Trudeau, whose huge scheme, the Global Information Network (GIN), had a multi-level marketing (MLM) component (the "GIN Affiliate Program") that was only recently suspended by the court appointed receiver. Some months back, the receiver had called the legitimacy of the MLM into question, as the "product" being sold is not a physical product but a Level One GIN membership (normal cost $1,000 "initiation" fee, with $150 monthly fee for as long as one is a member). According to court order the receiver had a legal obligation to keep GIN and all of Trudeau's business entities operational until and unless the entities were determined to be illegal (or unprofitable). The receiver's job is to uncover monies that can presumably be used towards paying the $37.6 million fine that the FTC has levied against Trudeau for deceptive marketing of his book, The Weight Loss Cure "They" Don't Want You To Know About.

Many people were reportedly shocked and outraged that the MLM was being discontinued. Some were actually making a little money in the program, though most were losing money, as is all too often the case with MLMs. But clearly, without the MLM -- the whisper of a promise of a possibility of making at least a little bit of money -- GIN's value plummeted in the eyes of many remaining members and prospective members.

As I've also reported at length on this Whirled, groups of current GIN and even ex-GIN members are struggling to save GIN and breathe new life into the "club," despite the fact that its leader will presumably no longer be able to participate, at least not in a visible or obvious way. Some of these people have said they never really had any interest in the GIN MLM program but that they found the other part of GIN -- the "training," which was delivered via increasingly pricey "membership levels"-- to be invaluable. Many of these folks claim that they want to keep GIN alive to continue to deliver this sort of value (but at a lower price than the exorbitant upgrade costs in the current setup).

However, it is clear from the communications of some of the main activists in the "save GIN" movement (including the leader of the "Intervenor" movement, Ohio GIN member Perry Kiraly) that the MLM is what really interests them. Some refuse to give up on that dream, perhaps because they have many thousands of dollars invested and they still hold out unicorn fantasies of recouping their losses. According to one of Kiraly's latest updates to his "Stand With GIN" followers, he has been consulting with an "MLM attorney" who is currently reviewing the GIN MLM to see how it can be modified to get it in line with US regulations and with regs in any part of the world where GIN members reside. To me this is akin to slightly altering the sausage-making process so that the levels of insect parts and rodent feces and possible carcinogens are within "acceptable" guidelines. There will still be insect parts and rat poop and other things you wouldn't want to put into your body, but they'll be there in a quantity that has the blessings of the regulators.

In any event, it seems clear that reviving the MLM is a top priority to some of these folks. And these are some of the same people who will argue till the cows come home that multi-level marketing is a wonderful way to make money and that just about anyone can become a zillionaire through participating in an MLM -- if they only work the program correctly and, of course, have the right attitude. The statistics tell a different story, as do the painful narratives of those whose lives have been torn asunder by MLMs and the self-help/prosperity cults that both support and are supported by various MLMs.

One such narrative comes from the pseudonymous Roger Willco, who told his story in a more abbreviated form on Salty Droid's blog in October, and whose story and MLM observations I also cited on my own blog at the same time. I also invoked Trudeau and GIN on that post, noting that GIN is but one drop in a huge ocean of fraud.

Roger has painstakingly expanded his narrative and has graciously given me his permission to share it here. Because it is lengthy, I am presenting it in two parts. Of note, the person in his life who was a serial MLM participant also joined GIN and became, Roger told me, a passionate defender of Kevin Trudeau's messianic qualities.

It is Roger's hope -- and mine as well -- that reading his story will help at least a few people rethink their decision to join or continue participating in potentially finance-wrecking, soul-destroying money schemes (and/or self-improvement cults), or at the very least that his narrative will help troubled MLM participants' loved ones gain a better understanding of the dynamics of MLM culture. As I noted, this is long, so you know the drill... print it out if you're prone to screen fatigue. But please do read it, even if you've already read the shorter version on Salty's blog, because much has been added to this one. And in particular, if you or someone you know is involved in an MLM and beginning to wonder why finances -- and lives -- seem to be spiraling out of control, this story may very well speak to you. ~CC

Tin Promises

My Life on the Fringe of MLM
by "Roger Willco"
© 2014, all rights reserved • Used by permission

This is the story of my 8½ years living on the fringe of multi-level marketing (MLM), its impact on my life and the lives of my former significant other and her son. It’s a sad story, parts of which you may find more than a little unsettling. However, it’s a story conscience and compassion compel me to tell. Although most of my involvement in the MLM industry was on the periphery, I look back at some of the things I did—knowing better in my core—and I feel remorse for the role I played in promoting MLM’s deceptions. More importantly, I feel compassion for the dozens of wonderful people I know and the millions I don’t know who remain trapped in MLM because they believe its golden promises. They’re convinced their success is just around the corner, despite overwhelming evidence that their eventual failure is inevitable.

There is plenty of good information available online to anyone who’s interested. It takes quite a bit of time to sort through all the pro-MLM websites masquerading as objectively informational; but learning the facts is worth the effort. There are thousands of stories that could put much-needed human faces on the nearly universal consequences of MLM involvement, if only they were told. This particular story exposes some of the more extreme costs MLM can exact from its victims. I hope its telling will help encourage a compassionate public to act before the MLM industry—largely centered in the United States—gains a foothold with its economic and social predation in more of our global community than it already has.

Several years ago Danielle (Danni), a friend whom I’d known since college but hadn’t seen much since, asked me to meet her at a regional training event held in a nearby city by the MLM company in which she was a distributor, also known as an independent business owner (IBO). The training was primarily motivational—the facilitator a top "Level 7" distributor in the company. Danni had been recruited four years earlier and was optimistic about her future success. She anticipated achieving the rank of "Level 3" in the near future through sales made by the downline of IBOs she’d been building during her tenure with the company.

