Wednesday, 28 November 2012

A Common Sense Approach to Cultism

In response to any other thoughtless commentators who pretend thatI am thoughtlessly condemning all forms of ritual belief as pernicious:
Young children’s unconscious acceptance of ‘Santa Claus’ as total realitystems from a fictitious scenario reflected as fact by the traditional culture in which they live. Up to a certain age, children are not equipped to challenge the model of reality offered to them by authoritarian figures within their family groups; particularly, their parents. Therefore, once children have been converted to a self-gratifying, non-rational belief in ‘Santa,’ the truth (that they are actually being deceived by the people whom they instinctively trust and follow) is unthinkable. The scenario can then be expanded to modify children’s behaviour — ‘Santa’ has magical powers… he can see and hear everything they do at all times… he will reward them for unquestioning belief and punish them for dissent. Only when they attain the necessary level of intellectual/psychological development, can children begin to use their critical and evaluative faculties and come to realise that ‘Santa’ is merely a game of make believe. If you think about it, what I’ve just described is the most elementary form of self-perpetuating, non-rational/esoteric, ritual belief system - perfectly tailored to fit infantile minds, and reliant on the maintenance of an absolute monopoly of information presented using a constant repetition of reality-inverting key words and images combined with pseudo-scientific mystification and closed-logic.
When analysed with the same level of intellectual rigour, many of the basic procedures and conditions required to establish 'MLM income opportunity' cults, like 'NMart' and 'Amway,' turn out not to be a mystery at all. They are revealed as only more-sophisticated versions of those which also propagate the benign ‘Santa’ deception. As such, they are frighteningly easy to replicate. However, the narcissistic instigators of groups like 'NMart' and 'Amway' are anything but benign and, interestingly, many of their most-deluded subjects and convincing apologists turn out to be well-educated adults who have simply become incapable of facing the ego-destroying reality that they’ve been fooled by what is merely a game of make believe. No sane person would ever suggest trying to ban ‘Santa,’ and everyone lies to their children at some time to modify their behaviour, but consider the variety of destructive behaviour that an authoritarian adult (with hidden criminal objectives) could get dependent children to follow by exploiting their unconscious acceptance of the same imaginary, but nonetheless emotionally and intellectually overwhelming, narrative as total reality. The unpalatable truth is that, just by perverting the closed-logic rules of the game, anything - from theft by proxy to sexual, and/or violent, abuse - becomes possible.
David Brear (copyright 2012)

Monday, 26 November 2012

'N-mart', 'Amway,' etc. have all exhibited the universal identifying characteristics of a cult

I think that the many new readers of this Blog should take note that groups like 'N-Mart' and'Amway' are pernicious or criminogenic cults, not simply because we say so, but because they have exhibited certain essential characteristics which identify them as such.
'The Universal Identifying Characteristics of a Cult' (David Brear, Axiom Books, copyright 2005):

Apart from its use in the sense of ‘a popular fashion especially followed by a specific section of society’ or ‘a person or thing popularised in this way,’ the traditional definition of the English noun, cult (Latin cultus worship), has been ‘a system of religious worship (Latin religiosus obligation, bondage) especially as expressed in ritual,’ or ‘devotion or homage to a person or thing.’ However, the word is now also used as shorthand for what is more accurately described as a pernicious cult. This evolving, criminogenic phenomenon can be briefly described as: 

any self-perpetuating, non-rational/esoteric, ritual belief system established or perverted for the clandestine purpose of human exploitation.

Such groups are identified by the following, essential characteristics:  

1). Deception. Pernicious cults are presented externally as traditional associations. These can be arbitrarily defined by their instigators as almost any banal group (‘religious’, ‘cultural’, ‘political’, ‘commercial’, etc.). However, internally, they are always totalitarian (i.e. they are centrally-controlled and require of their core-adherents an absolute subservience to the group and its patriarchal, and/ or matriarchal, leadership above all other persons). By their very nature, pernicious cults never present themselves in their true colours. Consequently, no one ever becomes involved with one as a result of his/her fully-informed consent.

