How will the California Supreme Court "Dynamex" decision affect MLM?

When California Supreme Court handed down the Dynamex decision on May 4th, 2018, people wonder if the "gig economy" is doomed, as the decision is likely to affect Uber and Lyft drivers, and potentially all gig economy participants. But here's a question so far that had not been addressed: how will this affect multi-level marketing aka "MLM"?

In issuing the decision, CSC also handed down a new "ABC test" to see if the work should be classified truly as an independent contractor. To be classified as such, the worker needs to satisfy ALL THREE criteria below:

• (A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact
• (B) that the worker performs work that is outside the usual course of the hiring entity’s business
• (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

Does MLM pass the test? This is important because ALL MLM classify their participants as independent contractors (except for their corporate staff). They may get glorified names like "consultants", "Independent business owners", "brand ambassadors", and so on, but they are independent contractors because they get a 1099 and the end of the year.

But is joining an MLM really as an independent contractor...or as an employee?

Question A: is working in MLM actually free from control and direction of the hiring entity, both in performance and in fact?

This is going to be hard to answer, as it's NOT possible to say definitely either way. Many MLMs have LONG bylaws and joining agreements, including how you can dress and present the company image. (Mary Kay is infamous for its "no pants rule", really, look it up)

Question B: is working in MLM actually performing work that is outside the usual course of hiring entity's business?

This should be a definite "yes". MLMs typically have ZERO sales/promotional department. They may have a sponsorship department buying sponsorships and PR but no "sales force" per se.

Question C: is working for MLM something that the worker already does as an established trade, occupation, or such?

This is a "very likely no". Most people join MLM with zero experience (indeed, this is one of the mantras of MLM, "no experience needed, work as much or as little as you like")  Indeed, MLMs often specifically seek out housewives and students with ZERO work experience.

If MLM companies are forced to reclassify much of their associates as employees, this would be the end of multi-level marketing (as we know it).   And based on the ABC test presented, there is no reason why vast majority of MLMs will not be forced to do so.

And it may not be a bad thing.

If you are a victim in Ponzi scheme under receivership, you MUST file a claim BEFORE the deadline!

A lot of ponzi schemes were caught by authorities and assets seized so the victims can be repaid.

• ZeekRewards Receivership has sent out hundreds of thousands of checks for hundreds of millions of dollars. All victims with allowable claims have received funds for at least 75% of their losses. 

This was a huge ponzi involving almost a billion dollars and a million victims. And this was one of the most successful repayments by the receivership.

But notice the term:  All victims with allowable claims

That means victims who filed all the proper paperwork proving the amount of their loss and other requirements.

Victims who did NOT file the paperwork will probably NOT get anything.  And one case that was adjudicated September 2017 illustrated this clearly.

MLMSkeptic Investigates: Why is Valentus illegal in the UK? (it's the ingredients)

Recently, it was all over the news (cite 1) (cite 2) (cite 3) that former finalist for Miss England and FHM model Charlotte Thompson was "busted" selling 'slimming coffee' and got a visit from the UK Trading Standards Officers and told to stop her business.  She went online to vent. But what you won't find in these news articles is WHY did Trading Standards make a visit to her home?

MLMSkeptic investigates this little conundrum, by exploring what Valentus did in the aftermath passing blame, then check the sources from Valentus itself, and the statements by Ms. Thompson, then checking the relevant UK laws and interpretations, to see if there is ANY hope for Valentus, in UK, and in rest of Europe.

Recently, when forced to address the issue, Valentus corporate "Director of International Registration", Terry Recknor, gave a webinar.  Ms. Recknor initially blamed Ms. Thompson for spamming thousands of people, implying that was the reason for the visit from Trading Standards, but she soon dropped this bomb:

What you need to understand is, the products technically are illegal because we’re not registered yet.

This seems to imply that as soon as Valentus registered their products in the UK, then there would be no more problems. In the meanwhile, there are suggestions that recruitment in UK and rest of Europe are continuing as if nothing was wrong, despite warning from Ms. Thompson that dealing in Valentus is apparently illegal.

So, what is the truth? Let's investigate first, what does UK Trading Standards actually do?  In the case of their visit to Ms. Thompson, it is to offer:

• Business advice: Trading standards offer a range of business advice and enforcement policies for all traders and businesses. These range from issues regarding licensing to consumer protection laws.

