Was James Foley murdered by a cult?

August 24, 2014, 2:20 am

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Radical changes of personality and behaviour. Pernicious cults can be of any size, duration and level of criminality. They comprise groups, and/or sub-groups, of previously diverse individuals bonded by their unconscious acceptance of the self-gratifying, but wholly imaginary, scenario that they alone represent a positive or protective force of purity and absolute righteousness derived from their leadership’s exclusive access to a superior or superhuman knowledge, and that they alone oppose a negative or adversarial force of impurity and absolute evil. Whilst this two-dimensional, or dualistic, narrative remains the adherents’ model of reality, they are, in effect, constrained to modify their individual personalities and behaviour accordingly.

False justification. In pernicious cults, a core-group of adherents can be gradually dissociated from external reality and reformed into deployable agents, and/or de facto slaves, and/or expendable combatants, etc., furthering the hidden criminal objectives of their leaders, completely dependent on a collective paranoid delusion of absolute moral and intellectual supremacy fundamental to the maintenance of their individual self-esteem/identity and related psychological function. It becomes impossible for such fanatics to see humour in their situation or to feel pity for, or to empathise with, non-adherents. Their minds are programmed to interpret the manipulation, and/or cheating, and/or dispossession, and/or destruction, of inferior outsiders (particularly, those who challenge their group’s controlling scenario) as perfectly justifiable.

I've been asked whether 'the beheading of American journalist, James Foley (1974-2014), should be described as the work of a cult?'

'The life of this American citizen, Obama, depends on your next decision.'

The short answer to this question is, yes, because the deluded fanatics who committed, and filmed, this heinous crime (and who have threatened to behead other US journalists and aid workers whom they hold captive, if their demands are not met), are evidently controlled by a self-perpetuating, non-rational, two-dimensional scenario of 'good vs evil.'However, a more detailed answer is as follows; for legalistically, cultism does not exist:

Abu Bakr al-Baghdadi

An organization ostensibly led by Abu Bakr al-Baghdadi, which claims to have volunteer fighters from all over the globe, has arbitrarily declared the establishment of a 'Caliphate' (an 'Islamic State') - comprising parts of Iraq and Syria, forcing many minority communities to flee their homes. http://www.bbc.com/news/world-middle-east-28975718 http://www.bbc.com/news/world-middle-east-28975638 http://www.ohchr.org/Documents/HRBodies/HRCouncil/CoISyria/A.HRC.27.60_Eng.pdf http://www.bbc.com/news/world-middle-east-28965959 A United Nations report indictates that mass public executions have become a common sight in the 'Islamic State', this has been confirmed by media reports.  It has been estimated that, during the past several years, well over 500 British citizens (many of whom have been teenage boys) have suddenly undergone radical personality transformations - abandoning their friends and families to travel to Syria and Iraq to become expendable combatants in a 'Jihad' (or Holy War) against 'Infidel' (or non-believers). A number of these self-righteous, young 'Jihadists' have then returned to Britain where the authorities fear that they remain in a dangerously-delusional state - unquestioning robots programmed to continue their leaders' imaginary struggle against the forces of evil (i.e. their fellow citizens).  The US has carried out strategic air strikes against the 'Islamic State' in Iraq, and President Obama has described it as a 'cancer.'

http://www.bbc.com/news/uk-28935613

The UK's head of counter-terrorism, Assistant Commissioner Mark Roley, has asked the public to help by identifying persons who have travelled to Syria and Iraq, or who are 'showing signs of being radicalised.'

http://www.bbc.com/news/world-middle-east-28116033

http://www.bbc.com/news/uk-28885512

The US government says that only a small number of Americans have travelled to Syria to fight for extremist groups.

Senior Director for Strategic Communications and US National Security Council spokeswoman, Caitlin Hayden:

'We continue to use every tool we possess to disrupt and dissuade individuals from traveling abroad for violent jihad and to track and engage those who return.'

http://www.bbc.com/news/world-us-canada-28945626

Philip Hammond

http://www.bbc.com/news/uk-28917176

Writing in the 'Sunday Times,' the current UK Foreign Secretary, Philip Hammond MP, has said:

• 'Islamist militants in Iraq and Syria will seek to strike us on British soil.' 

• 'The Islamic State is turning a swathe of Iraq and Syria into a terrorist state as a base for launching attacks on the West.'

•  It was 'horrifying to think that the killer of US journalist, James Foley, was British.'

• The UK government was 'investing significant resources to tackle a barbaric ideology which could threaten Britain.'

• 'The threat from Syria and Iraq' would 'last a generation.'

• 'It is an utter betrayal of our country, our values and everything the British people stand for.'

•  The UK had 'assisted Kurdish Peshmerga fighters, who are battling against Islamic State, with military aircraft delivering equipment.'

•  Britain would 'soon start sending Kurdish fighters Eastern European ammunition and weaponry with which they are already familiar.'

• The UK government was 'scoping out' what the UK might supply itself - such as night vision equipment, weapons and ammunition - although no specific request had yet been made.

•  'Our strategy is clear. We are investing significant resources to tackle this problem for the long-term.'

Senior Conservative Member of Parliament, David Davis.

Writing in the 'Mail on Sunday,' David Davis MP said:

•  'Since these young men are in effect swearing allegiance to a hostile state, they should all forfeit their British citizenship - not just those who are dual nationals.'

• 'Since this is an incredibly serious penalty, it should be done only after a proper public trial carrying all the public seriousness and opprobrium of a murder trial, because in many cases that is what it would be.'

• 'As the home secretary reiterated yesterday, lawyers would say you cannot render someone stateless.'

• 'Perhaps, perhaps not. Whitehall lawyers have been wrong before. Democracies have a right to defend themselves.'

Current Home Secretary, Theresa May, has said:

'The UK government is looking at new powers to tackle the threat of extremism in Britain.'

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It would seem that members of the current British government, led by David Cameron, now realize that the much-vaunted 'Good vs Evil  War on Terror'(a comic-book description coined by PR advisers to George W. Bush) is having completely the reverse effect to that which was advertized. As far as I'm aware, to date, no UK politician has demonstrated that he/she has a fully-deconstructed understanding of what has been instigated in Syria and Iraq, but then, successive British governments have been funding a group of academics at the London School of Economics who have sought to obstruct all intellectually-rigorous political/public debate of the cult/totalitarian phenomenon in Britain, for decades.

Since 1989, UK tax-payers have been financing, via the UK government's Home Office, a registered charity known as 'INFORM,' housed at the London School of Economics, Dept. of Sociology. In recent years, 'INFORM' has been receiving around £140 000 annually of public funds. Part of this has been used to assemble a labyrinthine 'data base,' allegedlyto provide free and objective, up-to-date information about 'cults and New Religious Movements,' for legislators, academics, law enforcement agents, members of the public, etc.

'Members of a minority religious movement.'

Whilst reading the following, typically-nonsensical, sweeping statements (which could have come straight out of the 'Ministry of Truth' in George Orwell's 'Nineteen Eighty-Four'), bear in mind the reality of the world we live in (as shown in the above, chilling photograph). These statements are to be found on 'INFORM's' external Website under the apparently objective title:

 'When is a religion a cult?'

'Inform believes it is important to recognise that definitions are man-made decisions. Exactly what characteristics are "put together" under a label, and where the distinguishing boundaries are drawn between different phenomena, can vary from place to place and time to time. Furthermore, different people may use the same concept to refer to very different things. Sometimes a term is used merely to denote a negative or positive evaluation, rather than to tell us about the specific characteristics of the phenomenon.

It is worth noting that most countries have no precise definition of the word "religion", nor is there a recognised definition in international law; however some institutions have their own working definitions and some countries have registers of recognized religions.

  

Although "cult" and "sect" are used as technical terms by sociologists of religion, these terms have come to be used as pejorative labels in popular parlance, often telling us more about the attitude of the speaker than about the movement in question.

For this reason, Inform prefers not to label a particular group or movement as a "cult", but instead, to use more neutral terms such as "minority religion" or "movement" as a starting point, and then to describe what it is that the movement believes and does.'

http://www.inform.ac/node/1357


When translated into plain English, the sociological 'Thought-Police' at 'INFORM' have effectively issued the unbelievably-arrogant edict that:

No one is allowed to challenge the authenticity of anything labelled 'religious movement ,' whilst 'sociologists of religion' are the only people wise enough to define and use the terms, 'cult' and 'sect.' Therefore, anyone else employing them, is not to be trusted! 

Thus, through the constant repetition of the thought-stopping word, 'religion,' the obvious truth that (in the hands of narcissists and psychopaths) the phenomenon of self-perpetuating, non-rational, esoteric, ritual belief systems, can be easily perverted for the clandestine purpose of human exploitation, has been excluded from UK government policy for more than 20 years. Readers of this Blog should take note that, contrary to what the members of 'INFORM' have implied, no phenomenon can be accurately defined (arbitrarily or otherwise, and certainly not by a country). However, all phenomena have universal identifying characteristics. Indeed, as George Orwell proved, once you know how they work (by dissociating their exploited-victims from external reality whilst giving them the illusion that they are making free-choices) all totalitarian deceptions (which are reality-inverting constructions of twisted human minds) can be deconstructed by one universal allegory. 

Sadly, whilst the members of all-encompassing organizations like 'INFORM' grudgingly accept that some crimes have been committed by the adherents of some 'religious movements,'they also continue to include in their 'doublethink' view of the cult/totalitarian phenomenon what narcissists and psychopaths claim tohave been doing, in apparent ignorance of what they have actually been doing (i.e. steadfastly pretending moral and intellectual authority whilst pursuing various hidden criminal objectives - fraudulent, and/or sexual, and/or violent, etc.). In reality, the inflexible members of groups like 'INFORM' (who have obstructed and denigrated common-sense inquirers into the cult phenomenon) have been a significant part of the problem and not the solution to it. 

'INFORM's' unjustifiable public-funding (which was recently reduced by 75%) is under further review.

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The only effective way to have challenged the cult/totalitarian phenomenon, would have been to educate our children as to exactly how it functions, but that would first require our leaders to admit to their own ignorance and then educate themselves.

Professor Robert Jay Lifton 

http://en.wikipedia.org/wiki/Robert_Jay_Lifton

In 1961 (after many years of field-research, interviewing US servicemen held prisoner during the Korean War), Robert Jay Lifton (b. 1926) published, ‘Thought Reform and the Psychology of Totalism.’ In this standard, medical text-book, Lifton identified 8 ‘themes’ which, if present in any group, indicate that its members are being subjected to a mixture of social, psychological and physical pressures, designed to produce radical changes in their individual beliefs, attitudes and behaviour.

1). ‘Milieu control’ — the attempted control of everything an individual experiences (i.e. sees, hears, reads, writes and expresses). This includes discouraging subjects from contacting friends and relatives outside the group and undermining trust in exterior sources of information; particularly, the independent media.

