'Nutrilite Double X' is/was really a double cross

Shyam 

You latest post paints a frighteningly-familiar picture. 

On September 6^th 1949, two USAAF veterans, Richard De Vos (aged 23) and Jay Van Andel (aged 25), registered the ‘Ja-Ri Corporation (later to become known as "Amway").’ However, during the 1950s, this company was only the agent of another one, the ‘Nutrilite Products Company Inc.’ 

‘Nutrilite’ was a controversial trademark owned by Carl F. Rehnborg a.k.a. Dr. Rehnborg, an American toothpaste-salesman of German origin who’d reinvented himself as a visionary autodidactic nutritionist, chemist, and businessman. Lawyers from the US Food and Drug Administration Bureau of Enforcement, who challenged the authenticity of Rehnborg's absurd claims in the federal courts during two decades, privately knew him to be nothing more than one of a trio of sinister quacks protected by an echelon of shyster attorneys, who’d combined, and updated, the medicine show and pyramid scam to reflect the spirit of the age. Tellingly, the ‘Amway’ version of Rehnborg's life sounds like a thrilling comic-book yarn. 

In 1915, Rehnborg (aged 25) voyaged to China on business. After 12 years of living in the Far East (where he witnessed ‘mass-starvation’ and survived the ‘siege of Shanghai’ by supplementing his diet with an improvised ‘vitamin and mineral-enriched broth made from grasses, powdered limestone and rusty nails, etc.’) Rehnborg sailed across the Pacific and landed on the West Coast of the USA. Despite having no money, he managed to establish a 'research laboratory’ in his modest loft-apartment on California’s Balboa Island. Assisted by his dutiful wife (Edith), Rehnborg then selflessly dedicated 6 years of his life to develop a ‘Revolutionary New Food Supplement’ to save mankind from starvation. He first naively tried to give his wonderful new formula away, but the cynical world wasn’t interested. So, in 1934, he reluctantly decided to create ‘California Vitamins Inc.’ In 1939, Rehnborg moved his ‘Business’ to a ‘Manufacturing and Processing Facility’ in Buena Park, California, and created the ‘Nutrilite Products Company Inc.’ By 1947, acting in association with a ‘Network Sponsoring Company’, ‘Mytinger and Casselberry Inc.’ (to whom he’d sold ‘Exclusive Nutrilite Distribution Rights’) Rehnborg (aged 57) had created the ‘World’s First Multilevel Marketing Scheme.’ Starting from nothing, he had become an admired and respected millionaire by ‘Helping 15 000 Americans to start their own Businesses.’ 

There is no reason to doubt that Rehnborg (who worked for 'Colgate &Co') was in China during, and after, WW I; whilst the exciting episodes in his oriental odyssey (although highly-implausible) can be neither proved nor disproved. The truth about Rehnborg’s convoluted ‘Rags to Riches’ fairytale is an entirely different matter. In 1934, Rehnborg (aged 44) created ‘California Vitamins Inc.’, to manufacture and distribute what he arbitrarily defined as the ‘World’s First Multi-Mineral/Multivitamin Plant-Based Food Supplement - a Unique Combination of Vitamins and Minerals in a Special Base.’ At first, this so-called ‘Health Tonic’ was brewed up, and peddled, in insignificant quantities. Consequently, it was of no particular interest to regulators. However, anyone with an ounce of common sense could immediately tell that Rehnborg’s ‘invention’ was just another essentially-inert potion (in the absurd tradition of the medicine show); a random mixture of cheaply-procured common substances with an expensive price tag. It had probably taken Rehnborg 6 hours to concoct, not 6 years. 

By 1939, Rehnborg changed the name of his profitable game of make-believe to the technical-sounding ‘Nutrilite Products Company Inc.’ and moved his quackery onto an almost unprecedented scale. Soon, Rehnborg was legally employing dozens of white-coated workers in purpose-built industrial buildings in Buena Park,California, but it is unclear exactly where he suddenly found all the necessary capital to acquire his impressive site and equipment. To casual observers, Rehnborg’s activity looked like any other lawful enterprise. His staff were ordinary honest folk. At this time, Rehnborg rechristened his potion ‘Double X (a.k.a. ‘XX’) Supplement.’ He now proposed to offer it as two ‘complimentary products’ in one box - a jar of red ‘Multivitamin Capsules’ and a packet of bluish green ‘Multi-Mineral Pills.’ The whole package was deliberately designed to lookpure and scientific (like a proprietary medicine), but, tellingly, the price was fixed at just less than $20 a box (the equivalent of several hundred dollars today). Rehnborg claimed that the ‘XX’ brand-name was derived from the Roman numeral representing twenty. It should have been read as ‘double cross;’ for when the former toothpaste salesman’s pricey wampum was routinely analysed by independent chemists working for the FDA, it was discovered that (although it contained essentially what it said on the labels and was quite harmless) ‘XX Supplement’ really did mostly comprise a random mixture of cheaply-procured, common substances (dried vegetable extracts: alfalfa; parsley; watercress; yeast; etc.). FDA experts later estimated that ‘XX Supplement’  cost no more than a few cents a box to produce. Thus, FDA lawyers knew that Rehnborg was, in fact, mass-producing a placebo labelled as a ‘Health Tonic’ (a meaningless term) and peddling it at a huge mark up (probably around 1000%). This crack-pot pseudo-scientific swindle, which was tantamount to selling a valueless amalgam of base-metals for the price of pure gold, could have been quickly nipped in the bud simply by charging Rehnborg with fraud. Apparently, FDA lawyers felt obliged not to take this course of action; reasoning that, by truthfully listing the banal ingredients, but avoiding making any specific therapeutic claims, on his packaging, Rehnborg had found a loophole in federal laws concerning criminal misbranding of medicines. As result, the puerile‘Nutrilite’ lie was permitted to be released on the vulnerable American public without a visible challenge. Not surprisingly, a host of copy-cat‘Unique Vitamin and Mineral Health-Tonic’ scams quickly sprang up. 