So presumably, when you combine the various statements given by Ms. Thompson, Ms. Recknor, and explanations, one should conclude that

• Valentus SlimRoast coffee needs to be registered in UK
• Lack of registration is a violation of consumer protection laws
• Ms. Thompson's spam alerted Trading Standards to let her know

But is this true?  Searching UK Food Laws (Food Safety Act 1990, Food Standards Act 1999, and Food Hygiene Regulations 2006) brought up nothing about registering coffee or similar drink mixes and such.  There had to be a different reason.

Which brings us back to "consumer protection", and what other areas does that cover. This was made clear at a different Trading Standards page:

We make sure that people are not misled by claims, prices, descriptions and other selling techniques used by traders when they are selling goods and services.

As it wasn't about registration, let us investigate whether Valentus made any misleading claims. But what constitutes misleading claims under UK law? As SlimRoast is about weight loss, I googled "weight loss claim UK", and that brought me to Advertising Standard Authority, or asa.org.uk and their guidance on slimming guidelines for the press (PDF).

MLM Basics: Why do so many MLM noobs don't understand "referral sales" is illegal?

It seems an MLM noob is very fond of her comp plan, which she described as

... I can find 3 people who also want sustainable <item> my order is then FREE

She doesn't realize that this is ILLEGAL. Yes, I said it. It is ILLEGAL.

This is called "referral sales", and it can be described as

1. Seller offer to prospective buyer a consideration (discount / rebate / commission, etc.) 
2. for a sale (or lease) of item from seller to buyer
3. the buyer must provide sellers list of potential customers
4. the consideration (see 1) is contingent on seller be able to make additional sales/lease to one or more of the potential customers (see 3)

And all four elements are in the quote found earlier. Let's check it again, with the elements highlighted.

... I can find 3 people (3) who also want sustainable <item>(4) my order (2) is then FREE (1)

And yes, this is ILLEGAL. In all 50 states of the US, and in all European countries, and Australia, and so on and so forth.

And you'd be surprised how many companies engage in this ILLEGAL behavior, and its affiliates are completely unaware they are being defrauded.

DSA's latest attempt to destroy direct selling: Moolenaar Amendment

Direct Selling Association is supposed to be promoting direct selling. Instead, for the past several decades, DSA has been trying to destroy direct selling by killing legislation that would have promoted retail, and promoting legislation that discouraged retail. This is actually not a surprise as DSA is really a lobbying group by the largest MLM companies like Amway, Avon, Herbalife, and so on.

In July 2017, DSA launched its latest attempt to destroy direct selling by trying to attach a rider to the current budget appropriations bill for FY18, known as the Moolenaar Amendment. It claimed that there is no Federal law that defined a pyramid scheme, and this bill would define one. The problem is, this is at best, a half-truth.

The US courts and FTC already have an existing definition of a pyramid scheme: The Koscot Test.  MLM attorney Jeff Babener called it "a twenty-year standard", back in 2001. So by now, it's a 36-year-old standard.  DSA, in its "selective blindness", pretended this standard does not exist so it can substitute a LOOSER definition instead.

DSA's previous attempt to pass a bill, deceptively titled "Anti-Pyramid Promotional Scheme Act of 2016", never made it out of committee. This time, by attaching the failed legislation to the appropriations bill, DSA hope it will sail through until various consumer organizations called them out.

But what is wrong with this piece of legislation, vs. the existing standard?

While on the surface the bill sounds rather clear, it contains several interesting bits of language designed to erode the definition over all.

But first, let us go back to the Koscot Test, and how it stood for 36 years (and counting).

SEC Halts Traffic Monsoon Ponzi Scheme, Reasserts that "Autosurf Ponzis" are illegal

The internet buzz on July 28th 2016 was the press release that SEC has halted the $207 Million Ponzi scheme called Traffic Monsoon.

Traffic Monsoon was operated by Charles Scoville, as a combination "internet traffic exchange and pay-per-click program" that solicited money from all over the world. It accepted money from at least 162000 investors primarily in US, India, and Russia by claiming to be a "highly successful advertising company", when in reality, more than 99% of the revenue was paid into the system by new investors, making it a classic Ponzi scheme.  Traffic Monsoon LLC is a Utah company. Scoville is believed to be in Dubai. SEC's motion to have an temporary freeze and receiver to take over the company has been granted.

Traffic Monsoon's primary product (which accounted for 99.6% of all revenue) is the "Adpack". At $50 each, purchaser is supposed to get 20 clicks on the banner (either they provide, or they can use one provided by Traffic Monsoon) and 1000 visitors from the traffic exchange, as well as "share in Traffic Monsoon's profit". In reality, TM was never able to fulfill the visitor promise. By its own counter, it can only provide about 1/10th of the visitors. In reality, TM operated as a $50 in, $55 out HYIP.