2). Self-appointed sovereign leadership. Pernicious cults are instigated and ruled by psychologically dominant individuals, and/or bodies of psychologically dominant individuals (often with impressive, made-up names, and/or ranks, and/or titles), who hold themselves accountable to no one. These individuals have severe and inflexible Narcissistic Personalities (i.e. they suffer 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).* They steadfastly pretend moral and intellectual authority whilst pursuing various, hidden, criminal objectives (fraudulent, and/or sexual, and/or violent, etc.). The admiration of their adherents only serves to confirm, and magnify, the leaders’ strong sense of self-entitlement and fantasies of unlimited success, power, brilliance, beautyideal love, etc.
‘Narcissistic Personality Disorder,’ is a psychological term first used in 1971 by Dr. Heinz Kohut (1913-1981). It was recognised as the name for a form of pathological narcissism in ‘The Diagnostic and Statistical Manual of Mental Disorders 1980.’ Narcissistic traits (where a person talks highly of himself/herself to eliminate feelings of worthlessness) are common in, and considered ‘normal’ to, human psychological development. When these traits become accentuated by a failure of the social environment and persist into adulthood, they can intensify to the level of a severe mental disorder. Severe and inflexible NPD is thought to effect less than 1% of the general adult population. It occurs more frequently in men than women. In simple terms, NPD is reality-denying, total self-worship born of its sufferers’ unconscious belief that they are flawed in a way that makes them fundamentally unacceptable to others. In order to shield themselves from the intolerable rejection and isolation which they unconsciously believe would follow if others recognised their defective nature, NPD sufferers go to almost any lengths to control others’ view of, and behaviour towards, them. NPD sufferers often choose partners, and raise children, who exhibit ‘co-narcissism’ (a co-dependent personality disorder like co-alcoholism). Co-narcissists organize themselves around the needs of others (to whom they feel responsible), they accept blame easily, are eager to please, defer to others’ opinions and fear being seen as selfish if they act assertively. NPD was observed, and apparently well-understood, in ancient times. Self-evidently, the term, ‘narcissism,’ comes from the allegorical myth of Narcissus, the beautiful Greek youth who falls in love with his own reflection.

Currently, NPD has nine recognised diagnostic criteria (five of which are required for a diagnosis):
  •       has a grandiose sense of self-importance.
  •       is preoccupied with fantasies of unlimited success, power, brilliance, beauty, ideal love, etc.
  •       believes that he/she is special and unique and can only be understood by other special             people.
  •       requires excessive admiration.
  •       strong sense of self-entitlement.
  •       takes advantage of others to achieve his/her own ends.
  •       lacks empathy.
  •       is often envious or believes that others are envious of him/her.
  •       arrogant disposition.

3). Manipulation. Pernicious cults employ co-ordinated, devious techniques of social and psychological persuasion (variously described as: ‘covert hypnosis’, ‘mental manipulation’, ‘coercive behaviour modification’, ‘group pressure’, ‘thought reform’, ‘ego destruction’, ‘mind control’, ‘brainwashing’, ‘neuro-linguistic programming’, ‘love bombing’, etc.). These techniques are designed to fulfil the hidden criminal objectives of the leaders by provoking in the adherents an infantile total dependence on the group to the detriment of themselves and of their existing family, and/or other, relationships. Pernicious cults manipulate their adherents’ existing beliefs and instinctual desires, creating the illusion that they are exercising free will. In this way, adherents can also be surreptitiously coerced into following potentially harmful, physical procedures (sleep deprivation, protein restriction, repetitive chanting/ moving, etc.) which are similarly designed to facilitate the shutting down of an individual’s critical and evaluative faculties without his/ her fully-informed consent.

4). Radical changes of personality and behaviour. Pernicious cults can be of any size, duration and level of criminality. They comprise groups, and/or sub-groups, of previously diverse individuals bonded by their unconscious acceptance of the self-gratifying, but wholly imaginary, scenario that they alone represent a positive or protective force of purity and absolute righteousness derived from their leadership’s exclusive access to a superior or superhuman knowledge, and that they alone oppose a negative or adversarial force of impurity and absolute evil.Whilst this two-dimensional, or dualistic, narrative remains the adherents’ model of reality, they are, in effect, constrained to modify their individual personalities and behaviour accordingly.