2). ‘Personal or mystical manipulation’ — charismatic (psychologically dominant) leaders create a separate environment where specific behaviour is required; leading to group members believing that they have been chosen and that they have a special purpose. Normally group members will insist that they have not been coerced into group membership, and that their new way of life and beliefs are the result of a completely free-choice.

3). ‘Demand for purity’ — everything in life becomes either pure or impure, negative or positive, etc. This builds up a sense of shame and guilt. The idea is promoted that there is no alternative method of thinking or middle way, to that promoted by the group or by those outside it. Everything in life is either good or bad and anything is justified provided the group sanctions it as good.

4). ‘Confession’ — personal weaknesses are admitted to, to demonstrate how group membership can transform an individual. Group members often have to rewrite their personal histories and those of their friends and relatives, denigrating their previous lives and relationships. Other techniques include group members writing personal reports on themselves and others. Outsiders are presented as a threat who will only try to return group members to their former incorrect thinking.

5). ‘Sacred science’ — the belief in an inexplicable power system or secret knowledge, derived from a hierarchy who must be copied and who cannot be challenged. Often the group’s leaders claim to be followers of traditional historical figures (particularly, established political, scientific and religious thinkers). Leaders promote the idea that their own teaching will also benefit the entire world, and it should be spread.

6). ‘Loading the language’ — a separate vocabulary used to bond the group together and short-circuit critical thought processes. This can become second nature within the group, and talking to outsiders can become difficult and embarrassing. Derogatory names, or directly racist terms, are often given to outsiders.

7). ‘Doctrine over persons’ — individual members are taught to alter their own view of themselves before they entered the group. Former attitudes and behaviour must then be re-interpreted as worthless, and/or dangerous, using the new values of the group.

8). ‘Dispensing of existence’ — promotion of the belief that outsiders — particularly, those who disagree with the teaching of the group — are inferior and are doomed. Therefore, they can be manipulated, and/or cheated, and/or dispossessed, and/or destroyed. This is justifiable, because outsiders only represent a danger to salvation.

Prof. Margaret Singer http://en.wikipedia.org/wiki/Margaret_Singer

Another giant in the field of academic research into the cult phenomenon, is Prof. Margaret Singer (1921-2003).  Her major work which was published in 1996, is 'Cults in Our Midst.' (http://en.wikipedia.org/wiki/Cults_in_Our_Midst). In this, Prof. Singer set out 'six conditions' in which totalistic thought-reform can be achieved:

• 1). Keep the person unaware of what is going on and how attempts to psychologically condition him or her are directed in a step-by-step manner.

Potential new members are led, step by step, through a behavioural-change program without being aware of the final agenda or full content of the group. The goal may be to make them deployable agents for the leadership, to get them to buy more courses, or get them to make a deeper commitment, depending on the leader's aim and desires.

• 2). Control the person's social and/or physical environment; especially control the person's time.

Through various methods, newer members are kept busy and led to think about the group and its content during as much of their waking time as possible.

• 3). Systematically create a sense of powerlessness in the person.

This is accomplished by getting members away from their normal social support group for a period of time and into an environment where the majority of people are already group members.

The members serve as models of the attitudes and behaviours of the group and speak an in-group language.

Strip members of their main occupation (quit jobs, drop out of school) or source of income or have them turn over their income (or the majority of) to the group.

Once the target is stripped of their usual support network, their confidence in their own perception erodes.

As the target's sense of powerlessness increases, their good judgement and understanding of the world are diminished (ordinary view of reality is destabilized).

As the group attacks the target's previous worldview, it causes the target distress and inner confusion; yet they are not allowed to speak about this confusion or object to it - leadership suppresses questions and counters resistance.

This process is sped up if the targeted individual or individuals are kept tired - the cult will take deliberate actions to keep the target constantly busy.

• 4). Manipulate a system of rewards, punishments and experiences in such a way as to inhibit behaviour that reflects the person's former social identity.

Manipulation of experiences can be accomplished through various methods of trance induction, including leaders using such techniques as paced speaking patterns, guided imagery, chanting, long prayer sessions or lectures, and lengthy meditation sessions.

The target's old beliefs and patterns of behaviour are defined as irrelevant or evil. Leadership wants these old patterns eliminated, so the member must suppress them.

Members get positive feedback for conforming to the group's beliefs and behaviours and negative feedback for old beliefs and behaviour.

• 5). The group manipulates a system of rewards, punishments, and experiences in order to promote learning the group's ideology or belief system and group-approved behaviours.

Good behaviour, demonstrating an understanding and acceptance of the group's beliefs, and compliance are rewarded while questioning, expressing doubts or criticizing are met with disapproval, redress and possible rejection. Anyone who asks a question is made to feel there is something inherently disordered about them to be questioning.

The only feedback members get is from the group; they become totally dependent upon the rewards given by those who control the environment.

Members must learn varying amounts of new information about the beliefs of the group and the behaviours expected by the group.

The more complicated and filled with contradictions the new system is and the more difficult it is to learn, the more effective the conversion process will be.

Esteem and affection from peers is very important to new recruits. Approval comes from having the new member's behaviours and thought patterns conform to the models (members). Members' relationship with peers is threatened whenever they fail to learn or display new behaviours. Over time, the easy solution to the insecurity generated by the difficulties of learning the new system is to inhibit any display of doubts—new recruits simply acquiesce, affirm and act as if they do understand and accept the new ideology.

• 6). Put forth a closed system of logic and an authoritarian structure that permits no feedback and refuses to be modified except by leadership approval or executive order.

The group has a top-down, pyramid structure. The leaders must have verbal ways of never losing.

Members are not allowed to question, criticize or complain. If they do, the leaders allege the member is defective, not the organization or the beliefs.

The targeted individual is treated as always intellectually incorrect or unjust, while conversely the system, its leaders and its beliefs are always automatically, and by default, considered as absolutely just.

Conversion or remolding of the individual member happens in a closed system. As members learn to modify their behaviour in order to be accepted in this closed system, they change—begin to speak the language—which serves to further isolate them from their prior beliefs and behaviours.

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Building on Lifton's and Singer's solid foundation (and after much research) I concluded that pernicious cultism is an evolving criminogenic phenomenon which can be briefly defined as:

'any self-perpetuating, non-rational/esoteric, ritual belief system established or perverted for the clandestine purpose of human exploitation.'

However, since phenomena cannot be accurately defined; I set down the following, essential, and universal, identifying characteristics of a pernicious cult and I published these in 2005:
  

1). Deception. Pernicious cults are presented externally as traditional associations. These can be arbitrarily defined by their instigators as almost any banal group (‘religious’, ‘cultural’, ‘political’, ‘commercial’, etc.). However, internally, they are always totalitarian (i.e. they are centrally-controlled and require of their core-adherents an absolute subservience to the group and its patriarchal, and/ or matriarchal, leadership above all other persons). By their very nature, pernicious cults never present themselves in their true colours. Consequently, no one ever becomes involved with one as a result of his/her fully-informed consent.

2). Self-appointed sovereign leadership. Pernicious cults are instigated and ruled by psychologically dominant individuals, and/or bodies of psychologically dominant individuals (often with impressive, made-up names, and/or ranks, and/or titles), who hold themselves accountable to no one. These individuals have severe and inflexible Narcissistic Personalities (i.e. they suffer from a chronic psychological disorder, especially when resulting in a grandiose sense of self-importance/ righteousness and the compulsion to take advantage of others and to control others’ views of, and behaviour towards, them).* They steadfastly pretend moral and intellectual authority whilst pursuing various, hidden, criminal objectives (fraudulent, and/or sexual, and/or violent, etc.). The admiration of their adherents only serves to confirm, and magnify, the leaders’ strong sense of self-entitlement and fantasies of unlimited success, power, brilliance, beauty, ideal love, etc.

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* ‘Narcissistic Personality Disorder,’ is a psychological term first used in 1971 by Dr. Heinz Kohut (1913-1981). It was recognised as the name for a form of pathological narcissism in ‘The Diagnostic and Statistical Manual of Mental Disorders 1980.’ Narcissistic traits (where a person talks highly of himself/herself to eliminate feelings of worthlessness) are common in, and considered ‘normal’ to, human psychological development. When these traits become accentuated by a failure of the social environment and persist into adulthood, they can intensify to the level of a severe mental disorder. Severe and inflexible NPD is thought to effect less than 1% of the general adult population. It occurs more frequently in men than women. In simple terms, NPD is reality-denying, total self-worship born of its sufferers’ unconscious belief that they are flawed in a way that makes them fundamentally unacceptable to others. In order to shield themselves from the intolerable rejection and isolation which they unconsciously believe would follow if others recognised their defective nature, NPD sufferers go to almost any lengths to control others’ view of, and behaviour towards, them. NPD sufferers often choose partners, and raise children, who exhibit ‘co-narcissism’ (a co-dependent personality disorder like co-alcoholism). Co-narcissists organize themselves around the needs of others (to whom they feel responsible), they accept blame easily, are eager to please, defer to others’ opinions and fear being seen as selfish if they act assertively. NPD was observed, and apparently well-understood, in ancient times. Self-evidently, the term, ‘narcissism,’ comes from the allegorical myth of Narcissus, the beautiful Greek youth who falls in love with his own reflection.

Currently, NPD has nine recognised diagnostic criteria (five of which are required for a diagnosis):

•       has a grandiose sense of self-importance.
•       is preoccupied with fantasies of unlimited success, power, brilliance, beauty, ideal love, etc.
•       believes that he/she is special and unique and can only be understood by other special people.
•       requires excessive admiration.
•       strong sense of self-entitlement.
•       takes advantage of others to achieve his/her own ends.
•       lacks empathy.
•       is often envious or believes that others are envious of him/her.
•       arrogant disposition.

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3). Manipulation. Pernicious cults employ co-ordinated, devious techniques of social and psychological persuasion (variously described as: ‘covert hypnosis’, ‘mental manipulation’, ‘coercive behaviour modification’, ‘group pressure’, ‘thought reform’, ‘ego destruction’, ‘mind control’, ‘brainwashing’, ‘neuro-linguistic programming’, ‘love bombing’, etc.). These techniques are designed to fulfil the hidden criminal objectives of the leaders by provoking in the adherents an infantile total dependence on the group to the detriment of themselves and of their existing family, and/or other, relationships. Pernicious cults manipulate their adherents’ existing beliefs and instinctual desires, creating the illusion that they are exercising free will. In this way, adherents can also be surreptitiously coerced into following potentially harmful, physical procedures (sleep deprivation, protein restriction, repetitive chanting/ moving, etc.) which are similarly designed to facilitate the shutting down of an individual’s critical and evaluative faculties without his/ her fully-informed consent.