Danni has always been a sweet and gentle woman with an unforgettable smile that begins in her twinkling gray eyes and spreads to her generous mouth (her lips are so luscious I often teased her that she couldn’t have gotten them without collagen injections). It doesn’t end until it bathes her entire slightly freckled face, exuding enough warmth to melt the polar ice cap in just a matter of hours should she happen to get too close. Danni cares for and trusts everyone—whether or not she’s met them; and she has a heart for service to others. She is an attentive mother, a delightful and affectionate companion and a concerned friend. Danni has always taken good care of herself, maintaining total fitness and high energy. Her accomplishments on several fronts—surfing, photography, music, academics and marathon running—are extraordinary. I suppose vivacious with infectious positivity would be the best description of her personality. On top of all that, Danni is exceptionally intelligent; and in her late 40s, she’s gorgeous…truly every man’s dream and for a time, she was my dream come true.

Several months after that initial reconnection, our renewed friendship blossomed into a delightful romantic relationship. I was retired from my own career and able to turn my time and energy to doing what I could to help Danni succeed in hers. To launch our business relationship, she enrolled me as an IBO in her downline at a cost to herself of over $1,000. Danni believed my life and health depended on consuming the company’s dietary supplements—a prospect at which I was decidedly unenthusiastic. In fact, she was unquestioningly convinced that the company’s products were revolutionary; and that the business opportunity and products she was selling dramatically changed lives. Danni also believed she was part of a movement embodied in the company that was changing the world. Her fervor was contagious, I wanted to help her bring her dreams to life and signing on would expand her downline. So, I agreed to the arrangement.

That autumn, Danni asked me to help her organize her previous year’s income and expense records for her tax return. That included tabulating her business expenses for the previous year. I was amazed to find that her expenditures for products alone exceeded $16,000. When we met with her tax accountant, I learned that most of the products she bought had been for her personal use. The rest was for inventory—much of which she gave away as promotional samples or sold at a loss. Danni’s personal consumption of over $1,000 worth of supplements each month seemed excessive to me. However, she explained that "large servings" (high doses) of the company’s array of bioactive products had cured her frozen shoulder in the past and that maintaining her high intake levels had prevented her from contracting the usual seasonal viruses ever since. Other possible reasons for her disproportionate product use would become apparent a few years later.

Danni and I attended her MLM’s annual three-day national event a few weeks later. In each of the general sessions, I experienced what I now recognize as manipulative mind control. Every general session included rousing music with the audience often clapping in rhythm, jumping to their feet and cheering as company platitudes were uttered from the podium, and according frenzied welcomes to each company luminary who stepped onto the stage. Speakers unrelentingly hyped the company and its products. Stories and pictorial depictions of endless wealth awaiting motivated MLM distributors peppered the entire event. I remember feeling isolated as I sat silent through many of the crowd’s emotional outbursts at each meeting.

Speaker after speaker spoke of traditional social sensibilities as roadblocks to success. They denigrated "J-O-Bs" as "enslavement . . . trading time for money"—as if working in an honorable occupation were some profane and immoral pastime. They discouraged distributors from associating with anyone who took issue with the way they conducted business. Company icons taught that persons "guilty" of critical thinking, as might be evidenced by questioning the company’s claims and the achievability of "the dream", were "losers, negative, and dream stealers" whom they’d be wise to avoid. They encouraged a unique version of "due diligence" by referring their listeners to the company’s own "informational" website where they could find "scientific studies" done by "independent researchers". To any critical investigator, the "scientific studies" posted there were markedly substandard and the "independent researchers" were easily recognizable as company shills whose conflicts of interest rendered their conclusions unconvincing at best.

Top-level distributors facilitated dozens of breakout trainings; and Danni was compulsive about attending as many as possible during the two days they were offered. Most of these trainings included at least implicit endorsement of deceptive techniques in prospecting distributors and customers. Obfuscation, avoidance, omission and just about any other means that didn’t involve outright lying were encouraged as effective, acceptable and ethical IBO practices. Facilitators regaled their audiences with depictions of lavish lifestyles and promises of lucrative passive income streams. They took every possible opportunity to emphasize that these were attainable by any distributor who believed in their upline, the company and its products, and followed top distributors’ "easily-duplicable" systems.

Even though I’d suppressed my own critical thinking to a limited extent, I was troubled by the testimonial session that ended the first evening. Dozens of distributors lined up to tell their stories of experiencing or witnessing healing and relief of suffering which they attributed to use of the company’s products—usually in remarkably large quantity. Many of the diseases, such as multiple sclerosis, discussed by testifiers are characterized by a labile course in which sufferers experience repeated spontaneous cycles of improvement and deterioration. This characteristic renders them susceptible to causal fallacy—the belief that a possibly coincidental variable caused the improvement. Other testifiers spoke about relief from diseases in which a psychosomatic (symptoms originating in the mind) component is highly suspect. Those afflicted with psychosomatic conditions are particularly predisposed to the placebo effect—a variant of causal fallacy. It was interesting to me that the evening’s master of ceremonies frequently repeated a disclaimer I eventually came to know by heart: "Our products do not diagnose, treat, prevent, mitigate or cure any disease." I found that statement incredibly ironic, given that every testimonial I heard described how the products had done exactly that.

No miracle cures
I’ll never forget one of Danni’s prospects who had contacted her seeking answers for his multiple sclerosis. Mark headed an exceptionally nice family that included an adult daughter who suffered the ravages of lupus. I went with Danni to their home with a full complement of her MLM company’s products to demonstrate their efficacy with "kinesiology". This is a pseudo-scientific and highly subjective method of testing the effect of any substance in physical contact with the subject’s tissues—often mucous membranes in the mouth—on their muscular strength. Increased strength indicated that the subject’s body had an affinity for the substance and that the subject should therefore take or apply it and by the prescribed route in order to achieve "optimal wellness". Based on the results of Danni’s tests, Mark and his family signed up for several hundred dollars worth of products each month by "auto-order".

