'Amway' and 'Scientology' have been run by reality-inverting narcissists like Gaddafi

Shyam

As ever, one doesn't know whether to laugh or cry. With almost all of N. Africa currently in a state of revolution against various reality-inverting tyrants, an unidentified (presumably Indian) 'MLM' adherent has suddenly appeared on your blog from the so-called 'Networkers Welfare Association,'  bleating all the usual reality-inverting,  'MLM,' closed-logic propaganda which has been fed to him/her by his/her own self-appointed leaders. Classically, this poor little 'MLM' lacky still inhabits a puerile world, in which he/she has been peddled the myth of future, economic redemption, but only if he/she believes totally in its existence and excludes the adult world of quantifiable reality. Thus, all free-thinking individuals (like you and me), and any quantifiable evidence (like Indian Supreme Court judgments), challenging  the authenticity of the imaginary '100% positive MLM business opportunity' scenario, is being systematically categorized and condemned as 'unenlightened', 'negative', etc. by this poor little lacky's castrated mind. 

For 15 years, my qualified-position (in respect of groups like'Amway' and 'Scientology') has been essentially the same as that of any free-thinking observer of any reality-inverting tyranny from any historical period. During this period, I have consistantly, and clearly, stated that common sense, as well as growing mountains of  evidence, proves beyond all reasonable doubt that organizations like 'Amway' and 'Scientology' were maliciously instigated as exploitative, totalitarian regimes in microcosm. For decades, these cultic gangs have been run by psychologically-dominant individuals (with made-up ranks and titles), who have held themselves accountable to no one. These dangerous charlatans have had severe and inflexible narcissistic personalities (i.e. they suffered from a chronic psychological disorder, especially when resulting in a grandiose sense of self-importance / righteousness and the compulsion to take advantage of others and to control others' views of, and behaviour towards, them). For more than half a century, successive, billionaire bosses of the 'Amway' and 'Scientology'  mobs have steadfastly pretended moral and intellectual authority whilst pursuing various hidden criminal objectives. The admiration of their adherents has only served to confirm and magnify, these deranged criminals' strong sense of self-entitlement and fantasies of unlimited power and wealth. 

In other words, there has been very little essential difference between the paranoid, but infinitely wealthy, clowns who have ruled 'Amway' and 'Scientology,' and the likes of Colonel Gaddafi. 

The intellectually-castrated individual who has recently appeared on your Blog, Shyam, seems to be claiming that groups like 'Amway' have been rife with fraud in the past, but now they have all been completely reformed.  Unfortunately, since 'MLM business opportunity' fraud first appeared in the USA in the 1940s, the number of ill-informed individuals around the globe who have been churned through the'Nutrilite' a.k.a.  'Amway' a.k.a. 'Quixtar' swindle alone, has been estimated at more than 40 millions. The rolling failure-rate of the mother of all so-called 'MLM business opportunities' has actually been effectively 100%. The grinning persons constantly portrayed in 'Amway's' reality-inverting propaganda as unquestioning examples of 'MLM success' to be copied, have either been insolvent dupes or wealthy decoys whose wealth had secretly derived from a secondary advance fee fraud (a.k.a. 'Tool Scam'). 

After losing their monopoly of information, it looks as though Colonel Gaddafi and his deranged offspring, aren't going to survive for much longer. Only a core-group of fanatical followers remain loyal. The Internet has played a leading role in the overthrow of the Gaddafi tyranny. 

By destroying their monopolies of information, the Internet is now also playing a major role in the fall of various 'MLM' tyrannies. 

David Brear (Copyright 2011)

Faceless, nameless networkers argue in favour of MLM

Networkers Welfare Association writes,

Dear Shyam Sir,

To practice as doctor we must have qualification of a doctor, to work as engineer we must have qualification of engineering, to make comment on MLM what is your qualifaction in this field, may I know. Most people working in this field have practical experience of 5 yrs and 10 yrs. What you are talking about past companies that vanished in air, for that, I have seen doctors who have killed people with wrong treatment and qualified engineers made big mistake in their field while working. Such things happen with some companies of MLM. Due to mistakes of some people don't blame this field and companies like NMart and Amway.

Dear faceless nameless members of Networkers Welfare Association,

It is glad you have responded to my blog and wanted some clarification. First let me clarify that I am a qualified advocate and a seasoned journalist. I have studied enough case laws about various MLM companies in India. Having said that, I think I am qualified to write about MLM cheating. Now do you know the criminal cases against several MLM companies like Apple FMCG, VCan Network, Amway India and the judgements of Madras High Court and Andhra Pradesh High Court against these companies.

