This American Life, a NPR radio / podcast, has a segment on "Wake Up Now", a business that "inspires" people into joining and making big bucks via cult-like mass media events, while its own PR chief says "we want people to make 5-600 a month", and most people don't make even that, according to its own income disclosure statements. WTF?
Listen to it yourself:
http://www.thisamericanlife.org/radio-archives/episode/543/wake-up-now?act=1#play
a blog about Skepticism, MLM, Scams, and Critical Thinking
Monday, December 29, 2014
Friday, December 26, 2014
BREAKING NEWS: TachoEASY AG confirms name was stolen by TachoEASY Iberica, NOT affiliated at all
Sharp-eye readers of BehindMLM have just spotted this press release on the TachEASY.DE (and TachoEASY.AT)
TachoEASY AG has recently become aware of the fact, that the trade name TachoEASY was associated with the Geteasy Group.
We have received a large number of statements of actual consumer confusion. We were also approached by third parties and asked about our possible relation to Tachoeasy Iberica.
TachoEASY AG is not affiliated with these entities and demanded vis-à-vis Tachoeasy Iberica that they immediately cease and desist any and all use of the trade name and logo TachoEASY.
The products distributed by Tachoeasy Iberica are not the original products developed and sold by our company, the TacoEASY AG. Any statements to the contrary are false.
For any further questions, please contact TachoEASY AG.
In other words, TachoEasy Iberica is a clone of a real company, and was apparently created to provide "social proof" for the GetEasy ponzi scheme.
Friday, December 19, 2014
News Update 19-DEC-2014: Zhunrize Plea Deal; PlanB4You Busted; Zeek Money May Be Stolen; FDA Admonishes Herbalife
Lots of little news this week... Remember folks, don't accept random news items without attribution. I link to my sources, and you should click through to make sure I didn't lie to you (unlike others)
PlanB4You Ponzi Busted in Europe
PlanB4You was reportedly busted by local police (Google Translate of refdag.nl article) when a seizure order was issued and bank account containing 2.5 million (?) have been frozen and multiple locations raided. Several luxury cars were apparently seized. And challenges to court have been denied.
PlanB4You (review by BehindMLM) is a virtually exact copy of Ad Surf Daily ponzi busted in the US in 2008, with 25% ROI in 25 days.
Zhunrize reaches Plea Deal with SEC, may go into receivership
Previously we reported that Zhunrize has been closed by SEC as a ponzi scheme, and at least one shill or troll claimed it was not true, and they had reopened. Seems every Ponzi scheme claimed this at one time or another, as there are reports this also happened with PlanB4You reported above.
Any way, to nail that rumor shut... (reported by BehindMLM) Zhunrize and owner Pan have reached separate deals with SEC to pay fines and disgorgement of ill-gotten gains. The judge has yet to sign the deal but is expected to.
There may be criminal cases pending later. Receivership will be appointed if the deal is accepted and that's the end of that.
PlanB4You Ponzi Busted in Europe
PlanB4You was reportedly busted by local police (Google Translate of refdag.nl article) when a seizure order was issued and bank account containing 2.5 million (?) have been frozen and multiple locations raided. Several luxury cars were apparently seized. And challenges to court have been denied.
PlanB4You (review by BehindMLM) is a virtually exact copy of Ad Surf Daily ponzi busted in the US in 2008, with 25% ROI in 25 days.
Zhunrize reaches Plea Deal with SEC, may go into receivership
Previously we reported that Zhunrize has been closed by SEC as a ponzi scheme, and at least one shill or troll claimed it was not true, and they had reopened. Seems every Ponzi scheme claimed this at one time or another, as there are reports this also happened with PlanB4You reported above.
Any way, to nail that rumor shut... (reported by BehindMLM) Zhunrize and owner Pan have reached separate deals with SEC to pay fines and disgorgement of ill-gotten gains. The judge has yet to sign the deal but is expected to.
There may be criminal cases pending later. Receivership will be appointed if the deal is accepted and that's the end of that.
Tuesday, December 16, 2014
NEWS UPDATE: TelexFree may be the widest Ponzi scheme ever, surpassing ZeekRewards
Previously the Ponzi scheme with the widest reach is believed to be Zeek Rewards at 1 million victims and almost nine hundred million dollars. It was shut down in 2012 by SEC and other US agencies.
The bankruptcy trustee in charge of shutting down TelexFree after it tried to declare bankruptcy revealed that TelexFree fraud may be even bigger... with possibly up to 2.1 million victims and OVER a billion dollars.
There are 60000 victims in SOUTH AFRICA... the opposite side of the globe.
Boston Globe reported that some unscrupulous lawyers are encouraging victims to flood Darr's office with paper claims (i.e. physical documents). He is NOT, repeat NOT taking paper claims because it cost too much to process. Soon claimants will be able to go to a website (much like Zeek Rewards Receivership) to file claims, and they will process the claims online.
Read the full article at http://www.bostonglobe.com/business/2014/12/16/telexfree-trustee-stephen-darr-may-have-toughest-job-boston/Wkk5JzcPtjfyar6c9QD1sI/story.html#
The bankruptcy trustee in charge of shutting down TelexFree after it tried to declare bankruptcy revealed that TelexFree fraud may be even bigger... with possibly up to 2.1 million victims and OVER a billion dollars.
There are 60000 victims in SOUTH AFRICA... the opposite side of the globe.
Boston Globe reported that some unscrupulous lawyers are encouraging victims to flood Darr's office with paper claims (i.e. physical documents). He is NOT, repeat NOT taking paper claims because it cost too much to process. Soon claimants will be able to go to a website (much like Zeek Rewards Receivership) to file claims, and they will process the claims online.
Read the full article at http://www.bostonglobe.com/business/2014/12/16/telexfree-trustee-stephen-darr-may-have-toughest-job-boston/Wkk5JzcPtjfyar6c9QD1sI/story.html#
NEWS UPDATE: WCM777 Ponzi leader Phil Ming Xu used Ponzi money to fund House and Fashion Shop
The receiver attempting to recover assets from WCM777 Ponzi scheme operated by "Phil" Ming Xu has found more money laundered by Ming Xu.
When SEC caught up with Ming Xu and his ponzi scheme in March 2014, Xu signed a plea deal and a receiver was appointed to track down all the assets for eventual return to the victims. And the receiver, Krita L. Freitag, was sure finding a lot.
Xu had at least 54 different bank accounts under a dozen different company names at different banks, alleged the SEC in its restraining order back in March 2014. And the receiver was discovering even more assets that had been distributed to what appeared to be other companies, but are actually family members and friends. One attorney and friend of Xu got a 5 million loan from Xu days before restraining order. The same attorney also claimed to have lost a 200000 (two hundred thousand dollar) cashier's check that belongs to the receiver. In yet another case, unknown people were observed removing furniture and other property from assets frozen by court order and law enforcement had to be contacted to compel return of said assets.
Then there's the story of the missing million...
When SEC caught up with Ming Xu and his ponzi scheme in March 2014, Xu signed a plea deal and a receiver was appointed to track down all the assets for eventual return to the victims. And the receiver, Krita L. Freitag, was sure finding a lot.
Xu had at least 54 different bank accounts under a dozen different company names at different banks, alleged the SEC in its restraining order back in March 2014. And the receiver was discovering even more assets that had been distributed to what appeared to be other companies, but are actually family members and friends. One attorney and friend of Xu got a 5 million loan from Xu days before restraining order. The same attorney also claimed to have lost a 200000 (two hundred thousand dollar) cashier's check that belongs to the receiver. In yet another case, unknown people were observed removing furniture and other property from assets frozen by court order and law enforcement had to be contacted to compel return of said assets.
Then there's the story of the missing million...
Friday, December 12, 2014
Bad Argument: Distributors can't lose money if they enjoy the product (WTF?!)
One of the contentious issues between MLM proponents and critics is the definition of a "customer" vs. a "distributor".
Logically, the differences are crystal clear:
Customer spends money, buys stuff (from distributors).