These wonderful people had invited us to share their noon meal after the conclusion of business. As we sat around the family table, enjoying homemade pea soup and BLTs, I was buoyed by the look of hope on every face. It was obvious too that Danni was delighted to have again helped someone.

Several months later, Mark phoned Danni about his and his daughter’s apparent unresponsiveness to the products they were taking. As it happened, there was a regional company event scheduled near Mark’s home within a few weeks. Danni advised Mark that he and his daughter should continue on the products until then; and if they would meet us there, she would put them in touch with an RN we knew who could better evaluate their lack of improvement.

Danni and I played host to Mark, his wife and his daughter at the event; and at the appointed time, the five of us met with our RN "friend", who also happened to be another IBO in the company. She asked Mark how much of which products he and his daughter were taking; and with no further evaluation of any kind advised them to "Just take more of the same products for longer."

No hole would have been too small for me to crawl into when I saw this woman’s cavalier exploitation of two suffering people in need. It was a clear indication of the moral depravity that was becoming more and more apparent in the culture that surrounded us. It also explained how similar exploitative advice might well have convinced Danni to purchase and consume $1,000 worth of products every month.

In retrospect, I wish I’d had the strength of character to call "foul" on what I saw that day. Soon after this incident, Mark and his family stopped their auto order and terminated contact with Danni; and that gave my conscience some relief. However, I will forever carry guilt for my part in helping Danni unknowingly perpetrate fraud on this beautiful family. I’m so far unable to access Mark’s last name so I can contact him and make right my part in his victimization. My unresolved experience with Mark and his family has become an important driving force in my determination to do all I can to make up for my wrong to them by helping expose the fraud embodied in the MLM industry.

A "naive cadre of distributors"
At the national event, a "storefront" was open during breaks between sessions. While a few of the company’s products were displayed for sale, the majority of shoppers seemed to spend most of their time looking at the abundant selection of "company-approved" sales aids and promotional materials offered for sale by the company’s purportedly independent tools-marketing partner. Danni usually spent a minimum of $1,000 at the storefront at each of the eight national or international events we attended together. She was certain that her dream of ascending to the next distributor level was just around the corner. Danni thought that if she just knew more and had the latest promotional literature and CD’s available for the prospects she canvassed, her sales and recruiting volumes would quickly increase.

However, like most people drawn in by MLM’s golden promises of wealth based on projected exponential sales growth, Danni hadn’t analyzed the model beyond the first few levels and neither had I. If we’d understood the implications of exponential growth—rapid market saturation with an oversupply of both products and distributors, we might have recognized that Danni was trying to succeed in a market which had long before become saturated. The solution for her frustration would only have been found by expanding into an unsaturated geographical market . . . not in updated sales aids. With uncontrolled exponential distributor propagation, there was no way for Danni to find out if or where an unsaturated market existed—just one more obscure but catastrophic flaw in the MLM distribution model.

The final evening was devoted to "giving back" through the company’s "charitable" arm. A company executive solicited donations of its "healthy candy" product or cash to purchase it for starving children in foreign countries. I watched in disbelief as Danni deposited a check for $500 in the bucket that was circulated after an emotionally charged offering appeal and prayer at the end of the meeting. To my knowledge, the company didn’t pay commissions on the products distributors bought at a discount for donation. It wasn’t until after I extricated myself from MLM world that I realized this had been a scam within a scam—particularly reprehensible for masquerading as a charity—further preying on the company’s naïve cadre of distributors.

While I couldn’t clearly identify why at that time, something about the whole event felt very wrong. I chalked my feelings up to nothing more than my personal discomfort with the appeals to avarice that seemed to dominate the atmosphere; and as I thought about it, there’s really nothing wrong with being rich. Out of my love for Danni, I suppressed my misgivings and continued forward, assisting her in her business to the extent I could.

As I look back, the entire event appears to have been engineered to combine principles of group think, emotional contagion, collective behavior and collective narcissism with the power of a large assembly of peers. The objectives would have been to coerce conformity from individuals to the anomalous behaviors, perceptions and attitudes of the crowd surrounding them and to cultivate a sense that they were part of an exclusive elite group. Whether or not use of these mind-control techniques was deliberate or simply the way it’s always been done is open to question. However, the result was the same either way—participants’ suspension of critical thinking or healthy skepticism that would otherwise prevent their acceptance of MLM’s array of deceptions and entry into its warped reality.

The company’s international event took place every spring. It was identical in format to the national gathering. Smaller groups of distributors in our state organized regional 1½-day conferences patterned after the company’s national and international events—only on a smaller scale and without the breakout sessions.

On the local level, individual distributors hosted periodic "opportunity meetings". The purpose of these meetings was to present the MLM’s "business opportunity" to prospects in a group setting. The usual practice in our community included stocking attendance with existing distributors who would bring their own prospects as guests and supply contagious enthusiasm. Opportunity meetings included some combination of training, promotional presentations and product sampling. Time was always set aside for testimonials.

Local meetings typically ended with an appeal by a facilitator to those in attendance to write down names of fifteen friends or family members with whom they’d want to share this "fantastic, once-in-a-lifetime opportunity". The prospective recipients of their "sharing" were identified to new initiates as their "warm prospects". By this time in the encounter, through hype and the same mind-control techniques used at the company’s national event, newly recruited IBOs were eager to follow through with their "warm prospects," believing they would be doing their friends and family a favor.

