Tuesday, August 28, 2012

COMMENTARY: Why didn't the so-called experts speak up sooner?

In analyzing the MLM industry only for about 3 or so years, I've been called many names by supporters of many suspect schemes.

While I am just as happy to have been proven right, or even... vindicated, regarding my criticism of Zeek Rewards, one thing bothered me somewhat...

Where were the "real" experts? Those who had been studying the industry for years, both for and against the MLM model? 

And where is the DSA in the whole Zeek debacle?

Let me start with the attorneys. 

The number of attorneys who specialize in MLM or direct selling industry... you can count on one hand.  Thompson & Burton, Grimes & Reese, Nehra & Waak, and Jeff Babener. Really, that's it. If I missed one, please let me know. 

I don't expect a statement from Grimes and Reese because Kevin Grimes appeared at Zeek functions as Zeek used his "compliance course". 

I don't expect a statement from Nehra and Waak because Zeek hired Gerald Nehra as compliance consultant (and apparently referred to Waak's article for something unrelated). 

I don't really expect a word from Thompson & Burton because Mr. Kevin Thompson is the lawyer for Bidify, a Zeek competitor and to say bad things about Zeek would be conflict of interest. To his credit, Mr. Thompson was one of the first to declare Zeek dead, and quickly published an essay on his blog that everybody in the industry was blind in not spotting this sooner.  

There had been NO WORD from Mr. Babener regarding Zeek or penny auctions for MONTHS before Zeek imploded.  Though I have to give him points for giving all due credit to Oz at BehindMLM (strictly amateur like me, though he'd been doing it much longer) for catching the Ponzi first...  Mr. Babener, however, gave credit on the day it all went down, which is much like closing the barn door AFTER all the horses escaped.

How about DSA? 

There's NO mention of Zeek or RVG on DSA's website except a link to Forbes.com article about Zeek's shutdown.

My private thought on this... DSA can't really denounce Zeek without pointing out how close MLM is to a pyramid scheme.

How about the MLM "celebrities"? 

When you search stuff for MLM, two of the most frequent names you'll come up is probably going to be Rod Cook (MLM Watchdog), and Troy Dooly (MLM Helpdesk). There's also Lou Abbot on his website MLM-thewholetruth, and Len Clements on Marketwave  (not in any particular order, I swear).

Rod Cook had Zeek on "shaky and flaky" list prior to the shut down, since February 2012, so he's "against". 

Troy Dooly, on the other hand, seem to have had a change of heart since about December 2011. First post about in December 2011 says there are concerns. In January, when Zeek announced they are hiring the attorneys (see above for list) Troy warmed up. In February and March 2012 his statements were taken as endorsements. While one cannot control what other people think of his or her words, there's definitely a hint of bias. Take a look at this comment on Troy's website:

After that, Dooly visited Zeek's HQ and interviewed then COO Dawn Wright-Olivares. After that, Troy Dooly moved from "not sure" to "I'm sure this will succeed", and have not changed his mind since, even AFTER the shutdown of Zeek. As of closing of this article, he believes that Zeek's not a Ponzi, but infiltrated by foreign Ponzi "gang" that somehow TURNED IT INTO a Ponzi.  (A position I personally consider to be absurd)

Lou Abbot (mlm-thewholetruth) did not have a position on Zeek until recently. He had an article on August 8th (10 days before shut down) that the industry has widely divergent opinions on Zeek and penny auctions. Though he did conclude that Zeek raises a huge red flag for him. However, Abbot was not as visible as Dooly or Cook.

Len Clements (Marketwave) has expressed some reservations about Zeek, and was writing a long treatise on Zeek, and was about 90% finished when Zeek was closed by the SEC. It was then published, with a conclusion that Zeek is a pyramid scheme, but not a Ponzi scheme. I agree with most of his findings, and he did dug up some details that even I wasn't privy to, but I don't agree with his conclusion. Suffice to say he was... slightly negative.

How about MLM cynics / opponents? 

The normally outspoken critics of MLM, such as Robert Fitzpatrick or Dr. Jon Taylor and other critics did not speak out against this Ponzi scheme. Search of their websites shows no sign of criticism, review, warning, impressions, or anything regarding Zeek.

Now, what was my point?

Mr. Kevin Thompson is right, the industry sat by and did nothing. Everybody in the industry either ignored Zeek altogether (like the DSA) or made statements that are positive enough to be taken as endorsements by fans of the scheme.

The only ones who spoke out against Zeek were the Zeek critics, such as BehindMLM, PatrickPretty, RealScam forum, Scam.com, and this blog and its author, and a few other commenters. And when we spoke up, we were insulted, charged with various spurious charges (shill for other companies being the most often mentioned "conspiracy") and so on and so forth.

As the saying goes:

All that is necessary for evil to triumph is for good men to do nothing  -- Leon Tolstoy, War and Peace

The MLM industry sat by and did nothing, for the most part.

This will have SERIOUS repercussions for the industry for many years.

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  1. Sometimes it's easier to look up to heaven than at the world around you. Especially when the world around you is full of people staring at you that want their money back

  2. It was much later that we learned that Troy Dooly was in fact a PAID CONSULTANT for Zeek Rewards, without disclosing so. He was fined by SEC for this conflict of interest.

    Stay tuned for an article on the "mercenaries" in MLM... consultants, economists, trainers, attorneys, etc.