Distributor earns money, sells stuff (to customers).
However, in the MLM world, things are never so clear. And one of the arguments proponents often use is "if the distributor enjoys the product for internal consumption, they could not be considered having suffered financial loss".
Or as someone argued on reddit /r/vemma...
There's another reason though... consuming the stock prevents distributor from getting a refund.
Logically, the differences are crystal clear:
Customer spends money, buys stuff (from distributors).
Distributor earns money, sells stuff (to customers).
However, in the MLM world, things are never so clear. And one of the arguments proponents often use is "if the distributor enjoys the product for internal consumption, they could not be considered having suffered financial loss".
Or as someone argued on reddit /r/vemma...
Because even those "poor souls" who join the business but don't earn commissions still aren't losing money, just like when you buy anything else in life that you ultimately consume or use you don't think of it as losing money.This is bogus logic. Can you imagine a bar owner drank all his own stock of liquor, and need to close the bar, and then tell himself, "I didn't really lose money because I got drunk"?
There's another reason though... consuming the stock prevents distributor from getting a refund.
Thursday, December 11, 2014
MLM Mythbusting: Is MLM really a growth industry? (The Numbers May Surprise You)
When you listen to MLMers / Network Marketers, you're often told that MLM is the big thing, it's "experiencing record growth", it's "amassing fortunes for millions of people each year", it's "#1 millionaire producing industry", big companies are going MLM, and so on and so forth. They'll dazzle you with numbers such as
- Every week 150000 people join network marketing around the world (but how many quit?)
- Worldwide sales of MLM is estimated to be 90 billion (still less than 1% of world economy)
- DSA estimates 200 million new distributors in next 10 years (again, how many quit?)
Is MLM actually growing that much, when compared to other industries? Let's look a little closer.
Is MLM the "next big thing"?
Claims have been made since the 1990's that MLM is the next big thing. Back in 1990, Richard Poe wrote in Success magazine that network marketing is "the most powerful way to reach consumers in the 90s". He also wrote a few books, specifically, Wave 4. This quote was reproduced ad infinitum by various MLMers trying to legitimize their own little niche. You can see this example where the author changed it to "21st century economy".
Basically, they've been saying it for THREE DECADES (going into FOURTH) and it STILL haven't come true.
Basically, they've been saying it for THREE DECADES (going into FOURTH) and it STILL haven't come true.
Those claims had not come true. Internet soon surpassed network marketing as the way to reach consumers, with online shopping, and ready access to review sites, peer reviews, and more. E-Commerce is a 289 BILLION dollar industry in 2012. For comparison, direct sales and network marketing is a 31.6 Billion industry in 2012, as per DSA. (see below)
One more point of comparison... Total US retail for 2012 is $4.9 TRILLION. That makes direct sales 0.64% of stuff sold. It's a niche market, and it's not growing much, and hadn't done so for decades.
One more point of comparison... Total US retail for 2012 is $4.9 TRILLION. That makes direct sales 0.64% of stuff sold. It's a niche market, and it's not growing much, and hadn't done so for decades.
Is MLM "experiencing record growth"?
A lot of places repeat big words like "record growth"...
The problem is... relative to what? DSA itself reports that sales has been down since 2006 and only just recovered in 2013 or 2014 (not counting inflation). See for yourself (all graphs courtesy of DSA.org):
1991 to 2000
2000 to 2008
2008 to 2012 (latest data from DSA)
So "record growth"... In relation to what, exactly? It's now 2014 and they probably did break their old 2006 record... but that just means they are not as recession proof as they claimed to be...
Also, is 31 billion a lot? Again, in relation to what? Franchising is a 740 billion industry as of 2011, according to a PricewaterhouseCoopers analysis. And franchising started at about the same time as network marketing. In fact, franchising may have success rate of up to 95% (the stats are old, per 1991, and no new data had been compiled since)
"Record growth" statement is meaningless.
"Record growth" statement is meaningless.
Friday, December 5, 2014
WSJ: T. LeMont Silver Blames Everyone But Himself for Being Sued as "Net Winner" in Zeek
Wall Street Journal article, published 2014-DEC-03 specifically named T. LeMont Silver, a Zeek "net winner" (i.e. he got more than he put in while others lost money), and serial Ponzi participant, as someone who admits he's an idiot, yet blames everybody except himself.
In the WSJ article SEC on Lookout for Web-Based Pyramid Schemes by Jean Eaglesham, it specifically named GoFunPlaces (and its parent eAdGear) as a scam shut down by the SEC.
At the end, Mr. T. LeMont Silver Sr. was mentioned by name, where the author wrote:
"Mr. Silver said he is a marketer with little knowledge of the business operations of the companies he promotes"
Yet he wants you to join him in making money.
Tsk, tsk, tsk...
In the WSJ article SEC on Lookout for Web-Based Pyramid Schemes by Jean Eaglesham, it specifically named GoFunPlaces (and its parent eAdGear) as a scam shut down by the SEC.
At the end, Mr. T. LeMont Silver Sr. was mentioned by name, where the author wrote:
"Mr. Silver said he is a marketer with little knowledge of the business operations of the companies he promotes"
Yet he wants you to join him in making money.
Tsk, tsk, tsk...
Thursday, December 4, 2014
BREAKING NEWS: Indian police arrested "YOBSN" heads (3 Indians, 1 non-Indian) for International Pyramid Scheme
First reported by PatrickPretty.com
The scam that was referred to "International MLM Fraud" is YOBSN, aka "Smart Media Technologies" (but also known as Social Media Technologies, Automatic Geek, and so on.)
Quoting from the BangalaruCityPolice's Facebook account:
CCB, Bengaluru City @CCBBangalore Busts INTERNATIONAL MLM Fraud which collected millions of $s and arrested New... http://t.co/J0g2LwHJK0
— BengaluruCityPolice (@BlrCityPolice) December 4, 2014
The scam that was referred to "International MLM Fraud" is YOBSN, aka "Smart Media Technologies" (but also known as Social Media Technologies, Automatic Geek, and so on.)
Quoting from the BangalaruCityPolice's Facebook account:
On Dec. 3, “acting on a complaint received at the office of DCP Crime, CCB F&M squad raided Room No 225 of Hotel Capital, Raj Bhavan Road, where 4 accused persons were explaining, advertising & collecting enrollment fee from new victims of YOBSN SOCIAL MEDIA NETWORK MLM fraud web based company ( hosted from US ) and run through a website www.socialmediatechnologies.com . . .New members are lured with promise of big money in USD $s by pushing the ‘CREATING YOUR OWN SOCIAL NETWORK’ tagline and encouraging members to bring in more members & growing their pyramid on the LEFT & RIGHT side.They advertise by saying that when a company like Facebook etc is making billions of $s from social network, why can’t you make money.This company runs a Web site called Smart Media Technologies. Any person can become a member by paying 8000 to 25000 INR as per their capacity. Then the person has to introduce Two persons (Left & Right member) to invest for which he would get 25% BONUS each as commission. As the pyramid grows, he would get more bonus. Each member is given a username/password and the commission earned & number of members introduced is meticulously accounted in the login itself. In fact, each user can see his pyramid and the amount of commission earned by it.