That they were about to violate the universal social taboo against exploiting personal relationships for profit seemed to be lost on them. I saw over time that this turned out to be the first step many new IBOs took onto a slippery slope of increasing social aberrancy. I also noticed early on that with few exceptions, it seemed friendships within our MLM culture were quickly formed and intense, but shallow, unreliable and remarkably phony—yet another indicator of tortured social values within that culture.

Declining fortunes and "channel stuffing"
Two years into our relationship, Danni bought some $20,000 worth of her MLM’s stock at around $20.00/share. Two years later, the company’s stock value began to drop after a nationally televised exposé on healing claims made for its products by one of its IBOs. Two months later, the attorney general for the state in which the company was headquartered filed suit, alleging deceptive marketing practices and violations of the state’s food and drug act. As the company’s stock continued its nosedive in the ensuing months, I pled with Danni to divest herself of her clearly doomed holdings. However, she remained steadfast in her refusal to sell, saying that to do so would betray the company. It wasn’t until another two years had passed that she finally let her stock go when its value had dropped to $3.00/share.

Danni’s flawed thinking was by no means the result of stupidity. By then, she was living almost exclusively inside the MLM culture where critical thought was disparaged as negative and counterproductive. "Believe in the products, believe in the company and believe in your upline" was an oft-repeated mantra that actively contributed to critical thought suppression. This was simply one more indicator that Danni’s thinking had been crippled by her exclusion of influences outside that bizarre culture.

The year after the company’s fortunes began to decline, I again helped Danni organize her business tax records—this time on my own computer. Somehow, working with each expense category one at a time, I had no sense of how much her business was costing her in total. Years later, I ran across the spreadsheets I’d prepared to calculate her expenses. Yielding to my curiosity, I totaled her write offs for the year. I knew Danni had sustained substantial net losses in her MLM business, but I was not at all prepared for what I discovered. Her MLM business expenses, excluding what she claimed for housing and utilities—expenses she’d have had with or without her business—totaled $49,606 for that year alone. I never tracked Danni’s finances; but I can’t imagine she received more than $20,000 in commissions and bonuses for the year. Extrapolating $30,000 in annual net losses over the course of our first 5½ years together, they would have totaled $165,000. However, with her savings exhausted after that time, Danni would have had to reduce her expenditures. That being the case, I have no basis for estimating her actual losses over our final three years.

Throughout our partnership, there was a constant influx of product shipments to Danni’s address. She received at least one shipment each week—sometimes two or three. We collected discarded shipping cartons in a corner of Danni’s garage; and every month or so we’d break them down so we could take them to our local recycling center. One day, while preparing to take our collection to recycle, I happened to notice that the addressee on a shipping label wasn’t anyone I knew. However, the street address was correct. Curious, I looked at several other shipping labels; and discovered that many of them were addressed to people I didn’t know at Danni’s home address.

When I asked her about it, Danni explained that by ordering product under the names of her downline members, she was able to maximize her commissions and bonuses. "So you’re paying for the products?" I asked. "Yes," she replied. "But they’re products I use or sometimes resell." Still puzzled, I mentioned that I thought the company would surely object to that practice. "Oh no." Danni said. "The company doesn’t care. Everybody does it and the company’s total commission payout isn’t affected." My initial concern assuaged, I never mentioned it again. However, I remained uncomfortable with what seemed to me an irregularity that could have an adverse impact on those in Danni’s downline who served as phantom product recipients.

Although I didn’t know it at the time, I had stumbled onto a variant of "channel stuffing", an illegal practice used by a company or sales force to inflate its sales figures. In retrospect, it’s obvious that this was part of the reason Danni always had a large surplus of product on hand, much of which she had to give away or turn at a significant loss. It could also explain—at least in part—Danni’s motivation for her inordinate personal product consumption. Her scramble at the end of each month to generate a product order in her own name large enough to qualify her for commissions on any of her or her downline’s sales only compounded her excess inventory load.

It was just one more seemingly inconsequential deception that added to many others. In combination, they comprised a huge ethical compromise for me that had accrued so insidiously I didn’t recognize it until much later. Always mindful of my personal history of controlling behaviors, I scrupulously avoided doing or saying anything that could be construed as controlling where Danni was concerned. However, I was also asleep at the wheel of my own life. I consider myself to be reasonably bright; but even my attenuated exposure to MLM’s reality warp somehow immunized me against recognizing my part in the fraudulent deceptions that are now so painfully obvious.

Throughout her latter years with the first MLM, Danni believed with all her heart that her advancement to "Level 4" would happen in the next three months. It was a target that had inexorably moved farther and farther out of her reach with each passing year. To this day, Danni believes in the company’s products and the MLM distribution model; and she chalks the company’s declining fortunes up to bad management decisions. More to the point, Danni also believes that she was truly helping every person she recruited into what she’s certain was an outstanding business opportunity.

However, Danni’s efforts to keep new IBO’s coming in at a rate sufficient to offset the number of those she was losing couldn’t have succeeded. The company’s distributor "churn" rate in our community as well as nationwide was greater than 100%. In other words, the number of new distributor recruits was less than the number who were exiting the business. That development was a premier indicator of market oversaturation as mentioned earlier in this story; and it meant that new recruits didn’t have a reasonable chance to even recoup their expenses, let alone make a profit. This reality was totally divergent from the representations everyone involved in the recruiting process—including the company—made to them.

The money isn't greener in the other MLM
"Friends" of Danni’s—high-level distributors in the first MLM who could see the writing on the wall—recognized an opportunity to build a new downline in a different company from the ranks of disappointed colleagues. After nine years of steady losses (3½ years of which preceded our partnership) and at her friends’ urging, Danni finally abandoned her involvement in the first MLM and joined her friends’ new downline in their new company.