5). Pseudo-scientific mystification. The instigators of pernicious cults seek to overwhelm their adherents emotionally and intellectually by pretending that progressive initiation into their own superior or superhuman knowledge (coupled with total belief in its authenticity and unconditional deference to the authority of its higher initiates) will defeat a negative or adversarial force of impurity and absolute evil, and lead to future, exclusive redemption in some form of secure Utopian existence. By making total belief a prerequisite of redemption,adherents are drawn into a closed-logic trap (i.e. failure to achieve redemption is solely the fault of the individual who didn’t believe totally). Cultic pseudo-science is always essentially the same hypnotic hocus-pocus, but it can be peddled in an infinite variety of forms and combinations (‘spiritual’, ‘medical’, ‘philosophical’, cosmological,’extraterrestrial’, ‘political’, ‘racial’, ‘mathematical’, ‘economic’, New-Age’, 'magical', etc.), often with impressive, made-up, technical-sounding names. It is tailored to fit the spirit of the times and to attract a broad range of persons, but especially those open to an exclusive offer of salvation (i.e. the: sick, dissatisfied, bereaved, vanquished, disillusioned, oppressed, lonely, insecure, aimless, etc.). However, at a moment of vulnerability, anyone (no matter what their: age, sex, nationality, state of mental/ physical health, level of education, etc.) can need to believe in a non-rational, cultic pseudo-science. Typically, obedient adherents are granted ego-inflating names, and/or ranks, and/or titles, whilst non-initiates are referred to using derogatory, dehumanizing terms. Although initiation can at first appear to be reasonable and benefits achievable, cultic pseudo-science gradually becomes evermore costly and mystifying. Ultimately, it is completely incomprehensible and its claimed benefits are never quantifiable. The self-righteous euphoria and relentless enthusiasm of cult proselytizers can be highly infectious and deeply misleading. They are invariably convinced that their own salvation also depends on saving others.

6). Monopoly of information. The leaders of  pernicious cults seek to control all information entering not only their adherents’ minds, but also that entering the minds of casual observers. This is achieved by constantly denigrating all external sources of information whilst constantly repeating the group’s reality-inverting key words and images, and/or by the physical isolation of adherents. Cults leaders systematically categorize, condemn and exclude as unenlightened, negative, impure, absolutely evil, etc. all free-thinking individuals and any quantifiable evidence challenging the authenticity of their imaginary scenarios of control. In this way, the minds of cult adherents can become converted to accept only what their leadership arbitrarily sanctions as enlightened, positive, pure, absolutely righteous, etc. Consequently, adherents habitually communicate amongst themselves using their group’s thought-stopping ritual jargon, and they find it difficult, if not impossible, to communicate with negative persons outside of their group whom they falsely believe to be not only doomed, but also to be a suppressive threat to redemption.
7). False justification. In pernicious cults, a core-group of adherents can be gradually dissociated from external reality and reformed into deployable agents, and/or de facto slaves, and/or expendable combatants, etc., furthering the hidden criminal objectives of their leaders, completely dependent on a collective paranoid delusion of absolute moral and intellectual supremacy fundamental to the maintenance of their individual self-esteem/identity and related psychological function. It becomes impossible for such fanatics to see humour in their situation or to feel pity for, or to empathise with, non-adherents. Their minds are programmed to interpret the manipulation, and/or cheating, and/or dispossession, and/or destruction, of inferior outsiders (particularly, those who challenge their group’s controlling scenario) as perfectly justifiable.

8). Structural mystification. The instigators of pernicious cults can continue to organize the creation, and/or dissolution, and/or subversion, of further (apparently independent) corporate structures pursuing lawful, and/or unlawful, activities in order to prevent, and/or divert, investigation and isolate themselves from liability. In this way, some cults survive all low-level challenges and spread like cancers enslaving the minds, and destroying the lives, of countless individuals in the process. At the same time, their leaders acquire absolute control over capital sums which place them alongside the most notorious racketeers in history. They operate behind ever-expanding, and changing, fronts of ‘privately-controlled, limited-liability, commercial companies,’ and/or ‘non-profit-making associations,’ etc. Other than ‘religious /philosophical’ and ‘political’ movements and ‘secret societies,’ typical reality-inverting disguises for cultic crime are:

‘charity/ philanthropy’; ‘fund-raising’; ‘lobbying’ on topical issues (‘freedom’, ‘ethics’, ‘environment’, ‘human rights’, ‘women’s rights’, ‘child protection’, ‘law enforcement’, ‘social justice’, 'peace,' etc.); ‘publishing and media’; ‘education’; ‘academia’; ‘celebrity’; ‘patriotism’; ‘information technology’; ‘public relations’; ‘advertising’; ‘medicine’; ‘alternative medicine’; ‘nutrition’; ‘rehabilitation’; ‘manufacturing’; ‘retailing’; ‘direct selling/ marketing’; ‘multilevel marketing’; ‘network marketing’; ‘regulation’; ‘personal development’; ‘self-betterment’; ‘positive thinking’; ‘self-motivation’; ‘leadership training’; ‘life coaching’; ‘research and development’; ‘investment’; ‘real estate’; ‘sponsorship’; ‘bereavement/trauma counselling’; ‘addiction counselling’; ‘legal counselling’; ‘cult exit-counselling’; ‘financial consulting’; ‘management consulting’; ‘clubs’; etc. 