Madras High Court has even commented that multilevel marketing is nothing but the illegal money circulation scheme.

In Kuriachan Chacko case, the Supreme Court in 2008, stated that network marketing is nothing but mathematical impossibility and they should be booked under Section 420 and Section 34 of IPC along with Section 2, 3, 4, 5 and 6 of Prize Chits and Money Circulation Schemes (Banning) Act, 1978. 

Now you know that I am more than qualified to write about the crooks like NMart and Amway India.

If NMart has guts let them file a defamation case against me for maligning their company. 

'MLM business opportunity' fraud makes a mockery of development aid to India

Shyam

According to a recent British government report, India has half a billion people living in 'desperate poverty.' India currently receives the largest share of British, direct, overseas development aid (US$ 1.25 billion, 2009-2011). Six months ago, the Indian government was debating whether it should still be accepting this handout from the UK, when the Indian economy is growing at 10% and the British economy is in recession  http://www.bbc.co.uk/news/world-south-asia-11318342 . The British Government has just decided to stop direct development aid to 16 countries and to freeze payments to India at existing levels. Indignant voices in the British media continue to demand that direct aid to India should be halted http://www.bbc.co.uk/news/uk-12589626 . 

These serious matters can be seen in an entirely light when you know that senior UK government trade regulators and law enforcement agents have effectively authorized 'MLM business opportunity fraud' to spread to India, by refusing to challenge its authenticity in Britain in the criminal courts. However, exactly the same accusation can be levelled at senior US government trade regulators and law enforcement agents. Currently, a plague of known, organized crime groups like 'Amway' are being allowed to steal billions of dollars from millions of poor Indians. 

In other words, just a bit of thought, and a relatively small financial investment, in the USA and UK, could have dramatically reduced an ongoing, titanic fraud in India. 

David Brear (copyright 2011)  

NMart is promising heaven and it would never be reality

Our reader Ms Sharan writes:

Sir,

There is no guarantee of government in India. Ex:  2G scam of A Raja, and Common Wealth Games. So do you expect guarantee for Rs. 5,500 and that too not giving respect to bond paper of our court. Sir, just wait and watch, India is renovating with NMart. Sir company is investing in  their own malls. So do you expect they rnove overnight??? 

Dear Sharan,

In the past several companies like NMart had vanished into thin air after they could not find new recruits. Every time out of greed for easy and quick people trust them again and never realise the pitfalls. They hope against hope that this is not going to shut down like others. 

We never learn from history. So many Bernie Madoffs have gone down the history and people again convince themselves that it is not going to happen and the latest one is a genuine company. Realise the fact, young woman, there is nothing like infinite chain.This NMart guy is promising heaven on your palm and he would never give anything whatever he is promising.

There is nothing like easy and quick money.

It is really funny that you are giving so much importance to the bond paper. And it is equally funny that you are believing that the judiciary court is actually giving those bonds. They are not worth its value. Go to an advocate you would learn the bitter truth. 

Hiding key-information about 'MLM business opportunity' fraud, is itself a crime

Shyam 

The Andhra Pradesh police are to be congratulated for filing a criminal case against 'KMJ Land Developers India Ltd.' 

It is universally accepted that lying to people in order to take their money, is fraud - which is a form of theft. However, the withholding of key-information from people in order to take their money, is also fraud.

So why have the thieves, and their de facto criminal associates, perpetrating, and hiding key-information about the catastrophic results of, so-called 'MLM business opportunities,' generally not been charged with fraud? 

Even the briefest examination of the available evidence reveals 'KMJ Land Developers India Ltd.' to be a classic example of an illegal, money circulation scheme disguised as a so-called 'MLM business opportunity'. Exactly like the 'Amway' original, 'KMJ'  is a malicious lie designed to appeal to the instinctual desires of its victims in order to shut down their critical faculties and lure them into a cruel trap. For more than 50 years, 'MLM' victims have been systematically blamed for wasting their time and money. Predictably, the instigators of the closed-logic 'KMJ' lie have constantly repeated 'Amway'-style reality-inverting key words and images ('income', 'freedom', 'security', 'dreams', etc). In this way, these racketeers have sought to control the thinking of not only their victims, but also casual observers. One thing is certain, in the adult world of quantifiable reality, prolonged unquestioning belief in the 'KMJ' version of the divisive 'MLM' fairytale, will have resulted in depression, destitution, dissociation, debt, divorce and possibly even death. 

