Wednesday, 17 February 2010

Amway remains the biggest scandal in American history

We should perhaps thank Mr. Scott 'Tex' Johnson (your Blog's resident deluded, unqualified and insolvent, psychological, and financial, expert) for kindly giving us the benefit of his (imagined) great wisdom on all matters moral, legal and intellectual. However, apart from his puerile and abusive (online) temper tantrums, Mr. Johnson's 17+ years of ongoing failure to confront external reality, amply disqualifies him as a truly-objective observer of closed-market pyramid sales swindles dressed up as 'Direct Selling.'
Mr. Johnson steadfastly pretends to know all about something which he calls the '70% Rule,' and, typically of the arrogant fellow (without the slightest attempt to qualify his simplistic opinions), he keeps stamping his little foot and screaming that I 'don't understand'.
In the adult world of quantifiable reality, the 70% test which I have recently referred to, comes from Dr. Peter Vandernat - the US Federal Trade Commission's senior economist during the 1990s. Dr. Vandernat (who is an internationally-recognized expert on pyramid fraud) came up with a blindingly simple method to evaluate, and identify, closed-market pyramid sales swindles.
In general, unless at least 70% of all the purchases of participants in any pyramid sales scheme are being resold to non-participants at a full retail price, then that scheme has insufficient external revenue to pay its participants legitimate commissions, and that scheme is, therefore, inherently a deception.
For it is a self-evident truth to state that all forms of counterfeit commercial schemes based on the mathematically-impossible proposition of easy income from endless chain recruiting are fundamentally, and universally, unlawful. In a closed-market pyramid sales swindle (without sufficient profitable retail sales to non-participants), the money to reward its participants can only come from one source: fresh recruits. Insufficient authentic and profitable retail selling is, therefore, the essential indentifying characteristic of any closed-market pyramid sales swindle dressed up as 'Direct Selling.'
Before 1980, pyramid sales swindles were not that widespread in the USA. During the 1960s, this updated version of an age-old of crime was controlled by various successful prosecutions brought by individual States (particularly, California). In 1975, the US Federal Trade Commission moved-in to kill-off the first really pernicious pyramid sales swindle, Amway', which (although once only virulent in the 'Bible Belt') was beginning to infect the nation. FTC attorney's had discovered that 'Amway's' banal, but outrageously over-priced, products were (effectively) unsaleable on the open market. From this evidence, they had then worked out that 'Amway' offerred a classic, mathematically-impossible, endless chain pay plan, and that the attractive income claims offered by 'Amway' were a fairy-tale, because the overwhelming majority of 'Amway' participants could never hope to make a profit. Therefore, the FTC decided that the time had come to charge 'Amway' with being inherently deceptive and a menace to the American public.
Considering what was at stake, why a rigorous criminal investigation was not launched under the Racketeer Influenced Corrupt Organizations Act 1970, remains a mystery. Indeed, since the bosses of the 'Amway' mob were employing known economic, and psychological, warfare tactics on millions of their fellow Americans, why they weren't charged with treason (as defined by the US Constitution) also remains a mystery.
Almost thirty five years ago, the FTC quickly proved its case that 'Amway' fixed prices and offered false income claims. However, in 1979, after 4 years of sophistic legal arguments (many of which are still being employed to obstruct justice by the 'Amway' Ministry of Truth), an FTC Administrative Judge decided to bring a halt to these costly and exhausting proceedings. He handed out a derisory fine and ruled that if, henceforth, 'Amway' agreed to respect new tougher federal regulations requiring that commissions would be paid primarily on retail sales to non-participants, rather than from sales to new participants, then the company could remain in business. Since that time, due to the Reagan administration's policy of de-regulation and the corrupting of senior Republican politicians (who later installed 'Amway's' de facto agent, Timothy Muris, to head the FTC), the 'Amway' mob has been allowed to ignore the FTC's requirement, and (in the face of domestic media exposure) has also been allowed move their organization's main racketeering activities outside of the USA. Under the Bush administration, Dr. Vandernat was actually moved from his FTC post.
The whole 'Amway' affair remains potentially one of the biggest scandals in American history. Not surprisingly, very few people in the American establishment want to open this particularly repulsive can of worms.
David Brear


Tex said...


So many words, so little to say.

Do you have a link for your claim what Vandernat said about the 70% rule?

How does what you claim compare to this, which is probably more recent than your information:

I won't address the remainder of your errors, I'm laughing too hard! LOL

Joecool said...

Never mind the 70% rule. How many IBOs sell a single item to people who are not IBOs?

Tex said...

12. LOL