As WWII drew to its close, ‘XX Supplement’ had lost its novelty, so Rehnborg (aged 55) teamed-up with two respectable-looking associates, Lee S. Mytinger and William S. Casselberry (later described by FDA officials as a ‘cemetery-plot salesman’ and a ‘psychologist’). The result was ‘Mytinger and Casselberry Inc.,’ a second corporate structure peddling ‘Exclusive Commission-Agency Rights’ to ‘Distribute XX Supplement’ using (what was first defined by the company’s owners as) a ‘New Business Model.’ In theory… you could try to sell ‘XX  Supplement’ to your social contacts for a small profit, but, if you wanted to make big money, you didn’t need to sell anything… you could buy a monthly quota of ‘XX Supplement’ yourself and sign-up your social contacts to do the same… your ‘Sponsored Recruits’ would then ‘Sponsor’ their own social contacts, etc., ‘compensation’ would automatically multiply in an infinitely-expanding geometric progression. ‘Mytinger and Casselberry Inc.’offered a mind-numbing ‘contract’ in which the ‘company’ undertook to pay its ‘Independent Distributors’ an escalating ‘monthly commission’ on the totality of their escalating ‘Business Volume’ [i.e.their own regular monthly purchases (falsely defined as ‘Sales’),added to the regular monthly purchases (falsely defined as ‘Sales’), of their ‘Sponsored Recruits’, and those of the recruits of their recruits, etc. etc. ad infinitum]. 

In reality, the new set-up was merely the original lie with a second chapter, but to casual observers ‘Nutrilite Products Company Inc.’appeared to be exclusively manufacturing for, and wholesaling ‘XX Supplement’ to, ‘Mytinger and Casselberry Inc.,’ whose commission agents, in turn, appeared to be retailing it on to the public. Although‘XX Supplement’ was presented as ‘Unique,’ it mostly comprised substances which could easily be bought at a fraction of the cost in traditional retail outlets. The assembled-product was effectively impossible to sell on the open market. Therefore, the overwhelming majority of final customers were the non-salaried agents of the second corporate structure, which itself was the sole agent of the first corporate structure. In order for them to maintain the false hope that if they signed-up further contributing participants they would automatically become rich, the participants in this camouflaged money game were obliged by its rules to hand over a monthly payment to Mytinger and Casselberry, to be shared with Rehnborg. From all points of view (medical, economic, legal, etc.), ‘XX Supplement’ might have well not existed, since it was just of laudering illegal payments in a closed market swindle. New victims were supplied with a $49.50 ‘Business Kit’ (i.e. a large cardboard box stuffed with a month’s supply of ‘XX Supplement’ and a fat folder containing page after page of mystifying pseudo-economic/medical presentations and diagrams, and instructions in how to go aboutremembering, contacting and recruiting everyone they’d ever known during their lives). These presentations contained the concrete evidence which FDA lawyers would later use to prosecute Rehnborg, Mytinger and Casselberry. Contributing participants were being instructed to smile, project enthusiasm, and to recite a precisely-worded script which proclaimed ‘Nutrilite XX Supplement’ to be ‘good value,’ because it could ‘cure or prevent,’ virtually any known human illness. 

Even though it wasn’t his area of responsibility, FDA Legal Counsel (1939- 1972), William H. Goodrich, was probably the first US law enforcement agent to deduce that the innocent baby that Rehnborg, Mytinger and Casselberry had baptised a ‘New Business Model’ (later to become known as: ‘Multilevel Marketing’) was actually the same old delinquent previously known as ‘multi-level pyramid selling.’ Again, anyone with an ounce of common sense could work out immediately that, since Rehnborg was a medical quack, the strong likelihood was that Mytinger and Casselberry were commercialquacks. The dubious trio were obviously acting in association, but agents of the Food and Drug Administration and those of the Federal Trade Commission acted independently. However, in the late 1940s, the rapidly-expanding ‘XX Supplement’ dossier was already in the hands of FTC lawyers. At this time, anti-racketeering legislation did not exist in the USA.  