4). Radical changes of personality and behaviour. Pernicious cults can be of any size, duration and level of criminality. They comprise groups, and/or sub-groups, of previously diverse individuals bonded by their unconscious acceptance of the self-gratifying, but wholly imaginary, scenario that they alone represent a positive or protective force of purity and absolute righteousness derived from their leadership’s exclusive access to a superior or superhuman knowledge, and that they alone oppose a negative or adversarial force of impurity and absolute evil. Whilst this two-dimensional, or dualistic, narrative remains the adherents’ model of reality, they are, in effect, constrained to modify their individual personalities and behaviour accordingly.

5). Pseudo-scientific mystification. The instigators of pernicious cults seek to overwhelm their adherents emotionally and intellectually by pretending that progressive initiation into their own superior or superhuman knowledge (coupled with total belief in its authenticity and unconditional deference to the authority of its higher initiates) will defeat a negative or adversarial force of impurity and absolute evil, and lead to future, exclusive redemption in some form of secure Utopian existence. By making total belief a prerequisite of redemption,adherents are drawn into a closed-logic trap (i.e. failure to achieve redemption is solely the fault of the individual who didn’t believe totally). Cultic pseudo-science is always essentially the same hypnotic hocus-pocus, but it can be peddled in an infinite variety of forms and combinations (‘spiritual’, ‘medical’, ‘philosophical’, ‘cosmological,’‘extraterrestrial’, ‘political’, ‘racial’, ‘mathematical’, ‘economic’, ‘New-Age’, 'magical', etc.), often with impressive, made-up, technical-sounding names. It is tailored to fit the spirit of the times and to attract a broad range of persons, but especially those open to an exclusive offer of salvation (i.e. the: sick, dissatisfied, bereaved, vanquished, disillusioned, oppressed, lonely, insecure, aimless, etc.). However, at a moment of vulnerability, anyone (no matter what their: age, sex, nationality, state of mental/ physical health, level of education, etc.) can need to believe in a non-rational, cultic pseudo-science. Typically, obedient adherents are granted ego-inflating names, and/or ranks, and/or titles, whilst non-initiates are referred to using derogatory, dehumanizing terms. Although initiation can at first appear to be reasonable and benefits achievable, cultic pseudo-science gradually becomes evermore costly and mystifying. Ultimately, it is completely incomprehensible and its claimed benefits are never quantifiable. The self-righteous euphoria and relentless enthusiasm of cult proselytizers can be highly infectious and deeply misleading. They are invariably convinced that their own salvation also depends on saving others.

6). Monopoly of information. The leaders of  pernicious cults seek to control all information entering not only their adherents’ minds, but also that entering the minds of casual observers. This is achieved by constantly denigrating all external sources of information whilst constantly repeating the group’s reality-inverting key words and images, and/or by the physical isolation of adherents. Cults leaders systematically categorize, condemn and exclude as unenlightened, negative, impure, absolutely evil, etc. all free-thinking individuals and any quantifiable evidence challenging the authenticity of their imaginary scenarios of control. In this way, the minds of cult adherents can become converted to accept only what their leadership arbitrarily sanctions as enlightened, positive, pure, absolutely righteous, etc. Consequently, adherents habitually communicate amongst themselves using their group’s thought-stopping ritual jargon, and they find it difficult, if not impossible, to communicate with negative persons outside of their group whom they falsely believe to be not only doomed, but also to be a suppressive threat to redemption.

7). False justification. In pernicious cults, a core-group of adherents can be gradually dissociated from external reality and reformed into deployable agents, and/or de facto slaves, and/or expendable combatants, etc., furthering the hidden criminal objectives of their leaders, completely dependent on a collective paranoid delusion of absolute moral and intellectual supremacy fundamental to the maintenance of their individual self-esteem/identity and related psychological function. It becomes impossible for such fanatics to see humour in their situation or to feel pity for, or to empathise with, non-adherents. Their minds are programmed to interpret the manipulation, and/or cheating, and/or dispossession, and/or destruction, of inferior outsiders (particularly, those who challenge their group’s controlling scenario) as perfectly justifiable.

8). Structural mystification. The instigators of pernicious cults can continue to organize the creation, and/or dissolution, and/or subversion, of further (apparently independent) corporate structures pursuing lawful, and/or unlawful, activities in order to prevent, and/or divert, investigation and isolate themselves from liability. In this way, some cults survive all low-level challenges and spread like cancers enslaving the minds, and destroying the lives, of countless individuals in the process. At the same time, their leaders acquire absolute control over capital sums which place them alongside the most notorious racketeers in history. They operate behind ever-expanding, and changing, fronts of ‘limited-liability, commercial companies,’ and/or ‘non-profit-making associations,’ etc. Other than ‘religious /philosophical’ and ‘political’ movements and ‘secret societies,’  typical reality-inverting disguises for cultic crime are:

‘charity/ philanthropy’; ‘fund-raising’; ‘lobbying’ on topical issues (‘freedom’, ‘ethics’, ‘environment’, ‘human rights’, ‘women’s rights’, ‘child protection’, ‘law enforcement’, ‘social justice’, 'peace,' etc.); ‘publishing and media’; ‘education’; ‘academia’; ‘celebrity’; ‘patriotism’; ‘information technology’; ‘public relations’; ‘advertising’; ‘medicine’; ‘alternative medicine’; ‘nutrition’; ‘rehabilitation’; ‘manufacturing’; ‘retailing’; ‘direct selling/ marketing’; ‘multilevel marketing’; ‘network marketing’; ‘regulation’; ‘personal development’; ‘self-betterment’; ‘positive thinking’; ‘self-motivation’; ‘leadership training’; ‘life coaching’; ‘research and development’; ‘investment’; ‘real estate’; ‘sponsorship’; ‘bereavement/trauma counselling’; ‘addiction counselling’; ‘legal counselling’; ‘cult exit-counselling’; ‘financial consulting’; ‘management consulting’; ‘clubs’; etc. 

9). Chronic psychological deterioration symptoms. The long-term core-adherents of pernicious cults are psychotic (i.e. suffering from psychosis, a severe mental derangement, especially when resulting in delusions and loss of contact with external reality). Core-adherents who manage to break with their group and confront the ego-destroying reality that they’ve been systematically deceived and exploited, are invariably destitute and dissociated from all their previous social contacts. For many years afterwards, recovering former core-adherents can suffer from one, or more, of the following psychological problems (which are also generally indicative of the victims of abuse):

depression; overwhelming feelings (guilt, grief, shame, fear, anger, embarrassment, etc.); dependency/ inability to make decisions; retarded psychological/ intellectual development; suicidal thoughts; panic/ anxiety attacks; extreme identity confusion; Post-Traumatic Stress Disorder; insomnia/ nightmares; eating disorders; psychosomatic illness ( asthma, skin disorders, headaches, fatigue, etc.); sexual problems/ fear of forming intimate relationships; inability to trust; etc.

10). Repression of all dissent. The leaders of the most-destructive cults are megalomaniacal psychopaths (i.e. suffering from a chronic mental disorder, especially when resulting in paranoid delusions of grandeur and self-righteousness, and the compulsion to pursue grandiose objectives). The unconditional deference of their deluded adherents only serves to confirm, and magnify, the leaders’ own paranoid delusions. This type of cult leader maintains an absolute monopoly of information whilst perpetrating, and/or directing, evermore heinous crimes. They sustain their activities by the imposition of arbitrary contracts and codes (secrecy, denunciation, confession,justice, punishment, etc.) within their groups, and by the use of humiliation, and/or intimidation, and/or calumny, and/or malicious prosecution (where they pose as victims), and/or sophism, and/or the infiltration of traditional culture, and/or corruption, and/or intelligence gathering and blackmail, and/or extortion, and/or physical isolation, and/or violence, and/or assassination, etc., to repress any internal or external dissent.

David Brear (copyright 2014)

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'Lyoness' lie faces official exposure in Australia.

August 28, 2014, 1:52 am

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Today's media release (posted below) from the 'Australian Competition Consumer Commission,' proudly declares that 'Lyoness' is has been under investigation, and will be prosecuted, as a suspected illegal pyramid/ referral marketing scheme cleverly dissimulated behind a'legal cash back'scheme. 

The same document reveals that agents of the 'ACCC' have not yet looked beyond the ends of their noses. Consequently, they still fail to acknowledge that the mystifying labyrinth of 'Lyoness' companies has merely been the corporate front for the latest version of an evolving, historically-significant, criminogenic phenomenon which can be accurately described as, blame-the-victim'Multi-Level Marketing Income Opportunity'cultic racketeering.

In reality, what has become popularly known as 'Multi-Level Marketing' is nothing more than an absurd, cultic, economic pseudo-science. The impressive-sounding made-up term 'MLM,' is, therefore, part of an extensive, thought-stopping, non-traditional jargon which has been developed, and constantly-repeated, by the instigators, and associates, of various, copy-cat, major, and minor, ongoing organized crime groups (hiding behind labyrinths of legally-registered corporate structures) to shut-down the critical, and evaluative, faculties of victims, and of casual observers (including regulators), in order to perpetrate, and dissimulate, a series of blame-the-victim closed-market swindles or pyramid scams (dressed up as 'legitimate direct selling income opportunites'), and related advance-fee frauds (dressed up as 'legitimate training and motivation, self-betterment, programs, leads,' etc.).

David Brear (copyright 2014)

http://www.accc.gov.au/media-release/accc-takes-action-against-alleged-pyramid-scheme-operator

ACCC takes action against alleged pyramid scheme operator

28 August 2014

The Australian Competition and Consumer Commission has instituted proceedings against Lyoness International AG, Lyoness Asia Limited, Lyoness UK Limited and Lyoness Australia Pty Limited (together ‘Lyoness’) for operating a pyramid selling scheme and engaging in referral selling.

Although Lyoness has been investigated by regulators for conduct in other countries, this is the first court action taken against Lyoness alleging that the Lyoness Loyalty Program constitutes a pyramid scheme.

Pyramid schemes involve new participants providing a financial or other benefit to other existing participants in the scheme.  New participants are induced to join substantially by the prospect that they will be entitled to benefits relating to the recruitment of further new participants. Pyramid schemes may also offer products or services, but making money out of recruitment is their main aim, and often the only way for a member to recover any money is to convince other people to join up.  In contrast, people in legitimate multi-level marketing schemes earn money by selling genuine products to consumers, not from the recruiting process.

The ACCC alleges that Lyoness has operated the scheme in Australia from mid-2011 and that it continues to operate the scheme. The scheme offers ‘cash back’ rebates to members who shop through a Lyoness portal, use Lyoness vouchers or present their Lyoness card at certain retailers.

Whilst cash back offers themselves are not prohibited by the Australian Consumer Law (ACL), the ACCC alleges that the Lyoness scheme also offers commissions to members who recruit new members who make a down payment on future shopping.

“Pyramid schemes are often sophisticated and may be operated under the guise of a legitimate business. Although these schemes can appear to be legitimate, the most significant inducement for new members to get involved is to earn ‘residual’ or ‘passive’ income from new members signing up,” ACCC Chairman Rod Sims said.

