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Pyramids, Ponzis & Amway -- Continuing Educational For Those Interested

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  • oracleintl@aol.com
    Unfortunately, there seems to be much confusion regarding pyramid schemes, Ponzi schemes and the legitimacy of Amway. Rather than ridicule third parties who
    Message 1 of 2 , Apr 3, 2005
      Unfortunately, there seems to be much confusion regarding pyramid schemes,
      Ponzi schemes and the legitimacy of Amway. Rather than ridicule third parties
      who admit they are not experts and then go right on to argue points and
      issues that they do not understand, and pontificate as if they were the very
      expert that they acknowledge that they are not, I would prefer to leave you with
      something useful.

      It is my intention that this post be informative; if you came to see me
      spank an insufferable fool who has only just recently learned who Ponzi was, this
      isn't the post.

      Let me begin by saying I am an internationally recognized expert with regard
      to financial crimes - this is what I do. I have been quoted by financial
      icons such as Forbes and Barrons and numerous other publications, the most
      recent of which I am aware was last week by the Phnom Penh Post in Cambodia.


      I have testified in person, and submitted numerous Affidavits and
      Declarations in civil and criminal cases related to Ponzi Schemes, Pyramid Schemes,
      Money Laundering, etc. For example, in the case of Arnold "Arnie" Strom, the
      Florida Office of the Statewide Prosecutor published numerous press releases
      characterizing his operation variously as a pyramid scheme and a Ponzi scheme.
      They spent more than a week presenting their case in Charlotte County
      Florida (you can easily look it up) and we destroyed it so badly that we got a
      directed judgment of acquittal without putting on a defense.

      Show me a person who uses pyramid and Ponzi interchangeably, and I'll show
      you an expert who isn't.

      Now, as for Prepaid Legal - I defy anyone to show me where I stated that
      their operation is a pyramid scheme. I did not; I merely referenced the claims
      being made by third parties and expressed legitimate concerns.

      I do not know whether PPD is a pyramid scheme or not. Nobody has paid me to
      make this determination and the determination has not been dispositively
      rendered anywhere that I know of. The points and issues are so complicated that
      only a fool would offer an opinion.

      On the other hand, I would feel far more confident arguing that Amway IS a
      pyramid scheme - a twenty-five year old FTC decision doesn't mean anything.
      Those of us who make a living in this business are very much aware that Amway
      has been under fire for quite some time as their program has devolved to the
      point that the procedural safeguards the FTC considered, and relied upon,
      have largely evaporated, and their "tools" program is especially worrisome.

      Let me offer you this quote as one of many references I would rely upon:

      Id., 2001 U.S.Dist. LEXIS 14455 at *36-38. The court then went on to
      summarize the evidence that Amway actually is a pyramid scheme.

      P&G and Dinsmore have come forward with 163 pages listing the nature of the
      evidence on which they relied in asserting that Amway has not been enforcing
      the rules and has allowed its business to become an illegal pyramid scheme.
      The evidence includes news articles, internal Amway memoranda, Amway
      motivational tapes, trial testimony from other cases filed against Amway, and
      correspondence. P&G and Dinsmore have come forward with evidence that certain Amway
      distributors earn far more in their sale of motivational tools than from the
      sale of Amway products. They have produced evidence that although Amway set a
      20% guideline for as a way to ensure proportionality of BSM sales to Amway
      product sales in 1983, some distributors have exceeded this guideline. They
      have produced evidence that many Amway distributors almost totally ignore the 10
      customer rule. They have produced evidence that the operation of Amway's
      buyback rule may not be adequate, given the Ninth Circuit's ruling in Webster v.
      Omnitrition, 79 F.3d 776, 783-84 (9th Cir. 1996), that the restocking fee
      prevented summary judgment on the issue of whether Omnitrition was an illegal
      pyramid scheme. See Omnitrition, 79 F.3d at 783-84.
      What P&G and Dinsmore knew about Amway also came from other claims that had
      been filed against Amway. Since the 1979 FTC decision, a number of cases have
      been filed against Amway alleging pyramid and RICO claims. P&G has produced
      evidence that Amway settled the Hanrahan case, which included a RICO count.
      Another court dismissed an action and counterclaim between Amway distributors
      on the basis that the transactions between the parties amounted to a pyramid
      scheme which was unenforceable as being against the public policy of the
      State of New York. Schaffer v. Talerico, 118 Misc. 2d 66, 67, 459 N.Y.S.2d 716
      (City Ct. N.Y. 1983).
      P&G and Dinsmore have produced internal Amway memoranda expressing the
      concerns of those at the top of the Amway corporation that the motivational tools
      business, if allowed to go unchecked, had a potential for becoming an illegal
      pyramid scheme [the district court's footnote cites the "Postma memo" and
      the "Directly Speaking" transcript]. Amway has not only addressed the issue of
      pyramid concerns internally, it has also publicly addressed the issue of
      whether Amway is an illegal pyramid on the Amway website. In addition to the
      information P&G and Dinsmore had when they filed the Texas case, discovery in
      this case has revealed internal Amway memoranda from Mulham and Halliday which
      reveal that Amway's highest executives were concerned about an illegal

