‘If something sounds too good to be true, it probably is’
Recently, I have had the annoying (but nonetheless encouraging) experience of hearing government regulators employ my term: 'closed-market swindle,' even though they hadn't the slightest idea who coined it.
To my great surprise, one UK regulator, a certain Mr. O'Callaghan, was prepared to go on the record as stating that he accepts that (after 'Amway's' $155 millions capitulation in the Pokorny RICO lawsuit in California), his Dept. had made a 'mistake' in only filing a public interest bankruptcy petition against one 'Amway' company in the UK. His only defense of this costly, tactical error was that 'racketeering does not exist in Britain.' (Although, I think what the fellow actually meant to say was: racketeering is not yet recognised as an offence under British laws)
Meanwhile, other regulators have assured me that they are now fully-aware that a lack of real external profits is the tell-tale signature of all Ponzi schemes and pyramid scams, even if these frauds are camouflaged by multi-billion dollar sales-figures (which are, in reality, financially-incestuous internal transactions). For obvious reasons, the latest generation of all-knowing UK regulators prefer to ignore the embarrassing fact that the deconstructed explanation of this type of fraud has actually been available for decades. Ironically, I was the person who, 15 years ago, coined the term 'premeditated closed-market swindle' as part of my attempt to get UK government regulators to take action against the billionaire bosses of the 'Amway' mob, and their many 'MLM' copy-cats, who (since the 1970s) have operated behind the shield of rigorous 'self-regulation' and the so-called 'UK Direct Selling Association' (itself a privately-controlled, limited-liability, commercial company, financed by foreign-based racketeers). In truth, complacent (and possibly corrupt) government regulators have been part of this ongoing criminogenic problem: not the solution to it.
How (in the cold light of day) can complacent (and possibly corrupt) UK trade officials still refuse to challenge publicly the malignant fairy-tale that: Richard DeVos and Jay VanAndel (a couple of ambitious, but penniless, WWII veterans), became billionaires by inventing a new form of infallible, philanthropic capitalism, 'MLM,' based on the ‘Christian-inspired principle of helping others to succeed?’ But then,how (in the cold light of day) could the complacent (and possibly corrupt) officials at the US SEC have refused to challenge publicly the malignant fairy-tale that: Bernie Madoff (an ambitious, but penniless, lifeguard),became a billionaire by inventing a new form of infallible, philanthropic capitalism, 'Split-Strike Strategy,' which enabled him to invest on the stock market and always show a profit, no matter what the overall trading conditions were? or that: Bernie Madoff was prepared (because of his Jewish-inspired Principles) to share the secret of his success with others?
At the risk of stating the obvious, if ten individuals each give you ten coins, then, no matter how you divide the resulting one hundred coins, it is impossible for you to give all your contributors a greater number of coins than they started with. In technical terms, this is the most elementary example of an incestuous, and therefore unviable, system of economic exchange; in that, since it has no source of external revenue, it can have no possibility of generating a profit for the bulk of its contributing participants. However, the same incontrovertible logic applies if your contributors number one hundred, one thousand, one hundred thousands, one million or even one hundred millions. Unless the person(s) receiving the coins possesses the superhuman power to suspend the laws of physics and miraculously create more coins from nothing, then their number remains finite. Any claim to the contrary is a lie, and lying to people to get their money is fraud which is a form of theft.
A pyramid scam can be more accurately described as a ‘premeditated closed-market swindle.’ In everyday terms, it is the peddling of the finite as infinite, or ‘Alchemy’ applied to economics.
Bernie Madoff ran the most-widely understood form of ‘closed-market swindle,’ technically defined as: those without tangible specificity (popularly known as: ‘snowball', ‘Ponzi' or ‘money circulation’ schemes); wherein the instigators style themselves as ‘Commercial Sponsors’, ‘Fund Managers’, etc. Then, by maintaining an absolute monopoly of information presented using a constant repetition of further, reality-inverting ‘commercial’ key words and images combined with pseudo-economic and structural mystification, deceive members of the public into becoming, and to deceive others into becoming, the unconscious victims of, and contributing participants in, a counterfeit‘Investment Scheme’ without a consistent source of external revenue (due to the fact that the instigators’ hidden motive is merely the acquisition of victims’ money) in which victims are arbitrarily, and falsely, defined by the instigators as ‘Investors,’but over which the instigators retain absolute control of its means of exchange.
Behind their sanctimonious act, what the ‘Amway’ mob released on a vulnerable 1950s America was a virulent new strain of premeditated closed-market swindle, which can be defined as: those with tangible specificity (popularly known as ‘Multilevel Marketing' , ‘MLM’ , or ‘Network Marketing’, or ‘Networking’, or‘Direct Selling’, or ‘Self-Directed Income' , ‘SDI', or 'Business Opportunity', scams); wherein the instigators style themselves as‘Manufacturers’, and/or ‘Suppliers’, of ‘Exclusive Products’, and/or‘Services’, and as ‘Commercial Sponsors’ then, by maintaining an absolute monopoly of information presented using a constant repetition of further reality-inverting ‘commercial’ key words and images combined with pseudo-scientific/economic and structural mystification, deceive members of the public into becoming, and to deceive others into becoming, the unconscious victims of, and contributing participants in, a counterfeit ‘Direct Sales Scheme’ (without a consistent source of external revenue due to the fact that the products, and/or services, are kept at such a banal quality, and/or high price, as to render them effectively-unsaleable on the open market) in which victims are arbitrarily and falsely defined by the instigators as: ‘Independent Business Owners, Self-Employed Distributors,’ etc., but over which the instigators retain absolute control of not only its means of exchange, but also over its means of production and distribution and over its system of dispute-resolution.
In effect, the ‘Amway’ mob originally instigated a more complicated (and, therefore, more sustainable) version of a Ponzi scheme where illegal internal payments were camouflaged as ‘sales.’ Victims were generally honest, law-abiding Christian folk manipulated by their existing beliefs and instinctual desires. When, inevitably, they lost money, on paper (because they were styled as ‘Independent Business Owners’) it appeared to be the participants own fault. Many were too financially weakened, and/or embarrassed, and/or guilt-ridden, to confront external reality and complain. They’d often been recruited by a friend or relative, and, in turn, they’d tried to recruit their own friends and relatives (making the truth even more unthinkable).