By 1947, Rehnborg, Mytinger and Casselberry were steadfastly pretending  ‘15 000 Successful Distributorships in the USA,’ with ‘Sales’ totalling ‘$500 000 dollars per month.’ They had also organized the production of a ‘Free’ booklet, ‘How to Get Well and Stay Well’, in which they further pretended that ‘Nutrilite Double X Supplement’ had ‘cured or greatly helped such common ailments’ as : ‘Low blood pressure, Ulcers, Mental depression, Pyorrhoea, Muscular twitching, rickets, Worry over small things, Tonsillitis, Hay Fever, Sensitivity to noise, Underweight, Easily tired, Gas in stomach, Cuts heal slowly, Faulty vision, Headache, Constipation, Anaemia Boils, Flabby tissues, Hysterical tendency, Eczema, Overweight, Faulty memory, Lack of ambition, Certain Bone conditions, Nervousness, Nosebleed, Insomnia, Allergies, Asthma, Restlessness, Bad skin colour, Poor appetite, Biliousness, Neuritis, Night blindness, Migraine, High blood pressure, Sinus trouble, Lack of concentration, Dental caries, Irregular heartbeat, Colitis, Craving for sour foods, Arthritis, Rheumatism, Neuralgia, Deafness, Subject to colds.’

Rehnborg now cast himself in the role of ‘Scientific Adviser’ to‘Mytinger and Casselberry Inc.’ He toured the USA preaching thegospel to wide-eyed ‘Distributors’ - ‘for less than $ 20 a month’,‘Nutrilite Double X Supplement’ was the ‘Answer to Man’s Search for Health.’ After both companies’ owners were approached by FDA officials and warned that they could face criminal prosecution for misbranding, the booklet was ‘revised.’ Specific therapeutic claims were supposed to be eliminated. ‘All illnesses’ suddenly became a‘state of nonhealth’ produced by ‘chemical imbalance’.… ‘Nutrilite XX Supplement’ cured nothing, it merely ‘enabled people to Get Well and stay Well’ by themselves. However, pages 41-52 of the booklet still recounted alleged case-histories explaining that ‘Nutrilite brought relief from such ailments as diabetes, feeblemindedness, stomach pains, sneezing and weeping.’ Not surprisingly, the FDA officials were not impressed, so they finally launched a number of raids, and seizures of ‘Nutrilite XX Supplement’ and associated publications.

In 1951, after a series of lawsuits, appeals and countersuits (in which Mytinger and Casselberry hired top lawyers who portrayed their clients as  American capitalist heroes being crushed by Soviet-style bureaucracy), the FDA obtained (on behalf of the people) a permanent Supreme Court injunction against ‘Mytinger and Casselberry Inc.’preventing ‘Distributors’ from referring to 50 publications making false claims about ‘Health Tonics and Food Supplements’ (including various ‘Revised Editions’ of ‘How to Get Well and Stay Well’). FDA agents soon found that the injunction was being flouted. As result of mounting complaints, they infiltrated the organization (as potential recruits) and recorded deluded proselytizers chanting the same cure-all mantra about ‘XX Supplement.’ Faced with more litigation and fearing that their monopoly of information might be lost, in 1954, Rehnborg, Mytinger and Casselberry produced a 20 minute colour propaganda film, ‘From the Ground up’ (featuring themselves as three nice ordinary American guys turned philanthropic scientists and industrialists), and they began to publish their own propaganda magazine, ‘Nutrilite News’ (stuffed with colour photos of happy, healthy and wealthy ‘Distributors’). Soon, they were organizing ‘Rallies and Seminars’ (addressed by ‘Successful Christian Distributors’ like Rich De Vos and Jay Van Andel). No quantifiable evidence (in the form of audited accounts) was ever produced to prove what percentage of claimed ‘Sales’ were authentic retail transactions to the public, or how many people who’d signed a ‘contract’ with ‘Mytinger and Casselberry Inc.’ had actually generated an overall profit from the operation of what its instigators arbitrarily defined as a ‘Business/income opportunity’. Excluding the tiny percentage of grinning schills at the top of the pyramid, the hidden, rolling insolvency/churn-rate was 100%. Since there was effectively no external revenue, participants were actually buying infinite shares in their own finite money. In 1959, when it seemed that ‘Mytinger and Casselberry/Nutrilite Products Inc.’ might finally be shut down (under the ‘Federal Food, Drug and Cosmetic Act 3381-3383’, rather than anti-pyramid scams legislation) De Vos and Van Andel created the‘American Way Association’ - the first of what was to become a shoal of red, white and blue herrings. The original 'Nutrilite' lie was finally absorbed back into the spin-off 'Amway' lie, in the 1970s. 