      It is not my intention to bore you to death; my point is that there is often
      a great deal more to things than most people know, and it would be better of
      people who do not know what they are talking about refrain from pontificating
      as if they do.

      Returning to PPD - how would we know whether PPD is, or is not a pyramid and
      how significant is it that they sell a real product?

      That would be a very good question and it is a question that should have
      been asked rather than the declarative statements that were offered.

      The fact that any entity sells a real product is COMPLETELY IRRELEVANT. The
      standard of evaluation has nothing to do with that. The probative question
      is, who is buying it?

      A financial crimes expert would be familiar with Koscot and Omnitrition -
      these are the two cases most often cited by the courts. According to these
      standards, the "product" sold to distributors is not considered relevant at all
      in making the evaluation - we need to know how much product is purchased by
      "real consumers" and that term excludes those who are distributing/marketing
      the product according to the court's definition.

      "Products Purchased by a Distributor for Personal Consumption do not
      Qualify as a Retail Sale"

      Those who are interested are encouraged to google Koscot Pyramid and
      Omnitrition Pyramid as they will provide the full background.

      In sum, I would like to make the following points.

      1) Neither investigators, lawyers, nor judges are per se "experts" with
      regard to any particular issue. Unless they can demonstrate unique knowledge,
      training and/or experience outside the common man's experience with regard to
      that issue, they are not experts and they cannot proffer a credible expert

      2) Virtually anyone can be an expert if they do have the requisite
      knowledge, training and/or experience - an expert is whomever the Court deems it
      appropriate to recognize as an expert.

      3) PPD may, or may not be a pyramid scheme. I have not committed myself to
      a position, I don't have the information available to make that
      determination, and the determination has not been made in any forum of which I am aware.

      4) Ponzi and Pyramid are not interchangeable terms - they are only
      distantly related. Carlo Ponzi did not operate a pyramid scheme.

      5) Amway may very well be a pyramid scheme - the 1979 FTC decision means
      very little as their policies and structure has changed dramatically over the
      last 25 years.

      6) Any pretentious wannabe who would proffer an opinion as to whether a
      complex marketing program is, or is not, a pyramid scheme without the necessary
      information is a fool - how's that for a "clue for the clueless.".

      Personally, I learn a lot from these lists, I believe that ongoing education
      is the key to professionalism, and I appreciate those who share their
      knowledge, training and experience (provided they have any) with those who are
      trying to learn.

      If anyone has any questions, issues, or concerns that I am qualified to
      address, I will be happy to take the time to reply - subject to the Disclaimer
      that follows.


      Bill E. Branscum, Investigator
      Oracle International
      PO Box 10728
      Naples, FL 34101
      (239) 304-1639
      (239) 304-1640 Fax
      Illegitimi non carborundum


      I am not a lawyer, and I don't even play one on TV. You may or may not
      construe this post to be legal advice; frankly, you may construe it to be the
      Holy Grail for all I care. It is my considered, and fervently held "Darwinian"
      opinion that anyone who looks to posts on the Internet for legal guidance and
      direction is far too stupid to deserve to survive.

      On the other hand, any silly bastard who thinks they have a defamation case
      to make should call me to arrange for acceptance of service. If I wasn't
      anxious to straighten your silly ass out, why would I take it upon myself to
      ridicule, belittle and humilate you?

      [Non-text portions of this message have been removed]
    • Vicki Siedow
      Thanks, Bill, for another of your informative missives. I have a collection of, and refer to them. Vicki Siedow Siedow & Associates Investigations & Custom
      Message 2 of 2 , Apr 5, 2005
        Thanks, Bill, for another of your informative missives. I have a collection
        of, and refer to them.

        Vicki Siedow
        Siedow & Associates Investigations
        & Custom Legal Support Services
        2629 Foothill Blvd. #262
        La Crescenta (Los Angeles area), CA 91214
        818-688-3295 fax
        CA Lic. PI #22852
        Member NCISS
        Need economical legal help?

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