It used to astonish me that there is an almost total absence of politicians discussing the ongoing problem of 'MLM business opportunity' fraud. However, I quickly came to the conclusion that politicians are as likely as anyone else to be fooled by the reality-inverting 'commercial' camouflage of 'MLM' racketeers and their de facto criminal associates. In my experience, most democratically-elected representatives just don't have the time to study major problems in depth, because they are too busy dealing with the day to day problems of their constituents. Consequently, even Ministers tend to rely on civil servants to supply them with information upon which they make policy decisions. Unfortunately, there is no guarantee that civil servants in key-posts cannot be fooled, and/or corrupted, by the de facto agents of racketeers, who are experts at pretending affinity with regulators. 

In Britain, there are around 600 members of Parliament at Westminster, as well as parliamentary assemblies in Scotland and Wales. The only occasion in the recent past that 'MLM' was officially touched on by politicians in the UK was when technical legislation concerning trading schemes was updated at Westminster in the 1990s. At that time, various de facto agents of 'MLM' racketeers, including the Director of the so-called 'UK Direct Selling Association,' were consulted by idle-minded officials in the Competition and Policy Directorate at the UK Dept. of Trade and industry. As a result, a misleading consultation document was published which included plenty of unqualified, reality-inverting 'MLM' terminology. One of the key-officials responsible was Mrs. Dyllis Gane. As far as I am aware, not one independent expert with a clear understanding of 'MLM business opportunity' fraud was consulted by civil servants (on behalf of UK legislators) about the modifications to trading schemes law enacted during the 1990s. Furthermore, when the proposed legislation was first announced, hundreds of members of the UK Parliament (including all Trade and Industry Ministers) were lobbied by deluded 'Amway' adherents who outwardly appeared to be happy and successful 'Independent Business Owners.' All these people had obviously been centrally-directed (at their own expense) to contact their political representives. Various misleading contributions were made to debates by a few Conservative members of the UK Parliament.  One such useful idiot was Andrew Rowe. He had been fooled into becoming a temporary de facto agent of the 'Amway' racketeers. Sadly, Mr. Rowe is now dead, but for at least three years, he apparently truly-believed (after being approached by 'Amway's' company officers and deluded adherents) that 'Amway' is an 'ethical direct sales company' whose officers had purely honest motives for wanting to give him £10 000 per year to act as a 'parliamentary consultant .' 

In the wake of the 1990s modifications to UK trading schemes legislation (which obviously made absolutely no reference to'MLM business opportunity' fraud), the same idle-minded officials the UK Dept of Trade and Industry, including Mrs Dyllis Gane, produced a misleading pamphlet which was supposed to explain to the UK public how to spot pyramid fraud and how to complain about it. It might have been helpful if the authors of this document had known how to spot pyramid fraud themselves; for it didn't even begin to address the important issue of how pyramid fraud has escaped prosecution by persuading people that they can become rich by giving their money in exchange for effectively-valueless wampum (at inflated prices) and recruiting their friends and relatives to duplicate the same endless chain system. Unbelievably, the UK government's trading schemes pamphlet included the contact details of the so-called 'UK Direct Selling Association' in reference to making complaint about pyramid fraud. The UK officials might as well have been directing lambs to a pack of wolves. Interestingly, when 'Amway' was finally investigated in the UK by more-rigorous officials in the same Trade and Industry Dept., this misleading document was quietly withdrawn. Obviously, it would have been deeply-embarrassing for officials like Mrs. Dyllis Gane, if a criminal investigation had been pursued into the subversive activities of the long-time Director of the so-called 'UK DSA,' Richard Berry. 

In 2004, another UK government regulatory Dept., the Office of Fair Trading, gave its approval to a 'code of conduct' proposed by Richard Berry and his de facto bosses in the USA  http://www.oft.gov.uk/news-and-updates/press/2004/209-04 . This time, the idle-minded official responsible was Mr. Colin Brown, who led the OFT 'Code Administration' team which made this dangerous decision. Mr. Brown, conveniently ignored 5 decades of quantifiable evidence proving that precious few agents of so-called 'direct-selling companies' have ever lawfully sold anything to the public for a profit anywhere in the world. The same team of idle-minded OFT officials created no independent mechanism to verify that such a pointless self-regulatory instrument (for a 'business' which hasn't really existed) would even be enforced. Indeed, the investigation of 'Amway UK Ltd.' pursued by other UK government agents proved quite conclusively that this so-called 'DSA code of conduct' was most-certainly not enforced between 2004 and 2007, and that that the document's real funtion was, therefore, to deceive the UK public and regulators alike. Mysteriously, even now, the OFT officials have never withdrawn their approval of this absurd fake. Yet, one would have assumed that an organization like the UK Office of Fair Trading would be staffed by well-informed individuals who would endeavour to warn the British public about all forms of fraud. Unfortunately, deaf, dumb, blind and possibly corrupt OFT officials continue to assist foreign-based racketeers to hide the real results of 'MLM business opportunity' fraud in the UK. 

