Is Robert "Rich Dad" Kiyosaki in a Faustian Bargain with Network Marketing?

Robert Kiyosaki Flipping Off the Haters
(Photo credit: i am real estate photographer)

Before 2000, NOBODY knew who Robert T. Kiyosaki is, other than a few seminar attendees, desperate for some advice to get rich.

Then in 2000, the book "Rich Dad Poor Dad" was published by Warner Business Books, and that thing just TOOK OFF like a rocket, resulting in a series of books that are just one rehash after another, filled with "pithy" sayings that may or may not apply, anecdotes that were presented as "these are the true stories of my two fathers"... but later admitted to be a myth, a fiction.

But what is the real secret behind the success of Robert T. Kiyosaki and his book "Rich Dad Poor Dad"?

A implicit bargain with an industry desperate for legitimacy... the "network marketing" industry.

Is it a Faustian bargain?  Does Kiyosaki care, or he just view everybody who asks as "haters"? As he can't make a mistake?

Paul Orberson dead at 57, best known for his pyramid scheme FHTM

English: Paul Orberson speaking at a convention. (Photo credit: Wikipedia)

Paul Orberson, controversial head of Fortune High Tech Marketing (FHTM), is dead at age of 57 from his kidney cancer, diagnosed in 2003, as reported by the Kentuckian.

Orberson start out humbly and went to college on a baseball scholarship, before eventually returning to his hometown as a high school basketball coach. During that time, he started doing Excel Communications that sell long distance phone service through MLM. He claimed that after doing Excel for 4 years he made a million dollars and retired to Florida in 1996. but boredom drove him to start a new company in 2001... Fortune High Tech Marketing. He signed up a couple famous companies such as Cingular (now AT&T Wireless) and GE Security in order to offer their products, and 12 people paid $299 to join. A month later, sales force grew to 1200 (each of whom paid $299). From there the company grew very quickly across the US, Canada, and UK.

In 2003, Orberson was diagnosed with kidney cancer but apparently forced it into remission.

Over the years, FHTM was charged by several states such as Texas, Montana, and North Carolina as pyramid schemes, and settled with each with fines and promises to reform certain practices.

English: Fortune Hi-Tech Marketing, Inc. (FHTM) Logo (Photo credit: Wikipedia)

That came to an abrupt end in January 2013 when the Federal Trade Commission, along with multiple states, including his home state of Kentucky, brought suit and killed the company as a pyramid scheme. Later audits revealed that while Orberson and his top lieutenants shared over 40 million in profits average ANNUAL commission of a typical FHTM affiliate is about 1000 dollars (not counting expenses).

Kevin Trudeau Will Face Jail for Lying on TV... AND Stiffing the Court of Penalties

Kevin Trudeau
 (Photo credit: Wikipedia)

Kevin Trudeau is a master salesman. Unfortunately, his early exposure to MLM seem to have lead him down a dark path, and he became a scammer instead. And now he's really going to pay the price... in jail. Following is a short history of Kevin Trudeau.

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Kevin Trudeau apparently was a real go-getter even when he was young. He was voted "most likely to succeed" by his high school graduating class. However, he refused to go to college. He claimed he went to an Amway meeting at 15 and have wanted to be financially free ever since. He claim to have started a mail order company before he was 18. However, after high school he tried selling cars for a while, found it boring, then went on the seminar circuit, peddling one thing after another, like "super memory!" around the nation. Apparently that was not challenging or lucrative enough, as he went into fraud.

Apparently around 1990 he impersonated a doctor when meeting with bank officials to open accounts, then wrote 80000 worth of bad checks. He apparently also fraudulently obtained 11 credit cards (identify theft) and spent them. For the first crime he spent maybe a month in jail as the judge gave him a soft sentence for first time offender. A year later, when he got caught for the credit card fraud, he spent almost two years in a Federal prison.

When interviewed by Washington Post in 2005, Trudeau blamed "math error" and "overzealous bank officials" for his rap sheet. For the fraudulent credit cards, he said he was unfairly penalized for paying late one time his AMEX card which resulting in him not being able to get any card, and he had no choice but to apply with fake social security numbers.

He just cannot admit that he did anything wrong. Such narcissistic behavior is indicative of sociopathic personalities.

The prison stay did not stop his criminal behavior at all. It only make him even MORE determined to make his money... through any means possible. He also met up with a guy named Jules Leib (to whom he gave a Tony Robbins self-help book while in prison), and when they got out, they teamed up to make money... through MLM.

Network Marketing? Or Cargo Cult Marketing?

Ever heard of Cargo Cults? No? It's a cult (alternative religion) that evolved during WW2 in Malenesia (little Pacific Islands) where the natives evolved a religion based on airplanes dropping huge amounts of cargo out of the sky and if they pray and march and wear the right uniforms and build "runways" or "fake airplanes" the great plane will come and give them more cargo. And yes, they're still around.

Cargo Cult of the Pacific, via http://www.rusticaobsessa.com/?p=257

Those of us who know a little history would realize that those were WW2 supply missions where transport planes drop supplies for our troops that probably went off course for one reason or another.

Cargo cults existed for 50 years and no great planes have appeared since WW2. Yet it persists. Why? Because they *wanted* to believe, even though it doesn't work and hadn't worked for 50 years. They keep doing the same thing.