By then, we could no longer afford for me to accompany Danni on her business-related travels. Therefore, I didn’t see what went on at the national events she attended. I did however, attend local trainings with Danni in another community as well as opportunity meetings she hosted in her home. These events followed essentially the same pattern as the first MLM’s—replete with instruction in deniable deception techniques and the ever-present appeals to avarice.

A year after her move to the second MLM, Danni’s "friends" left that company, initially complaining of wrongdoing on the company’s part. However, they finally settled on a different explanation: While they’d been doing well, their downline had not. The inconsistency in their stories seemed to be completely lost on Danni; and she eagerly followed them into a third MLM. Again . . . more of the same.

Within months of her transition to the third company, my growing cognitive dissonance finally overcome me; and I withdrew from any significant supportive involvement with Danni’s upline, although I continued to assist Danni. Our household financial losses had begun to mount to the point they were no longer sustainable and our lives were diverging—eventually to the point that although we were still living in the same space, we existed in completely separate worlds.

Concerted efforts by our couple’s counselors to gain Danni’s cooperation in formulating a household budget and rationalizing her business involvements were unsuccessful. After months of upheaval, I reluctantly told Danni she would soon be faced with having to choose between her continued MLM involvement and me. Without hesitation, she replied that given that choice, she’d stay with MLM. Several months later, she spent an afternoon exploring yet a fourth MLM "business opportunity". Sensing impending loss, I was hurt and my anger became unrelenting. Our conversations were now nothing more than rehashes of the same old arguments in which my conduct was openly and inappropriately hostile. I’d come to see Danni as my enemy and my verbal tirades were frightening her. I began to find sleep nearly impossible.

A painful goodbye

Early one morning I found myself again lying awake, staring at the moon through the bow window in Danni’s bedroom. I remember looking at the clock on her nightstand. It was 2:30. My mind began to process my predicament; and as I lay still, the realizations started to come—slowly at first, but soon flooding my thoughts in a relentless rush. My emotional fuel was exhausted. I was out of financial resources, even though I’d filed for bankruptcy a year earlier. I was smoking again, I’d become obese, I was constantly overwhelmed by fatigue and worst of all, I was hurting the love of my life.

The changes in Danni over the years were so insidious that I hadn’t really recognized them; but I finally realized that I no longer knew her. The sweet guileless woman who only wanted to help others was now totally consumed by her pursuit of material wealth—a pursuit that recognized no bounds. Danni’s rationalization for her ambition was that the more material wealth she possessed, the more resources she’d have to help those in need. However, her expressed motive wasn’t the main issue for me. That Danni’s obsession had become the transcendent priority in her life and now overshadowed every aspect of both our lives was really the problem.

It was finally clear to me that Danni’s active involvement in MLM’s twisted and isolating culture had become so compulsive and destructive that I could no longer ignore the looming specter of an addiction. MLM’s glittering promises had revealed themselves as worthless counterfeits—nothing more than tin masquerading as gold. Our relationship had lost its magic; and I had been withdrawing more and more from Danni and from life. I could no longer deny that my very survival now depended on me making the change I’d hoped would never be necessary.

I studied Danni’s graceful moonlit silhouette sleeping peacefully next to me; and tears welled up as I realized that the woman I still loved with all my heart had become exactly what I saw—a barely discernible shadow of the woman I had once known.

Finally clear on my only reasonable course, I slipped silently from between the sheets of the bed I knew Danni and I would never again share, gathered a few clothes, packed them in a small suitcase in the next room, took a quick shower, then labored for a few hours over a goodbye letter to her. Knowing I could no longer delay my departure, I slid my packed suitcase into the back seat of our old beater second car and returned to Danni’s bedroom for the last time. Again, I took in her still sleeping form, now clearly visible in the early morning light. Wiping away tears that by now were beyond my control, I leaned over and softly kissed her forehead. It was over; and I was tearing myself away from the woman of my dreams. However, I was also leaving a crumbling life that had inexorably been destroying me.

I’m no angel; and I brought my own issues into Danni’s and my relationship. In fact, I’d become an isolated, brooding and grumpy old guy no one would’ve wanted to be around. It would take me nearly two years to sort through my own garbage enough to finally put most of the puzzle of our relationship’s failure together. Writing this story has been the catalyst that has enabled me to assemble a recognizable picture of our disastrous descent from what started out as an idyllic life together. A lifetime of accumulated baggage for both of us undoubtedly contributed to many difficulties in our relationship. However, it’s crystal clear to me that our involvement in MLM was at the center of everything that tore us apart.

Hard-learned lessons about the MLM business model
Time and distance from my life on MLM’s fringe is lifting the fog of confusion and depression that engulfed me for much of the time I lived in that sinister world. Intensive self-directed study since I left that life has led me to some solid and carefully considered conclusions:

1. The MLM business model is reliant on "business opportunity" prospects being sold on two foundational fictions:

• There is an endless chain of prospective distributors.
• There is a perpetually virgin market for the products offered for sale.

If prospective distributors aren’t at least implicitly convinced these two fictions are actually truths, an MLM cannot even launch, let alone survive.