For more than 10 years, it has been my stated opinion that the grinning Directors of so-called 'Direct Selling Associations' have been hiding key information about various 'MLM business opportunity' frauds around the world, and that the salaries of these dangerous dummies have been paid with the proceeds of ongoing, major organized crime. 

One would have thought that if my analysis is incorrect, all these self-proclaimed honest people would have sued me, but their silence has been deafening. 

David Brear (copyright 2011)

Fraudulent companies induce people with high returns on their deposits

Hi, Mr. Shyam,

This is Anurag from Bhopal (Madhya Pradesh). At present I am franchisee of TV99 news channel for Madhya Pradesh, Chhattisgarh, Bihar, Jharkhand and Vidarbh state.

There are a lot of chit fund companies working in the rural areas of Madhya Pradesh. Some days ago (Economic Offences Wing) EOW of Madhya Pradesh had taken strong action against local branches of chit fund companies.

One of them is Saiprasad Foods, just like KMJ. The website address of Saiprasad Foods is www.saiprasadgroup.com. In their group Saiprasad Developer is chit fund company and it is collecting deposits from public without the permission of the RBI.

Anurag Mahalwala

Anurag,

There are a number of companies which have been cheating the gullible all over country. People are induced with high rate of interest in a short span of time. That is why they part with their hard-earned money easily. We have to bring awareness among public that there is nothing like easy and quick money and their money is safe in the scheduled commercial banks only. The Reserve Bank of India guarantees for their deposits with the commercial banks.

All non-banking finance companies collect deposits without any permission from the RBI. The police who are supposed to safeguard the interest of people turn a blind eye stating that they are busy with the routine work.

In fact, the RBI way back in 1986 has given instructions to all the State Governments through out the country to appoint circle inspector level police officers to check the illegal collection of deposits.Sadly there is no action on the part of the respective State governments so far.

While collecting deposits, these fraudulent companies offer heavy commission to the persons who collect deposits from public. That amounts illegal money circulation schemes and criminal cases could be filed on that count also.

CID police of AP file criminal case against KMJ Land Developers India Ltd

The CID police of the State of Andhra Pradesh filed a criminal case No. 5 of 2011 against KMJ Land Developers India Ltd for indulging in money circulation scheme in the name of real estate.

One look at the company's website reveals that it has no registered office address but has offices in many States across India. The web site offers EXTRA INCOME, ECONOMIC FREEDOM, and SECURE FUTURE and induces people to become a member of KMJ family to fulfill your DREAMS. Rings any bell! Yeah! IT is same like Amway India. 

They opened a business centre at Door.No.40-1-82, First Floor, M.G. Road, NTR Circle,  Vijayawada – 520 010 and started enrolling members. 

The scheme of the KMJ Land Developers India Limited, (Business Centre) is 1:2 sponsoring scheme. The first person has to sponsor 2 persons and again these 2 persons have to sponsor 2 persons each and this 1:2 enrollment keep on goes infinite. The person should be enrolled only by an already enrolled member.  The entrance fee of the KMJ Land Developers India Limited, (Business Centre) is Rs.5,000/- in the name of deposit. Out of this entrance fee, commissions will be given to all the upline members. Half of the entrance fee is directly credited to company account and out of remaining share, half is distributed among the network/chain members and the remaining is said to be for issuance of an identity card and some products by the company. Joining a member into the scheme is treated as sale of products. The person is called Advisor.  The commission on the enrollment of a member will be distributed from bottom to top of the company.

There are 12 levels in the scheme of KMJ Marketing. Depending on the enrollment of every new member not only on his personal efforts but also on the efforts of his downline members, different titles will be given. The following table demonstrates the promise of quick or easy money on the event or contingency applicable or related to enrolment of new members into the scheme. One left and one right is treated as an Agency.