Those that track scams, such as the MLMSkeptic, would notice that this is structurally IDENTICAL to 12DailyPro (2005-2006) or Ad Surf Daily (2006-2008), both were also prosecuted as autosurf ponzi schemes.

What's more interesting is Charles Scoville himself has been observed operating several predecessors to Traffic Monsoon. There's TVIBUX, and there's AdHitsProfits, both are slight variations on the same ideas. Neither, however, made it big to hundreds of millions of dollars.

But first, let's explain what an autosurf is, and what an investment autosurf.

What is an autosurf? 

Autosurf is a type of Internet website traffic exchagne that automatically rotate advertised websites in the web browser.  Imagine leaving a browser window open to constantly display banners from all the other websites, which changes periodically. Each "view" earns you a "credit" which allows your site's banner some display time in other people's browser window.

Autosurf can operate as a "ponzi scheme" even if no money changes hands, if overall credits earned is in excess of total pageviews delivered, thus ensuring that there will always be credits left over.

Autosurf that involve money are known as Investment autosurfs.

Scam Absurdities: Birds of a Feather Flock Together, or the Rodrigues and Filho financial links

There was an old saying: Birds of a Feather, Flock Together

Basically means: like attracts like.

So how does this apply to Ponzi schemes? One needs to look no further than Sanderlay Rodrigues De Vasconcelos aka "Sann Rodrigues", and his ties to Daniel Rojo Filho.

For those of you who don't know "Sann" Rodrigues... he used to go by the title "First Millionaire TelexFree US". That's right... he's a "net winner" in the TelexFree scam in both Brazil and the US. Previously he operated a Ponzi scheme called FoneClub that was shut down by the SEC around 2006. Oh, gee, now here he is again, a top leader in ANOTHER Ponzi scheme, TelexFree, shut down by the the SEC! But it gets better. At the time Sann was in Brazil, and he simply came up with a new scheme... called iFreeX.  And within a few months Massachussetts called it suspect Ponzi, which apparently prompted Brazilian authorities to raid his recruiting seminar and invited him downtown for a long chat.  He was released but apparently under travel restrictions, roughly March 2015 or so.

MLMSkeptic was immediately reminded of the circumstances how half of the TelexFree US, Carlos Wanzeler, escaped the country... by driving into Canada ahead of the authorities with his daughter, leaving his wife behind, and from there they flew to Brazil, where they cannot be extradited against their will (as per Brazilian constitution. Wanzeler still holds Brazilian citizenship). When his wife Katia Wanzeler tried to join them she was arrested at the airport by Federal agents, minutes before she got on the plane.  She had previous told Federal agents serving a search warrant on the Wanzeler house that Carlos is staying at a hotel when it was later discovered that when she told the Federal agents Carlos and daughter was in fact heading toward the Canadian border in a car registered to her company.

But we're here to talk about Sann Rodrigues... Any way... Apparently Sann Rodrigues managed to get himself out of Brazil despite Brazilians told him to not go anywhere. So when he disappeared, Brazilian authorities put out a Interpol Red WANTED notice:

Interpol Wanted Notice for Sann Rodrigues

So when he showed up in Newark, New Jersey (yes, in the US) getting back into the US... He was promptly arrested for VISA fraud. He had apparently neglected to mention that he was arrested for Ponzi scheme back in 2008 or so... among other problems. He posted bail, had his passport (and those of his family) confiscated, only to be arrested AGAIN for the Interpol warrant. He spent another weekend in jail until Brazilians eventually responded "you can keep him for now".

Okay, so what does this have to do with Daniel Rojo Filho? And who is Daniel Rojo Filho? Pretty complex guy... and "ambassador of the Sinaloa Drug Cartel", according to a Mexican article.