David Brear (copyright 2012)

Magic remedies are taking a toll on the health and wealth of Indians

The other day an old acquaintance met me at a commercial bank. Since it was a very long time we met, he was very happy to see me. However, he looked very weak and it seemed he lost a lot of weight and sheen on his face. Without asking, he told me that he suddenly lost weight when he tried to lose some weight by using the herbal brew called Doctor's Tea. The so-called Herbal Tea caused dehydration and it may further damage kidneys too had he continued its use. Doctor's Tea is something heavily advertised in print and electronic media inducing people to lose weight without any hard work or sweating it out in a gym.

These crooks like Amway India advertise heavily in the print and electronic media inducing people with lots benefits. For instance, Doctor's Tea promises to shed extra flab, Dhanalakshmi Yantram promises abundant riches to you if you keep that copper sheet in your house, Sani Dosha Yantram, another copper sheet drives away the evil forces from your home, some Magic oil gives relief to pain in the knee and other joints, a simple machine gives you a good six-pack body, some funny tablets would solve your problem of erectile dysfunction, some coloured semi-precious stone would help you change your fortunes and makes you rich, some cream would enhance the size of women's breasts, some health drink would increase the height of young boys and girls, some Lehyam would enhance the memory of students, so on and so forth.

This type of advertisements have been inducing the gullible to solve all problems they face. Not only that, these advertisements feature prominent film personalities to get a legitimate look for their products. Bollywood hero of yesteryear Jackie Shroff  woos people to buy magic oil in the Hindi version and popular Telugu film actors Chalapati Rao and Rajita assure people that their knee joints are cured of the pain with the magic oil.

India has a great legislation enacted way back in 1954 in the name of Drugs & Magic Remedies Objectionable Advertisements Act.

It covers a host of ailments like Appendicitis, Arteriosclerosis, Blindness, Blood poisoning, Bright's disease, Cancer, Cataract, Deafness, Diabetes, Diseases and Disorders of brain, Diseases and Disorders of the optical system, Paralysis, Disease and disorders of the uterus, Disorders of menstrual flow, Disorders of the nervous system, Disorders of the prostrate gland, Dropsy, Epilepsy, Female diseases (in general), Fevers (in general), Fits, Form and Structure of the female bust, Gall stones, kidney stones and bladder stones, Gangrene, Glaucoma, Goitre, Heart diseases, High/Low Blood Pressure, Hydrocele, Hysteria, Infantile paralysis, Insanity, Leprosy, Leucoderma, Lockjaw, Locomotor ataxia, Lupus, Nervous debility, Obesity, Pralysis, Plague, Pleurisy, Pneumonia, Rheumatism, Ruptures, Sexual impotence, Smallpox, Stature of person, Sterility in women, Trachoma,Tuberculosis, Tumours, Typhoid fever, Ulcers of the gastro-intestinal tract, Veneral diseases, including syphilis, gonorrhoea, soft chancre, veneraal granuloma and lympho granuloma.

In a recent amendment, two more ailments--Ashtma, AIDS-- were also included in the list.

Nobody should advertise about these ailments to sell drugs directly to the patients. Patients should approach doctors to get those diseases cured and purchase medicine from a qualified pharmacist.

In spite of the enactment, the crooks of all hues have been advertising heavily both in print and electronic  media cheating people without any fear.

According to the enactment, the Drug departments of respective State Governments all over country are empowered to file criminal cases against these advertisements. However, the officials of Drug Department say that they were poorly staff to file criminal cases  against such crooks. When we asked information under the Right To Information Act  regarding the number of cases filed by each Drug Inspector in the last year,  we were informed that not even a drug inspector filed more than one case in the whole year. This speaks volumes about the poor performance of the Department.

After a criminal case was filed by our team against Kunnath Pharma for advertising its Musli-Xtra to cure erectile dysfunction, the Drug Inspector hurriedly filed a case against the Kerala-based company.

In essence, the crooks have been escaping the law without any let or hindrance. It is high time people came forward to file criminal cases or consumer cases against such companies whenever they suffered loss to their body or property.

Several copycats of Amway are raising their ugly heads

On one hand, Corporate Frauds Watch has been exposing the rackets of various hues who have been cheating public in the name of selling products and services, several copycats of this old crook Amway have been raising their ugly heads.

Crooks like LifeIsSpeed, Dreams1000 are out on the prowl to cheat the gullible with their promise of self-styled  world class products and services.

What is more the LifeIsSpeed claims to have a host of celebrities in its advisory board though it is doubtful whether they know that they are members of that board.

Dreams1000 is just another dubious company which sells Nano bio card which enhances the health of the card holder. For every enrollment Rs. 500 will be paid.

If Amway says its products are world class, these crooks also say the same thing that their products and services world class. 