9). Chronic psychological deterioration symptoms. The long-term core-adherents of pernicious cults are psychotic (i.e. suffering from psychosis, a severe mental derangement, especially when resulting in delusions and loss of contact with external reality). Core-adherents who manage to break with their group and confront the ego-destroying reality that they’ve been systematically deceived and exploited, are invariably destitute and dissociated from all their previous social contacts. For many years afterwards, recovering former core-adherents can suffer from one, or more, of the following psychological problems (which are also generally indicative of the victims of abuse):

depression; overwhelming feelings (guilt, grief, shame, fear, anger, embarrassment, etc.); dependency/ inability to make decisions; retarded psychological/ intellectual development; suicidal thoughts; panic/ anxiety attacks; extreme identity confusion; Post-Traumatic Stress Disorder; insomnia/ nightmares; eating disorders; psychosomatic illness ( asthma, skin disorders, headaches, fatigue, etc.); sexual problems/ fear of forming intimate relationships; inability to trust; etc.

10). Repression of all dissent. The leaders of the most-destructive cults are megalomaniacal psychopaths (i.e. suffering from a chronic mental disorder, especially when resulting in paranoid delusions of grandeur and self-righteousness, and the compulsion to pursue grandiose objectives). The unconditional deference of their deluded adherents only serves to confirm, and magnify, the leaders’ own paranoid delusions. This type of cult leader maintains an absolute monopoly of information whilst perpetrating, and/or directing, evermore heinous crimes. They sustain their activities by the imposition of arbitrary contracts and codes (secrecydenunciation, confession,justice, punishment, etc.) within their groups, and by the use of humiliation, and/or intimidation, and/or calumny, and/or malicious prosecution (where they pose as victims), and/or sophism, and/or the infiltration of traditional culture, and/or corruption, and/or intelligence gathering and blackmail, and/or extortion, and/or physical isolation, and/or violence, and/or assassination, etc., to repress any internal or external dissent.
David Brear (copyright 2005)

Sunday, 25 November 2012

Lost little 'N-Mart' sheep exhibit confirmation bias

Even before its narcissistic instigator went on the run, any free-thinking adult (with an ounce of common-sense), could immediately deduce that 'N-mart' is merely the puerile, made-up name for another pernicious 'MLM income opportunity' racket/cult.
However, Corporate Frauds Watch has lately been attracting the remaining flock of lost little'N-Mart' sheep, who are all still in denial of external reality and who are effectively-bleating for their good shepherd to continue to sell them for slaughter .
Your free-thinking readers should be aware that these 'N-Mart' supporters are exhibitting what psychologists have labelled 'confirmation bias.'
David Brear (copyright 2012)

Wednesday, 21 November 2012

Police issue lookout notice for Gopal Shekhawat in all airports in India

NMart supremo Gopal Shekhawat who is running away from the law is said to be hiding in some foreign country. 
The police collected the details of the latest passport of Gopal Shekhawat and sent out a lookout notice to all the airports through out the country.
In essence, the police would arrest the fugitive on his arrival at any airport through out the country.
In spite of the clarifications issued in this blog on the issue of filing writ petitions in various high courts, many people are still arguing in this blog that NMart is a good company and its business model is legal.
Why these people are so assertively saying that the business of NMart is legal though Gopal Shekhawat himself could not say so. 
The only reason is these people are making easy and quick money by enrolling more members into the scheme. Many of these apologists have already amassed sizable amount in this scam. That is why they are showing more loyalty to NMart than Gopal Shekhawat himself. 
It seems Gopal Shekhawat is not interested in saving NMart. Otherwise, he would have sent his counsels to various courts to prove his case.
On the flip side, he knows that it is illegal business and that is why he disappeared with the money he stashed somewhere leaving all the members in the lurch.
Anyway, I have nothing to do in all these issues. I only passed on information to the police stating that it is an illegal money circulation scheme and it is up to the police to take action against the illegal business of NMart. The police did their job. Now it is up to the judiciary to decide whether it is illegal or not.
Let the judiciary decide the fate of NMart. If judiciary says it is not illegal, nobody has any objection to continue the business.