Sl.No.	Name of the Title	No. of Persons to be sponsored	Promise of easy or quick money in the name of commissions
1.	Advisor	-	Kit worth Rs.200/-
2.	Sales Executive	2	600/-
3.	Field Executive	4	800/-
4.	Organiser Executive	8	1000/-
5.	Marketing Executive	16	1200/-
6.	Marketing Officer	32	1400/-
7.	Development Officer	64	1800/-
8.	Regional officer	128	2200/-
9.	Zonal Officer	256	2600/-
10.	Zonal Manager	512	3000/-
11.	Sr. Zonal Manager	1024	5000/-
12.	Executive Manager	2048	8000/-
13.	Sr. Executive manager	4096	10000/-
14.	Executive Director	8192	12000/-

            From 2^nd level onwards, the title holders will get easy money consisting of benefits of Supervisor and group income which purely depend on the enrollment of new members into the scheme and not depend on the sale of products. The promoters pretty well know that if one person enrolls ten persons, at one point world population will be over and due to mathematical impossibility crores of peoples will be cheated.

            This promise of income is directly related or applicable to the event or contingency relative to enrollment of new members into the scheme.

Already there are several millions all over the country who became victims of this easy/quick money racket and lost their hard-earned money. Let us hope more and more such crooks are brought to book by the CID police of Andhra Pradesh.

Half a million more 'MLM' victims to add to all the countless millions

 Shyam

 One of your free-thinking readers, Gorzi, has effectively asked the obvious questions about yet another absurd, but nonetheless pernicious, 'MLM business opportunity fraud' - 

- Why do the Indian authorities continue to turn a blind eye to what lurks behind the corporate structure known as 'Speak Asia Online?'

- Why have so many Indian citizens (half a million) joined, and continue to join, 'Speak Asia Online?' 

Until the 1970s, this type of self-perpetuating fraud was an exclusively-American problem. Unfortunately, the absolute failure of US federal regulatory agencies to stamp out, 'MLM business opportunity' fraud (when agents of the US Federal Trade Commission identified the problem during the 1970s), allowed it to spread around the globe like a virus during the final quarter of the 20th century. By passing laws, but not enforcing them, the US government has authorized the very crime which it ostensibly sought to prohibit. The fact that the racketeers behind  'MLM business opportunity' fraud have not been prosecuted in the criminal courts, has given their criminal enterprise commercial credibility. Fortunately, Shyam, as you have pointed out, some senior Indian Judges are already fully-aware of these alarming facts. 

Had the original instigators of 'MLM business opportunity' fraud been thrown in jail in the USA the 1940s as charlatans, then we wouldn't be where we are now. Today, in dozens of countries around the globe, idle-minded regulators continue to do nothing whilst millions of people continue to be cheated, on the assumption that 'MLM' might be controversial, but it can't be technically illegal, because the US Federal Trade Commission has allowed it . However, so-called 'MLM' (as it has been operated) has never been a business in the traditional sense of the word. 

More than half a cenury of evidence, proves that the overwhelming majority of all the countless millions of ill-informed persons who have invested their time and money in countless so-called 'MLM business opportunities,' have not received even the slightest overall profit. A significant minority of 'MLM' victims have wound up not only destitute, but also dissociated from their friends and families and suffering from chronic psychological deterioration symptoms (particularly, overwhelming feelings of guilt). This is because all these ill-informed persons have found the obligatory products, and/or services, offered within these schemes (at a fixed quality and price) to be effectively-impossible to sell for a profit to the public. However, they have been told that no matter what is says in the 'MLM' book of  'rules', there is no need to sell anything to make money, on the contrary, simply by duplicating a proven system and regularly buying the 'MLM' products, and/or services, and recruiting others to duplicate the same system, etc. ad infinitum, anyone can achieve 'total financial freedom.' In reality, all these so-called 'MLM business opportunities' have been centrally-engineered closed-market swindles, in which victims have been peddled an infinite shareof their own finite money. Generally, 'MLM' victims have been falsely defined in their contracts as 'Independent Business Owners' in order to fool them into believing that failure was all their own fault. This is why some of the very worst 'MLM'victims have been driven to suicide. 

The regulators can have no excuse. The universal test to determine the true nature of any commercial enterprise, is simply to establish whether it has consistently generated significant, lawful, external profits.  No matter what their instigators steadfastly pretend to be reality, the evidence proves that so-called 'MLM business opportunities' have all been based on the crack-pot, pseudo-economic theory of endless-chain recruitment and regular self-consumption = infinite profits. 

David Brear (copyright 2011)

Authorities close stable only after horse escaped

One of our Readers, Gorzi, wants to know if Speak Asia Online company is fraud why Government and other authorities are not taking any action till now. Already 5 Lakh (Five hundred thousand) people in India joined the company and many more are joining daily.

I hope in 5 lakh Indians( who already joined) there must be people from all walks of life. Are they all fools?