2. The deceptive behaviors and mind-control practices of MLM are essential for its viability. Distributors who are capable of critical thinking get out when they recognize the logical fallacies on which MLM relies. Therefore, MLM must prevent its distributors from becoming "infected" with critical thought; and cult methodology works efficiently to that end.
3. Most MLM recruits are drawn into MLM’s alternative reality for any of a number of reasons—most having nothing to do with personal character flaws or a lack of native intelligence. The human mind is predisposed to intuitively accept certain logical fallacies. Cults (including MLM) exploit that tendency in order to deceive their victims and induce them to act against their own self-interest. Case in point: Danni was the valedictorian of her high school graduating class, but was still drawn into the false promise of MLM. Another case in point is my own gradual descent into complicity with MLM’s constellation of deceptions; and I hope I’m at least reasonably bright.
4. Only a very few MLM distributors are knowing perpetrators of predatory fraud. Their prey are new recruits, many of whom become unwitting predators as well. Unaware participants lose their money—sometimes all of it, rack up debt—often insurmountable, sully or destroy many of their personal relationships and forfeit their personal credibility. Most of what they sacrifice in pursuit of the MLM dream can never be recovered.
5. They are victims of the most pervasive and costly ongoing business-opportunity fraud in America—15.6 million victims losing in aggregate, $15 billion in 2012, according to one authoritative source.
6. When these unfortunate victims run out of money, credit and other external means of support, they tiptoe out of the industry—isolated, embarrassed and convinced they were the cause of their own failure. They "didn’t work hard enough," they "didn’t follow the system well enough" or they "didn’t believe enough". For those reasons, they seldom complain to regulators. In fact, only 1.4% of consumers who actually realize they’ve been harmed file a complaint with authorities, according to the Federal Trade Commission; and empirical evidence suggests that only a small minority of MLM victims are even aware they’ve been defrauded.
7. At least 990 of every 1,000 MLM recruits lose their investment and more—completely unaware they never really had a chance. Danni is just one of them. They are unaware because no MLM can reveal the truth to prospective or existing distributors and remain viable. Moreover, the public has been snookered into a belief that MLM’s proffered "business opportunities" level the entrepreneurial playing field to the benefit of the little guy.
8. Linear depictions of exponential growth as pyramids are demonstrably inaccurate—optimistic myths. A linear graph of a binary (base 2) exponential growth progression actually looks like a flat line with an imperceptible peak in its middle. In fact, the graph of thirty three levels of binary progression (one recruits two, who each recruit two and so on), in which each level is represented as one inch high and each participant is represented as one inch wide, would be thirty three inches high and more than 67,000 MILES wide. That’s wide enough to wrap around the circumference of the earth nearly three times. It would encompass the entire human population of our planet—including every man, woman and child plus another 1.5 billion.

Here’s a graph of the first 11 levels—the most that can be viewed on a computer screen (click to enlarge):

The larger the base number, the flatter the graph will be. By any objective analysis, especially taking into account the downline overlap that invariably occurs with uncontrolled distributor propagation, this growth pattern is completely unsustainable.

No MLM can survive without being deceptive. For that reason, the industry is incapable of self-regulation. Unfortunately, most state and federal government agencies charged with protecting the public from fraud don’t step into the regulatory void. So MLM scams roll on, crushing their millions of victims with impunity year after year and decade after decade. MLM, with its tin promises and nefarious mind control has damaged Danni immeasurably—defrauding her, her downline and her customers and leading to her divestiture of normative social values.

And me? I’m collateral damage—just one among tens of thousands of others who’ve lost loved ones to MLM’s thickly veiled depravity. I sacrificed my self respect on the altar of expedience—my judgment clouded by my own emotional needs, and my discounting of what seemed at the time to be harmless departures from time-proven social and ethical principles. In the process, I injured unwary distributors and hope-filled disease sufferers by carelessly encouraging them to become victims of MLM’s tangled web of deceit.

I’m out now; and I’m grateful for that. As I sit at my desk, completing yet another revision of my story, I’m struck by how each iteration—each telling—brings new realizations to the surface. Each telling makes the story longer; but each telling also makes the picture for me more complete.

This experience won’t discourage me from trying new things or thinking in new ways. Openness to change has always enriched my life and helped me understand those who live differently from the way I do, who see things differently from the way I do and who look different from me. However, during my life in MLM, a voice from deep within me was always there, telling me to "Be cautious. Something isn’t right. You may be harming others. You may be betraying who you are." Knowing now how painful it is to face the reality of my failures during those years . . . how it haunts me to know I can never make right the damage I’ve done, I’ll never again ignore that cautionary voice.

Finally, I sometimes wonder if I’ll ever fall in love again. When I ask myself that question, sweet memories of the Danni I once knew come flooding back into my mind and my heart; and I realize I really haven’t fallen out of love . . . but that’s OK. The current Danni and I are moving in very different directions with our lives. I’m more than content and fulfilled answering my calling to help people stay out of the MLM trap and to provide relief and resolution to those who are caught in it but want to get out. My calling has become my passion and with that, I can live well.

"Oh, what a tangled web we weave when first we practice to deceive." — Sir Walter Scott . . . and Mom

This narrative has a tragic epilogue, which I mentioned in my previous post on this matter. That is coming up in Part 2.
~CC

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MLM: Kevin Trudeau's GIN is just one toxic drop in a huge ocean of fraud

Inspired by Barbara, a regular commenter on the Salty Droid blog

All you have to do to succeed :: is succeed at convincing others that they can succeed at succeeding … just by convincing others to succeed.
It’s that simple {of a mindf--k}.
Why aren’t you doing it?
Oh and also :: it will most likely tear your life apart … and ruin everything.
~ Salty Droid, on the MLM monster, 4 October 2013

Statistically, 997 of every 1,000 MLM recruits will sustain a net loss over the course of their involvement.
~ "Roger Willco," anti-MLM activist, in a comment on a July 2013 Salty Droid blog post

For the past few months I've been focusing a lot -- perhaps even a bit too much -- on the courtroom dramas of serial scammer Kevin Trudeau. I know some of you are probably getting a little bored with that, and perhaps you wish I would either get back to my old-Whirled roots of just writing about the silly and wackadoodle aspects of New-Wage/selfish-help/McSpirituality culture (I know you're still out there, HHH!). Others of you probably think I should turn my attention again to some of the larger and more serious problems, of which Kevin Trudeau and his scammy, Ponzi-like Global Information Network (GIN) are but one smallish part.