Monday, 19 November 2012

The only truly free-choice: is a fully-informed choice

More than 50 years of quantifiable evidence proves beyond all reasonable doubt that 'MLM income opportunity' racketeers have used co-ordinated devious techniques of social, psychological and physical persuasion designed to shut down the critical, and evaluative, faculties of their victims whilst giving them the illusion that they have been making free-choices.
Bearing the above statement in mind, I observe that a particularly foolish individual has posted a simplistic comment on Corporate Frauds Watch requesting that you stop informing your many readers of the dangers of 'MLM income opportunity' fraud, on the reality-inverting pretext that your information infringes Indian citizens' right to make a free choice.
Self-evidently, the only truly-free choice is a fully-informed choice.
David Brear (copyright 2012)

Saturday, 17 November 2012

NMart's writ petition of 2010 was also withdrawn

This week NMart's counsel has withdrawn the writ petition he filed on behalf of NMart in the AP High Court in August 2010 after Corporate Frauds Watch lodged a complaint with the police against the fraudulent company stating that it is a fraud attracting the provisions of Prize Chits & Money Circulation Schemes (Banning) Act, 1978. The NMart appealed to the High Court to declare its business model legal.
Corporate Frauds Watch filed an implead petition in the same writ petition and appealed to the High Court to hear its plea before taking a decision on the writ petition filed by NMart.
However, the fraudsters tried their best to prolong the hearing on the writ petition.
Finally, the Andhra Pradesh police led by an upright police officer Dr Raghuram Reddy, superintendent of police of Prakasam district started taking action against NMart in 2012.
Immediately the NMart racketeers filed two more writ petitions in AP High Court in 2012 instead of putting forward arguments in the 2010 writ petition. 
When they found the going got tough, they simply appealed to the High Court to allow them to withdraw the petitions.
However, the writ filed in 2010 was not withdrawn at that time.
The counsel of NMart on Monday withdrew the writ petition as there was nothing else he could do with it.
In effect, the NMart lost one more chance to defend its business model in AP High Court. In essence, it could be deduced that NMart has actually nothing to present to the judiciary to defend his racketeering.
It is really pity that still the NMart 'distributors' - the fancy name for members - are still in the make believe world that the NMart would open soon.
It has already been mentioned several times in this blog that no court in India would give any relief to the racketeering of NMart and their ilk.
The classic example of this statement is the latest raids on Amway India in Kerala. The fraudulent company has no defense left for it to claim its 'proven business opportunity all over world' was good for Indians.
Last time in 2011 too, instead of approaching the judiciary for a remedy, the fraudulent Amway racketeers have mobilised some IBOs to submit a representation to the chief minister of Kerala.
This time they simply tucked the tail and slunk off.

Tuesday, 13 November 2012

The average Australian, knows 'Amway' is a scam and a cult

Readers of Corporate Frauds Watch (particularly, Indian law enforcement agents and prosecutors in Kerala) might be interested to take a look at the following frightening description of 'Amway' from an Australian who signed him/herself 'Mo.'
'Well your blog has really been the eye opener.
For 6 months our family was hounded by my cousin's ex-partner. He is 37 - that's if he is still alive. Although he is a big strait bloke who has worked some pretty rough jobs, he was groomed like a little choir boy by a creepy older man from his past who rang him with the "business deal of the century." He was taken out on his first Amway date in a new 4X4 to a swanky restaurant then seduced by all the bright lights and rock music at the late night razzle dazzle Amway masses. He became sure he was going to become a big millionaire leader with his own big car in a couple of years. He shaved off his beard dug out a suit gave up drinking and stacked his garage with the Amway rubbish. He spoke like a tape recorder. He told us that the Amway business is not a scam because it has been running since the 1950s with government backing. He also told us that you don't need to sell anything. You can buy hundreds of dollars of Amway products every month and recruit 6 people to copy all the buying and recruiting. When no one fell for the scam he was giving his Amway rubbish away by the box load. I suppose he thought having to use it every day would get us hooked. Eventually no one would speak to him and my cousin and their kids were taking a lot of flak. She is now diagnosed with depression. Her ex has run up 40 000 dollars on their credit cards and done a runner. She thinks he's topped himself. The average Australian knows Amway is a scam and a cult, but I never really got how it all worked until I read your explanations. "Wampum's" about right. The rubbish products are a smoke screen to steal your money in a pyramid scam and pretend your in a legal selling business. '
Corporate Frauds Watch