“The concern with pyramid schemes is that the financial benefits held out to induce potential members to join up rely substantially on the recruitment of further new members into the scheme.  For these schemes to work so that everyone can make a profit, there would need to be an endless supply of new members."

“Under the Australian Consumer Law, it is illegal not only to establish or promote a pyramid scheme, but also to participate in one in any capacity," Mr Sims said.

The ACCC also alleges that the conduct by Lyoness breached the ACL prohibition on ‘referral selling’, where a consumer is induced to buy goods or services by the promise of a commission or rebate contingent on a later event.

The ACCC is seeking declarations, pecuniary penalties, injunctions, an order requiring the Lyoness website to link to the case report and costs.

As Lyoness International AG, Lyoness Asia Limited and Lyoness UK Limited are located overseas, the ACCC will be making arrangements for service on those entities.

The first Directions Hearing in these proceedings will be at 9.30am on 16 September, 2014 before Justice Flick in Sydney.

Release number: 

MR 217/14

Media enquiries: 

Media team - 1300 138 917

US regulators and law enforcement agencies unite to tackle international Pyramid schemes.

September 1, 2014, 12:44 am

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Beth Healy

Given the current tragicomic situation with dozens of US-based, blame-the victim, 'MLM Income Opportunity'rackets ('Herbalife', 'Amway', 'USANA', 'Forever Living Products', 'NuSkin', 'Xango', etc.) still being allowed to steal from a never-ending chain comprising countless millions of people all over the globe, the article posted below might (at first glance) seem to be a piece of heavy satire; nonetheless, Beth Healy reports in the 'Boston Globe' (August 30th 2014):

http://www.bostonglobe.com/business/2014/08/29/regulators-and-law-enforcement-talks-tackle-rapidly-growing-internet-ponzi-schemes/01vDzz4tOzBSc9ps63fKgP/story.html?p1=ArticleTab_Article_

'Authorities in talks to tackle online Ponzi schemes'

'US regulatory and law-enforcement authorities are engaged in discussions about how to stop the worldwide spread of Internet pyramid schemes, following criminal indictments in Massachusetts against the owners of TelexFree Inc., who allegedly conducted a $1 billion global fraud.

The talks involve creating a coalition of federal and state securities regulators, as well as law-enforcement agencies, who would in turn reach out to their counterparts abroad, according to two US officials with knowledge of the effort. The Department of Justice is among the parties participating in the process.

The discussions reflect a growing realization by regulators in the United States and overseas that greater collaboration is needed to fight a new breed of online financial scams that move seamlessly across borders and ensnare victims with unprecedented speed.

“They are beginning to multiply exponentially,’’ said Luis Guillermo Velez, superintendent of companies in Colombia, in a recent interview. In the past year, Velez said, he has shut down three large pyramid schemes in his country, including TelexFree and Emgoldex, outfits that also have thrived in the United States.

“It’s so difficult to identify the people responsible and to really capture them, that at some point there needs to be an international agreement on how to handle this situation,’’ he said.

Officials say today’s online Ponzi schemes can expand so rapidly they make Bernard Madoff’s brand of financial fraud look quaint by comparison. No longer does it take years to attract assets through word-of-mouth referrals. Fraudulent startups barely need an office, never mind banks of telemarketers like those in the boiler rooms of corrupt brokers in the 1980s. Launching an online money scheme appears to require merely basic Web skills, a target audience, and a few slick YouTube videos.

William F. Galvin

“Obviously, the days of securities regulation being done by jurisdiction, based on a geographical area — it doesn’t work any more,’’ said William F. Galvin, Massachusetts’ secretary of state and head of its Securities Division. His office filed civil fraud charges in April against TelexFree, which sold long-distance phone plans but relied on a constant flow of new investors for most of its revenue, according to prosecutors.

In Massachusetts alone, hundreds of investors believe they are owed $90 million by the company, according to Galvin’s complaint. Globally, the figure may exceed $1 billion, authorities say.

TelexFree is an example of how quickly alleged pyramid schemes can spread. Even though it was shut down by a judge in Brazil in June 2013, the company was able to set up shop in Marlborough and flourish here for nearly a year, reeling in hundreds of Massachusetts residents, particularly in Brazilian and Dominican immigrant neighborhoods. Participants were promised large returns if they opened accounts for about $1,400 and helped promote the company by persuading friends and family to join, and approving online ads that touted TelexFree.

Galvin and the US Securities and Exchange Commission started investigating TelexFree once they learned about it. But the company, registered as a telecommunications provider, stayed under the radar by not seeking a license as an investment firm. Regulators say better communication with their foreign counterparts could help prevent such alleged schemes from operating undetected for so long.

Galvin’s office is now investigating Emgoldex Team USA Inc. and its principals for selling gold online in an apparent pyramid scheme. He said the company promises investors large returns if they get other people to buy gold as well.

No one from Emgoldex returned calls seeking comment.

“At the root of it is, they’re promising returns that are just ridiculous. That’s really the essence of what most securities fraud is,’’ Galvin said.

Velez, the Colombian official, shut down Emgoldex in his country in May. He said victims there may have lost $25 million to $50 million. But because Emgoldex is an online entity with locations purportedly in Munich and Dubai, his office so far has found no assets to recover or people to charge.

“Nobody has shown up — no attorneys, no representatives, nothing,’’ Velez said. Panama’s banking regulator is now investigating the company, he said.

Velez has had no contact with US authorities, he said. But he agrees that greater international cooperation could help put a halt to online schemes.

The SEC in March froze the assets of World Capital Market Inc., known as WCM777, in California, charging it with raising $65 million from investors through a Ponzi scheme. The same company also allegedly defrauded investors in Colombia, Velez said. Galvin shut the firm down in Massachusetts in 2013. The company is now in bankruptcy.

Often, these outfits gain traction by preying on particular groups of people.

Madoff, who is serving a 150-year prison term for a massive Ponzi scheme, targeted the Jewish community and nonprofits. TelexFree in the United States focused on Brazilian immigrants. WCM777 pursued Asian-Americans and Hispanic-Americans, according to the SEC’s complaint in Los Angeles.

Even after such firms are shut down, their principals and top promoters often move on to new schemes, with different names. Several people formerly involved with TelexFree, including family members of the principals, are now promoting similar ventures.

One of TelexFree’s American owners, James Merrill of Ashland, is home awaiting trial on criminal fraud charges in the case. His business partner, Carlos Wanzeler, has fled to Brazil, and is considered a fugitive. Both men face up to 20 years in prison if found guilty.

Merrill pleaded not guilty to the charges against him. Lawyers for both men deny any wrongdoing by their clients.

Galvin said achieving international cooperation will require coordination at the federal level.

“If it’s a scam in Columbia, it’s a scam here,’’ he said. “If it’s a scam in Brazil, it’s a scam here.” '

Beth Healy (Boston Globe copyright 2014)

Bob McDonnell convicted of corruption, whilst 'MLM' racketeers continue to buy US politicans.

September 5, 2014, 2:56 am

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Despite steadfastly pretending to be a pious Catholic and happily-married conservative father, the former Governor of Virginia, Bob McDonnell (centre), disclosed during his recent corruption trial that he has split from his wife, Maureen (right); whilst the couple's eldest daughter, Jeanine, revealed in court that her father's squeaky clean public image had been a sham for many years.

Bob McDonnell is currently living with his family's Priest, Father Wayne Ball. Apparently, Father Ball, has the dubious distinction of once being arrested (with another man) for performing sex acts in a parking lot.

In a sensational court case, which must have caused sleepless nights for the many US politicians, and former politicians, who have been co-opted by 'MLM' racketeers (particularly those peddling pseudo-medical wampum), the former (Republican) Governor of Virginia, Bob McDonnell, and his wife, Maureen, have been convicted of conspiring to use his public office to promote what has been (somewhat generously) described as a 'dietary supplement,' in return for substantial bribes.

A federal jury convicted Bob McDonnell of 11 of the 13 counts with which he was charged; Maureen McDonnell was convicted of 9 of the 13 counts with which she was charged. Sentencing will not take place until Jan 2015. Both  McDonnell and wife now face up to 20 years in prison for each of their combined total of 20 conspiracy, fraud and bribery convictions. In reaction to the mounting list of guilty verdicts, the couple hung their heads in shame and wept profusely. The McDonnells then left the courtroom separately. 

Although it now beggars belief, Bob McDonnell (a man who couldn't even manage his own finances, let alone those of his country) had once been widely-tipped as Mitt Romney's running mate for the 2012 Presidential election. However, Mr. Romney's own extensive, sleazy, financial connections with wealthy  'MLM'racketeers (particularly, those behind the latter-day snake oil known as 'Nuskin' ) are even more astonishing.

To date US federal prosecutors, have not  taken the slightest action against any of the numerous public officials, and former public officials, co-opted by 'MLM'racketeers. Yet, it has been widely-reported that Madeleine Albright, and her consultancy company, have been in receipt of $10 millions from'Herbalife.'

Latter-day snake-oil salesman, Jonnie Williams. http://www.timesdispatch.com/business/tobacco-industry/star-scientific-ceo-has-a-long-history-of-salesmanship/article_0619cc78-b591-550b-b2f3-2f816e723f77.html

The McDonnells had been charged with doing favours for the controversial former CEO of 'Star Scientific,' Jonnie Williams, in exchange for more than $165,000 in'gifts' and 'loans.' They were also charged with submitting fraudulent bank loan applications, and Maureen McDonnell was charged with one count of obstructing justice.

Apparently in return for his co-operation with federal prosecutors, Mr. Williams was not charged with any criminal offence, and it has been reported that he received a 'rare blanket immunity'

During the trial, attorneys acting for Bob McDonnell and his wife, provided painfully-intimate details of the breakdown of their marriage.

For obvious reasons, Maureen McDonnell chose not testify during the trial. However, the former Governor testified in his own defence, claiming that he only gave 'routine political courtesies' to Jonnie Williams. 

http://www.huffingtonpost.com/2014/08/27/jeanine-mcdonnell-testimony_n_5723660.html

Bob McDonnell, and other witnesses (including eldest daugher, Jeanine), divulged embarrassing details about his secret marital problems; particularly concerning Maureen McDonnell's obsessive behaviour towards Jonnie Williams. However, this was apparently perceived by the jury as being part of a defence strategy to prove that the McDonnells could not be guilty of a conspiracy, because they had not been on speaking terms.

http://www.dailymail.co.uk/news/article-2533346/FDA-cracks-supplement-makers-claim-protect-against-CONCUSSIONS.html

Jonnie Williams testified (under immunity) that he actually spent lavishly on the McDonnells in order unlawfully to obtain their help promoting his 'cure-all, tobacco-derived anti-inflammatory, Anatabloc.' Heading the list bribes were approximately $20,000 of designer clothing and accessories for Maureen McDonnell, a $6,500 Rolex watch for her husband, $15,000 for one of their daughter's weddings, along with various vacations and golf outings. Mr Williams also admitted supplying what were described as'loans'totalling $120,000.