Will action be taken only after company ran away. RBI has the knowledge about the company that millions of money is transfered to India by them every week. WHy they are allowing?

WHY? 

Gorzi, just read the comment by the Madras High Court while holding Apple FMCG guilty of violating law.

"It is true that several companies including Multinational Companies carry on the business of multilevel marketing and it is also true that the executive and the law enforcing authorities keep a blind eye on such activities. This also does not make an illegal act legal. It is always a fact that the law enforcing authority would try to close the stable only after the horse escaped. That is, the law enforcing authority would realize that this scheme would ultimate leave a large number of persons cheated. Thereafter, after losing their money, they would approach the executive complaining that they were cheated. Till such time, the law enforcing authorities do not act. They do not take preventive action to enforce the provisions of the existing law." (Madras High Court in Apple FMCG Vs. Govt of India, State Govt of Tamilnadu. 07-01-2005)

This is the comment by the Madras High Court. This is what is happening still all over country and all over world too. Just go through the blog you would find plenty of examples.

Corporate fraud has become widespread because of indifference

Shyam 

Your free-thinking reader, Sashi Kiran, in effect, asks the obvious questions: 

- Why - when companies like 'Agrigold Properties' , etc. are fronts for absurd, but nonetheless pernicious, frauds - have the Indian police and regulators not taken swift action against their bosses?

- Why has the mainstream Indian media not tried to warn the public? 

However the same obvious questions could be asked in dozens of different countries around the world, and about thousands of similarly fake companies. In reality, the overwhelming majority of  police officers, regulators and journalists are just as likely to be completely baffled by this type of fraud as anyone else. Yet, the simple test to determine the true nature of any commercial enterprise is to establish whether it consistently generates significant, lawful, external profits. Currently, the world is full of racketeers peddling ill-informed persons infinite shares of their own finite money. These crooks have been allowed to hide closed market swindles by pretending that they pursue commercial enterprises which consistently generate significant, lawful, external profits. Unfortunately, in the light of all the evidence, anyone in India who continues to believe that they live in a democracy defended by a courageous, independent media and governed by laws drafted to protect the people, and which are enforced by public servants who couldn’t be so dozy, and/or corrupt, as to allow  gangs of racketeers to use corporate structures to steal from the people and avoid being held to account, cannot be more wrong. Even if well-informed mainstream journalists were to try to expose this type of fraud, it's very doubtful if their editors would want to boadcast the full truth for fear of being drawn into costly lawsuits, and/or losing advertising revenue. 

With the benefit of hindsight, the Wall Street ‘liar-loans’ a.k.a. ‘subprime’ scandal of 2007  (in which trillions of dollars were unlawfully generated via the peddling of effectively-worthless pieces of paper arbitrarily defined as ‘secure investments’) could have been limited, if not prevented, by US regulators; that is, had fully-accountable and insightful individuals been employed in key posts actually to police the markets rigorously, and without fear or favour. Since it is now a matter of public record that this titanic American-based fraud - fronted by thought-stopping technical jargon and a labyrinth of legally-registered corporate structures - triggered the current, world economic crisis (the full-effects of which are, as yet, unknown), most reasonable observers would imagine that, at the very least, the discovery of such a potentially-catastrophic financial crime against humanity should have set loud alarm-bells ringing in government offices around the world, but no! To my certain knowledge, when they are not sleeping on the job, most national regulators still prefer to see no evil, hear no evil and speak no evil - on the idle-minded assumption that 'Amway' is an influential, but highly-controversial, labyrinth of American-controlled corporate structures, which has pursued a dubious, but technically-lawful, commercial enterprise when, in reality, this is only because 'Amway's' bosses retain unlimited amounts of stolen cash to hide the truth that it never has, and because selectively deaf, dumb, blind and possibly corrupt, key US officials have not nailed them for fronting less-than-titanic fraud, and/or racketeering, years ago. 

David Brear (copyright 2011)

Agrigold would refund money as long as they raise new deposits

One of our readers Mr Sashi Kiran raises genuine doubts 

Shyam garu,

I think I need to thank you a lot for the information you gave in your Corporate Frauds Watch blog. I was suggested by somebody among my friends circle to invest in Agrigold properties and was searching for some good testimonials to gain confidence about the decision but instead found some shocking news about the company in your blog. I am amazed that you could amass so much information about all this all alone on your own. Thank you once again for saving my hard-earned money.

But a small doubt, why did you lodge a sincere complaint in a police station instead of making it public in media? What was the problem that you faced that you did not take this issue to TV channels? I was wondering why not a single customer approached regulators like RBI or Company Law Board about this? Did you think of doing it or filing a public interest litigation after knowing all this? I feel bad for all those who have put their money into this company hoping for a good return, thats why I am asking you all these questions.

