Pyramid Schemes

Other MLM Scams

"Market America" ... another MLM Scam. See lower left for more.

Mary Kay   Milwaukee, WI November 20 2006 — Tracy L. Coenen, CPA, MBA, CFE, a nationally-recognized fraud examiner and expert witness, has developed a website to educate and inform the public about the Mary Kay Cosmetics business opportunity. Pink Truth (www.pinktruth.com) has quickly become a valued resource to hundreds of thousands of women around the world. See this LINK for Mary Kay within the church.

Nu Skin LINK  (the Utah Winter Olympics sponsor) ... also operated as PharmanexInterior Design Nutritionals (IDN), Big Planet, PhotoMax... was ordered by the FTC to stop mispresenting the earnings of its distributors. See LINK

Usana  Evidence of Large-Scale Fraud against Usana (Aug '07)  Forbes Magazine now reports that the FBI has begun a criminal investigation of the MLM, Usana Health Sciences. This news follows a long list of research, analysis, SEC investigations, lawsuits and news reports, all indicating that Usana is a largescale fraud. The Forbes article includes the extraordinary news that the national accounting firm that audits Usana's books, Grant Thornton, has suddenly quit. See lower right & visit frauddiscovery.net for much more!

What follows is one person's experience from the "MLM Survivors" page re: Market America   See Link

    It would take me hours to convey to you what a bunch of crap Market America is. To put it in the most simplistic terms; everything I have read about Amway sounds like Market America. Except the "tools" (marketing) we bought are strictly marketed by the company, so there is no tools scam here. But there are plenty of other things wrong.
    For instance heres a perfect example of what I mean; they have a "wonderful" (look out, I'm going to be sick) new cosmetics line they introduced called Motives. The 1 day training costs $250 (that doesn't include the $850 you have to spend to get the makeup kit plus the additional $64 for shipping and handling) The trainings are run by the "certified Motives trainers". The majority of these "trainers" have no prior training or experience in makeup, and were selected due to a "who-knows-who" type of thing. Its such a joke. They put a lot of pressure on the men to get involved too. These consultants run around calling themselves experts and they basically know as much about putting on makeup as a caveman.
    Also the whole line itself was promoted to the distributors as a "high quality" top of the line cosmetic. There have been rumors circulating (more than likely, rumors started by the company to brainwash the consultants into believing its good stuff) that the line is made by the same company as M.A.C. and Bobbie Brown. Well, it didn't take long for the distributors who DID have a background in cosmetics to find out that the whole line was sooooo overpriced. The "wholesale, special-to-distributors, can't be bought in stores- makeup is made by a cheap, drug store brand that retails its lipsticks for $3.95 RETAIL. Market America charges is distributors $10.75 after S&H.
    Oh, and the huge bottles of foundation they sell for the custom blended foundation is a bigger joke. It comes from a company that sells it to salons for $20. Market America's price to distributors- $184!!!!!!! Some of these nit-wit consultants were going into salons trying to market their cosmetics line (poor things; some of them dropped $2,000-$3,000 to get started) only to be laughed out of the salons by the owners who were already familiar with the product, knowing they could get it for $20. The same makeup is also available at Sears, and some of the consultants found out the hard way when their customers discovered this, and returned entire purchases.
    Its not fair to these poor saps who have plunked down their hard earned money, get "training" that is a total joke (nobody seems to know how to do this custom blend thing even after the training). The people in the upline (the few making money, and of course its at the expense of their downline) put a lot of pressure on everybody to get involved with the makeup line as it provides them with a lot of BV's to earn their checks. Of course these jerks don't even use the crap. Even the Head Trainer for the company shops at Chanel. Whats wrong with this picture????
    Lets see, although they don't sell tools through the distributors to make money, the company has started offering discounts to the higher pin levels if they buy large quantities of tapes, so they can distibute them to their downlines. So, I guess this will result in them eventually making a buck off the tapes, especially if the upline is buying the tape for $1, and selling it for $5. So, now that I think about it, yeah, I guess they are making money off tools. They also are really big on filling the "trainings" and "seminars".
     One "seminar" where they flew in some A-hole from across the country was an 8 hour snoozer where this jerk basically went through the steps of an "interview process". We already all have this "interview process" in booklets we recieved at another seminar! And during the breaks they turned on music and made this room full of about 250 people get up and dance.They looked like complete jerks, doing the "party train" and all. I was embarrassed to be there. If you didn't get up, people gave you dirty looks. Oh, in Market America, we don't "sign" people up, we put them through an "interview" to see if they are right for the biz. OH PUUUULLLLEEEEEZZZE.
     Yeah, get them through the ""interview" and then let them know its about $1,000 to get started (products you have to buy; "you can't sell something you don't have"!!!) a $250 ticket to the awsome, blockbuster, kick-butt International Convention (if you don't go, you are obviously not serious about success and the upline will basically ignore you, so screw your financial obligations, your kids, your family, yourself, and GET YOUR BUTT THERE) then, plan on setting aside about $100 per month for the voicemail which is soooo important to get your daily testimonials and trainings, oh, and don't forget, about $50 a month for the trainings, cause you are a dummy and need to hear it seven times before it sticks, and also you really, really SHOULD be on transfer-buying to the tune of $60-$250 per month; simply transfer the $$ you are spending at the store and buy it from yourself!!! Oh you mean like on shampoo ($1 for Sauve, or $12 from myself!!), cosmetics (we already covered that), coffee ($4 per lb. at store, $14 per lb. from myself!) cheesecake sampler ($12 from Sam's Club, $52 from myself!!), etc... I think you get the picture.There are so many half truths going on.
    This company was founded by a guy who claims to have been very successful with Amway. No wonder this company is the way it is. I can write more stories for you later if you are interested. I will also send you a couple of links to check out. The problem with Market America is the same problem as all the other MLM's out there; very few people make money and its mostly an illusion created by the few who are making money. They want to get you in to keep their gravy train running at full speed. Let me know if you want any further info from me.

