News update 13-JUN-2014 (Friday!): TelexFree Faith Sloan plays dumb and begs for money; Solavei goes Chapter 11 Bankruptcy;

Remember, folks, get your news from a trusted news source, like I do. I don't relay unconfirmed information, and neither should you.


Faith Sloan Plays Dumb and Begs Court to Release Money; SEC says "No Way"

Faith Sloan, one of the "TelexFree 8", has filed a motion on 10-JUN-2014 asking court to release about 18K to pay expenses such as lawyers, rent, and food.

However, this is specifically against the injunction that froze her money in the first place. SEC and the judge that issued the freeze has specifically stated that no "carveout" ( i.e. taking money from accounts that contains money that may be tainted by the fraud) will be allowed if the account owner does not declare his/her assets. Thus far, Faith Sloan has refused to declare her assets as she claimed doing so may incriminate herself (i.e. "plead the fifth").

SEC has also long documents that detailed her multiple violations of freeze order, including:

1) Paid $14854 to "Changes Worldwide" another suspect scheme on 24-APR-2014
2) Paid $3990 to "Changes Trading LLC", which is a part of Changes WorldWide, on 28-APR-2014
3) Wired $30000 to her attorney on 7-MAY-2014
4) Transferred her house deed to her mother on 12-MAY-2014

And here she comes asking the judge to release more money to pay rent... to her mother, whom she just gave her house to. AND another $18000 to her attorney.

Hahahahahaha.

Quick Research: What is Eternyon and should you give them any money? (Probably not)

Occasionally MLMSkeptic was asked questions about a specific company. This is both such an investigation and an example about how I do such research. All this is done in about 30 minutes. (It took longer to write this blog post than to do the actual research)

Today's subject... Eternyon

So what the heck is Eternyon? They claim to be "advertising, technology, and e-commerce, using network marketing".

Frankly, their website looks like what some spammers built to catch people unaware, using only stock photos, like those fake universities.

Right now, there's no mention on who runs this business, or where they're located, on their own website. But it's clear it's aimed at Brazilian Americans, because it's in both Portuguese and English.

The wording in English is also quite... interesting. "Our Differential"? "Clients Benefits"? That looks as if it's written in Portuguese then ran through a translator.

It's allegedly centered in Worcester, Massachusetts... Where TelexFree was just closed not long ago by Feds.

You need to search online to find that Eternyon was allegedly founded by Wayne Howe and George Lima... Howe's allegedly a Massachusetts native, while George Lima was born in Rio de Janeiro but emigrated many decades ago.  However, there are no official paperwork viewable by the public proving Wayne Howe and George Lima are indeed the founders or executives of Eternyon, other than words of people trying to recruit you into Eternyon.

Searching Eternyon.com WHOIS hit a "domain by proxy"... They don't want you to know who registered the company domain.

Eternyon refers to itself as "Eternyon LLC" but never stated where the business is registered. There is an "Eternyon" registered in Wyoming: 2014-000657722, first registered in 2014-JAN-24.

You can search Wyoming entity search here:   https://wyobiz.wy.gov/business/filingsearch.aspx

However, this is NOT an LLC, but a "trade name", i.e. "dba - doing business as". And it was registered by yet ANOTHER LLC, at the same address:

Tech Products LLC
255 Park Ave Ste 1000
Worcester, MA 01609 USA

However, Tech Products LLC, which is also a Wyoming entity (2011-000603187), is marked as "inactive-dissolved".

So to make things clear, Eternyon is registered in Jan 2014 by an entity that went inactive merely 4 months later (May 2014). Its executives are unknown. Enternyon is just a name. The company is "inactive - dissolved".

What do we know about the address?

Is Your Upline a Machiavellian? (i.e. Is S/he Exploiting You or Helping You?)

Niccolo Machiavelli
(Photo credit: Wikipedia)

A Machiavellian, named after Niccolo (ni-co-LO) Machiavelli, is a manipulative SOB (or DOB, just to keep it equal), who knows every button to push to make you do his (or her) bidding, through cunning and duplicity. Whether the one being used will be harmed is of no consequence to the "user", as long as the user derived benefit from it.

By default, any network marketing upline is a Machiavellian, because as long as you have joined (and bought a starter kit), your upline will have benefited. Whether you benefit from joining is completely irrelevant.

However, as in most cases, manipulation can be for good... or evil. Machiavelli himself was often portrayed as amoral manipulator, but that would be simplifying the issues too far into black and white. He was advocating the rulers to get things done, through manipulation if need be.