Regards,

Sashi Kiran

Sashi Kiran,

Your doubts are not unfounded. There are many people who raise such doubts. The main reason for no intervention by the police is generally there are no complainants so far. Still, the RBI has given direction to all the State Governments to check the illegal mobilisation of deposits from public. Police turn a Nelson's eye for reasons better known to them. By the time, these companies become defaulters, they would have made several millions if not billions. Then only the police register a case and start investigation. With the money power behind them, these companies prolong criminal cases in the judicial courts.

I have taken up these problems with the media - both print and electronic. However, they are interested only in the huge advertisements these companies give them but never care for public interest. If they have to survive with profits, they have to depend upon the advertisements and we cannot blame them. Anyway, they must have some social responsibility also. The latest case in point is, the swindle of Duck Development Society of Ongole, Prakasam district, Andhra Pradesh. I have warned both the police and media of the impending danger. Still, there is no action from both of them. Now the organisers of the society decamped with Rs. 50 crore. Who should be blamed for this fiasco?

The RBI states that the local governments should take suitable action and file criminal cases under the Section 58 S of RBI Act.

Corporate Frauds Watch has been regularly touch with the police and is whenever possible filing criminal cases against such companies. We have filed impleading petitions in the Andhra Pradesh High Court against at least 14 companies which obtained stay orders and got them quashed. Many of these companies closed shop.

GoldQuest International, Gemini Techno are among such companies which are completely shut down after criminal cases were filed against them.

We have filed public interest litigation against Amway India and it is pending in the AP High Court.

As long as they keep on getting new deposits from public, they refund the amounts to the investors. Once the incoming funds dry up, they close shop and the investors have nowhere to go. That is the tragedy.

Amway's business plan is nothing but easy and quick money: AP High Court

What made the Andhra Pradesh High Court to come to the conclusion that Amway India has been making easy and quick money. The following paragraphs established that how Raja Naren, a diamond, made several hundreds of thousands of rupees every year without purchasing a single product.

14.       In his rejoinder, Shri B. Adinarayana Rao (counsel for the petitioner Amway India) reiterated that the Government of India has not taken a specific stand that the business activity of petitioner No.1 is hit by the provisions of the Act.  He submitted that the main ingredient of quick or easy money envisaged under Section 2(c) of the Act does not exist in the petitioners’ scheme.  He further submitted that the 1^st petitioner has an annual business turnover of 700 crores  and even assuming that all the 4,50,000 subscribers paid the annual renewal fees of Rs.995/-, the 1^st petitioner gets only about Rs.40 crores and by no stretch of imagination it can be said that the 1^st petitioner is getting quick or easy money on this count.  He referred to the instance pertaining to Accused No.4 (Raja Naren) in Crime No.10 of 2006 narrated in the counter affidavit wherein it is stated that the said person became a diamond member of the 1^st petitioner company in the month of August 2006 and that he has not purchased goods worth a single rupee, but still he has credited with points worth Rs.7,61,140/- during that year and submitted that even if these figures are correct, the provisions of Section 2(c) of the Act are not attracted because making of such a profit by a person is not forbidden by any law.  The learned counsel submitted that the commission credited to a sponsor on the purchases made by the downline distributors is only one of the components of the payments received by the sponsor members.  The learned counsel then submitted that even if the Court comes to the conclusion that Section 2 (c) is attracted in the case of the petitioners, they cannot be forced to close the business till the conclusion of the criminal proceedings and indiscriminate seizure of products being effected by the police should be declared illegal and nullified.

22.       We shall now examine whether on the admitted facts and the material available on record, the scheme envisaged by petitioner No.1 attracts the aforementioned ingredients of clause (c) of Section 2 of the Act. 

The Scheme:

23.       The purported theme behind the scheme appears to be direct selling which means sale of products to the customers by the distributors of the company without there being any wholesaler or retailer.  It is explained in the affidavit filed in support of the writ petition that a person becomes a distributor by purchasing a business kit at a cost of Rs.4,400/- comprising; a) Rs.2,600/- towards the products and other material (sales aid and literature) and b) Rs.1,800/- towards product literature and subscription fee.  In this process, the distributors are provided with incentives.  Annexure-7 (brochure) to the reply affidavit filed by the petitioner titled “Amway Sales and Marketing Plan in India” unfolds the entire scheme.  It is explained therein that distributors can generate income in two ways, namely; 1) by earning retail sales profit, and 2) through performance incentive; that the distributors purchase products from Amway at distributors cost and then sell these products at higher price (not more than printed MRP) which is the retail sales profit.  As regards performance incentive, it is appropriate to extract the relevant portion of the brochure:

“ Performance Incentive:

Your performance incentives are based on monthly calculation of your individual and group PV/BV.  This incentive is based on a slab system that ranges from 3% to 21@ depending on your business volume.  Your earnings would be proportionate to your efforts.