Well, I agree with all of you. Everyday I see silly wackadoodle things that are seriously blogworthy, so don't give up on me, HHH. But today, I fear, we are going to have to be a little more seriously serious, because I was reminded again of the larger and more serious problems when reading Salty Droid's blog post today, which features a "confesstimonial" from one Roger Willco (not his real name). Roger in recent years has become an activist against multi-level marketing, or MLM, for several very good reasons. Some of those reasons will become painfully obvious when you read Roger's story on the above-linked Salty post.

Now, before I go any further, understand that I have no intention of abandoning my courtroom vigil (or PACER.gov vigil, as the case may be) where True-dough is concerned. (I updated my most recent Katie blog post just now, with a link to more court documents filed today. Here's the link to the post; scroll to the bottom.)

And in fact, today's blog post about multilevel marketing and the damage it does is related to Trudeau and GIN as well, because Trudeau has been involved in MLMs for decades himself -- starting with Amway, and then, after his prison stint, going on to Nutrition for Life, as well as grooming Barb and Dave Pitcock, who made their fortunes with an MLM they call Livinity, which last year merged with another MLM called Youngevity, which is run by veterinarian and naturopath Joel Wallach... and oh, the bigness and the sickness of the big sick machine -- even just True-dough's part of it -- boggles the mind, but this sentence is already far too long, so I'd better cut it off now.

As most of you are well aware, one of Trudeau's biggest schemes to date, GIN, has a significant MLM arm, in which thousands of people over the few years GIN has been in operation have placed their hard-earned money, as well as their hopes and dreams of achieving the lavish lifestyle and pure happiness that Trudeau always bragged about. The "product" being sold via that MLM is a Level One GIN membership, which costs $1,000 for the "initiation" and $150 per month thereafter. Members are strongly and unceasingly encouraged -- pressured, actually -- to upgrade to ever more expensive levels of membership. That all seemed to be working out fine for a while; well, at least it worked to put money in Trudeau's pockets and those of a few of his cronies and KT's lawyers. It appears that almost everyone else lost money, though many are still unwilling to admit it.

These days, due to Trudeau's own long-standing legal troubles, GIN too is clearly in all sorts of trouble, with even the court-appointed receiver, Robb Evans and Associates, raising questions about the legitimacy of GIN as an MLM. The receiver says there is no real "product" -- fancy that. Of course this story isn't over yet. I'm watching it.

But today's post on the Salty Droid blog focuses on MLMs in general, with a story told by someone who was once very close to a serial MLM junkie, and saw firsthand how MLM devotion can wreck bank accounts and lives. And I think you need to read it. Roger Willco actually lays out dollar figures of how much his ex spent on MLM products and recruiting "tools," versus how little she made, as she worked her way through one MLM after another after another after another. Her story is far from atypical. It's much more the rule than the exception.

Following his narrative, Roger very concisely reiterates what is fundamentally wrong with MLMs:

The MLM business model is reliant on convincing prospects of two foundational fictions:

• There is an endless chain of prospective distributors.
• There is a perpetually virgin market for the products being sold.

If prospective distributors aren’t at least implicitly convinced these two fictions are actually truths, an MLM cannot even launch, let alone survive.

Other pertinent points from Roger:

Only a very few MLM distributors eventually become knowing perpetrators of predatory fraud.  Their prey are new recruits, many of whom become unwitting predators as well.  Unaware participants lose their money—sometimes all of it, rack up debt—often insurmountable, sully or destroy some or all of their personal relationships and give up their personal credibility.  Most of what they sacrifice can never be recovered.

They are the victims of the most pervasive and costly ongoing business opportunity fraud in America—15.6 million victims losing in aggregate, $15 billion in 2012, according to forensic accountant and certified fraud investigator, Tracy Coenen.

When these unfortunate victims run out of money, credit and other external means of support, they tiptoe out of the industry—embarrassed and convinced they were the cause of their own failure.  They “didn’t work hard enough”, they “didn’t follow the system well enough” or they “didn’t believe enough”.  And because of their embarrassment, they seldom complain to regulators.

That latter point explains why more ex-GIN MLM-ers haven't publicly spoken out about their money and just how much they lost. And even with all of the media publicity about GIN, many may never speak out. Many would rather just forget it, including, apparently, one former "Inner Circle" GIN member who spent more than $130,000 in GIN. That person was a member of a private Facebook forum in which I also participated, but the person now seems to be M.I.A.

Roger has contributed previously to Salty's blog (and on mine too). On a July 30, 2013 blog post about Herbalife on Salty's blog, Roger wrote:

Pyramid standards are the biggest among many problems inhibiting FTCs enforcement of consumer protections against MLM abuses. Whether or not any company can classify the requisite percentage of sales as “retail” is nothing more than a red herring to which the commission has been susceptible since the 1979 Amway case. It’s unclear if Amway purposely concocted “pyramid standards” to suit their purpose. However it’s served the MLM industry well in keeping the the FTC at bay. Any MLM relying on the promise of exponential growth to recruit distributors (are there any that don’t?) is running a pyramid scheme.

In fact, conceptualization of exponential growth progressions as anything remotely resembling a pyramid is simply fallacious. A binary growth model (one recruits two who each recruit two who each in turn recruit two and so on), can only reach 32 levels before the entire population of the planet–every man, woman and child–is exceeded…not really new information. But if one graphs the same model such that each level is represented as one inch high and each recruit is represented as one inch wide the resulting figure is 32 inches tall and 67,786 MILES wide–essentially an extremely long flat line with an imperceptible peak in the middle. By any reasonable analysis, such a growth pattern is completely unsustainable. MLM proponents will try to throw wrinkles into this mathematical reality; but the core principle remains unchanged. If a trinary or greater model is used, as is the case with most MLMs, the line is even flatter.