Friday, October 24, 2014
BREAKING NEWS: GetEasy under police investigation in Portugal
RPT "Friday at 9" News reported that GetEasy, an alleged Ponzi scheme, is under Judicial Police investigation in Portugal.
http://behindmlm.com/companies/geteasy-under-police-investigation-in-portugal
Full video report is available at
http://www.rtp.pt/play/p1047/e170084/sexta-as-9-ii
http://behindmlm.com/companies/geteasy-under-police-investigation-in-portugal
Full video report is available at
http://www.rtp.pt/play/p1047/e170084/sexta-as-9-ii
BREAKING NEWS: Fed Grand Jury Indicts Paul Burks of Zeek Reward Ponzi Scheme
Star Tribune (North Carolina) has reported that Federal grand jury has indicted Paul Burks, head of Rex Venture Group, parent company of Zeekler and ZeekRewards ponzi scheme, of wire and mail fraud, conspiracy, and tax fraud.
http://www.startribune.com/business/280347122.html
http://www.startribune.com/business/280347122.html
BREAKING NEWS: Massachusetts filed civil fraud charges against Emgoldex "Team USA"
Massachusetts securities division (MSD) has filed civil fraud charges against "Emgoldex Team USA" and its four members of selling unregistered securities, pyramid scheme, and general public fraud. The lawsuit can be viewed here:
http://www.sec.state.ma.us/sct/current/sctemgoldex/EmGoldex-et-al-Complaint-Docket-No-2014-0056.pdf
If you promote an alleged scam, you can be targeted by your local regulators, regardless of whether you "own" the scam or not. "Emgoldex Team USA" and the four members are certainly not owners, but if that's what local authorities can get their hands on, then the local authorities will do so.
Thanks to BehindMLM and PatrickPretty for the headsup.
http://www.sec.state.ma.us/sct/current/sctemgoldex/EmGoldex-et-al-Complaint-Docket-No-2014-0056.pdf
If you promote an alleged scam, you can be targeted by your local regulators, regardless of whether you "own" the scam or not. "Emgoldex Team USA" and the four members are certainly not owners, but if that's what local authorities can get their hands on, then the local authorities will do so.
Thanks to BehindMLM and PatrickPretty for the headsup.
BREAKING NEWS: Moolah goes bust, CEO missing with 1.5M worth of DogeCoins; other cryptocoin scams shut
According to _The Guardian_, Moolah, a cryptocurrency exchange that specialized in Dogecoin (and even sponsored a car in NASCAR racing series), headed by "Alex Green", had apparently gone bust and all the customer funds (believed to be 1.4 to 1.5 million pounds?) are gone.
Alex Green allegedly told everybody that he was previously named "Ryan Kennedy" after running several business into the ground, including Flirble (a web hosting service that ran only 2 months) and Lemon (a bitcoin mining firm that shut down in 2013), according to _The Guardian_. And because this company is also done, he's taking the money and he's gonna run.
In July 2014 "Green" and his company Moolah bought a competitor "Mintpal" after Mintpal was hacked and lost $2M worth of bitcoins. However, nobody had even apparently saw "Green" in person outside of Moolah's offices.
Alex Green allegedly told everybody that he was previously named "Ryan Kennedy" after running several business into the ground, including Flirble (a web hosting service that ran only 2 months) and Lemon (a bitcoin mining firm that shut down in 2013), according to _The Guardian_. And because this company is also done, he's taking the money and he's gonna run.
In July 2014 "Green" and his company Moolah bought a competitor "Mintpal" after Mintpal was hacked and lost $2M worth of bitcoins. However, nobody had even apparently saw "Green" in person outside of Moolah's offices.
Tuesday, September 30, 2014
BREAKING NEWS: Massachussetts calls iFreeX "rebranded TelexFree fraud"
According to Massachusetts Securities Division, the first agency to pound on TelexFree fraud, iFreeX is a reload scam targeting TelexFree victims. It even has the same ponzi pimp: Sann Rodrigues (who's actually "Sanderley Rodrigues de Vasconcelos") People who have verifiable information are urged to call MSD at 1-800-269-5428 to assist in the investigation.
http://patrickpretty.com/2014/09/30/urgent-bulletin-moving-massachusetts-issues-warning-on-ifreex-scheme-ifreex-appears-to-be-nothing-more-than-a-rebranded-telexfree-fraud-for-mobile-phones/
http://patrickpretty.com/2014/09/30/urgent-bulletin-moving-massachusetts-issues-warning-on-ifreex-scheme-ifreex-appears-to-be-nothing-more-than-a-rebranded-telexfree-fraud-for-mobile-phones/
Friday, September 26, 2014
BREAKING NEWS: SEC shuts down eAdGear (GoFunPlaces / GoFunRewards)
According to latest article on BehindMLM, eAdGear, the folks behind GoFunPlaces / GoFunRewwards are done... shut by SEC, with help of FBI, and authorities in Hong Kong, China, Canada, and United Kingdom.
This would mark the FOURTH Ponzi shut by SEC in this year alone (WCM, Zhunrize, and TelexFree)
See http://behindmlm.com/companies/sec-shuts-down-eadgear-gofunplaces-gofunrewards/
This would mark the FOURTH Ponzi shut by SEC in this year alone (WCM, Zhunrize, and TelexFree)
See http://behindmlm.com/companies/sec-shuts-down-eadgear-gofunplaces-gofunrewards/
Tuesday, September 23, 2014
BREAKING NEWS: Zhunrize closed as $100 million ponzi/pyramid scheme by SEC
Breaking news: Zhunrize, an alleged e-commerce platform that was pitched as "Internet store you can own" for $3000 a pop has been closed by SEC as a pyramid scheme where joiners are encouraged to recruit more joiners and get paid if they do so.
SEC has obtained a full Federal money freeze order from court in Georgia and have frozen all assets belonging to Zhunrize, and cited stats of up to 70000 victims who handed over 105 million dollars.
http://www.courthousenews.com/2014/09/23/71668.htm
Behind MLM had previously done a review of Zhunrize where it concluded this can only be a ponzi scheme. I have provided additional comment that this is just "Skybiz" pyramid scheme reinvented for 21st century... using the same lure: ecommerce.
http://behindmlm.com/companies/zhunrize-review-a-3000-e-commerce-platform
This marks the THIRD major Ponzi scheme shut down in 2014 ... TelexFree, WCM777, AND now Zhunrize.
SEC has obtained a full Federal money freeze order from court in Georgia and have frozen all assets belonging to Zhunrize, and cited stats of up to 70000 victims who handed over 105 million dollars.
http://www.courthousenews.com/2014/09/23/71668.htm
Behind MLM had previously done a review of Zhunrize where it concluded this can only be a ponzi scheme. I have provided additional comment that this is just "Skybiz" pyramid scheme reinvented for 21st century... using the same lure: ecommerce.
http://behindmlm.com/companies/zhunrize-review-a-3000-e-commerce-platform
This marks the THIRD major Ponzi scheme shut down in 2014 ... TelexFree, WCM777, AND now Zhunrize.
Sunday, September 21, 2014
NEWS UPDATE: Quite a lot of catching up with all sorts of news updates regarding Ponzi, potential Ponzis, and such
Okay folks, sorry for not updating the blog for a week or so. Had been busy doing some other stuff... like playing way too much Doctor Who Legacy. Any way, articles are coming back next week. In the meanwhile there are some news to tide you over.
Remember, I link to the source, so click through if you want more details. Don't believe random people telling you some sort of news, then provide a link to their own website with no further citings.
See BehindMLM article: http://behindmlm.com/companies/zeek-rewards/howard-kaplan-gave-bad-legal-advice-to-850m-ponzi/#more-19145
Which contains links to the actual court documents, courtesy of ASDUpdates.
Remember, I link to the source, so click through if you want more details. Don't believe random people telling you some sort of news, then provide a link to their own website with no further citings.
Howard Kaplan claims he cannot be negligent regarding Zeek Rewards
In June Zeek Rewards receiver Ken Bell sued Howard Kaplan (the tax attorney who advised Zeek Rewards at a widely publicized event) and MLM lawyer Kevin Grimes for legal malpractice. Kevin Grimes have been since ousted from what used to "Grimes and Reese PLLC", and the company renamed "R & R Law" with a new partner in his place. We learned, on in late July / Early August 2013, Howard Kaplan's attorney(s) has denied any responsibility and wants to case to be dismissed, not because they're not guilty, but because they argue that a guilty party (i.e. Zeek) cannot sue its consultants/lawyers for malpractice because of "in pari delicto", a legal term that roughly means "both are equally at fault". Zeek Receiver Ken Bell have since fired back a reply to the court that Kaplan's reasoning is flawed, and urge the case to continue.See BehindMLM article: http://behindmlm.com/companies/zeek-rewards/howard-kaplan-gave-bad-legal-advice-to-850m-ponzi/#more-19145
Which contains links to the actual court documents, courtesy of ASDUpdates.