Breaking News / Woo Files: Nu Skin Taiwan head accused of illegally importing medical devices

News from Taiwan via Malaysia, original Chinese and English translation provided. (Thanks to JusticeAlwaysLate for spreading this bit of news)

台灣．新北市18日訊）在馬來西亞、新加坡和汶萊都設有分公司的著名直銷公司美商如新華茂（NU SKIN）台灣總裁姜惠琳與多名幹部、高階直銷商，涉嫌明知產品“BODY SPA機”是未獲衛生機關核准輸入的醫療器材，仍在2012年間從香港帶1萬多套回台販售，獲利約1600多萬元台幣（下同．約210萬令吉）。新北地檢署昨依違反《藥事法》等罪嫌，起訴姜女等31人。

(Taiwan, Taipei Dec 18th) Well-known direct selling US company Nu Skin, with branches in Malaysia, Singapore, and Brunei, has its Taiwan CEO Huilin Jiang, along with several officers and high level members accused of knowing that the product "Body Spa machine" is an "not permitted as import" medical device, yet brought back over 10000 kits from Hong Kong for sale in Taiwan, profited over 16 million NTD (almost $500000 USD). Taipei Public Prosecutor's Office has now officially charged 31 people, including Ms. Jiang, with violations of "Drug Regulation Act". 

美商如新集團1984年在美國創立，以直銷方式銷售、製造美妝保養品，至今已跨足全球54個市場，1992年設立台灣分公司，2007年由姜惠琳接任台總裁，還曾贊助2013年的台北101跨年煙火。

Nu Skin is founded in the US in 1984 and operates via direct sales of cosmetics, and is now in 54 markets around the world. Taiwan branch was established in 1992, and Ms. Jiang took over as CEO in 2007. Nu Skin Taiwan was a sponsor of the 101 building New Years Fireworks and festivities 2013. 

全案起因於前年，一名林姓賣家在網路上販售號稱能緊緻肌膚的“BODY SPA機”，被檢舉未經核准，林到案供稱是向如新直銷商購買後，獲緩起訴。

The case started three years ago. A "Lin" advertised a machine online for sale called "Body Spa" that claimed to tighten muscle tone, and was investigated as the device is not legally permitted for sale without Taiwan FDA approval. Lin cooperated with investigators and said he got the machine from Nu Skin reps and had his case continued. 

不過檢調追查，發現衛生署早在2011年，就曾以未附安全證明文件等理由，禁止如新進口“臉部SPA機”，但姜惠琳仍在同年底，未申請主管機關核准，就另外核可BODY SPA機行銷策略，由如新的寰宇領袖、藍鑽級主任等高階直銷商，向下線會員推銷，稱可向海外預購BODY SPA機，然後趁集團在香港舉辦大中華區年會時領貨。

Further investigations show that the Taiwan FDA had denied Nu Skin's import of Body Spa back in 2011, due to various reasons including "no safety documents included". However, Ms. Jiang went ahead, later in 2011, and approved sales strategy of Body Spa kits by (Cosmo?) leaders, Blue Diamond level execs, and such highest level members to be promoted to lower level members, claiming that the high level execs can pre-pay for these new machines and stock them overseas, and everybody can pick up their stock when Nu Skin held their convention in Hong Kong later. 

PSA: Victims of WCM777 and related fraud must file claim by December 24th (Deadline extended)

If you were a victim of Phil Ming Xu's ponzi scheme WCM777 and its related entities, you need to gather up your paperwork ASAP and file a claim before December 24th, 2015.

This is the URL of the receiver’s site: http://www.worldcapitalmarketreceivership.com/

This is the URL of the site to file claims: https://www.wcm777claimsprocessing.com/en/Home/Filing

Among the defendant companies, affiliated entities or receivership entities are World Capital Market, Inc.; WCM777, Inc.; WCM777 Ltd (d/b/a WCM777 Enterprises, Inc.); Kingdom Capital Market, LLC; Manna Holding Group, LLC; Manna Source International, Inc.; WCM Resources, Inc.; To Pacific, Inc.; and ToPacific, Inc.

You do not need a lawyer, but you do need to be online and have paperwork ready, and ability to use an English website and follow instructions.

Any delay in filing a claim may result in you not getting any compensation from this fraud.

UPDATE: After a motion filed by the receiver and agreement by the judge, the deadline has been extended to December 24th, 2015.

Now you have NO excuse not to file if you are a victim.

BREAKING NEWS: Jeunesse banned in Malaysia, website blocked at national level

According to users in Malaysia, as relayed to JusticeAlwaysLate on Facebook, any one attempted to access Jeunesse Global website (jeunesseglobal.com) from Malaysia is greeted with the following message:

JeunesseGlobal.com blocked in Malaysia by government order
for violation of Control of Drugs and Comestics Regulations 1984

Jeunesse lists an office in Malaysia on their contact us page. The status of that office is unknown at this time.

MLMSkeptic will bring you the latest news as soon as it becomes available.