Dear fellow Indians! Do not fall for the false promises of these crooks with easy and quick money. There is nothing like easy and quick money. 

'Scientology' has again been judged to be an organized fraud in the secular French Republic

Shyam

If you ignore the deceptive names over their entrances, as well as their own reality-inverting black-propaganda, the two absurd, but nonetheless dangerous, organizations which have been most-commonly referred to as the 'Amway Corporation' and the 'Church of Scientology,' are revealed as being essentially-identical. In plain language, they are both examples of  outrageous 'Nazi'-style big lies which have been repeated so often, that they have eventually become accepted as the truth by their unquestioning adherents. Fortunately, you can fool some of the people all of the time and all of the people some of the time, but you can't fool all of the people all of the time (with the notable exception of stupid, and/or lazy, and/or corrupt, government regulators and so-called 'Sociologists of Religion'). 

Regular readers of Corporate Frauds Watch will remember that, just over two years ago, a couple of French-registered corporate structures, and several of their officers, were convicted of organized fraud and the illegal operation of a pharmacy. You will also recall that these serious criminal convictions were immediately appealed.  At that time, I attempted to explain to your free-thinking readers that this protracted French, criminal prosecution was only interesting from the much-wider view-point that the corporate structures in question, were merely two out of countless, expendable front-groups around the world, which have been centrally-controlled from the USA by the self-appointed sovereign leadership of the pernicious/totalitarian cultic organization most-commonly referred to as the 'Church of Scientology.'  In reality, these French 'Scientology' corporate-decoys, and their demonstrably-deluded decoy-officers, form part of a world-wide pattern of ongoing, major, racketeering activity (as defined by the US federal Racketeer Influenced and Corrupt Organizations Act, 1970) which now stretches back more than 60 years. Self-evidently, this classic criminogenic labyrinth is neither original nor unique; therefore, it cannot be fully-understood in isolation. It was maliciously set up to prevent, and/or divert, investigation and to isolate the billionaire American bosses of the 'Scientology' mob from liability. The Mafia-style, 'Scientology' edifice, which originally comprised just one corporate structure (registered in the USA as a privately-owned, limited liability, commercial company), was first instigated in the early 1950s by L. Ron Hubbard - a penniless, narcissistic author of comic-book yarns who, on various occasions in the late 1940s, had openly-boasted of his intention to become a millionaire by starting his own 'religion'. However, it would have been far more-accurate for Mr. Hubbard to have declared his clandestine criminal objective of starting his own copy-cat, blame-the-victim closed-market swindle and advance fee fraud, dissimulated as a 'tax-free religion'.

On February 3rd, 2012, after carefully-examining the evidence, a French Appeal Court in Paris, upheld the conviction against 'Scientology's' two French front-groups and their evidently-psychotic officers. 

http://blogs.villagevoice.com/runninscared/2012/02/scientology_in_4.php

http://infinitecomplacency.blogspot.com/search/label/France

http://www.independent.co.uk/news/world/europe/church-of-scientology-loses-appeal-against-french-fraud-conviction-6348727.html#disqus_thread

Your free-thinking readers will observe that, when it became apparent that the French Appeal Court was going to reject the so-called 'Scientologists' steadfast pretence that their unlawful enterprise was perfectly lawful, because the effectively-valueless 'self-betterment' wampum, which they had been peddling to vulnerable individuals for tens of thousands of Euros, was religious (even though the abusive 'Scientology' fairytale has never been recognised as a religion in the secular French Republic), they continued to demonstrate their dissociation from external reality by flouncing out of the legal proceedings and posing as the victims of religious intolerance

David Brear (copyright (2012)

Another money circulation scheme vanishes with Rs. 300 million

Yet another company namely Forever Gold vanished after collecting about Rs. 300 million from the people of Northern district of Srikakulam in Andhra Pradesh with the promise of easy and quick money. The owners of this dubious company promised short of heaven to the people and collected deposits from them.

Forever Gold is just another blade company which has vanished with the deposits. It promised huge returns within a short span of time and not surprisingly people have fallen for the bait. They have given huge sums and the company has even distributed post-dated cheques to be en-cashed later by them. However, their joy was short-lived after the cheques got bounced when they were presented in the Banks.

A larger number of people took out a procession on the streets of Srikakulam town demanding action against the erring company and repayment of their deposits.

One of the victims told the journalists that Forever Gold claimed that it is also like AgriGold, Akshaya Gold, Abhaya Gold companies which have been collecting huge deposits from public.

It is apt to recall here that Corporate Frauds Watch filed a criminal complaint against AgriGold about two years ago and police have yet to take action against the fraudulent company. Had the police taken action on that company, these fraudulent companies would not have born.

The Madras High Court aptly stated that the bureaucrats turn Nelson's eye and close the stable only after the horse escaped.

People never learn a lesson from the past and the bureaucrats never take action against the fraudulent companies for reasons better known to them.