Think about it. Aren't modern laws trying to "push" you into behaving a certain way? Like the various "sin tax" on things like cigarettes and alcohol?

But in general governments don't enact laws to be evil. Scammers do. Let's assume for now we are talking about the EVIL machiavellians only.

Machiavellianism (manipulate others for one's own gain), along with Narcissism (extremely self-centered), and Psychopathy (have no empathy), are known as the "dark triad" of personality traits.


Origin of Machiavellianism in Scams

How do uplines "go bad"? Generally, it's because they were taught that way. Instead of learning how to sell (i.e marketing), they were taught "ass backwards" to emphasize the network instead. Apparently they were taught that as long as everybody they recruit (into the network) buy a 'starter kit' that counts as "sales".

But it's not sales. There were no sales to real customers. All sales are to affiliates / recruits.

And they will instill the SAME (and WRONG) attitude onto their downlines.

Chinese has a term for this: 層壓式傳銷 which literally means "level pressure style marketing", though commonly translated as "pyramid selling". The closest term in the West is "product-based pyramid scheme", where products are barely sold outside the network, but are mostly consumed within, but with money moving from the bottom up. At certain angles, this indeed resembles network marketing, but the key difference is in network marketing, the overall goal is to sell products to customers OUTSIDE the company. There are people outside, NOT affiliates, that are actively using the products, and people are selling to those customers. Product-based pyramid scheme, on the other hand, sells to its own affiliates, with little to no sales to outside customers. Some are known to claim to give away stocks or "points" that can be traded for stocks later... if you buy up a lot more products.

One such scheme in China went after the elderly, by telling them the company will do initial public offering (IPO) soon, must bring up sales figures, must look good, so IPO can go smoothly, and encouraged the affiliates / customers to buy up even more products (most of which are vastly overpriced) for the "virgin stocks" which supposedly can be traded for real stocks if IPO goes through. It never did, and the company was busted as pyramid selling. The seniors were manipulated into joining, with fraudulent product claims and income potentials, then with various manipulations to buy up even more stuff that they don't need. The same scenario was repeated last year, when another company was busted in Hong Kong, this time claiming that this US-based company is going to be very big if people buy up their "Internet Comm Suite" for 24000 HKD (about 3000 USD) a year to accumulate "points" to be traded for stock later, and company will buy back the stock for huge riches.

Both pyramid selling cases relied on people who have little understanding of IPO and stock market. But the same idea can be applied to almost any sort of potential profit. And it always involve the same 3 steps.

A machiavellian's "modus operandi" has 3 steps:

• Deception
• Manipulation
• Exploitation

Let us discuss each in turn.

News Update 07-JUN-2014: TelexFree trustee appointed; TelexFree Faith Sloan know NOTHING about fraud, SEC disagrees; Lyoness not a pyramid scheme in Norway now

Remember folks, when you read news, even ones provided here, you should check the links I provided to make sure I was representing the new properly, and you should do the same for ALL the "news" you come across, unless you encounter news such as those from major newspapers, which has readers to account for and has a reputation of telling the truth, rather than what you want to hear. Stop reading crap meme and spreading them.


Stephen B. Darr selected as US trustee to oversee TelexFree bankruptcy

As directed by the judge Hoffman, US trustees has appointed Stephen B. Darr of Merisow Financial Consulting as trustee to takeover the TelexFree bankruptcy.

Here's the actual court order making the appointment:  (Thanks to Attorney Tim Durken for the lead)

http://www.scribd.com/doc/228343084/TelexFree-Certificate-of-Appointment-of-Chapter-11-Trustee

What exactly does a trustee do? Here's Cornell Law School's link to actual law on that:

http://www.law.cornell.edu/uscode/text/11/1106

You can find a short profile on Mr. Darr on the Merisow website:

http://www.mesirowfinancial.com/mfc/leadership/darr_s.jsp

NEWS UPDATE 03-JUN-2014: Burnlounge is a pyramid scheme (duh); Merrill about to flip on Wanzeler in TelexFree case? Rippln + Mannatech = ?!?!?!

Remember folks, get your news from REPUTABLE news sources (which I link to) so you can decide for yourself, rather than just one-sided narrative by unknown people.


Burnlounge appeal rejected by Federal Appeals Court

Burnlounge appeal of their 2012 judgement as a pyramid scheme was rejected by the Ninth Circuit Court of Appeals, affirming that they are indeed, a pyramid scheme.