Richard Feynman coined the term "Cargo Cult Science", where people are doing apparently scientific research, studies, theories, etc. trying to explain some problems and propose solutions, except they have tried for decades, and nothing has worked. He was referring to criminal science (how to reform criminals) and pseudo-science such as ESP. Things have NOT improved for those fields. It's gotten WORSE.

Network Marketing is the same way. It is really "cargo cult marketing" because in most cases most network marketers only know how to indoctrinate as many people as possible and hope they make you rich. All the junior reps are recruited through "edification" of the top reps, and was given the message: monkey see, monkey do. (i.e. you can be me if you do what I do) even though there is no proof that doing what they did is the key to success.

Only a few PROFESSIONALS realize the truth and try to do it the right way. VAST MAJORITY of people are doing it wrong, and they are either ignorant... or simply don't care. They see their own success as "proof" of their own brilliance, not realizing they are simply lucky... or good at OTHER things... such as recruiting or cult indoctrination.

And that's exactly what a cargo cult does. They do what their "ancestors" did even though there is no proof and no reason it would work.

But there's more... the CULT aspects.

MLM Mythbusting: No, MLM Did NOT Create the most millionaires of any modern industry

Recently, I can across yet ANOTHER MLM wild claim  from a MLM supporter

He claimed that "MLM has produced more millionaires than any other industry".

I asked him does he have any proof, and he never got back to me.

Time to call in the MLM Mythbusters!  Is the claim "MLM has produced more millionaires than any other industry" true or false?

The story is quite fascinating, as it demonstrates some of the worst aspects of MLM... blind repetition of claims with no verification.

First, there is NO PROOF of this claim in ANY popular fact-checking sources, or any reputable news source.

The sole source that can be verified was that it was ALLEGEDLY stated by "Les Brown", pretty famous motivational speaker. It was cited by multiple MLM fan sources, but nobody can give a specific date, time, or speech that he allegedly said that, nor was his source of that claim given.

UPDATE: MLM Consultant Len Clements (whose website is InsideNM.com) identified the source of the myth as Beverly Nadler, a popular MLM author in the 1980's and 1990's, who since has backed away from her own claims. MLM Skeptic have previously identified Nadler as the source of "Harvard Teaches MLM" myth. Please see comments at the end.

A secondary source is Paul Zane Pilzer, an economist who likes to play entrepreneur and encourage the wellness industry, which jibes with a lot of MLM pushing "nutritional supplements". Pilzer claimed that the wellness industry, and network marketing will be the two largest growth markets in the US in the coming decades. However, he didn't say it already produced millionaires.

THERE IS NO PROOF that MLM / Network Marketing has produced the most millionaires in modern times (say, since MLM got started with Amway in late 1970's) other than ONE man's word, with no evidence and no source.

But it's repeated by all the MLM fan sites, with NO fact-checking.

So which industry did produce the millionaires, if not network marketing?

UPDATED NEWS: Payza funds in US frozen by Department of Homeland Security? Or Not?

U.S. Department of Homeland Security Official Signature Websafe Colors (Photo credit: Wikipedia)

According to Ultralight Financial Services (ultralightfs.com), aka Obopay's homepage, funds that originally belonged to Payza (i.e. MH Pillars, who bought out AlertPay earlier) was frozen by Department of Homeland Security.

EDIT: Some updated info regarding Obopay. Please click "continued" and see the UPDATE section.

Those who play in HYIP or suspect Ponzi scheme circles should be familiar with Payza, because Payza doesn't have the restrictions of Paypal (no HYIP, no get rich quick schemes, etc.). With closing of Liberty Reserve earlier (and guilty plea by one of the co-owners not long ago) Payza had inherited the "Dark Paypal" moniker from Liberty Reserve.

Several suspect Ponzi schemes (they call themselves "income systems" or "rev share systems" or such) are definitely using Payza. Though some European firms prefer the Russian version.

However, Payza does not have license to transmit money in the US, so it has an exchange agreement with Obopay (i.e. Ultralight Financial Services) which has such license.

And now Payza US funds are frozen. Not seized, mind you, merely frozen. ALL OF IT, millions of dollars.

This apparently was noticed days ago, when Payza started notifying their US customers that they cannot get through to Obopay to pay people in the US, and they will have to start legal action against Obopay.

Then suddenly the notice on Obopay's home website appeared... Assets frozen.

It's suddenly very clear that Obopay was under a gag order... They are NOT to reveal what's going on with Payza's account... Until they are allowed to say so... and it's clear that DHS now has a full record of who got / sent how much Payza money via Obopay to / from whom.

While no reason was given by Obopay, one can easily surmise the reason had everything to do with money laundering... the same reason Liberty Reserve was shut down.

And speculations are running wild.

HAPPY THANKSGIVING, and a message from MLM Skeptic

Today is Thanksgiving Day in the US, where we are supposed to give thanks to the world and each other about having made it another year.

So here's best wishes to you, the reader, with a bit of help from a South Park meme... (look up "Craig")

"If I could get some real customers
instead of just friends and family needing
favors... I would be so happy." 

If you are in MLM, may you find real customers (who are NOT affiliates like yourself) and make a profit the way it's meant to be made.

If you are a victim of scams, may you find relief soon... and the wisdom to not fall for a reload scam or any other types of scams.

If you're neither, you get the generic "Happy Holidays" wishes. :D