USANA 

From Pyramid Scheme Alert... See LINK    An investigative article in the prestigious New Zealand business magazine, National Business Review, reveals that thousands of New Zealand consumers are being solicited by Usana without getting true or complete facts about almost certain financial losses they will suffer in the scheme. Entitled, “Most People Won’t Get their Money Back” the article quoted government statistician Murray H Smith, who has served as an expert witness in New Zealand pyramid scheme cases, “you can make a very strong argument that this could be a pyramid scheme.”

--
Usana distributors have now accused the company of fraud and filed a class action lawsuit that seeks to shut down Usana operations in California.

In a
letter to Deborah Platt Majoras, Chairman of the Federal Trade Commission, the consumer education and advocacy group, Pyramid Scheme Alert, has formally requested that the FTC open an investigation of Usana Health Sciences, headquartered in Utah. Pyramid Scheme Alert also sent alert letters to the Attorneys General in all 50 states notifying them that Usana is under investigation by the Securities & Exchange Commission. The State AGs were directed to an in-depth analysis of Usana business model.l

See the overview and analysis of how Usana actually operates.

-- A new report shows that Usana operates in a very similar manner to Burnlounge Inc., which is now being prosecuted by the Federal Trade Commission as a pyramid scheme. Very little revenue is gained from actual retail customers (consumers who are not in the pay plan) and even less distributors’ profits come from retail sales.

--The
Wall Street Journal has reported:
* Numerous class action suits have been filed by Usana shareholders that charge the company has misrepresented important information or withheld it.
* The founder of Usana renounced US citizenship to swear allegiance to a well known offshore tax haven. He also parked the largest block of the company’s stock in another offshore tax haven.
* The founder of Usana – same one that renounced his USA citizenship for a tax haven – sold millions of dollars of shares of Usana stock when it reached its highest price ever – and just before the stock plunged when the Wall Street Journal reported findings of a fraud investigation report.
* The Usana Chief Financial Officer admitted he had falsely reported he is a CPA.
* A major spokesman and Usana director admits he faked his academic credentials.
* A major medical advisor for Usana admits he had falsely claimed he is a licensed M.D. when he is not.

Usana's own published datawhen properly analyzed – revealed that 99% of all distributors do not earn a profit.
* Usana will not disclose the total number of distributors that quit the scheme each year, but experts estimate it is between 50-90%. Effectively, the scheme is constantly collapsing, since distributors are also the “customers.”
* Usana products are priced as much as 20 times higher than similar products sold in retail sales. The pyramid recruitment money (about 40% of the price) is imbedded in these high prices and is passed upline to the recruiters. 3% of the recruiters at the top get over 70% of all commissions.

Public scrutiny of Usana was prompted by the release of a 500-page investigative report by www.frauddiscovery.net, co-founded by well known fraud investigator, Barry Minkow. The report offered evidence that Usana’s business model is untenable, that the company functions as a pyramid scheme and that Usana’s SEC filings contain omissions and misrepresentations. Numerous class action lawsuits have since been filed against Usana.


 

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