Wednesday, September 10, 2014
BREAKING NEWS: TelexFree investigation in Colombia
There has been little news out of Colombia after their Twitter-announced shutdown of WCM777 Ponzi that involved tweets from both the President AND the Police Chief. Now, the Superintendency of Companies in Colombia has apparently shut down TelexFree Colombia.
The Agency has published a public notice, based on the authority given in the financial emergency act of 2008 that given the government authority to investigate and close down scams in the wake of DMG and other pyramid schemes that almost destroyed the country's economy.
The public notice listed names and ID numbers of multiple individuals, with surnames of Lopez, Sierra, Moreno, and Vergel, with specific reference to "TelexFree Colombia"
A Colombian News article also pointed out that Colombia had recognized the existence of DMG-style pyramid/ponzi scheme in TelexFree.
It's also worth noting that TelxFree had been shut down in Brazil back in 2013, and is also shut down by Federal authorities in the US in 2014 after attempting to declare bankruptcy.
Thanks to PatrickPretty.com for the heads-up
The Agency has published a public notice, based on the authority given in the financial emergency act of 2008 that given the government authority to investigate and close down scams in the wake of DMG and other pyramid schemes that almost destroyed the country's economy.
The public notice listed names and ID numbers of multiple individuals, with surnames of Lopez, Sierra, Moreno, and Vergel, with specific reference to "TelexFree Colombia"
A Colombian News article also pointed out that Colombia had recognized the existence of DMG-style pyramid/ponzi scheme in TelexFree.
It's also worth noting that TelxFree had been shut down in Brazil back in 2013, and is also shut down by Federal authorities in the US in 2014 after attempting to declare bankruptcy.
Thanks to PatrickPretty.com for the heads-up
Tuesday, September 9, 2014
Due Diligence: Does the Business Model Make Sense To You? Are you sure?
As the MLM Skeptic, one comes across all sorts of alleged businesses, and many of them makes sense as a business, but not so much as an affiliate/distributor. Some makes sense as an affiliate, but makes no sense as a business. Obviously, a real business have to make sense to both the business itself and to the affiliates/distributors.
In a typical retail business, the business model is very simple: buy low, sell high, sell much. There is no separate model for the participants, as participant is the owner of the business.
In a direct sale business, we have to examine both layers, and they should coincide. Business buy the inventory at low prices, then sends out the direct sales people to sell them at higher prices. The business model for the participants, the direct sales force, are the same: buy low, sell high, sell much.
However, with newer technologies a variety of schemes have appeared to entice participants to put in money or sign up in order to reap benefits... Yet its business model makes no sense upon closer examination.
Remember, for a business to succeed, both its own business model and the business model of its participants must both be sensible AND profitable.
Today, we shall examine one business whose business model makes no f***ing sense upon closer examination.
Or to put it another way: If it's so profitable why are they paying you?
Sunday, September 7, 2014
News Update 07-SEP-2014: Herbalife problem in Norway; TelexFree Brazil Exposed; Zeek, TelexFree, and WCM ponzi updates
Remember folks, when you read "news", they better have a source, and it better be a reputable source (or links to a reputable source), and I do try to do that. If I don't, let me know and I'll fix it. If the sources you read don't cite sources... Well, maybe you shouldn't trust them.
I know I haven't updated this blog for a week, so here's some belated updates:
Herbalife Scandal in Norway; False Claims that former Norwegian PM joined Herbalife
Norwegian magazine Kapital broke the news that Gro Harlem Brundtland, former three-time Prime Minister of Norway and former director general of World Health Organization (WHO) was completely unaware that her name was used on the website "Herbashop Norway" where one of the replicated websites proudly claims "Welcome to Gro Harlem Brundtlands Herbashop! ... After only three months I had controlled my weight down and changed pant size from 42 to 36"
The page had since been removed from the Herbashop website. However, there is no word on whether Brundtland will take further action against Herbalife or Herbashop, or whether Herbalife itself may take some sort of action against Herbashop, which is an independent operation based in Norway by affiliate Dan Ove Tuven. Herbalife has promised an investigation.
Norwegian news Dagbladet claims that several other Norwegian celebrities were also used in various claims regarding Herbalife products, probably without their permission.
In March 2014 Ray Liotta sued Nerium, when he found that Nerium affiliates claimed for months in late 2013 that Ray Liotta's skin condition improved due to use of Nerium products.
(First reported by BehindMLM)
Brazilian News Revealed Shell Companies Allegedly Used by TelexFree for Money Laundering
Globo news in Brazil have published allegations from Brazilian Federal Police that they believe TelexFree has engaged in money laundering and concealment of assets through various shell corporations by using relatives of Carlos Costa, head of Ympactus, i.e. "TelexFree Brazil". At least two companies are registered to Carlos' daughter Leticia Costa: AgroFruta and Brasil Factoring, and their stocks are allegedly worth millions despite her only declaring income of 60K a year. It's also worth noting that Carlos' wife Jozelia is named as the biggest creditor in the original TelexFree US bankruptcy application.
Brazilian Federal Police suspect that money that was ordered frozen by Brazilian court back in 2013 may have been used illegally to fund these alleged shell companies in order to hide them from authorities. Many of the directors in these companies are TelexFree top promoters, said the police.
You can read the Globo report here in Portuguese
I know I haven't updated this blog for a week, so here's some belated updates:
Herbalife Scandal in Norway; False Claims that former Norwegian PM joined Herbalife
Norwegian magazine Kapital broke the news that Gro Harlem Brundtland, former three-time Prime Minister of Norway and former director general of World Health Organization (WHO) was completely unaware that her name was used on the website "Herbashop Norway" where one of the replicated websites proudly claims "Welcome to Gro Harlem Brundtlands Herbashop! ... After only three months I had controlled my weight down and changed pant size from 42 to 36"
 |
| Screenshot of the said Herbashop Norway, courtesy of Kapital magazine page has been since removed |
Norwegian news Dagbladet claims that several other Norwegian celebrities were also used in various claims regarding Herbalife products, probably without their permission.
In March 2014 Ray Liotta sued Nerium, when he found that Nerium affiliates claimed for months in late 2013 that Ray Liotta's skin condition improved due to use of Nerium products.
(First reported by BehindMLM)
Brazilian News Revealed Shell Companies Allegedly Used by TelexFree for Money Laundering
 |
| Coat of arms of Brazilian Federal Police (Photo credit: Wikipedia) |
Globo news in Brazil have published allegations from Brazilian Federal Police that they believe TelexFree has engaged in money laundering and concealment of assets through various shell corporations by using relatives of Carlos Costa, head of Ympactus, i.e. "TelexFree Brazil". At least two companies are registered to Carlos' daughter Leticia Costa: AgroFruta and Brasil Factoring, and their stocks are allegedly worth millions despite her only declaring income of 60K a year. It's also worth noting that Carlos' wife Jozelia is named as the biggest creditor in the original TelexFree US bankruptcy application.
Brazilian Federal Police suspect that money that was ordered frozen by Brazilian court back in 2013 may have been used illegally to fund these alleged shell companies in order to hide them from authorities. Many of the directors in these companies are TelexFree top promoters, said the police.
You can read the Globo report here in Portuguese
Sunday, August 31, 2014
Scam Alert: Bitcoin as disguise for Ponzi scheme
EDITOR'S NOTE: I counted the difficulty wrong. It's FAR MORE HOPELESS than I ever imagined. See revision throughout the last half of the article.