Related articles

• More Idiots Who Don't Check the Information They Pass On: UFUN Edition
• How to Scam a Scammer
• Scam Psychology: How does a scam encourage people to adopt a lost cause?
• A Common Scam Defense: Similarity Between Homeopathy Advocacy and HYIP promotion

Vemma update: Vemma / BK Boreyko / Tom Alkazin said it's ALL affiliate's fault

Vemma, BK Boreyko, and Tom Alkazin each had filed response to FTC's case. From here on, it's clear what their strategy is:

To all the YPR Vemma affiliates...

IT IS ALL YOUR FAULT! (you deserved to be scammed)

Why, you thought I was kidding? 

Excerpt from Vemma's official response:

...Consumers represented by the FTC knowingly and voluntarily, and possibly unreasonably, exposed themselves to any claimed losses with knowledge or appreciation of the risk involved...

BK Boreyko's response also contained this section. 

Tom Alkazin's response is slightly shorter, but said the same thing:

...Any consumers represented by the FTC knowingly and voluntarily assumed the risk of losses.

In other words, if you lost money, it's because you are stupid, not because they tricked you. 

But this attitude of victim blaming is hardly unique.  It is a frequent defense by scammers, who basically said "the victims deserved to be fleeced". 

FTC shuts down Vemma for being a $200 million pyramid scheme...

It brings me no joy to see this news, which was a surprise even to me... I expect action, but not this fast. 

But to summarize, Vemma's assets has been frozen and operation stopped based on temporary restraining order as issued by court based on lawsuit brought by the Federal Trade Commission.

Quoting AP / CNBC story:

The Federal Trade Commission said Wednesday that Vemma Nutrition has been temporarily shut down for operating a pyramid scheme that promised college students riches if they sold its nutritional drinks, but most ended up losing money. 

The consumer protection agency said that Vemma told recruits that they could make as much as $50,000 per week selling its nutritional beverage Vemma, energy drink Verge or protein shake Bod-e. An initial investment of $600 was paid for products and business tools and $150 in Vemma products had to be bought each month to receive bonuses. The FTC said Vemma provided little help on how to sell its products and instead rewarded them for recruiting more people. 

Vemma earned $200 million a year in 2013 and 2014, according to the FTC.
A representative from Vemma, which is based in Tempe, Arizona, did not immediately respond to a request for comment.

A full copy of the complaint and the 5 summary points are available at BehindMLM.com:

Count 1 – Vemma is an “illegal pyramid” scheme 

Defendants promote participation in Vemma, which has a compensation program based primarily on providing payments to participants for the recruitment of new participants, not on the retail sale of products or services. 

Defendants’ promotion of this type of scheme, often referred to as a pyramid scheme, constitutes a deceptive act or practice. 

Count 2 – Income Claims 

In numerous instances in connection with the advertising, marketing, promotion, offering for sale, or sale of the right to participate in the Vemma program, Defendants have represented … that consumers who become Vemma affiliates are likely to earn substantial income. 

In truth and fact … consumers who become Vemma affiliates are not likely to earn substantial income. 

Count 3 – Failure to Disclose 

In numerous instances … defendants have represented … that individuals have earned substantial income from participation in the Vemma program, and that any consumer who becomes a Vemma affiliate has the ability to earn substantial income. 

In numerous instances … Defendants have failed to disclose, or disclose adequately, that Vemma’s structure ensures that most consumers who become Vemma affiliates will not earn substantial income. 

This additional information would be material to consumers in deciding whether to participate in the Vemma program. 

Count 4 – Means and Instrumentalities 

By furnishing Vemma affiliates with promotional materials to be used in recruiting new participants that contain false and misleading representations, (Vemma) have provided the means and instrumentalities for the commission of deceptive acts and practices. 

Count 5 – Relief Defendant 

Relief Defendant Bethany Alkazin, has received … funds or other assets from (Vemma) that are traceable to funds obtained from (Vemma’s) customers through the deceptive acts or practices described herein. 

Relief Defendant will be unjustly enriched if she is not required to disgorge the funds or the value of the benefit she received as a result of (Vemma’s) deceptive acts or practices.

But what does this mean to you, the Vemma affiliate, other MLM participants, and so on? What will happen on the hearing on September 3rd?

Here's a few layman's speculations. Remember, I'm not a lawyer, and I have no insider information. (Lack of such, however, has not stopped various Vemma "leaders" from issuing feelings, such as "Vemma doesn't deserve to be shut down" "It's just a complaint, not a lawsuit" "The lawsuit is a joke", "FTC bit off more than it can chew" and so on)

But let's be realistic here... If you want people to lie to you and tell you everything will be alright, go read whatever verbiage your upline put out. You're here for some real analysis.