In exchange, the McDonnells:

• appeared at various 'Anatabloc' promotional events which were reported in the media.
• hosted a lunch at the Virginia Governor's Mansion which'Star Scientific'propaganda described as a 'product launch.' 
•  permitted Jonnie Williams to invite a number of his associates to a reception for Virginia health care leaders (also held at the Governor's mansion) 
•  arranged private meetings for Mr. Williams with two state health officials. 

(It was, thus, revealed in court that Jonnie Williams had tried to legitimize his so-called 'Antabloc' product by being seen to associate with Governor, and Mrs., McDonnell and with senior public officials, and by trying to obtain state funds for research. However, in the end, no applications for research grants were submitted).

Prosecutors explained that it was the McDonnells who had approached Jonnie Williams, because they were in deep financial trouble. Yet, it would seem that the couple must have been a perfect target for an experienced charlatan. Their credit card debt had been around $90,000, whilst they were losing between $40,000 and $60,000 annually on family-owned, vacation rental properties.




Two of  Williams'loans' to the McDonnells (totalling $70,000) had apparently been intended to subsidise their two loss-making, Virginia Beach, rental houses.

Mr Williams openly stated in court that he first wrote out a cheque for $50,000 in response to Maureen McDonnell's desperate confession that she and her husband had major problems. Williams testified that Maureen McDonnell offered to helphis company and that she had experience of selling nutritional supplements.

Bob McDonnell testified in court that he had now repaid all the outstanding loans to Jonnie Williams, but apparently, it has not been disclosed exactly where he suddenly obtained this money.

David Brear (copyright 2014)

Robert FitzPatrick asks: 'How is any endless chain MLM legal?'

September 7, 2014, 2:21 am

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WARNING

'Is Multi-Level Marketing 

legal?' 

This frequently asked question can, in itself, be deeply-misleading; for what has been commonly-referred to as 'MLM,'is just a means of shutting-down the critical, and evaluative, faculties of all ill-informed observers in order to dissimulate fraud and prevent victims from facing reality.

In the final analysis, 'MLM' jargon is not a traditional use of language. 

'MLM' jargon is thought-stopping nonsense which has been designed to deceive. 

Therefore, it is the usual policy of this Blog that mystifying 'MLM'jargon should never be repeated without detailed qualification or heavy irony.

In reality, 'MLM' jargon is part of an overall pattern of ongoing major racketeering activity which can be traced back to the 1940s.

Due to the vast number of victims it has touched around the globe, and the length of time it has survived without a rigorous challenge, blame-the-victim 'MLM income opportunity'racketeering, should, therefore, be classified as a criminogenic phenomenon of historic significance.

David Brear (copyright 2014)

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The following article is by Robert FitzPatrick, President of Pyramid Scheme Alert.

International Association to Expose, Study and Prevent Pyramid Schemes ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Pyramid Scheme Alert  Pyramid Scheme Alert is a non-partisan, non-profit, all-volunteer consumer education group. Contact Robert L. FitzPatrick, Pres. at info@pyramidschemealert.org Website Update - September 2014 Update

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In the last Update, I wrote that America's "top government defender" of multi-level

Top "government defender" of MLM, Mark Shurtleff, former AG of Utah, was arrested and charged with bribery.

 marketing, former Utah Attorney General Mark Shurtleff, had been arrested and charged with bribery, along with another former Utah AG who was also known for protecting MLM from pyramid prosecution. Shurtleff took an international leadership role with MLM when he led a successful campaign to roll back Utah's anti-pyramid law and even protected MLMs from being sued by Utah victims. MLMs were among his top campaign donors and Utah has the highest concentration, per capita, of MLM headquarters in the nation.

MLM's most famous attorney has been sued for promoting and protecting the Ponzi scheme, Zeek Rewards, shut down by the SEC

Now, MLM's "top lawyer", Kevin Grimes and his law firm, the most famous in the MLM world, have been sued for "legal malpractice" for deceptively promoting and profiting from the MLM, Zeek Rewards, that was shut down by the SEC as a massive Ponzi scheme.

The law suit brought by the United States Securities & Exchange Commission (SEC) was settled on August 17, 2012. The settlement included agreements for the company and all remaining assets to be handed over to a court-appointed Receiver. That Receiver, is now suing Grimes and his law firm for their role in promoting and profiting from the scam, as a "vendor." Other suppliers and promoters of Zeek Rewards may also be sued.

Grimes, the suit claims, was an important element of Zeek's predatory and deceptive recruiting program. The suit states, "Defendants' negligence and breach of this duty proximately caused an injury to RVG (Zeek victims) in an amount in excess of $100 million." 

CLAWBACK!

But perhaps even more significant than the lawsuit against MLM's top legal expert and court room defender is that the Receiver is also going after as many as 10,000 individual consumers who invested in Zeek Rewards and "won" profits. They are now being sued in "clawback" claims. The Receiver is going after their "winnings." 

In other words, consumers who think they can make money in MLM must not only know that the claims of "unlimited income potential" are false, but also that if they were to make any money at all, they could be sued, if the scheme is ever prosecuted.

 Zeek was an MLM that operated under the disguise of an online "penny auction", in which people paid to bid on items for sale. The SEC prosecuted Zeek as a money transfer Ponzi that gained more than $600 million in its brief 18-month life span. The rewards paid to recruiters came from payments made by the recruits not from the company's or the distributors' profits on the auction transactions. This is equivalent to other MLMs paying rewards to recruiters, based on the purchases and sales of those they recruit. If recruiting stops, purchases stop, and the money transfer collapses. Profits on "Sales" do not support MLM "winners". Recruiting does.Just like the victims of Bernie Madoff's Ponzi, the people who "made" money in the Zeek MLM are now being sued to pay back that money, including Zeek's high profile attorney and legal consultant, Kevin Grimes.

A July 30, 2014 announcement by the  court-appointed Receiver, Kenneth Bell in Charlotte, NC stated, "On March 3, 2014, I announced the filing of a lawsuit to obtain the return of the money paid out to net winners in the ZeekRewards scheme in excess of the amount they paid into RVG (legal name of Zeek scheme). In that lawsuit,...  I made claims against more than 10 of ZeekRewards' largest "net winners" in the United States asking that the Court order them to repay the net winnings they received from the scheme. I also made class action claims against approximately 9,400 ZeekRewards net winners in the United States who each won more than $1,000."

The names of the "winners" have been individually listed and publicized. The receiver's notices and lawsuits can be found at http://www.zeekrewardsreceivership.com.

How Could Consumers Have Known?

Which raises the question repeatedly posed to Pyramid Scheme Alert by consumers - how could anyone have known whether Zeek was legal or not?

The answer is they could not have known. Consumers have, effectively, been left to the mercy of wolves in sheep's clothing when it comes to "direct selling" and "income at home" schemes, aka "multi-level marketing" (MLM). In the case of the MLM, Zeek Rewards, the MLM legal star, Kevin Grimes, aided and profited from the wolf's predatory hunting, and he was an important part of the "sheep" disguise, according to the Receiver's lawsuit against him and his firm.

Zeek Rewards, like every other MLM on earth, claimed to be "perfectly legal". To bolster this false claim it employed the best known MLM lawyer in America, Kevin Grimes, of the law firm, Grimes and Reese P.L.L.C. That law firm's website, MLMLaw.com, was the go-to source for MLM lawsuits, archives of prosecutions, and MLM interpretations of laws. The firm claimed to have advised hundreds of new MLMs about the status of laws and the regulatory environment.

Zeek contracted with Grimes to conduct a "Compliance Test" that all the Zeek participants had to pass. Zeek and Grimes falsely led the recruits to believe that the only way the company would be prosecuted is if they, the participants, broke the law. In other words Grimes helped convince the public that Zeek was so legal it went an extra mile to prevent greedy or untrained consumers from jeopardizing the company's upright and ethical status. Now, Grimes and his firm Grimes & Reese are being sued for legal malpractice and the money they earned is being "clawed back."

Grimes' law firm used to be the in-house attorney for the MLM company, Melaleuca. It counts among its MLM clients the industry stalwarts such as Herbalife, Take Shape for Life (Medifast), Usana and Donald Trump's "Trump Network." Grimes was acclaimed for telling MLMs how to operate "legally." Grimes even reportedly touted his personal history as a former distributor for the MLMs, Amway and Nikken.

Endorsement of Kevin Grimes' law firm by client, Herbalife, posted on law firm's website

Since the SEC brought charges against its former client, Zeek Rewards, there is no mention of Zeek Rewards on the law firm's website. In fact, Grimes himself has disappeared from the website, MLMlaw.com, and the firm has been renamed, R&R Law Group.

DSA Support?

Like most MLMs, Zeek Rewards was not a member of the official trade group for MLMs, the Direct Selling Association (DSA). However, Zeek's lawyer/law firm, Grimes and Reese who administered the "compliance test" to Zeek recruits and helped to convince the public that Zeek was "legal," was an award-winning member of the DSA. DSA affiliation through Grimes was an important element in disguising Zeek as "legal."

The DSA announced in 2010 that Grimes & Reese received DSA's "Partnership" Award. The DSA award to Grimes and Reese was personally presented by  DSA's "Hall of Fame" winners. The DSA stated, "Grimes & Reese's expertise in the industry is highlighted by the fact that in all of the major FTC pyramid scheme actions brought against direct sellers in the past decade the defendants have sought out their firm for representation. They have a truly unique understanding of legal expertise, marketing practices, compensation plan operation and industry ethics that enables them to provide legal services to direct sellers that other law firms simply cannot match."

In sum, Grimes, aka Grimes and Reese, world-famous in MLM for keeping MLMs out of jail or helping MLMs fight regulators. The DSA even gave them awards for this work. With his high-profile MLM credentials and award winning DSA-affiliation, Grimes became an important element of Zeek's predatory and deceptive recruiting program, according to the court-appointed Receiver, as well as a major financial beneficiary of the fraud.

The Standard MLM "Endless Chain/Matrix" at Work, Once Again.

Beneath Zeek's rhetoric about "penny auctions"  (little consumer income was ever generated from actual auction transactions) from and "profit sharing" (payments to recruiters came from the investments of new recruits, not true company profits) the scheme was a standard MLM program. The SEC Complaint against Zeek states,

"ZeekRewards also employs a pyramid "Matrix" to reward its investors for recruiting others to join the scheme. The company places each newly recruited affiliate into a "2x5 forced-fill matrix," which is a multi-level marketing pyramid with 63 positions that pools new investors' money and pays a bonus to affiliates for every "downline" investor within each affiliate's personal matrix. Affiliates that have (i) enrolled in a monthly subscription plan requiring payments of $10, $50, or $99 per month; and (ii) recruited at least two other "Each one recruits two more Preferred Customers" (i.e., investors who have likewise enrolled in a monthly subscription plan) qualify to earn bonuses through the Matrix."