In the past 6 or so months there has been a plethora of suspect Ponzi schemes that involves Bitcoin as its disguise. Some of them are basically pure HYIPs (BitClub Network, Bitcoin Zones), while others are existing schemes that decided to incorporate Bitcoin as part of its various schemes (GetEasy, Paymony) Here's description from one of them:
In the past 6 or so months there has been a plethora of suspect Ponzi schemes that involves Bitcoin as its disguise. Some of them are basically pure HYIPs (BitClub Network, Bitcoin Zones), while others are existing schemes that decided to incorporate Bitcoin as part of its various schemes (GetEasy, Paymony) Here's description from one of them:
XXXXXXX costs $99 for your membership.
You can then buy shares in their three mining pools for $500; $1,000; and $2,000 per share respectively.
Every share you purchase will pay you daily payouts for 1,000 days.This, gentleman, is an unregistered security, as defined by US law known as the Howey Test.
A security in the US is defined as:
- investment of money due to
- an expectation of profits arising from
- a common enterprise
- which depends solely on the efforts of a promoter or third party
You "buy shares", you expect "payouts", you buy into "pool" which is obviously a "common enterprise", and payout solely depends on some unknown "mining pool".
This is OBVIOUSLY an investment security, and it's ILLEGAL to offer in the US of A.
"Now wait a minute", I hear you ask... "Are you telling me Bitcoin mining is illegal?"
NO! You see, in a *typical* bitcoin mining operation, you contribute CPU POWER ONLY (think of it as labor or material), not actual money. For example, this is how you join the BitMinter pool:
1. RegisterOther actual MINING pools are the same: you join by contributing CPU / processing power, NOT actual money.
2. start bitminter clientBitminter client: Hit the start button to start Bitminter client. You get bitcoins for the work it does. Works on Windows, Linux and Mac. Requires updated Java. Other clients: bfgminer, cgminer, etc. Connect to the pool at stratum+tcp://mint.bitminter.com:3333. As user name put your Bitminter user name, an underscore, then a worker name, e.g. DrHaribo_asic3. In case you have firewall issues, port 443 and 5050 (Stratum) are also available. There is no password check, any password is accepted.
3. Get a wallet to transfer your coins to. Make sure you secure your wallet.
In fact, you can join one now, using your regular desktop PC. It won't do much compared to dedicated hardware that costs THOUSANDS of dollars, but you can do it for FREE (and your payout will be negligible).
Ah, but you say, but *maybe* they really are buying the hardware to do the mining with the money you gave them?
Then it'd be a stupid investment, and I'll explain to you why by crunching some numbers.
Friday, August 29, 2014
BREAKING NEWS: Australia authorities sues Lyoness; alleges pyramid scheme and referral selling
According to press release from ACCC (Australian Competition and Consumer Commission) has launched a lawsuit to shut down Lyoness and related entities from operating in Australia. According to ACCC:
The ACCC alleges that Lyoness has operated the scheme in Australia from mid-2011 and that it continues to operate the scheme. The scheme offers ‘cash back’ rebates to members who shop through a Lyoness portal, use Lyoness vouchers or present their Lyoness card at certain retailers.
Whilst cash back offers themselves are not prohibited by the Australian Consumer Law (ACL), the ACCC alleges that the Lyoness scheme also offers commissions to members who recruit new members who make a down payment on future shopping.
...
“Under the Australian Consumer Law, it is illegal not only to establish or promote a pyramid scheme, but also to participate in one in any capacity," Mr Sims said.
The ACCC also alleges that the conduct by Lyoness breached the ACL prohibition on ‘referral selling’, where a consumer is induced to buy goods or services by the promise of a commission or rebate contingent on a later event.First hearing is set for September 16, 2014 in Australia. No word from Lyoness just yet.
(Thanks for BehindMLM and PatrickPretty for the heads-up)
Thursday, August 28, 2014
MLM Basics: Is MLM considered entrepreneurship?
A recent discussion regarding a certain suspect MLM already fined in Europe for pyramid selling brought up an interesting point of discussion... Is participation in MLM considered entrepreneurship?
But first, what exactly is entrepreneurship?
BusinessDictionary.com defined it as "The capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit."
From the surface, it does appear that participating in network marketing could be considered a business venture, but again, we have to look a little deeper: is becoming an IBO / affiliate a "business venture"?
Same place defined "business venture" as "Start-up entity developed with the intent of profiting financially. A business venture may also be considered a small business."
Ah, here lies the problem.
Most network marketing company deal with you as a hybrid... You're not a business (so it's not a business to business) but you're NOT an employee either. You are an "independent contractor". Here, for example, is Amway's agreement on this specific topic:
So what's the problem? The problem is in the PROFIT motive. Being an entrepreneur means you intend to profit.
Yet for a MAJORITY of participants in network marketing, apparently profit is NOT a motive.
You're probably going, WHAT?! Let me give you examples:
But first, what exactly is entrepreneurship?
BusinessDictionary.com defined it as "The capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit."
From the surface, it does appear that participating in network marketing could be considered a business venture, but again, we have to look a little deeper: is becoming an IBO / affiliate a "business venture"?
Same place defined "business venture" as "Start-up entity developed with the intent of profiting financially. A business venture may also be considered a small business."
Ah, here lies the problem.
Most network marketing company deal with you as a hybrid... You're not a business (so it's not a business to business) but you're NOT an employee either. You are an "independent contractor". Here, for example, is Amway's agreement on this specific topic:
3. Independent Contractor Status. You agree this authorization does not make you an employee, agent, or legal representative of Amway, your sponsoring IBO, or any other IBO. As a self-employed independent contractor, you will be operating your own independent business, buying and selling products and services available through and by Amway on your own account. You have complete freedom in determining the number of hours that you will devote to your business, and you have the sole discretion of scheduling such hours. Amway will not provide you with a place of business, and if you desire a place of business other than your own residence, you will be responsible for procuring, furnishing, and paying the rental for such place of business. As a self-employed independent contractor, you are responsible for complying with any provincial licensing requirements and Municipal Zoning and Business Licensing By-Laws. With respect to services performed by you under your IBO Contract, you will not be treated as an employee for federal or provincial tax purposes, and you will be responsible forWell, Amway certain wants you to think you own an "independent business". In fact, they refer to all of their distributors as "IBOs"... Independent Business Owners. And you are REQUIRED to print that on your business card.
payment of any self-employment and other income taxes.
So what's the problem? The problem is in the PROFIT motive. Being an entrepreneur means you intend to profit.
Yet for a MAJORITY of participants in network marketing, apparently profit is NOT a motive.
You're probably going, WHAT?! Let me give you examples:
Sunday, August 24, 2014
The Woo Files: MLM Viagra Coffee (no, I'm not kidding, and it's illegal)
There are all sorts of "fortified" coffee, containing all sorts of stuff that's allegedly good for you, from Asian mushrooms (Lingzhi) to various uber(woo) fruits like Acai berries, goji berries, to various forms of vitamins. So it's really no surprise when someone made coffee with allegedly "all natural herbs" to raise your libido, eh?
Meet "Magic Power Coffee", world's first (and last?) aphrodisiac coffee.
Now, you may say, this is cute and stuff, but what does it have to do with MLM? Ah, but look at the words "income opportunity". Yes, this is a MLM.
Quoting from a recruitment website :
Start Your Magic Power Home Business Today Start as a Standard Associate for only $70.00 plus a one time $15.00 administration fee. Quickly break even, operate for FREE, and build your Home Based Business part time until it exceeds your primary income sourceFurthermore:
The Magic Power Coffee Home Business Opportunity provides multiple income streams. They are covered below.
Personal Enrollments:
Each time a member joins the home business opportunity via your invitation you are awarded $15.00 to $45.00 depending upon their membership level... To keep it simple and free, enroll three.
Matrix:
When you introduce and invite others to become members they too establish their own Home Business. You are accredited through a 3 X 10 matrix system for those who fall within the three positions below you. ...
Matching Bonuses:
Matrix Bonuses are percentage matched down 6 generations of each individually sponsored member
Retail Sales:
Retail sales of Magic Power Coffee and the Magic Power Product line generate commissions...