MLM Basics: Just What is Deductible in MLM, and what is NOT?

One of the "advantages" of opening your own business, MLM proponents touted, was that you can deduct a lot expenses as cost of doing business. But can you really?

In terms related to MLM, can you deduct the trips (tickets, hotels, travel expenses, etc.) to attend meetings all over the country?

Under rules in the Federal Tax Code, Section 162 provides that a taxpayer who is carrying on a trade or business may deduct ordinary and necessary expenses incurred in connection with the operation of the business.  The taxpayer has the burden of proving entitlement to a business expense deduction. The deductibility of their MLM expenses depended on whether their activity was engaged in for profit.

To determine whether an activity is engaged in for profit, Section 183 provides a list of factors for the court to consider: (1) The manner in which the taxpayer carried on the activity; (2) the expertise of the taxpayer or his advisers; (3) the time and effort expended by the taxpayer in carrying on the activity; (4) the expectation that the assets used in the activity may appreciate in value; (5) the success of the taxpayer in carrying on other similar or dissimilar activities; (6) the taxpayer's history of income or losses with respect to the activity; (7) the amount of occasional profits, if any, which are earned; (8) the financial status of the taxpayer; and (9) elements of personal pleasure or recreation.

This brings us to the case of the Olletts in 2004. They joined Amway in 1996. They kept their day jobs and made about $100K in 1999 and 2000 respectively, and claimed Amway expenses of $17500 in 1999 and $23000 in 2000, both year with losses (-1450 in 1999 and -3235 in 2000). IRS denied their deductions and it went into tax court, where they were ruled against (i.e. deductions are disallowed) in 2004. Do you know why? The hints are listed above, but let's be specific...

Scam and Religion: What does Islam Say About Scammers (and MLM?)

Ban_pyra.gif (No to network marketing). (Photo credit: Wikipedia)

Previously, MLMSkeptic has covered how the Christian Bible has prohibitions against scams. Then a reader asked, what about Islam?

Good question! Some research is required to answer this, and one of the best resource is Islamqa.info (however, it is also known for issuing its own fatwas, something frowned upon in Saudi Arabia, but that's something else entirely). In it, we were able to locate Fatwa 42579 as issued by the Standing Committee as established by the Sovereign of Saudi Arabia to be the definitely authority for all Sunni Islamic matters.

To make a long story short... Network Marketing is PROHIBITED under shariah law. It is haram.

Why? Here's my summary, but you can read the full decision.

1)  If you have to buy a product / kit to join, and you earn "commission" by recruiting others who also buy the kit, you have engaged in two forms of riba, aka usury / interest, and riba is considered haram. Specifically, riba al-fadl (exchange of goods of same type but different quantity) and riba al-nasi'ah (deferred payment of larger amount than if paid immediately, i.e. get 10 now, or 12 later). The product / kit purchased is considered a smokescreen for the riba.

2) If you are promised pay for recruiting X number of people, it is considered gharar, or "ambiguous transaction", also forbidden, because there is a chance you will be unable to recruit the number of people needed to be paid.

3) The transactions are fundamentally insincere and thus, forbidden, as the transaction benefits primarily the company and some participants encouraged to misrepresent the true nature of transaction.

4) The transaction itself also involves lying and cheating by promising participant wealth they do not usually earn.

More Idiots Who Don't Check the Information They Pass On: UFUN Edition

UFUN is a multi-national alleged ponzi scheme that has ties in Thailand, Malaysia, China, and other countries. In the past three weeks Royal Thai Police have swept up a lot of the heads of the company, but the company's real headquarters is in Malaysia, and at least three of the heads escape through Malaysia. One's remaining in the limelight, supposedly celebrating some signing documents with some developement project, while the other other two have fled Malaysia as well. A retired Thai General that's involved has escaped to the US.

Its primary American cheerleader appears to be a guy by the name of Rodney Burton, who gave himself the title "Global Ambassador", and recently posted something like this on Facebook:

The problem is the link was in Thai, and he clearly does not read Thai, as a different link describing the same announcement reads VERY VERY differently. As you can see, same three guys, just a very different angle. Follow me so far? Here's the link:  

http://www.nationmultimedia.com/national/UFUN-case-a-transnational-crime-police-30259107.html

And a quote from the article:

Suwira quoted prosecutors as saying that the UFUN case would be regarded as a transnational crime if police were able to present to the OAG clear evidence that the company had been involved in similar criminal offences outside the country as well.  