The Reserve Bank of India has issued guidelines way back in 1986 to the State Governments all over India to appoint an officer not lower than a Station House Officer to check the illegal collection of deposits from public. The Police Chief may state his own reasons for the inaction, however, it is the people who are losing their hard-earned money due to their inaction and incompetency.

Kerala government’s guidelines in favour of MLMs says expert

Moneylife Digital Team

While intention of the state government may be genuine, its new guidelines for direct selling companies will not curb the menace of MLMs but in fact would shield them

The guidelines being framed by the Kerala state government to distinguish a genuine direct selling company from fake one are grossly inadequate and misleading. According to an expert in reality, it (the guidelines) aims to protect the fake money multiplier companies and schemes. Kerala is trying to become the second state, after Manipur, to have separate guidelines for multi-level marketing (MLM) companies.

Robert FitzPatrcik, co-author of False Profits, the first book-length analysis of pyramid schemes and multi-level marketing, told Moneylife that, “The rules (being framed by Kerala government) noted are grossly inadequate and misleading and, I fear, will  result in the tragedy of  millions morepeople falling victim to pyramid frauds that are disguised to look like legitimate sales companies. By prohibiting requirements to recruit others or to buy products, and by requiring that all payment be based on a purchase, the rule has "validated" a pyramid scheme that is disguised as a sales company, but, beneath the disguise, is perpetrating a blatant fraud.

Mr FitzPatrick is also founder and president of ‘Pyramid Scheme Alert’ and is based in the US.

The Kerala government had set up a high-level committee headed by the chief secretary following the complaints of few direct selling firms, calling themselves genuine, which were affected by the drive of the investigating agencies to weed out ‘get-rich-quick’ companies. The guidelines were approved by the state cabinet on 12th September 2011. 

According these guidelines, any direct selling company would be considered ‘valid’ if it does not directly ask seller or a consumer to purchase any product or collect membership fees as a condition precedent for enrolment. The compensation should be based solely on the quantum of goods and services. These entities would also require giving full refund to consumers who have returned the unsatisfied goods within 30 days. 

Mr FitzPatrick says that either handing over cash or purchasing products, these schemes still remain fraudulent. “The fraud lies in the false and misleading income proposition, not in the official requirements regarding products and purchases. It matter little if a person is defrauded by handing over cash or by purchasing products. If the fraud that induced the payment or the purchase are the same, and the net effect is the same -- huge losses -- then the policies protected no one. Indeed they achieved the opposite by giving protection to the scams.”

Apart from legally registering and filling necessary tax returns mandated under law, according to the guideline, these direct selling entities should also have a valid license or a registered trademark identifying its promoter, goods and services. They should also maintain websites with complete details of the company, and other such as price, terms and condition of its products/ services.

However Mr FitzPatrick says that the new policies of this state would legitimize a gross unfair and deceptive marketing practice. “Allowing the endless chain promise to drive purchases corrupts and pollutes the market place. It lures millions to join the schemes in the desperate need, not of the products, but of income. Yet, these schemes, by their design, cannot offer income to any but a few. To all others, the schemes, by design, cause financial losses.

He adds, “For this income promise to be valid, the chain of salespeople would have to extend forever, which obviously it cannot. Those who join later will not be able to gain the income because they will not be able to enroll enough new members. So the harm of the pyramid scheme occurs, just as if the money were directly transferred rather than through product purchases.”

In India there are various direct selling firms such as Amway, Herbalife, Tupperware have huge market base and membership with turnover amounting to several crore.

The sales people, according to the directive, should carry their identity cardissued by the government while selling the product. It should also furnish full details of the order date, amount, and bill to the consumer. Interestingly, the direct seller should take prior permission or appointment of the person to whom the goods or services are intended to be sold.

It is important to note that, apart from Kerala, other states like Manipur, Rajasthan, Maharashtra and Andhra Pradesh are keeping tight vigil on ponzi schemes.

Moneylife had reported that Kerala, said to be the country’s most literate state, is flooded with numerous ‘get-rich-quick’ or ‘earn-huge-return’ schemes offered by money swindlers. While the state director general of police has admitted noticing frauds amounting to over Rs1,000 crore, the worrying factor is that even a few policemen have been found to be involved in these MLM schemes.

Mr FitzPatrick says that actual fraud in MLM is the deceptive promise. “The fraud of pyramid scheme is not in whether money changes hands directly or throughout the vehicle of a purchase. The fraud is in the deceptive promise which cannot be fulfilled. The rule would not prohibit the use of this "endless chain" lie. It would, in fact, validate it by merely requiring that it assume a disguise and enact meaningless "policies" that have no effect in practice.