"Once qualified, an affiliate earns bonuses and commissions for every paid subscription within her downline 2x5 pyramid, whether or not she personally recruited everyone within the matrix. Furthermore, affiliates are rewarded merely for recruiting new investors without regard to any efforts by the affiliates to sell bids or otherwise support the retail businesses."

The "2X5 forced-fill matrix" is a boiler-plate MLM "binary" pay plan. All MLMs require a qualifying purchase level or fee payment to earn "bonuses", as Zeek did. The classic MLM bonuses are said to grow "exponentially" by an expanding "matrix" of recruits, as they claimed at Zeek. Hundreds of MLMs also require the recruitment of two other participants to qualify for future rewards, often called the "right leg and the left leg" and, after that, the recruitment is carried on by others who continue the one-recruits-two program, forever.

All of MLMs make a false promise of "unlimited" expansion, even though, an "each recruits two" plan could only go 32 levels before the entire earth's population would be in the MLM. And, in all cases, the money for those "bonuses" is sourced, in total or in part,  from purchases and fee payments of new recruits. Even where there is more "external" money, MLM "winners" do not gain profit without recruiting, a model that dooms the vast majority to losses based on bottom-level positions on the chain, not their effort.

Was Zeek Rewards special? Why was it singled out and prosecuted?  If it is not special, then the question that is posed to Pyramid Scheme Alert every day by confused and concerned consumers must be directed to the FTC and SEC, "How is any "endless chain" MLM legal?"

Robert L. FitzPatrick, Pres. 

PYRAMID SCHEME ALERT 

Norwegian regulators fail to identify the 'Lyoness' racket.

September 20, 2014, 2:52 am

≫ Next: 'Herbalife (HLF)' - Bill Ackman begins to throw some light on the big 'MLM' lie.

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'Lyoness' is the name over the entrance to a classic blame-the-victim 'income opportunity' cultic racket, comprising a dissimulated closed-market swindle, or pyramid scheme, and related advance fee frauds. In the simplest terms, behind all the commercial/philanthropic camouflage and layers of linguistic/mathematical/economic hocus-pocus, the overwhelming majority of the money which has been flowing into the dark heart of the 'Lyoness' racket, has come from its never-ending chain of temporarily deluded core-adherents (based on their false-expectation of future reward).

Monica Alisøy Kjelsnes

Over the past few months, Norwegian lottery regulators, led by Monica Alisøy Kjelsnes, have supposedly been  investigating the activities of the organization known as 'Lyoness.'The result of these supposed investigations can only be described as astonishing; particularly, when you consider that the corporate front for the  'Lyoness' racket has been set up in Norway in such a devious way that Norwegian regulators could not access any audited accounts. Instead, they relied on unverifiable figures supplied externally by the 'Lyoness' Ministry of Truth.

Thus, the Norwegian lottery regulators, led by Monica Alisøy Kjelsnes, have finally concluded that although 'Lyoness' has been the front for an illegal pyramid scheme in Norway, based on the organization's own figures, 'Lyoness' is no longer hiding such criminal activity and, consequently, will not be prosecuted.

'In the report the Norwegian Gaming Authority have concluded that Lyoness is not engaged in an illegal pyramid scheme in Norway today. The reason for our conclusion is that we have received information showing that more than 50% of revenue from Lyoness business in Norway today comes from sales of goods and services and not from recruiting members and their participant payment. We see that Lyoness in an establishment period in Norway has had more than 50 percent of its revenue from recruiting members and not the sale of goods and services.

However, the Authority considers that the Lyoness in the years 2012 and 2013 ran an illegal pyramid scheme in Norway where more than 50 percent of revenue in this period came from recruiting members. 

Since Lyoness currently operates legally we will not react to the violation.

We have posted information about the case on our website - https://lottstift.no/blog/2014/09/18/lyoness-ingen-ulovlig-pyramide-dag/

Yours sincerely'

Monica Alisøy Kjelsnes seniorrådgjevar Lotteritilsynet

Readers might be interested to learn that during the past months I have written to Monica Alisøy Kjelsnes on two occasions, and asked her what would be her personal reaction if a member of her own family suddenly announced that he/she had signed up with 'Lyoness?'

Predictably, I have yet to receive a reply to my common-sense question.


David Brear (copyright 2014)

'Herbalife (HLF)' - Bill Ackman begins to throw some light on the big 'MLM' lie.

July 30, 2014, 1:39 am

≫ Next: Gang of British women face jail for running a pyramid scheme

≪ Previous: Norwegian regulators fail to identify the 'Lyoness' racket.

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Last week, Bill Ackman announced that his company, Pershing Square Capital, has (during  the last 2 years) invested $50 millions researching, investigating and challenging  'Herbalife.' 

During his most-recent public presentation, an (at times) emotional Bill Ackman took a step further into my territory and openly-described 'Herbalife' as a 'criminal enterprise' and the company's CEO, Michael Johnson, as a 'predator.' He also briefly spoke of 'Herbalife's'so-called 'MLM income opportunity' as being an example of a propaganda technique used by the 'Nazis' and totalitarian regimes, known as the 'big lie.' At one point during the presentation, Bill Ackman’s was asked if his language was inviting a lawsuit. The questioner observed that a lawsuit would oblige'Herbalife' to disclose internal documents. In response, Bill Ackman smiled. 'Sure, that’d be great,' he said, 'bring it on.'

Bill Ackman's investigation (led by Christine Richard and assisted by victims and whistle- blowers) has now gathered evidence proving that, internally, 'Herbalife's'so-called'Nutrition Clubs'are not at all what they have appeared to be to casual observers (including : law enforcement agents, regulators, financial journalists, investors, insurers, bankers, accountants, co-opted-celebrities, opinion-makers, etc.).

So-called 'Herbalife Nutrition Clubs' have been part of the self-perpetuating, blame-the-victim cultic game of make-believe known as 'MLM income opportunity.'  In the most simple terms: Pershing's undercover investigators have discovered that the only significant group of people regularly to have bought the banal, and over-priced, pseudo-medical 'Herbalife' wampum, have been a never ending-chain of losing-participants in the so-called'Herbalife MLM income opportunity.' Furthermore, these persons have been deceived into handing over their money in the false expectation of future reward.

Bill Ackman apparently still has faith in the American Republic. He sees himself as a product of the American Dream.

For obvious reasons, Bill Ackman is the first well-known, and wealthy, opinion-maker to look beyond the end of his nose and confront the extraordinary reality that the bosses of kitsch, US-based, major organized crime groups, like'Herbalife,' have been world-class liars, and unfeeling parasites, who have amassed vast capital sums by reflecting the spirit of our age - peddling a Utopian Capitalist fiction (in the form of a perverted version of the American Dream) as fact. Yet despite his moral courage, education, wealth and celebrity, Bill Ackman has (so far) only pointed a flashlight at one part of the latest section of a much wider, evolving, criminogenic phenomenon which various other intellectually-rigorous observers have shone powerful searchlights on, in the past.

In 1945, whilst most, contemporary mainstream commentators were unable to look beyond the ends of their noses, with a perfect sense of irony, Eric Arthur Blair a.k.a. George Orwell (1903-1950) presented fact as fiction in an insightful 'fairy story' entitled, 'Animal Farm.' He revealed that totalitarianism is merely the oppressors' fiction mistaken for fact by the oppressed.

In the same universal allegory, Orwell described how, at a time of vulnerability, almost any people's dream of a future, secure, Utopian existence can be hung over the entrance to a totalitarian deception. Indeed, the words that are always banished by totalitarian deceivers are, 'totalitarian' and 'deception.'

Sadly, when it comes to examining the same enduring phenomenon, albeit with an ephemeral 'Capitalist' label, most contemporary, mainstream commentators have again been unable to look further than the ends of their noses. However, if they followed Orwell's example, and did some serious thinking, this is the reality-inverting nightmare they would find.

More than half a century of quantifiable evidence, proves beyond all reasonable doubt that what has become popularly known as 'Multi-Level Marketing' is nothing more than an absurd, cultic, economic pseudo-science, and that the impressive-sounding made-up term 'MLM,' is, therefore, part of an extensive, thought-stopping, non-traditional jargon which has been developed, and constantly-repeated, by the instigators, and associates, of various, copy-cat, major, and minor, ongoing organized crime groups (hiding behind labyrinths of legally-registered corporate structures) to shut-down the critical, and evaluative, faculties of victims, and of casual observers, in order to perpetrate, and dissimulate, a series of blame-the-victim closed-market swindles or pyramid scams (dressed up as 'legitimate direct selling income opportunites'), and related advance-fee frauds (dressed up as 'legitimate training and motivation, self-betterment, programs, leads,' etc.).

________________________________________________________________________

Yet again, in the wake of Bill Ackman's recent presentation, I have been asked:

• How many victims have wasted their time and money in 'Multi-Level Marketing' scams?

• Why do so few 'MLM' victims ever complain?

The short answer to these frequently-asked questions, is that the overwhelming majority of all the countless millions of victims who continue to get burned by individual 'MLM Income Opportunity/Prosperity Gospel' cults, will remain silent and continue (unconsciously) to form part of the overall lie: whilst, as a direct result of the passivity of the overwhelming majority of the victims, all casual observers of individual 'MLM income opportunity/Prosperity Gospel' cults (including, law enforcement agents, regulators, academics, legislators, judges, journalists, insurers, bankers, accountants, associated celebrities, etc.) will also remain passive and continue (unconsciously) to form part of the overall lie.

Today, it is very difficult to determine exactly how many people in total around the world have already been churned through the pay-through-the-nose-to-play 'MLM Income Opportunity/Prosperity Gospel' cultic game of make-believe, since it was first peddled as reality under the name of 'Nutrilite Inc. /Mytinger and Casselberry Inc.' back in the late 1940s. It is also important to distinguish between short-term and chronic 'MLM' losing-players. In general, the overwhelming majority of fraud victims never complain, but, right from the outset, the self-perpetuating 'MLM' lie was maliciously designed to implicate its victims - loading them with shame and guilt, and, thus, prevent them from ever facing reality. Classically, the quantifiable evidence proves that, without exception, chronic 'MLM' losing-players have been subjected to co-ordinated devious techniques of social, and psychological, persuasion designed to shut down their critical, and evaluative, faculties. In this way, they have been conditioned (unconsciously) to think of themselves, not as the victims of a cruel deception or as brainwashed cult adherents, but as 'Independent Business Owners' exercising free-will.  What has made external reality even more unacceptable, is the ego-destroying fact that a large proportion of 'MLM' victims were deceived by a close friend or relative (acting under the guided-delusion that 'MLM' has been of great benefit to its participants) and, in turn, these victims then deceived, or tried to deceive, their own close friends and relatives (acting under the same guided-delusion that 'MLM' has been of great benefit to its participants). The few, destitute, chronic former 'MLM' losing-players who have managed to recover fully their critical, and evaluative faculties, and who have filed well-informed civil lawsuits against the corporate fronts of 'MLM' cultic racketeers, have invariably been obliged to settle out of court. Although a number of isolated civil investigations, and successful prosecutions, have been pursued by the Federal Trade Commission against some smaller 'MLM' front-companies in the USA, no co-ordinated official effort has ever been made to face wider-reality and identify, let alone tackle, the overall criminogenic/cultic phenomenon that has lurked behind all the shielding layers of structural, and pseudo-economic/scientific, mystification, reality-inverting 'direct selling/commercial'  jargon and kitsch capitalist/Utopian/American Dream imagery.