Statistically, 997 of every 1,000 MLM recruits will sustain a net loss over the course of their involvement.

Until the Commission recognizes they’ve been sidetracked by a red herring and understands that the MLM model is, in all cases, flawed, they’ll remain paralyzed in their enforcement of consumer protections against MLM abuses.

I’ll concur with whatever profanity Salty Droid applies to this unfortunate circumstance.

In my opinion, the least costly way to curb MLM fraud is for the FTC to mandate and monitor accurate disclosure of historical income data to prospects by those seeking to recruit them into any MLM “business (bankruptcy) opportunity. The industry contends that such disclosures would severely impede their ability to recruit distributors…No shit! And they’ve successfully lobbied MLM’s exemption from the disclosure requirements of the Commission’s recently promulgated Business Opportunity Rule. Interesting posture for an industry that promises incredible wealth to its prospective distributors. If their promises were well founded, it sorta seems like they’d jump at every opportunity to trumpet them.

The day after Roger made that comment, another frequent and spot-on Salty Droid participant, Barbara, wrote on another Salty post:

@ Roger Willco,
Yesterday you wrote:
“Statistically, 997 of every 1,000 MLM recruits will sustain a net loss over the course of their involvement.”
I’m embroidering that on a sampler right now. It seems more important than Home Is Where The Heart Is.

I cannot embroider worth a crap, but I have become quite proficient at crude Photoshopping.


Some damage can never be undone
Sometimes MLMs -- and the self-improvement culture that supports and enables them -- can cause (or contribute to) much more than financial, psychological, emotional, and spiritual damage to the participants and/or those who love them. Sometimes, lives are lost. There is a tragic epilogue to the narrative above, but it has to be told right, and we're still working out those details. Suffice to say for now that there is an MLM as well as a self-improvement LGAT (Large Group Awareness Training) connection to the tragedy.

One thing I've noticed from my own firsthand observations is that MLM people just love them that "self- improvement" stuff. They are drawn to it like hipsters to upscale food trucks. (I think I've used that simile before but what the heck, here it is again.) MLM-ers are often enthusiastic consumers and promoters not only of their MLM but also of various self-improvement groups and LGATs. The tragic story in question seems to be an an undeniable example of how MLM involvement leads to suspended critical thinking, rendering followers susceptible to the many prosperity and self-improvement cults that orbit around MLM and rely on their victims' diminished analytical ability to get into their wallets.

This case is particularly sad because it involves someone who, thanks to strong MLM influences, began involvement with a self-improvement LGAT as a youth. As you may know, most of these LGAT orgs have youth and kid versions, because they like to start 'em young. (Access Consciousness is one particularly disturbing example.)

I'll tell more as soon as I can. The story is too important not to be told right. I've written before about the darker side of LGATs, and how they can sometimes contribute to psychotic episodes that result in suicide or other violent acts. Here's one example. And the terrible tale of James Arthur Ray follower Colleen Conaway, told in such poignant detail on Salty Droid's blog, appears to be another example of what can happen when disastrously unqualified "leaders" recklessly mess with the psyches of vulnerable people.

We don't just have to sit idly by and take it.
Roger Willco tells me he is currently directing many of his efforts, both individually and as part of an anti-MLM consortium/coalition, to persuading the Federal Trade Commission (FTC) to open an investigation of the entire MLM industry. One point of contention is the FTC's explicit exclusion of MLMs (presumably including GIN’s MLM program) from the disclosure provisions of its revised Business Opportunity Rule (16 CFR Part 437 -- here is a direct link). Activists want the FTC to rescind that exclusion. As Roger noted in another comment to Salty's "Falsifyingly Herbalife" blog post, the documents linked to in the previous sentence...

...make repeated references to the cooperation, goodwill and good rapport that exists between the [MLM] industry and the FTC. While this commentary doesn't constitute a slam-dunk admission of agency capture, it's perilously close; and it indicates the sort of relationship I'd hope wouldn't exist between an industry and the government agency charged with regulating it.

(I've long said that if Katie had just stuck to MLM-ing his GINfolk -- using some of the proceeds to pay on that big FTC fine, instead of doing everything he could to dodge the fine and hide his assets overseas -- the FTC would have been cool with it, since they seem to have a cozy relationship with MLMs in general. Trudeau could have avoided several if not all of the contempt charges that now threaten to land him in prison. And he could have avoided most of the Ponzi accusations (accurate or not) if he'd avoided some of those dodgy bonus schemes and Lazyman promos and incentive deals that initially got some of the troops complaining in early 2012.)

"There are some 20-30 other consumer advocates currently active in the anti-MLM cause," Roger tells me, "addressing the issues in several different ways; and among them, they’ve made a tremendous amount of good information available to the public."

But Roger thinks that ongoing education efforts, including informative blogs such as Salty Droid's, and hey, even snarky blogs like this one, are an important part of the equation as well.

As for the ex? Roger tells me that his ex has informed him she has "given up recruiting" for MLM. But, he says, "She's now an ardent GIN member and buys Trudeau's BS about his messianic qualities." 

And so it goes, with the big sick machine sucking 'em in and spitting 'em out, and then lathering, rinsing, and repeating (I apologize for the mixed metaphors). One big problem is that so many people, either because of desperate circumstances or chronic deep denial, are willing to crawl right back in and start over, again and again and again and again. And the scammers will scam on, as long as there are people who are willing, against all rational evidence and horrid reality, to believe in them.

But make no mistake: this isn't a blame-the-victim screed. The onus is still on the scammers not to scam, and on the regulatory agencies to regulate, and enforce those regulations, responsibly.

As Salty says, "It’s not that we can’t do something about it … it’s just that we haven’t."

But we can.

This may be a good beginning. I expect more links to be coming to this page soon.

A little related history: Back in Time with the big sick machine 

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