An invitation to Prof. Hans Micklitz, and his colleagues, to justify their 1999 European Commission report

Shyam

In the past, I have stated that the more-highly-qualified a person is, the less likely he/she is to want to admit that he/she can be deceived. As if to prove the validity of this analysis, I have recently been trying to have a rational discussion with Prof. Hans Micklitz, a highly-qualified, senior, European, legal academic who was engaged, in the late 1990s, by the European Commission to head a team of highly-qualified, legal academics to draw up a report into 'Door to Door Selling', 'Pyramid Selling' and 'Multi Level Marketing'.  So far, the only response that I have been able to obtain from Prof. Micklitz, is his friendly (and remarkably-frank) confession that he found this (undoubtedly-well-paid) task to be amongst the most-difficult of his academic career. 

Since Prof. Micklitz has rather rudely-ignored my subsequent, urgent concerns (despite being given ample opportunity to respond in private), I have now decided to make his highly-embarrassing, supporting-role in the ongoing tragi-comedy of 'MLM income opportunity' fraud, public.

Unfortunately, under Prof. Micklitz' management, the resulting 300 page document (submitted to the European Commission in November 1999), mainly comprised a typically-incomprehensible legalistic analysis of the diverse trading schemes laws, and regulations, of not only the member countries of the European Union, but also those of the USA. However, Prof. Micklitz, and his colleagues, then failed to deduce that the entire report was fundamentally-flawed, because it was partly-based on demonstrably-worthless anecdotal evidence (supplied by demonstrably-deluded 'MLM' adherents) and on the classic, misleading definition of 'direct selling' supplied by US-based 'MLM income opportunity' racketeers via their de facto agents in Europe. http://ec.europa.eu/consumers/cons_int/safe_shop/door_sell/sur10_01.pdf .

In other words, part of Prof. Micklitz report was the equivalent of looking at an absurd medical pseudo-science through the clouded-eyes of a few delirious individuals who claimed to have been cured. 

That said, other parts of this 1999 report to the European Commission, began to identify how a closed-market swindle, without any significant or sustainable external revenue, can be dissimulated as a 'direct selling income opportunity.' The report also contained extensive reference to US federal anti-racketeering legislation. However, in brief, the report completely failed to identify a major, ongoing, organized criminal enterprise which has damaged and silenced, and continues to damage and silence, countless millions of ill-informed victims around the world and, instead, essentially-concluded that the existing, diverse legislation in the various European countries appears to be largely adequate (because 'MLM' participants seem quite happy and no one has really complained) and, therefore, neither unification of these diverse laws, nor significant changes in their individual content, was needed.  

Some of the rather obvious questions which I would like to put to Prof. Hans Micklitz are: 

- What do you understand by the terms: 'blame the victim fraud' and the 'Big Lie?' 

- Why on Earth did you and your colleagues consult with, and accept the word of, unaccountable persons whom (at the very least) you must have suspected could have had a severe conflict of interest when it came to telling the truth about the results of so-called 'MLM?' 

- Why on Earth didn't you apply common-sense and try to hold these persons to account by asking them to provide quantifiable evidence (in the form of audited account) to support their anecdotal claims, or independently check the quantifiable evidence as to the actual long-term results of so-called 'MLM'  in Europe (i.e. consult with European income-tax officials)?  

Unfortunately, this far-from intellectually-rigorous 1999 report to the European Commission, should really be seen as an object-lesson in how to not to go about examining organized crime cloaked with labyrinths of corporate structures pursuing lawful, and/or unlawful, enterprises, instigated, and/or perverted, to prevent, and/or divert, investigation and isolate their bosses from liability .

As ever, I would advise your free-thinking readers (particularly, senior Indian law enforcement agents) not to fall into the same trap as Prof. Micklitz and his colleagues. Instead, they should make a conscious effort not to be distracted by the mystifying fairytale that the bosses of 'MLM income opportunity' frauds, and their deluded-followers, have steadfastly pretended to be reality. They should concentrate on uncovering the growing, Indian section of the global financial holocaust (with a small 'h') which so-called 'MLM income opportunities' have all been hiding.

These are the irrefutable facts.

- Numerous corporate structures exist around the world which have been arbitrarily defined by their instigators as 'Multi Level Direct Selling Companies.'

- An almost total absence of income tax-payments by the constantly-churning, insolvent, non-salaried, commission agents of these corporate structures over a period of 50+ years, proves that it has always been effectively-impossible to earn net-income lawfully from so-called 'MLM income opportunities.'

- The made-up, technical-sounding term, 'MLM income opportunity,' has, therefore, been a big 'Nazi'-style lie.

- Lying to people in order to take their money is fraud which is a form of theft.

Given these irrefutable facts, Corporate Frauds Watch formally invites Prof. Hans Micklitz, and his colleagues, to justify the content (and particularly the conclusion) of their 1999 European Commission report.

 David Brear (copyright 2012)

Supreme Court passes judicial order on Justices' opinions

In a land mark judgement, the Supreme Court of India stated last Friday that the opinions by the former chief justices or justices would cut no ice with any case and passed a judicial order barring such things future.