  

Until the 1970s, the original 'MLM Income Opportunity/Prosperity Gospel' cultic racket  'Nutrilite' a.k.a.'Amway,' remained confined to the USA. In the face of a prolonged (but far-from morally, or intellectually, rigorous) FTC investigation, the 'Amway/MLM' lie first spread to Canada, then to W. Europe and Australia. However, in 1979, when a corrupt, and/or naive, US federal judge failed to identify 'Amway' as the corporate-front for an ongoing, major, organized crime group, this classic regulatory-failure was widely-seen as a license to steal. Since that time, countless US-based copy-cat rackets have been instigated behind labyrinths of legally-registered corporate structures pursuing lawful, and/or unlawful, enterprises - a significant number of which ('Forever Living Products', 'Herbalife', 'USANA', 'Nu Skin', 'Xango' etc.),  have been allowed to grow out of control and to infiltrate traditional culture all around the globe, accompanied by a distracting flock of co-opted political, academic and celebrity stooges, and shielded by a parallel labyrinth of legally-registered corporate structures known as, 'Direct Selling Associations.'

In the past, various casual observers have thrown up their hands in horror when I have dared to say that, given its duration, scale and devastating impact on huge numbers of vulnerable persons,  blame-the-victim 'MLM Income Opportunity/Prosperity Gospel' cultic racketeering is an ongoing financial, and psychological, holocaust (with a small 'h') of which many people have been in denial. Sadly, the essentially-absurd fairy story entitled 'MLM income opportunity' has been allowed to expand to such titanic proportions, that the truth has long-since become almost unthinkable. However, since the concept of the big propaganda lie, is widely-understood, it seems almost inconceivable that the directors of law enforcement, and intelligence, agencies around the world have also remained unable to look beyond the ends of their noses and identify what the bosses of 'MLM/Prosperity Gospel' cults have actually been doing. 

The following sinister quote has often been attributed to one of history's most-sinister criminals, Joseph Goebbels: 

'If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.'

Given its content, it is supremely ironic that there is no evidence for Goebbels ever having made the above statement. That said, it is a very accurate description of Goebbels' reality-inverting activities as Adolf Hitler's propaganda chief. Indeed, before his cowardly suicide in the face of reality, Goebbels spent the last years of his life steadfastly pretending that the heroic and enlightened leader of the 'Noble Aryan Master Race,' Adolf Hitler, was telling the truth, whilst the leaders of Britain and the USA (controlled by the forces of evil - Jews and Freemasons) were repeating big propaganda lies.

The origin of the first part of the above Goebbels statement would appear to have been a psychological profile of Adolf Hitler, compiled in the USA during WWII by the 'Office of Strategic Services,' later to become known as the 'CIA.' This document concluded that : 

'His (Hitler's) primary rules were: 
never allow the public to cool off; 
never admit a fault or wrong; 
never concede that there may be some good in your enemy;
never leave room for alternatives;
never accept blame; 
concentrate on one enemy at a time and blame him for everything that goes wrong; 
people will believe a big lie sooner than a little one and if you repeat it frequently enough people will sooner or later believe it.' 

Hitler's psychological profile was drafted (prior to the full-extent of his crimes against humanity being discovered) by a team of medically-qualified academics who had apparently been studying 'Mein Kampf,' Chapter 10:

 '... in the big lie there is always a certain force of credibility; because the broad mass of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily; and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie, since they themselves often tell small lies in little matters but would be ashamed to resort to large-scale falsehoods. It would never come into their heads to fabricate colossal untruths, and they would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation. For the grossly outrageous lie always leaves traces behind it, even after it has been nailed down, a fact which is known to all expert liars in this world and to all who conspire together in the art of lying.' 

Despite appearances, Hitler was not confessing to being a liar in Chapter 10 of 'Mein Kampf.' This was merely a typically-mediocre little narcissist (who imagined himself to be a great author/thinker - the anointed-Messiah/saviour of his people) revealing his extraordinary knowledge of how to lie successfully whilst steadfastly pretending to be struggling to establish the truth against the reality-inverting forces of evil. Hitler would soon transform into a megalomaniacal psychopath. The unconditional deference of his deluded followers only served to confirm, and magnify, his own increasingly-paranoid, and self-righteous, delusions of grandeur.

David Brear (copyright 2014)

Gang of British women face jail for running a pyramid scheme

September 28, 2014, 4:51 am

≫ Next: Grenade Blast At 'Amway' Head Office, Imphal India.

≪ Previous: 'Herbalife (HLF)' - Bill Ackman begins to throw some light on the big 'MLM' lie.

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About 15 years ago, I coined the common-sense phrase:'premeditated, or dissimulated, closed-market swindle,'in order to deconstruct all Ponzi schemes, pyramid frauds, money circulation games, chain-letter scams, etc. However, although a few commentators have used my term (sometimes without attribution), a'closed-market swindle'is not yet defined in law. That said, it is universally accepted that lying to, or withholding key-information from, people in order to take their money, is fraud which is a form of theft. Common-sense also reveals that, by 'passing any law, but failing to enforce it, has the effect of authorizing the very crime which you are trying to prohibit.' 

The lie which is fundamental to all 'closed-market swindles' is that people can earn income by contributing their own money to participate in any alleged 'profitable commercial opportunity' which is secretly an economically-unviable fake, due to the fact that the alleged 'profitable commercial opportunity' has been rigged so that it generates no significant, or sustainable, revenue other than that deriving from its own participants. For more than 50 years, 'Multi-Level Marketing' racketeers have been allowed to dissimulate closed-market swindles by offering endless-chains of victims various banal, but grossly-over-priced, products, and/or services, in exchange for unlawful payments, on the pretext that 'MLM' products and/or services, can then be regularly re-sold for a profit in significant quantities. However, since no gang of 'MLM' racketeers has ever proved that 'MLM' wampum has actually been regularly re-sold to the general public for profit in significant quantities, 'MLM' participants have, in fact, been peddled infinite shares of their own finite money.

In the final analysis, other than their ephemeral external presentations, internally there is no real difference between all closed-market swindles; for any alleged 'opportunity to make money,' wherein (when challenged, and/or rigorously investigated) the promoters are unable to provide independent quantifiable evidence to prove that their alleged 'viable commercial activity' has had any significant, and sustainable, source of revenue other than its own losing participants, is self-evidently a dissimulated closed-market swindle.


David Brear (copyright 2014)

________________________________________________________________________

Bearing the above in mind, often, I don't know whether to laugh or cry when I read the mainstream media's far-from-intellectually-rigorous reporting of 'pyramid schemes' (only after they have run their course and collapsed).

Readers are reminded that, for decades, some of most pernicious dissimulated closed-market swindles, or pyramid schemes, in history ('Amway', 'Herbalife', 'Forever Living Products', etc.) have been allowed to flourish in the UK without any rigorous challenge from mainstream media or law enforcement agencies. Readers are also reminded that lying to, and/or withholding key information from people in order to take their money, property, etc., is fraud which is a form of theft.

http://www.bbc.com/news/uk-29250910

http://www.independent.co.uk/news/uk/crime/the-key-to-a-fortune-pyramid-scheme-queens-who-conned-10000-out-of-their-savings-9742163.html

http://www.telegraph.co.uk/news/uknews/crime/11110946/The-story-behind-the-respectable-pyramid-scheme-ladies.html

http://www.bristolpost.co.uk/Women-conned-thousands-cash-pyramid-scam/story-22949203-detail/story.html

http://www.mirror.co.uk/news/uk-news/pyramid-greed-gang-middle-aged-4282692

Hazel Cameron leaving Bristol Crown Court after pleading guilty to charges of operating and promoting a £21 million pyramid scheme.  http://www.westernmorningnews.co.uk/Women-guilty-21m-pyramid-scheme-Devon-Somerset/story-22945860-detail/story.html#ixzz3Ebi7sgN0

Susan Crane (left) and Mary Nash leaving Bristol Crown Court after pleading guilty to charges of operating and promoting a £21 million pyramid scheme.

This week, it has been widely-reported that:

Six 'respectable,'middle-aged British women, Hazel Cameron, Mary Nash, Susan Crane, Carol Chalmers, Jennifer Smith-Hayes, Laura Fox, have been convicted of operating and promoting a pyramid scheme in which at least ten thousands persons (mainly vulnerable women) lost their money.

More than a year ago, I was contacted by certain angry individuals whose lives have been wrecked by this particular fraud. However, until this week, no one has been allowed to report these matters due to the ruling of a Judge.

Interestingly, although this a relatively straight forward example of a dissimulated closed-market swindle (in which the victims instinctual desires were manipulated in order to peddle them infinite sharesof their own finite money), it has taken three separarate trials, and finally a guilty plea, to re-establish the rule of law. However, UK trade regulators accept that this case is just the tip of a growing iceberg comprising countless, similar pyramid frauds.

  _______________________________________________________________________

 UK Government Press Release

http://www.tradingstandards.gov.uk/extra/news-item.cfm/newsid/1637

Nine convicted of multi-million pound pyramid promotional scheme

Following a Competition and Markets Authority (CMA) prosecution, over three trials, nine people have been convicted at Bristol Crown Court of organising and/or promoting a pyramid promotional scheme involving over £20 million pounds.

Alex Chisholm, CMA Chief Executive, said;

‘As the convictions make clear, pyramid selling schemes where money is generated primarily by recruiting new people to join in, are illegal and criminal.  Anyone thinking of organising or promoting such a scheme risks a criminal record and a spell in prison.

‘The case will be a warning for consumers.  The vast majority of consumers stand to lose their money from such schemes.  The adage remains, that if it sounds too good to be true, it probably is.’

Sarah Davey, Principal Trading Standards Officer, Bristol City Council, South West Scambusters, said: 

‘I welcome these convictions. Pyramid promotional schemes, such as ‘Give and Take’, are intrinsically unsustainable and doomed to collapse, resulting in significant loss of money for the vast majority.  Rightly, such schemes are banned outright and the convictions have confirmed that Give and Take was an illegal scheme.’

The so called ‘Give & Take’ scheme (G&T) began in 2008 and was an unsustainable money pyramid promotional scheme that needed ever increasing numbers of new members – each paying £3,000 -to keep it alive. It involved around 10,000 people - mainly from the South West of England and from South Wales – with the majority losing their money.  