If the attorney-general deems it a transnational crime, the punishment will be harsher than under normal law. The attorney-general will be the person setting the interrogation method and there will be more complicated steps in the probe, he explained. 

For now, police will gather more documents and interview those claiming damages to confirm whether there were criminal offences outside Thailand, Suwira said, urging affected persons to file complaints with police during the May 1-5 holiday period.

So basically, this Mr. "GlobalAmbassador" Burton got it completely wrong. There is plenty of evidence of UFUN's guilt in Thailand. There's not quite enough evidence of victims OUTSIDE Thailand for Thai Office of Attorney General (OAG) to elevate the case to "Transnational Crime" and invoke ASEAN and Interpol international assistance to end this scheme once and for all.

BIG SOLID CASE AGAINST UFUN
PLENTY OF EVIDENCE IN THAILAND

Which proves that if you don't read or understand Thai, you should not pretend to understand what the video actually said. Liar, liar, hair on fire...

Right now there's no mention of how will Thai Police gather victim reports from outside of Thailand.

I personally would suggest that if you are a victim of UFUN outside of Thailand, and have a local Thai Embassy, you should write up your report and ask your local Thai Embassy to turn it over to Thai Police. I can't think of any other way at the moment. If there is an address or such where you can send such reports published, I will update the method here. 

OLD NEWS: World Ventures busted in China, Taiwan, and Malaysia back in 2014

According to Chinese news (Hunan TV) World Ventures, i.e. "WV", was investigated by Changsa Public Security back in October 2014. Other sources indicate that World Ventures was also met with legal challenges in Taiwan, and Malaysia, where it was accused of operating illegally.

Ministry of Labor and Commerce Enforcement Agents along with Public Security raided a facility that had a huge sign with the WV Logo and slogan outside, and asked the two present, a male and female, to show the business registration papers for WV. The two refused, claiming they had nothing to do with WV, but is instead a university career training workshop, and thus is not licensed and not for profit.

When confronted with the sign outside, the male "supervisor" deny any and all knowledge about the banner, claimed they had nothing to do with the banner. During the search, a business card was discovered with the supervisor's name on it, and even had the WV logo, but the man still refused to admit he runs a local WV branch, but instead tried to explain "I merely suggested some trip ideas to my friends and relatives."  PS personnel then found the documents saved on the company computer and printed them out, which contains WV promotional material and comp plan. When confronted, the man continue to deny, claiming it was left by visitors. He was then confronted that his own printer printed those off his own computer. Then he had nothing else to say.

Labor and Commerce enforcement bureau spokesperson explained that WV is suspected of illegal pyramid selling, but most of the websites used to promote such are located outside of China, and thus making investigation and enforcement difficult.

MLM Basics: Critical Thinking for MLMers -- Errors in Perspective

Previously MLMSkeptic have pointed out various reasoning problems of many participants in MLM, but someone pointed out why don't I have a guide on what *should* be done instead?

So here's the effort, called it "How not to argue for MLM" series. You can also think of it as "Critical Thinking for MLMers".

Many of these have been covered previously as "Bad Arguments".

There are many kinds of errors in your thinking process. As the old saying goes, "To err is human." However, one must learn from the errors to improve oneself. Today, we will discuss "Errors In Perspective".


What is Errors in Perspective?

Errors in perspective basically means you have a biased perspective of the world; you don't see the world as it really is, but only as you saw it. It's as if you've been wearing a bad set of tinted glasses all your life that you didn't even know it was there. And that's why they are very dangerous for you to think critically... You may *think* you are doing so, but you're doing it from the wrong perspective / viewpoint.

If you are not in MLM, keep in mind that many MLMers will accuse you of having the wrong perspective, with bad argument such as "unless you're in it you don't have the right perspective" (i.e. "you have to try it to know it / criticize it")

There are many different types of errors in perspectives.


Unwarranted Assumptions

One of the hardest errors in perspective to detect are unwarranted assumptions, because they are usually implied, rather than stated outright, and thus, you almost have to read between the lines to see them. A lot of "folks wisdom" or "commonly held facts" are actually unwarranted assumptions.