Sunday, 11 November 2012

Amway area manager in Kerala in judicial custody

Action against multi-level marketing firms
Area manager of Amway in the State P.M. Rajkumar, 29, who was arrested following searches at the offices and godowns of Amway in Thrissur, Kozhikode, and Kannur, was produced before the Judicial First Class Magistrate, Thamarassery, on Saturday and remanded in judicial custody for 14 days.
The Crime Branch (Economic Offences), Kozhikode, team, which is spearheading the drive against multi-level marketing companies in the State, had arrested Rajkumar on Friday night.
The investigating team led by P.A. Valsan, Superintendent of Police, Crime Branch (EO), Kozhikode, decided to arraign the Delhi-based couple Sharadul Suresh Shroff and Pallavi Suresh Shroff, both directors of Amway, as accused in the case.
The drive was triggered by a complaint filed by Vishalakshi, a tailor in Kozhikode. It is expected that more complaints would be registered, leading to more arrests.
It is learnt that Rajkumar maintained the company’s official line that it was doing legal business within the guidelines approved by the State government in 2011 for direct selling companies. However, the investigating team is charging that the company making it mandatory for its distributors to purchase products to get returns out of investment amounted to violation of the guidelines.
Also, the Crime Branch team is finalising the procedures to issue lookout notices on eight directors of Alga Royal Life Marketing Company, which was closed down for violation of Prize Chits and Money Circulation Scheme (Banning) Act.
All the directors of the company went into hiding after the case. One of the senior officials in the team said that even though the company offered products against investments made during initial stages, towards the later period it was directly canvassing investment after promising double the returns. The company used to distribute products marketed by Maharishi Herbals.
The business model outlined in the website of the company offers five streams of income for those joining as distributors, which keeps multiplying depending on the number of new distributors brought into the network by them.
Getting at least one of the directors in custody was essential to gauge the exact spread of the network, as it could only by cracked through the transactions made online. Without interrogating any of the directors, the administrative rights to go into the records online could not be secured. The investigating team has decided to wait for it rather than seeking help of the Cyber Cell to crack the website.

Friday, 9 November 2012

Kerala police raid Amway outlets again

Kerala police on Friday (9-11-2012) raided the Amway outlets, warehouses all over the State and closed down the outlets.
This is the second time in a year Kerala police conducted raids on Amway stating that it is running illegal money circulation scheme in the name of selling products.
Recently, the Kerala Government filed an affidavit in the Kerala High Court stating that the guidelines the government issued sometime back related to direct selling companies but not to the multilevel marketing companies like Amway and others.
Basing on the affidavit, the Kerala police raided the Amway outlets and seized the warehouses.
Details are awaited.

On August 7, 2011, the Kerala police conducted raids on the nine premises of Amway India in Kerala following criminal cases against the multilevel marketing company filed by several persons at three places - Kannur, Wynad and Thrissur.
Police conducted raids on the premises of Amway India at Thirvunanthapuram, Kollam, Kottaaym, Kochi, Kozhicode, Thrissur, Palakkad, Wynad and Kannur in the Indian southern State of Kerala.
There have been several complaints against this fraudulent company of indulging in money circulation scheme in the name of selling products. This fraudulent company has been offering a 'good business opportunity' to become rich in 3-5 years.
The website of Amway India offers its members a monthly of Rs. 62,500 if they succeed in enrolling 102 members downline of each member with the business model of 6-4-3. That means every member has to enroll six members and in turn these six members has to enroll four members each and these four members has to enroll three members each to complete one cycle. If the cycle is completed the first member would earn every month Rs. 62,500 without any personal effort.
In effect, the business of Amway India has been completely shut down for the time being in this Arabian coastal cash-rich State of India.
It may be recalled that Andhra Pradesh High Court has already held that the business model of Amway India is illegal and police have powers to stop such business. And when the Amway  India preferred a special leve petition in the Supreme Court of India, the Apex Court upheld the judgement of Andhra Pradesh High Court. Still, the fraudulent  company is still practising the same business model for quite sometime on the pretext that there were no complaints.
The Madras High Court in the Apple FMCG case held that for the simple reason that there were no complaints the business model would not become legal. A crime is a crime whether there were complaints or not.