Leadership Pool:
3% of the entire company product are sales set aside and distributed proportionately as you reach certain milestones. The Tour will explain this best, but the award amounts are substantial.
Thus, there is no doubt this is MLM, right? Except the product is ILLEGAL, as it is NOT all natural, as it claimed.
Friday, August 22, 2014
News Update 22-AUG-2014: More TelexFree Lawsuits, Zeek Lawsuits, and Phil Ming Xu (WCM) lawsuits
A lot of developments regarding various closed ponzi schemes in recent months...
According to an expert tracking ponzi scheme, a new Ponzi scheme was discovered every 5 days in the US. That's right, every five days, just during the first 6 months in 2014, with over 1 BILLION dollars in potential losses.
But here's some news...
Court Approves Zeek Receiver to Sue International Winners
US Federal Judge overseeing the receivership of Zeek Rewards has approved the receiver's request to start suing "net winners" who do not reside in the United States. Previously, receiver have already sued most net winners in the US who has gained 1000 dollars or more from Zeek Rewards. Many have already settled for a lesser amount, though a few notable exceptions are the really top winners, who have gained anywhere from 500K to well over a million dollars from Zeek.
It is worth noting that several prior top promoters of Zeek has indeed fled the US to various countries, including the Dominican Republic and the Philippines.
Speaking of foreign countries...
Federal Prosecutors Allege Extremely Complex International Fraud Regarding TelexFree
According to documents filed with Federal court overseeing the TelexFree case, Federal prosecutors asked the judge to designate the case as "complex case" which will make it exempt from the "Speedy Trials Act" that requires the indicted defendant to be tried within 70 days, because there are significant portions of fraud linked to Brazil and will require foreign investigation / testimony, and subpoenas.
Prosecutors asserted that they have seized 400 TERAbytes of data spanning 46 servers, 26 separate computers from TelexFree and 3 more from grand jury subpoenas containing yet more records. There are total of 185 grand jury subpoenas issued for evidence related to TelexFree such as business records. They have not yet compiled catalog of existing evidence, and there are strong possibilities that they will need to travel to Brazil to interview yet more witnesses and/or gather more evidence there. Thus, there's no way this can be done in less than 70 days.
Judge has yet to rule on this motion.
In related TelexFree news:
According to an expert tracking ponzi scheme, a new Ponzi scheme was discovered every 5 days in the US. That's right, every five days, just during the first 6 months in 2014, with over 1 BILLION dollars in potential losses.
But here's some news...
Court Approves Zeek Receiver to Sue International Winners
US Federal Judge overseeing the receivership of Zeek Rewards has approved the receiver's request to start suing "net winners" who do not reside in the United States. Previously, receiver have already sued most net winners in the US who has gained 1000 dollars or more from Zeek Rewards. Many have already settled for a lesser amount, though a few notable exceptions are the really top winners, who have gained anywhere from 500K to well over a million dollars from Zeek.
It is worth noting that several prior top promoters of Zeek has indeed fled the US to various countries, including the Dominican Republic and the Philippines.
Speaking of foreign countries...
Federal Prosecutors Allege Extremely Complex International Fraud Regarding TelexFree
According to documents filed with Federal court overseeing the TelexFree case, Federal prosecutors asked the judge to designate the case as "complex case" which will make it exempt from the "Speedy Trials Act" that requires the indicted defendant to be tried within 70 days, because there are significant portions of fraud linked to Brazil and will require foreign investigation / testimony, and subpoenas.
Prosecutors asserted that they have seized 400 TERAbytes of data spanning 46 servers, 26 separate computers from TelexFree and 3 more from grand jury subpoenas containing yet more records. There are total of 185 grand jury subpoenas issued for evidence related to TelexFree such as business records. They have not yet compiled catalog of existing evidence, and there are strong possibilities that they will need to travel to Brazil to interview yet more witnesses and/or gather more evidence there. Thus, there's no way this can be done in less than 70 days.
Judge has yet to rule on this motion.
In related TelexFree news:
Tuesday, August 19, 2014
An 2014 Update on AiYellow: Is this thing for real or for grins?
Recently, there seems to be a resurgence of comments, on AiYellow, probably because my previous blog post on AiYellow is somehow now #3 on Google search when you search for AiYellow, as of today, 18-AUG-2014.
This, inevitably, has drawn in various defenders of AiYellow, who copy-paste a bunch of marketing material, without understanding the CONCERNS I had brought up almost two years ago regarding the legality and utility of AiYellow.
So far, it seems nothing has changed regarding its business practices, and the products are being marketed with the wrong emphasis, with its utility (i.e. how effective it can be) in further doubt.
Let's study one aspect of the problem... "Alexa Ratings". Feel free to check it yourself, as I can only offer you a snapshot of the information as I see them today, 18-AUG-2014.
Alexa rating for AiYellow can be found here: http://www.alexa.com/siteinfo/aiyellow.com It's the 5th most popular link regarding AiYellow, as shown by Google search above. You should see something like this:
Global rank 7117th, yet in South Africa 135th. Why is it so much more popular in South Africa than elsewhere where global rank has dropped 2000 places in last 3 months? Let's keep looking.
The audience geography is strange. Normally if a website started in a particular country its countrymen would have embraced it first, so it should be more popular at home than abroad. AiYellow is exactly the opposite: it's more popular in South Africa and Thailand than its home in Argentina. This is a very weird growth pattern, keep that in mind while we keep looking.
According to Alexa, only 15% of visits to AiYellow came from search engines, and the most popular search terms seem to be South African. However, most visits seem to have came from the parent company, AmarillasInternet.com.
But it is where the visitors actually go that is the most interesting:
 |
| Wow, how did that blogpost got to #3 search for AiYellow? |
So far, it seems nothing has changed regarding its business practices, and the products are being marketed with the wrong emphasis, with its utility (i.e. how effective it can be) in further doubt.
Let's study one aspect of the problem... "Alexa Ratings". Feel free to check it yourself, as I can only offer you a snapshot of the information as I see them today, 18-AUG-2014.
Alexa rating for AiYellow can be found here: http://www.alexa.com/siteinfo/aiyellow.com It's the 5th most popular link regarding AiYellow, as shown by Google search above. You should see something like this:
 |
| Alexa Overview of AiYellow.com, part 1, red lines and words are my comments |
Global rank 7117th, yet in South Africa 135th. Why is it so much more popular in South Africa than elsewhere where global rank has dropped 2000 places in last 3 months? Let's keep looking.
 |
| Why is AiYellow more popular in South Africa and Thailand, than where it started: Argentina? Colombia? |
 |
| Only 15% of AiYellow's visitors came from search engines (but there's an upward trend) |
But it is where the visitors actually go that is the most interesting:
Sunday, August 17, 2014
MLM Basics: Why are there so many names for MLM?
Have you ever wondered why are there so many different names for multi-level marketing? Here are most of them:
Any way, why are there so many fancy names for the same thing? Fraud experts, such as Tracy Coenen say this is an attempt to obfuscate and distract from the bad reputation multi-level marketing had picked up over the decades it had been in existence. However, I think this is also a symptom of how the decentralized nature of MLM became a sin, not a virtue. People are just appropriating terms that sounds SOMEWHAT similar to multi-level marketing, and in some cases, inventing them out of thin air.
First, let us define multi-level marketing... a marketing strategy where the sales force is compensated on multiple levels... direct sales profit, and portion of sales profit achieved by other salespeople they recruited (downlines). Remember, MLM = direct sales + commission based on downline sales.
But first, we have to clear up a few myths...
Multi-level marketing, the main term
Network marketing? Multi-level marketing?
Home-based Franchising? Direct Sales?
Concentric Marketing? Affiliate Marketing?
Referral Marketing? Inline Marketing?
WTFIsIt Marketing?