Not all assumptions are unwarranted, as you can't live a life without some assumptions, like the guy you pass on the sidewalk is not going to jump up and stab you, or your car will start in the morning, and so on. You may be wrong sometimes, but most assumptions you made every day are based on your knowledge or experiences. It is when you assume too much, more than justifiable by the circumstances or experiences, that you get unwarranted assumptions.

One of the most frequent unwarranted assumption held by victims of scams is "because Scheme X paid someone, therefore Scheme X will pay me (in the future)." When you think about it, this is basically "the sun will come up tomorrow" assumption. It makes sense for the sun, but it makes no sense for Scheme X, no matter how good / honest / rich Scheme X appears to be.  Furthermore, pyramid schemes and Ponzi schemes always pay a few people and make them "judas goats" to draw other people in. Some people (even you) getting paid does not prove everybody will continue to get paid indefinitely.

So how do you stop making unwarranted assumptions? First you have to FIND the unstated assumptions, THEN you have to logic check them to determine if they are warranted or not.

MLM History: DSA Killed a Bill in 2010 That Would Have Saved MLM

Network Marketing is in an identity crisis, and it had been for decades.

At the beginning MLM was really about selling stuff. It is in the past 3 decades that MLM had morphed into an industry no longer cares about retail. And their industry organization, Direct Selling Association (DSA) does not even bear the MLM or NM name.

(Frankly, DSA had existed LONG before existence of MLM, and was basically "taken over" by MLM companies. But that's a different story for another time. )

Previously I've addressed how DSA managed to condemn FHTM in 2012, a pyramid scheme, mainly by dissociating itself far from FHTM and claimed FHTM was denied membership 3 years in a row. My conclusion then is DSA is not making any efforts to clarify the differences between its members and a pyramid scheme, and it may not like how FTC will shape the industry in the future.

I've also addressed that DSA has basically ignored the existence of product-based pyramid scheme, and this action is clearly deliberate, because it needed to defend Herbalife in 2013 amidst Bill Ackman's long and epic short. DSA should instead lead the effort to stamp out product-based pyramid schemes and lead its members to strive for retail volume. But it won't.

Later, I discovered a DSA position paper where it basically denied the existence of legal precedents (i.e. just ignore it) and everybody can self-consume to their own riches. That, I predicted, will lead to the eventual destruction of MLM itself, if not by Ackman, then by the government.

But what surprised even me was the DSA's reluctance to even nail down the definition of "customer"... and how they killed a legislative bill in Tennessee back in 2009/2010 that attempted to separate a legitimate MLM from a product-based pyramid scheme. It wasn't launched by a "crusader" who's out to kill MLM. It was launched by a MLM insider.

And it went down in flames, killed by DSA lobbyists.

BREAKING NEWS: PlanB4You Admin "Johny Schabregs" arrested by Netherland Authorities

PlanB4You, a suspected low-level ponzi scheme had been shut down in December 2014 by Netherland's FIOD (Fiscal Information and Investigation Service). Instead of keeping his nose clean and await trial, Schabregs, operator of PlanB4You apparently hoping for a fresh start, offered "two for one positions", i.e. buy one position, get one free. This resulted in his arrest on 20-FEB-2015 by FIOD. 

Prosecutors alleged that victims of Schabregs are spread among multiple countries in the Eurozone, including Netherlands, Germany, Belgium, Slovenia, and Italy. 

Even now defenders of scheme still claimed that the money will be used to start 25 companies and everybody will profit. 

http://behindmlm.com/companies/planb4you-ponzi-admin-arrested-in-the-netherlands/

BREAKING NEWS: SEC halts "Achieve Community" ponzi scheme

English: The U.S. Securities and Exchange Commission headquarters located at 100 F Street, NE in the Near Northeast neighborhood of Washington, D.C. (Photo credit: Wikipedia)

The shoe have dropped, folks. And it's actually a sledgehammer.

Washington D.C., Feb. 18, 2015 — 

The Securities and Exchange Commission today announced fraud charges and an emergency asset freeze against two operators of a Colorado-based pyramid and Ponzi scheme that promises investors extraordinary returns of 700 percent through a purported “triple algorithm” and “3-D matrix.”

In a complaint unsealed yesterday afternoon in federal court in Denver, the SEC alleges that Kristine L. Johnson of Aurora, Colo., and Troy A. Barnes of Riverview, Mich., have raised more than $3.8 million since April 2014 from investors they enticed into buying positions in their company Work With Troy Barnes Inc., which is doing business as “The Achieve Community.”  

Full press release available here:  http://www.sec.gov/news/pressrelease/2015-35.html#.VOTcBPnF-Sr