PV (Point Value) is a unit amount assigned to each product.  It is an effort index, which puts emphasis on the units sold and not the selling price.  Each month the PV is totaled in order to determine the performance incentive bracket.  These brackets range from 3% to 21%.

BV (Business Volume) is a monetary figure assigned to each product.  In order to calculate the Performance Incentive, the percentage amount determined by total PV is applied to the total BV for the month.  The ratio of PV to BV in India is 1 PV = 45 BV.

Performance Incentive table

If Total Monthly PV is          BV is           Performance incentive is

10,000                               4,50,000        21% of Your BV   7,000                               3,15,000              18%   4,000                               1,80,000              15%   2,000                                  90,000              12%   1,000                                  45,000                9%      500                                  22,500                6%      100                                    4,500                3%

27.       In the above given diagram drawn to a 1-6-4-3 pattern, the first member sponsors six members.  Each of the six members in turn sponsors four members and each of the twenty four members sponsors three members.  Thus the strength of the total group becomes 103.  At the minimum level of PV and BV, the profit margin and the commission the person heading the group, by taking his personal PV and BV gets is Rs.12,420/-, from the PV and BV of the six persons he sponsored he gets Rs.23,760/-, from the PV and BV of the 24 distributors who were sponsored by six distributors he gets Rs.1,14,480/- and from the PV and BV of 72 distributors whom the 24 distributors sponsored he will get Rs.6,83,300/.  This is the admitted position under the scheme.                         

28.       As is evident from the contentions advanced on behalf of the petitioners as noted earlier, the petitioners have taken the stand that there is no quick or easy money involved in the scheme and that the money which the sponsor member gets does not depend on any event or contingency relative or applicable to the enrollment of the members into the scheme.  But on a careful analysis of the true nature of the scheme as explained above, it is quite apparent that one of the components of the income earned by a sponsor member is the commission which is calculated not only on the personal PV of the sponsor member, but also from the PV earned by all the remaining 102 members falling within his group.  There is, therefore, no gainsaying that a substantial part of the income which the first sponsor member of the group gets depends on the event or contingency relative or applicable to the enrollment of members into the scheme.  This conclusion can be tested by a further analysis of the income figures given in the earlier paragraph.  Supposing the sponsor member at the top does not introduce any member and if he merely sells the products given to him, he gets an income of Rs.12,420/-.  If he sponsors only six people and they in turn do not sponsor any member, then he will get an additional income of Rs.23,760/-.  If those six members whom he sponsored again sponsor four members each, he will get a further income of Rs.1,14,480/- and if the 24 members sponsor three members each, he will get a further sum of Rs.6,83,300/-.  Thus the money which the member at the top of the line gets depends upon the members whom he enrolls or the members enrolled by him enroll.  

29.       In Para 21 of the counter affidavit of respondent No.6 the example of Raja Naren is cited and the petitioner did not dispute the averment relating to the income he earned in a year.  The said instance is illustrative of a person earning fabulous income without doing anything after he accomplishes his task of enrolling the required number of persons as members into the scheme. 

30.       From the aforementioned discussion, it is proved that the scheme provides for easy/quick money to its distributors.  The first ingredient is thus satisfied.

30.       From the aforementioned discussion, it is proved that the scheme provides for easy/quick money to its distributors.  The first ingredient is thus satisfied. 

31.       Whether second ingredient is also satisfied or not is to be considered now.  As seen above, each member on his enrollment pays Rs.4,400/-.  Payment of Rs.4,400/- by a member on his enrollment and his future earnings through marketing/enrolling other members constitutes event or contingency relative to his enrollment.  The distributor gets all this money as a consideration for promise made by the sponsor at the time of his enrollment.  Thus as far as the member joining the scheme is concerned, both the ingredients of Section 2(c) of the Act, i.e., a) making of quick or easy money, and b) the chance or opportunity of making quick or easy money depending on an event or contingency relative or applicable to the enrollment of members into the scheme are satisfied.

After thoroughly going through the submitted material to the High Court only the Division Bench has come to conclusion that the Amway India's business model is nothing but a money circulation scheme.