Sunday, 26 February 2012

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

You latest post paints a frighteningly-familiar picture. 
On September 6th 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 matterIn 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. etcad 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)

1 comment:

nationwide said...

These presentations independent the accurate affirmation which FDA attorneys would after use to arraign Rehnborg, Mytinger and Casselberry. Contributing participants were actuality instructed to smile, activity enthusiasm, and to recite a precisely-worded calligraphy which proclaimed ‘Nutrilite XX Supplement’ to be ‘good value,’ because it could ‘cure or prevent,’ around any accepted animal illness.

Outsourcing Accounting