My short profile on Burnlounge:
http://amlmskeptic.blogspot.com/2012/09/scam-study-burnlounge.html

In their decision, the court stated that:

The district court found that because purchasing a package was required for participation as a Retailer or Mogul, and because Moguls earned cash for selling packages, “[Moguls] by default received compensation for recruiting others into the program.”

The 9th Court's decision can be read here:
http://cdn.ca9.uscourts.gov/datastore/opinions/2014/06/02/12-55926.pdf

The short of it is, if you claim you sold something and are getting paid for that, but in effect you recruited and the recruits are required to buy something, then  your claim of sales is invalid... You are getting paid for recruiting, not selling.

What is interesting is the court's decision reaffirmed Webster vs. Omnitrition as a precedent, but it's no surprise as it's also the Ninth Court that made the Omnitrition decision.

You can read my summary of Omnitrition case here:
http://amlmskeptic.blogspot.com/2014/01/mlm-dictionary-omnitrition-case_30.html

This would have some profound impact on some very big players in network marketing that relies on recruiting 'self-consumers' who then recruit more self-consumers to make themselves rich. Those who emphasize retail sales by sales teams should not be affected.

News Update 30-MAY-2014: Zeek Receiver First Disbursement Few Months; Sann Rodrigues will NOT get award in Brazilian Congress; Trustee order issued by TelexFree judge

For real news regarding scams and schemes affecting you, stay tuned to REAL news, not bogus news spread through your uplines and similar people out to recruit you.


Zeek Receiver Announce First Distribution Coming 30-SEP-2014

On the ZeekRewardsReceivership website, receiver Ken Bell announced that the first interim distribution is tentatively scheduled for 30-SEP-2014. All people who have filed a claim must have accepted the claim by 15-AUG-2014 to be paid by 30-SEP-2014. Also, those outside of the US must sign the OFACS waiver as well. Please see the ZeekRewardsReceivership.com update for yourself, as linked above.

Obviously this will NOT be the only distribution, but rather than make victims wait even longer (Zeek was closed in 2012!)  a distribution will be made now while receiver goes after more net winners.


Sann Rodrigues will NOT receive award in Brazilian Congress

An event arranged by a Sao Paolo business leader Regino Barros to honor Sann Rodrigues, accused pyramid scheme TelexFree co-conspirator, and other people, has been cancelled hours before it was to start, according to iG News in Brazil. Sann Rodrigues was scheduled to receive "multi-level marketer of the year" award, according to program notes for the event, where Regino Barros will name Sann Rodrigues to "Multi-level Marketing Regulatory Agency", which is a private organization, despite the official sounding name and is not a government agency, according to iG. The senator who booked the room in Congress for Barros apparently was surprised at seeing Rodrigues' name on the list of honorees, but replied "we should not crucify before we have all the fact." when questioned by iG about Rodrigues. It is unknown if Rodrigues would have attended personally.

http://economia.ig.com.br/2014-05-29/homenagem-a-lider-da-telexfree-no-senado-e-cancelada.html (in Portuguese)  and thanks to PatrickPretty for the lead

Scam Psychology: The Illusion of Asymmetric Insight

Ever heard of "illusion of asymmetric insight"? No? Me neither, at least not until about a week ago, when I heard it on the "You're not so smart" podcast.

The premise is quite simple: let's say A and B have a difference of opinion on a certain issue. However, A thinks that he understands B's position better than B understands A's position. Sometimes, A thinks he understands B's position than B understands his own position.

The reverse is also true: A believe he knows his own position far better than any one ever could, certainly more than B's understanding of A's position, at least in A's own mind.

The problem is more often than not, this is an illusion, not reality.

Cover of Lord of the Flies, Educational Edition

Lord of the Flies

In 1954, a group of psychologists, posing as camp counselors, got 11 and 12-year old boys into a camp... on separate ends of the camp. The two groups don't even know each other exists as they arrived on separate buses via separate routes. As psychologists predicted, a social order quickly emerged, with leaders taking charge and the rest will serve the order in whatever roles needed. The two groups are nearly identical... except they are on separate ends of the camp.

So what happened when they met? Well, you can read the short account by David McRaney of "You are not so smart". Let's just say, one of the things each group obsessed on is trying to find differences between the two groups... and used that difference to "prove" (to themselves) that their own way is superior and the other group is inferior, even though such differences are trivial.

And the experiment almost got out of hand when... let's just say... knives were involved.

http://youarenotsosmart.com/2011/08/21/the-illusion-of-asymmetric-insight/