(Photo credit: Wikipedia)- Network marketing (most often used alternative)
- Home-based Business Franchising -- WARNING: franchising is NOT multi-level marketing
- Direct sales -- selling direct to consumers, related to but NOT equivalent to MLM
- Affiliate Marketing -- now used by Vemma, often plagued by fraud
- Seller-Assisted Marketing -- mostly a "business opportunity" scam
- Referral Marketing / sales -- marketing via word of mouth; some forms may be illegal
- Dual Marketing / Dual-Level Marketing -- mainly used by Mary Kay, still MLM
- Concentric Marketing -- used by convicted pyramid scheme Burnlounge, replaced "levels" with "circles", but otherwise, the same as MLM
- Consumer Direct Marketing -- the consumer is doing the marketing, potentially illegal if recruitment heavy, as it becomes recruiters recruiting more recruiters.
- Inline Marketing -- trademarked by "Nutraceuticals Inc", it's still MLM
Any way, why are there so many fancy names for the same thing? Fraud experts, such as Tracy Coenen say this is an attempt to obfuscate and distract from the bad reputation multi-level marketing had picked up over the decades it had been in existence. However, I think this is also a symptom of how the decentralized nature of MLM became a sin, not a virtue. People are just appropriating terms that sounds SOMEWHAT similar to multi-level marketing, and in some cases, inventing them out of thin air.
First, let us define multi-level marketing... a marketing strategy where the sales force is compensated on multiple levels... direct sales profit, and portion of sales profit achieved by other salespeople they recruited (downlines). Remember, MLM = direct sales + commission based on downline sales.
But first, we have to clear up a few myths...
Thursday, August 14, 2014
Breaking News: Brazilian TelexFree promoter shot, one killed; Peruvia TelexFree promoter arrested
Peruvian Arrested at Airport for TelexFree Fraud
Peruvian alleged fraudster who recruit people into the TelexFree ponzi scheme was caught at the airport airline counter by Peruvian authorities, according to trome.pe and taken into custody.
Detectives of Peruvian Judicial Police arrested Yoel Alexander Sandoval Mamani (age 24), better known as "Uncle Manrique of Cusco" at the airport. When confronted, he initially denied being the person sought for million P$ fraud, and was carrying a hidden bag with six thousand P$ "that were products of the fraud that was Telexfree International". Then he confessed that he intended to go to Brazil "to safeguard his financial integrity" after one of his fraud accomplices was arrested in Cusco.
http://trome.pe/actualidad/callao-detienen-sujeto-acusado-realizar-estafas-internet-2019202
Ambush in Brazil over TelexFree losses
A man was ambushed in Brazil when walking to work on Wednesday (13th) for his graveyard shift (10PM) and shot through the head. Police stated this was due to the victim having enticed the shooter previously to put 3500 R$ into the TelexFree fraud. The alleged shooter is still at large.
Peruvian alleged fraudster who recruit people into the TelexFree ponzi scheme was caught at the airport airline counter by Peruvian authorities, according to trome.pe and taken into custody.
Detectives of Peruvian Judicial Police arrested Yoel Alexander Sandoval Mamani (age 24), better known as "Uncle Manrique of Cusco" at the airport. When confronted, he initially denied being the person sought for million P$ fraud, and was carrying a hidden bag with six thousand P$ "that were products of the fraud that was Telexfree International". Then he confessed that he intended to go to Brazil "to safeguard his financial integrity" after one of his fraud accomplices was arrested in Cusco.
http://trome.pe/actualidad/callao-detienen-sujeto-acusado-realizar-estafas-internet-2019202
Ambush in Brazil over TelexFree losses
A man was ambushed in Brazil when walking to work on Wednesday (13th) for his graveyard shift (10PM) and shot through the head. Police stated this was due to the victim having enticed the shooter previously to put 3500 R$ into the TelexFree fraud. The alleged shooter is still at large.
Wednesday, August 13, 2014
Scam Post-Mortem: TelexFree location lies confirmed by authorities
Back in July 2013, LONG before TelexFree got raided (April 2014) by DHS, FBI, etc. MLMSkeptic had warned the readers about how TelexFree office is a virtual office, and its co-owner, James Merrill, is allowing misinformation, such as "TelexFree own the whole building" to be perpetuated by its members in multiple languages on multiple continents.
Today brings an end to that chapter of the TelexFree lie; the bankruptcy trustee has terminated the $5944 per month lease of the TelexFree office, which only started January 2014 and is scheduled to run through March 2015. By forfeiting the deposit and a portion of the furnishings, the lease has been terminated, saving tens of thousands of dollars that can be repatriated to the victims of TelexFree.
In other words, it took another 5 MONTHS (July to December 2013) of constant pressure by "promoters" to convince TelexFree that they need a "real" office rather than the virtual one they had been touting. And they are willing to pay THOUSANDS of dollars a month just to keep up appearances, with office staff that does nothing except to smile and look busy, and there were only 7 of them for a company that allegedly did 1 billion dollars of business a year, according to themselves.
But wait, there's more!
Today brings an end to that chapter of the TelexFree lie; the bankruptcy trustee has terminated the $5944 per month lease of the TelexFree office, which only started January 2014 and is scheduled to run through March 2015. By forfeiting the deposit and a portion of the furnishings, the lease has been terminated, saving tens of thousands of dollars that can be repatriated to the victims of TelexFree.
In other words, it took another 5 MONTHS (July to December 2013) of constant pressure by "promoters" to convince TelexFree that they need a "real" office rather than the virtual one they had been touting. And they are willing to pay THOUSANDS of dollars a month just to keep up appearances, with office staff that does nothing except to smile and look busy, and there were only 7 of them for a company that allegedly did 1 billion dollars of business a year, according to themselves.
It is further alleged that in 2013, TelexFree reported sales of $1.016 billion, while known sales of the TelexFree VoIP product represented less than 0.1 percent of TelexFree’s total revenues. --- FBI press release
But TelexFree — whom some affiliates say is a $1 billion company with a VOIP product — has only seven employees at its Marlborough office, according to regulatory filings in Tennessee. These employees work in “administration, sales and marketing, accounting, and operations positions.” -- PatrickPretty.comThat can't be legit.
But wait, there's more!
Sunday, August 10, 2014
Scam Psychology: The illusion of explanatory depth (especially about MLM)
One phenomenon that initially puzzled the MLMSkeptic is the SEVERE LACK OF UNDERSTANDING by most MLM participants about their own industry. They seem to be completely unaware of the facts, and instead believe in misinformation, such as
And many more.
It is as if many participants are relying on... "folk wisdom" passed down by their uplines, who are passing misinformation, whether by design or negligence, leading to a game of "telephone" where after a few generations / levels there are no facts left, only misinformation.
That's when I discovered yet another cognitive bias... "the illusion of explanatory depth".
Basically, most people only *think* they know something. This is termed "feeling of knowing" by psychologists, or "FOK". They only follow correlations, and form their own idea about what caused what, even though those can be elaborate ruses or illusions designed to trick them. They actually have NO IDEA how whatever they observed actually works.
Here's one example. Do you know how bicycles work? Are you sure? (Those who can look at a bicycle or ride a bike several times a week can probably skip this test) Without looking it up, draw the bicycle frame, wheels, where are the pedals, and where does the chain go.
Go ahead, draw it. When ready, click "continue".
- Harvard Business School teaches/endorses MLM (NO THEY DON'T!)
- MLM / Network Marketing Created the Most Millionaires (NO THEY DIDN'T!)
- Having a product means the scheme cannot be a pyramid scheme (WRONG!)
And many more.
It is as if many participants are relying on... "folk wisdom" passed down by their uplines, who are passing misinformation, whether by design or negligence, leading to a game of "telephone" where after a few generations / levels there are no facts left, only misinformation.
That's when I discovered yet another cognitive bias... "the illusion of explanatory depth".
Basically, most people only *think* they know something. This is termed "feeling of knowing" by psychologists, or "FOK". They only follow correlations, and form their own idea about what caused what, even though those can be elaborate ruses or illusions designed to trick them. They actually have NO IDEA how whatever they observed actually works.