Wednesday, 7 November 2012

Renowned gold merchants cheating people with illegal schemes

Big Corporate Houses like Tanishq, Kirtilal, Mahaveer Jewelers, Mohammad Khan & Co Kalyan Jewelers and a score of others which are into sale of gold ornaments, diamonds and other products have been cheating millions all over the country in the name of various schemes.
But there is one similarity in all these schemes. All these schemes violate Prize Chits & Money Circulation Schemes (Banning) Act, 1978. Though they have been cheating millions in the name of schemes, in spite of the complaints by Corporate Frauds Watch, police are not taking action against these companies on the pretext that there are no victims to lodge a complaint against them.
The Madras High Court in Apple FMCG Marketing vs. Union of India in 2005 stated that the mere fact that no complaints were received does not make an act legal, if it be otherwise illegal.
Section 2 (e) of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 defines what is Prize Chit. It clarifies that the conventional chit fund won't fall under this enactment. 
A close look at their schemes reveals how they are cheating the gullible with the promise of benefit to the customers. In fact, they are only making easy and quick money.
Section 2(e) “prize chit” includes any transaction or arrangement by whatever name called under which a person collects whether as a promoter, foreman, agent or in any other capacity, monies in one lump sum or in installments by way of contributions or subscriptions or by sale of units, certificates or other instruments or in any other manner or as membership fees or admission fees or service or service charges to or in respect of any savings, mutual benefit, thrift, or any other scheme or arrangement by whatever or the income accruing from investment or other use of such monies for all or any of the following purposes, namely:-
(i) giving or awarding periodically or otherwise to a specified number of subscribers as determined by lot, draw or in any other manner, prizes or gifts in cash or in kind, whether or not the recipient of the prize or gift is under a liability to make any further payment in respect of such scheme or arrangement ;
(ii) refunding to the subscribers or such of them as have not won any prize or gift, the whole part of the subscriptions, contributions or other monies collected, with or without any bonus, premium interest or other advantage by whatever name called, on the termination of the scheme or arrangement, or on or after the expiry of the period stipulated therein, but does not include a conventional chit. 

As per the schemes, the members have to pay money in installments for a certain period and by the end of the period, the member would be repaid in kind but not in cash. Anyway, the enactment prohibits in repayment of cash too.
For instance, if a member pays Rs. 1000 per month the company would receive Rs. 12,000 in a year. If they collect the subscriptions from 1000 members, the company would be collecting every month Rs. 10 lakh and in a year and the amount would be a staggering Rs. 1.2 crore.
The company repays only in kind i.e., gold ornaments or other products. In effect, there would be an assured business of Rs. 1.20 crore to the company with profits. Moreover, the money would be with the company through out the scheme period fetching interest on the deposit which is also another profit to the company. This is nothing but easy and quick money. 
And the most dangerous part, there is no guarantee for the deposits if the company vanishes with the deposits.
The companies may claim that their companies have long-standing record of repayment perfectly to the customers. But that does not make an illegal act, a legal one. It is illegal to collect deposits from the public without the permission of the Reserve Bank of India.
In June, 1974, the Reserve Bank of India had constituted a Study Group under the Chairmanship of James S. Raj, the then Chairman of Unit Trust of India for examining in depth the provisions of Chapter III-B of the Reserve Bank of India Act, 1934. In its report submitted to the Reserve Bank in July, 1975, the Group observed that the prize chit/benefit/ savings schemes benefit primarily the promoters and do not serve any social purpose, and that they are prejudicial to the public interest and affects the efficacy of the fiscal and monetary policies of the country.  The Study Group formulated the Prize Chits & Money Circulation Schemes (Banning) Act and it was enacted in 1978.

Monday, 5 November 2012

MLM has been described as the greatest of all scams

Dear Colleagues,
I have just posted a Blog, entitled "Have I Got a Deal for You: The Endless Chain Offer." The Blog references the excellent article recently published by Bruce Craig, former Asst. Attorney General of the state of Wisconsin.

Many of us have debated, studied and written about the fraudulent practice of selling products (services, dreams, investments, training, etc.) by using an endless chain income promise as the marketing lure. Rewards depend on an ever-increasing number of other investors or participants also joining the plan. The "endless chain" is basis for all pyramid schemes, ponzi schemes, economic bubbles and financial manias. Recent events show it to be the most dangerous of all threats to global economic stability. It can distort pricing, ruin asset values, wipe out jobs, and make people crazy. Yet, it is still a largely unstudied or misunderstood form of fraud.

In much of my own analysis of the endless chains in multi-level marketing (MLM) fraud -- following the mainstream Federal Trade Commission approach -- I have focused on levels of retailing by the MLM salespeople as a determinant of MLM legality. 

Yet, in recent months, mostly from conversations with Bruce Craig, and through my own defense in a defamation lawsuit brought against me by a multi-level marketing company,  I have come to see more clearly that an endless chain is an insidious fraud, regardless whether the "downline" has retail customers or not. It is true that perhaps the harm to the victims would be lessened if all the salespeople could recoup some or all of their investments from retail sales profits. But the reason for their initial investment would have been based on deception by the perpetrators. The promised income could not be gained. All their time, effort and other capital investments would be lost.  Also, many would not actually recoup their direct financial investments anyway since the "unlimited" recruitment rewards and the endless profusion of "salespeople" in all areas makes profitable retailing pointless and unproductive. 