Army chief General V K Singh may be forced to dump opinions of former Chief Justices of India he has annexed with his petition in the Supreme Court (SC) to strengthen his claim that he was born on May 10, 1951 and not May 10. 1950 which has been fixed by the Government of India as his date of birth.

A Bench comprising Chief Justice S H Kapadia and Justices A K Patnaik, and Swataner Kumar flew into rage and rebuked the petitioner for citing opinions of four ex-CJs - Justices J S Varma, V N Khare, G B Patnaik, and RC Lahoti-  in the PIL. they have filed in General Singh's support.

The Bench was so upset over the attempts to cite opinion of retired justices, a growing trend among petitioners who try to staple opinions of retired judges favouring their claims, that it passed a judicial order barring such things in future.

The Supreme Court of India's judicial order has significance in a number of cases. Several multilevel marketing companies cite the opinions of former Chief Justices of India to claim that their business model is legal.

Amway flaunts the opinion of former Chief Justice Y V Chandra Chud in its petitions all the time. However, it did not cut much ice with the Supreme Court when Amway filed a Special Leave petition against the judgement of Andhra Pradesh High Court.

Now after the Supreme Court passed a judicial order barring such opinions, these crooks like Amway, et al could no longer annex their petitions with the opinions of former chief justices.

It is apt to recall here that GoldQuest used to flaunt the opinion of noted advocate Mrs Nalini Chidambaram, wife of Union Minister of Government of India, Mr Chidambaram to claim that their business model is legal. However, after criminal cases were filed, Mrs Nalini Chidamabaram backtracked her opinion.

The worthless 'Amway' Lord Hee Haw is formally offered ten US dollars

Shyam 

Your free-thinking readers (and particularly 'Quixtarisacult') should be amused to learn that the unmasked 'Amway' Lord Hee Haw, David Steadson a.k.a. 'IBOFB', continues to try to post puerile propaganda commentaries on Corporate Frauds Watch (on behalf of the 'Amway' crime bosses), in which he steadfastly pretends that I have issued a million dollar challenge to him.  I think that, given this imaginary situation (which I'm about to explain more-fully), it would be entirely appropriate, formally to offer the worthless Mr. Steadson a mere $US10.

The 'Amway' Lord Hee Haw has extrapolated this fictitious challenge from the fact that I recently stated that, even if we offered a million dollars to 'Kuntal' (a poor little Indian 'Amway' adherent who recently claimed that he and several members of his family, had been receiving commision payments from 'Amway') he could not provide any quantifiable evidence (in the form of audited accounts; particularly, income-tax payment receipts) proving that he had received so much as one Rupee of overall net-income lawfully, from regularly retailing 'Amway' wampum to the Indian public for a profit. Predictably, the childish  'Kuntal' has now vanished from CFW. 

Although he doesn't actually spell it out, the masked comic-book character, 'IBOFB',  has apparently now claimed to be in possession of many years of income-tax payment receipts and related- audited accounts (presumably all bearing his given name, David Steadson), which might indicate that at least one person has operated a so-called 'Amway business' through which that person consistently managed to generate  net-earnings derived entirely-lawfully from regularly retailing significant quantities of 'Amway' wampum to the public for a profit. Furthermore, Mr. Steadson also pretends that his 'IBOFB' character is personally acquainted with lots of other so-called  'profitable Amway business owners' whom 'IBOFB' cannot name, but who can, nonetheless, provide similar independent documentary evidence (presumably bearing their given names).  

However, the 'Amway' Lord Hee Haw not only pretends that IBOFB' is in possession of these key-documents and to have seen similar key-documents in the possession of other unnamed persons, but he also pretends that (for reasons best known to himself) neither his anonymous 'IBOFB' character,  nor 'IBOFB's' anonymous friends, will disclose any of this alleged quantifiable evidence, unless I prove to 'IBOFB' that I am in possession of, and will undertake to give a comic-book character alone, one million dollars. 

Obviously, since 50 years of quantifiable evidence proves, beyond all reasonable doubt, that it has always been effectively- impossible for anyone regularly to retail any 'MLM' wampum to the public for a profit, Mr. Steadson's comic-book character's key-documents, and his unnamed acquaintances, cannot, and do not, really exist.

Thus, the 'Amway' Lord Hee Haw  (like the narcissistic little shit with a psychology degree that he is) has conveniently invented this one-sided million dollar challenge/side-bet, complete with his own one sided-closed logic-rules,  in order that he can continue to pretend that 'IBOFB' and his many friends have not only been running lawful direct selling businesses, but also that they have all inexplicably and illogically withheld the only quantifiable evidence to prove it. 

As ever,  I imagine that, after writing down his latest convoluted fantasy, Mr. Steadson sang three choruses of 'Walzing Matilda' and then fell down in a heap.

David Brear (copyright 2012)