Here's one example. Do you know how bicycles work? Are you sure? (Those who can look at a bicycle or ride a bike several times a week can probably skip this test) Without looking it up, draw the bicycle frame, wheels, where are the pedals, and where does the chain go.
Go ahead, draw it. When ready, click "continue".
Friday, August 8, 2014
MLM Basic: Why Do So Many MLM Noobs Fail? Because They Don't See their TRUE role in MLM (as consumer, not seller)
 |
| DSA (US) Logo (Photo credit: Wikipedia) |
The median annual income for direct sales consultants in 2011 was $2,400, according to Amy Robinson, spokesperson for the Direct Selling Association. (quoted from Forbes article)
Yes, that's ANNUAL. That's $200 a month. Most people make NO money from MLM, despite their hopes and dreams, car bonus, financial freedom, blah blah blah. Lots of "retire young, have fun", millionaire by 30, blah blah blah recruiting around.
Do you know WHY they fail? They don't understand their role in network marketing. (And often, neither do you.)
Network marketing is still marketing, and marketing means SALES.
In sales, the objective is to introduce the product to people who may want it, then convince them they need it (without lying)
Finding the people who may want it is known as "lead generation" (and I don't mean recruiting downlines, just retail customers).
Convincing them that they need it and get them to open their wallet is known as "closing the sale".
As a salesperson, your job is to add value to the product, and value is more than just price.
Do you know why Avon and Mary Kay and NuSkin succeed? It's NOT just because their products are good. Their sales people were able to DEMONSTRATE the quality and value of their products successfully, at a competitive price and most have stock to be sold then and there. AND they often consult on what color goes with what skin tone, plus more makeup tips. Despite the cliche, products do NOT sell themselves, at least not at the beginning.
 |
| Are you adding value to the products you are selling? Can you do more? |
Think about it. The entire act of retail is to add value. Even your local corner store added value by making products available to you just around the corner instead of some supermarket or club store miles away. You will gladly pay a little more for the convenience of walking around the corner than driving 15 minutes to get the same thing at a supermarket.
Sometimes, you may choose to buy local rather than through Internet vendor because you know you can almost instantly drop the broken item off at a local store and pick up a replacement instead of hassle of shipping returns. The local stores are adding value by their physical proximity.
As a MLM salesperson, what value are YOU adding to the products? (as opposed to your competitors, i.e. other MLM grunts just like you? )
Very often, the answer is... absolutely NOTHING. Remember, a lot of the MLM uplines emphasize replication, i.e. make clones of themselves. They teach talking scripts (either in person or Youtube videos), not sales techniques, not customer service, etc. And since everybody is selling the same products, NOBODY STANDS OUT. And with Internet, there is not even any geographical exclusivity. You can and WILL find more than a few MLMers trolling the same pool for "customers", since they tend to spawn from the same social circles.
You are the Borg drone. You... all of you, talk the same, sell the same, act the same, move the same.
Thus, you all have the same odds, nothing to stand apart.
So what does that do to your bottom line?
Monday, August 4, 2014
Scam Psychology: Sponsorships can be fradulent; the story behind Energee, Indy Car, and possible Ponzi scheme
In May and June 2014, a new energy drink suddenly popped up on the market called "Energee", backed by some "Integrity Asset Group", who apparently announced that they will be the primary sponsor for Bryan Herta Autosports's Indy Car, and they have the pictures to prove it. This is the announcement on BHA's website:
Yet less than 2 months later, 31-JUL-2014, BHA is suing Integrity for breach of contract.
That of course doesn't stop all the press releases, and publicity photos, announcements, videos... Mostly to Spanish speaking folks esp. South America.
What happened, and why did IndyCar and a famous Indy racing team accept an unknown sponsor?
Lack of due diligence.
Let us do a little research into what is this "Integrity Assets Group" ...
 |
| BHA announcement that Energee will be their sponsor for IndyCar, as of 09-MAY-2014 |
Yet less than 2 months later, 31-JUL-2014, BHA is suing Integrity for breach of contract.
 |
| BHA sues Integrity Assets Group, et al, 31-JUL-2014 |
 |
| Spanish promoter touting Energee as "next best income opportunity" promises bazillion more products like electronics, vehicle tires, and more |
Lack of due diligence.
Let us do a little research into what is this "Integrity Assets Group" ...
Sunday, August 3, 2014
MLM History: The (Not so) Secret Origins of Amway
 |
| English: Honda- Amway（AVCL）Hồ Chí Minh (Photo credit: Wikipedia) |
If you go to Amway's website, their timeline only goes up to 1950's, when Jay Van Andel and Rich DeVos founded "American Way" in Ada Michigan, and later shortened the name to Amway. But in reality, their history goes back a bit further.
 |
| Carl Rehnborg, courtesy of nutrilite.com |
Origin of Amway can actually be traced back to 1930's to a gentleman named Carl Rehnborg, founder of Nutrilite (exclusively distributed by Amway). According to Nutrilite's website, Rehnborg, who lived in China as early as 1915, had experienced much of the unrest during that uncertain era in Shanghai, and experimented with soup/broth made from various locally procured ingredients, including herbs, plants and vegetables, animal bones (source of calcium), and even rust from rusty nails (source of iron) to supplement the meager army rations at the time.
It is worth noting that Mr. Rehnborg was only verified to be a salesman for Colgate in China at some time (there are some doubts, according to some sources, that he may or may not be in China at the time he claimed) and has no verifiable formal training in nutrition. There are some unverifiable or self-referential claims that he may have been a "doctor of chemistry". According to yet another source, he's "trained in biology and chemistry" but apparently did not have a degree.
Upon returning to the US in the 1930's, healthier than others due to the broth/soup (so he claimed) but broke, he started experimenting with the beginnings of multi-vitamin / nutritional supplement market. When he felt he had perfected the formula, he started "California Vitamin Corporation" in 1934 and started selling "Vita-6" (later "VitaSol") to friends and friends of friends. What was not mentioned was upon returning to the US (he had sent back his wife and children before the unrest in China started) Rehnborg apparently turned down a job from Colgate in order to pursue his dream, which caused his first wife and two children to leave him. His second wife died at childbirth with the child.
According to Carl's son Sam (from Carl's third wife) , Carl discovered "contrafreeloading" at this time, as the supplements given to friends for "trial" was left on a shelf and forgotten. When he started CHARGING MONEY for the supplements, then people really started wanting to buy them. When people started referring people to Rehnborg to buy his products, Rehnborg told them that they should sell the stuff themselves, and he'll give them discounts. Thus is the seed planted for multi-level marketing.
Saturday, August 2, 2014
Bad Argument: The "We shall see" parting shot and how it's linked to cultism
When defenders of a certain scheme ran completely out of viable arguments, they will often depart with a throwaway comment:
This is a pretty lame departing shot, as it basically demonstrate they have *faith* that they will be vindicated eventually, but they don't have any evidence to support their opinion right now, which makes that a BELIEF.
Note definition #2... "based on ... apprehension rather than proof".
That's exactly what happened here... they have only their own apprehension of how the scheme will make them rich, rather than actual proof. It's religious, rather than evidence-based.
The fact that many scheme promoters behave in a religious fashion have lead to cult experts in calling such schemes "commercial cults".
"we shall see"It has several variations, like
"Time will tell"
"History will be the judge"
"Truth will prevail"and such.
This is a pretty lame departing shot, as it basically demonstrate they have *faith* that they will be vindicated eventually, but they don't have any evidence to support their opinion right now, which makes that a BELIEF.
faith
fāTH/
noun
- 1.complete trust or confidence in someone or something."this restores one's faith in politicians"
synonyms: trust, belief, confidence, conviction; More
Note definition #2... "based on ... apprehension rather than proof".
That's exactly what happened here... they have only their own apprehension of how the scheme will make them rich, rather than actual proof. It's religious, rather than evidence-based.
The fact that many scheme promoters behave in a religious fashion have lead to cult experts in calling such schemes "commercial cults".
Subscribe to:
Posts (Atom)