Often the so-called threshold of retail sales is said to have been met (3 customers for each salesperson, with both buying the same amount and paying the same price, with salespeople classified as both customer and distributor), yet, virtually none of the so called "distributors" is profitable. They are still paying out more than they gain in retail profit. Gaining the few retail customers (usually friends or family or phantom customers paid for by the salespersons themselves) is merely an additional "consideration" paid to qualify for the illusory endless chain rewards. The scheme is profitable at the expense of thousands of unprofitable salespeople.

Meanwhile, the promised income, that is based on building a downline, is reserved for the top 1% of recruiters. That fact is mathematically pre-determined and immutable. Offering it to everyone as the lure to draw investments, purchases and fee payments or to induce retail sales is "unfair and deceptive", that is, a swindle. Some state laws, Wisconsin's and California's for example, among others, plainly prohibit endless chain income or discount schemes, and they do not include any provision for a threshold of retail sales. The endless chain is recognized as an "inherent" fraud.

Unfortunately, due to the Amway federal court decision of 1979, the PR and lobbying of MLM companies, and the laxness of the FTC,  "retail sales" has become the wedge that opened a chasm for endless chain promises to enter the marketplace, with multi-level marketing (MLM) as the standard bearer. The pyramid scheme was elevated to a "business model." And now, each year,  millions of people transfer their last remaining savings to the MLM promoters on the futile hopes and dreams of building a huge downline and making the "unlimited" income that is promised.  The endless chain income promise is the central and defining feature of MLM pay plans. Without its false but seductive lure, these schemes would collapse in weeks. 

And since retail levels are the held up as the key factor for claiming legality, the MLM industry has gone to great lengths to ensure that data on retailing cannot be documented. They claim not to know retail sales levels or any other facts about "end-users" or that the data is impossible to document. In fact, this is because, in most cases, the retail customers don't exist! So, a factor (retail sales levels), that it essentially irrelevant to legality, is held up as proof of legality, and then that factor is hidden from the public or regulators to document. The legal defense is both irrelevant and mythical. 

MLM has been described as the greatest of all American scams, but the legal defense of MLMs may be an even greater scam.


Robert FitzPatrick, Pres.
Charlotte, NC

Friday, 2 November 2012

Watch A great short film on the MLM which is killing relationships

A must watch short film in Tamil with subtitles. Thanks to Shanmuga for bringing it to my notice. 

Thursday, 1 November 2012

Deluded Ambot or 'Amway' Ministry of Truth in thin disguise?

The many free-thinking readers of this Blog should be amused to learn that, Corporate Frauds Watch has received another load of reality-inverting, scripted-bullshit from either a temporarily-deluded Ambot or from the 'Amway' Ministry of Truth in thin disguise.
Laughably, a classic piece of 'Amway' propaganda, signed 'gigirichard' (who claimsto be an 'Amway Distributor Building the Business in Singapore') instructs 'Amway'adherents not to read CFW, but (in almost the same breath) attempts to portray the authors of this Blog as time-wasting, closed-minded propagandists who cannot tolerate the free-opinions of others.
In the adult world of quantifiable reality, the position of CFW remains as follows:
The quantifiable evidence (in the form of an effectively-total lack of income-tax payments, over many decades, by a never-ending chain of tens of millions of temporarily-deluded persons imagining themselves to be 'Independent Amway Business Owners') proves beyond all reasonable doubt that the so-called 'Amway Income Opportunity' has been a pernicious, Utopian lie designed to steal its victims cash whilst loading them with guilt. 
So come on 'gigirichard', don't be shy, I'm giving you the perfect opportunity to prove to the many free-thinking readers of CFW that you are neither a temporarily-deluded Ambot nor the 'Amway' Ministry of Truth in thin disguise - please demonstrate that your critical and evaluative faculties are, indeed, fully-functioning(as you claim) simply by answering the following common-sense questions:
  • Since the organization's instigation, exactly how many people around the world have signed-up with 'Amway' and exactly how many of these alleged 'Independent Business Owners' have got back more money than they paid in?
  • What quantifiable evidence can you supply which would prove that the so-called 'Amway Income Opportunity' has had any significant and sustainable revenue other than that deriving from a never-ending chain of losing participants?
David Brear (copyright (2012)