The scheme was brought to a close between January and April 2009 with the arrest of committee members from the Bristol area, who ran the G&T scheme, and of other significant promoters of the scheme.  Charges were subsequently brought by, the CMA’s predecessor, the Office of Fair Trading (OFT), against eleven defendants.

Bristol City Council’s trading standards service first referred the case to the OFT in 2008.  A detailed investigation followed, with the OFT working closely with enforcement partners, including the South West Scambusters Team (a specialist regional trading standards team) and Avon & Somerset Constabulary. The case saw almost 300 witness statements taken and over 5,000 items of material seized and examined.

The prosecutions were the first brought by the OFT under the Consumer Protection from Unfair Trading Regulations 2008. Under these regulations, pyramid promotional schemes in which the money for payments is derived primarily from introducing or enrolling others into the scheme, are automatically deemed to be unfair commercial practices. Establishing, operating and promoting such practices are a criminal offence punishable by up to two years imprisonment.   

The defendants were split into three trials – the first taking place between April and July 2012, the second taking place between May and October 2013, and the third was due to commence in September 2014 – with the results subject to a reporting ban until the conclusion of the third trial. 

Laura Fox, instigator of the 'Give and Take' fraud.

At the first trial, the Chair of the committee and figurehead of the scheme, Laura Fox, and two other committee members, Carol Chalmers and Jennifer Smith Hayes, were convicted unanimously by a jury and each sentenced to nine months in prison.  

At the second trial, a jury were unable to reach full verdicts. Before the start of the third trial, a further three committee members - Susan Crane, Mary Nash and Hazel Cameron - pleaded guilty to the offences of promoting and operating the scheme, bringing the prosecution to a conclusion. Sentencing of these defendants has been adjourned to 13 October 2014.  

A further three defendants, Sally Phillips, Rita Lomas and Jane Smith, pleaded guilty before the start of their trials to offences of promoting the scheme, and were sentenced to prison terms of three, four and four-and-a-half months respectively, suspended in each case for two years. 

A further two defendants, Tracy Laurence and Rhalina Yuill, were acquitted. 

The G&T scheme relied on existing members recruiting others to join. It was organised into a series of small pyramids of 15 people. When eight new members signed up they were placed on the bottom row of the pyramid and paid their £3,000 joining fee to the person at the top, who was referred to as the ‘Bride’.  The Bride received £23,000 (the remaining £1,000 went towards purported administration costs and to a charity of the Bride’s choosing). The pyramids would then be split with the two people below the Bride, the ‘Bridesmaids’, becoming the new Brides, with eight new people needed to join each pyramid.  The scheme expanded exponentially this way so that, in theory at least, each member had the chance to rise to the top of a pyramid and net £23,000.  The scheme had expanded to over 900 pyramids by the time it was closed.

Participants were encouraged to invite their family, friends and colleagues to large promotional events where the cash payouts were awarded to the Brides.  The events were designed to generate excitement around the scheme and give the impression that people would lose out if they did not join.

The scheme was promoted as being within gambling laws. Although some of the organisers sought legal advice they did not reveal the full nature or changes made to the scheme when obtaining that advice. The organisers nevertheless continued to claim that the scheme had full legal backing.  

Although the scheme was targeted at women and promoted as being open to women only, men were allowed to join once the numbers began to dry up, as long as they used a woman’s name. 

The CMA is also continuing with action to confiscate defendants’ criminal assets under the Proceeds of Crime Act 2002.

NOTES 

1.The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. From 1 April 2014 it took over the functions of the Competition Commission and the competition and certain consumer functions of the Office of Fair Trading, as amended by the Enterprise and Regulatory Reform Act 2013.

2.Pyramid promotional schemes are those where the ‘compensation’ for participants is derived primarily from introducing others, rather than from the sale of a product or service.  Such schemes are automatically unfair commercial practices under the Consumer Protection from Unfair Trading Regulations 2008.  They are distinct from promotional arrangements under which compensation payments are derived from the sale of a product or service.  Unlawful pyramid promotional schemes may involve products or services but these will generally be overpriced and have no real resale value, the primary source of the compensation for participants being derived from introducing others to the scheme.

3.Found guilty of ‘promoting’ and ‘operating’ a pyramid promotional scheme under the Consumer Protection from Unfair Trading Regulations 2008, were: 

•  Laura Fox - Chairman of G&T
• Jennifer Smith-Hayes - Treasurer of G&T
• Carol Chalmers - Venue Organiser.

4.Pleading guilty to ‘promoting’ and ‘operating’ a pyramid promotional scheme under the Consumer Protection from Unfair Trading Regulations 2008, were: 

• Mary Nash – Charts Coordinator of G&T
• Susan Crane– Committee Secretary and Sub Treasurer of G&T
• Hazel Cameron – Games Coordinator for G&T.

 5.Pleading guilty to ‘promoting’ a pyramid promotional scheme under the Consumer Protection from Unfair Trading Regulations 2008 were non-committee members:

•  Sally Phillips
• Jane Smith
• Rita Lomas.

 6.Acquitted by a jury of ‘operating’ and ‘promoting’ a pyramid promotional scheme under the Consumer Protection from Unfair Trading Regulations 2008 was non-committee member: 

•  Rhalina Yuill.

 7.Following two trials at which separate juries each failed to reach a verdict, no evidence was offered in relation to charges of both ‘operating’ and ‘promoting’ a pyramid promotional scheme under the Consumer Protection from Unfair Trading Regulations 2008 in respect of a further non-committee member, who was therefore acquitted: 

•  Tracy Laurence.

 8.South West Scambusters targets rogue trading and scams across England and Wales, supporting all local authority areas in England and Wales. There are separate arrangements in place in Scotland.

9.Members of the public if they think they have identified a dodgy pyramid scheme or been a victims of an illegal pyramid promotional scheme should report it to Action Fraud: www.actionfraud.police.uk or call 0300 123 2040.  Victims or groups of victims should consult a lawyer or other legal representative, including those at Citizens Advice, for help getting money back.

Press enquiries: 

rory.taylor@cma.gsi.gov.uk

0203 7386798

Out of hours mobile: 07774 134814

DATE: 18 September 2014 

______________________________________________________________________

The following article is from the 'Western Morning News' (September 18th 2014).

______________________________________________________________________

A group of “greedy” women masterminded a £21 million get-rich-quick pyramid scheme which spread across the South West, it can be reported for the first time today.

The group encouraged around 10,000 vulnerable women to “beg, borrow or steal” £3,000 to put into the scheme between May 2008 and April 2009.

Victims were lured by the promise they would receive a £24,000 payout when they reached the top of their pyramid, with organisers promising they “could not lose”.

The scheme, called Give and Take, quickly spread from Bath and Bristol to Gloucester, Bridgwater, Cheltenham, Torquay, Weston-super-Mare and Wales.

Committee members behind the scheme pocketed up to £92,000 each, while as many as 88% of the women they recruited lost out – some up to £15,000.

The scheme, also known as Key to a Fortune, was hidden under a veil of secrecy as members were banned from writing about it, Bristol Crown Court heard.

But the pyramid was uncovered by authorities when a disgruntled employer in Bristol contacted Trading Standards to complain that it was being promoted in his workplace.

Eleven women, aged between 34 and 69, became the first to be prosecuted for such a scheme, under new legislation in the Consumer Protection from Unfair Trading Act 2008.

Following two lengthy trials, in 2012 and 2013, three were convicted of the charges against them, three pleaded guilty, one was acquitted and two juries could not reach a verdict on another.

A third trial – a retrial of three women a jury could also not reach verdicts on – was due to begin at Bristol Crown Court on Wednesday but the defendants entered guilty pleas before a jury was sworn.

Reporting of the case was banned until the conclusion of all trials and lifted this morning following legal representation from the three women and the media.

Judge Mark Horton will sentence the three women, charts co-ordinator Mary Nash, 65, committee secretary Susan Crane, 68, and games coordinator Hazel Cameron, 54, in October.

Nash, Crane and Cameron all admitted operating and promoting the pyramid scheme.

Sally Phillips, 34, of Hengrove, Jane Smith, 50, of Bishopsworth, both Bristol and Rita Lomas, 49, of Whitchurch, Somerset admitted promoting the scheme in 2012.

Phillips received a three-month suspended prison sentence, Smith a four-month suspended sentence and Lomas a four-and-a-half month suspended sentence.

Chairman Laura Fox, 69, Jennifer Smith-Hayes, 69, and Carol Chalmers, 68, were convicted of operating and promoting the scheme during a trial in 2012.

Fox, of East Harptree, Smith-Hayes of Bishopsworth and Chalmers, of Weston-super-Mare, were sentenced to nine months’ imprisonment.

No verdict was reached following two trials of Tracey Laurence, 60, of Bradley Stoke, South Gloucestershire, while Rhalina Yuill, 34, of St George, Bristol was acquitted of promoting a pyramid scheme on her second trial.

Judge Horton, speaking as he lifted the order today, said the public had to be aware of the dangers of pyramid and chain gifting schemes.

“These cases and the actions and attitudes of these defendants demonstrate the way in which pyramid promotional schemes and chain gifting schemes can be secretly created and quickly spread amongst a vast number of people and over several counties,” Judge Horton said.

“This particular scheme caused a loss to the general public of around £19 million.”

Judge Horton said the scheme targeted vulnerable women who could ill afford to lose the money.

“A number of these women suffered enormous and in some cases lifelong financial hardship due to their involvement in this scheme,” he said.

“The public need to be aware that schemes like this lead to the destruction of lifelong friendships and families and in some cases whole communities as friends and family are lured into such a scheme.”

Judge Horton said 88% of those who entered the scheme would lose their money.

“It is important now that the full matter of risks of this type of scheme are exposed and made known to the public,” he added.

“If it looks to good to be true, that’s because it is not true.”

During the trials, the two juries were told how the scheme operated around pyramid charts that had 15 spaces on.

Each space was filled with a participant who paid £3,000 and introduced two friends, who also paid that amount.

Once the chart was filled, the eight people on the bottom of the chart paid their £3,000 to the person on the top, called the “Bride”.

Participants collected their winnings at specialist prize-giving pamper parties, where they would be asked a series of simple questions before being handed the £24,000.

A set £1,000 fee from the payout was deducted, with £600 shared between charities and £400 used to pay costs the committee occurred.

Miles Bennett, who prosecuted both trials, said potential recruits were invited to the parties at the Battleborough Grange Hotel in Burnham-on-Sea, owned by Carol Chalmers.

The “champagne evening celebrations” were attended by up to 300 people, who paid £2 entry for games and drinks.

Mobile phone footage recorded at one of the parties showed Laura Fox shouting: “We are gambling in our own homes and that’s what makes it legal.

“This is Carol’s home, we have been friends since we were 11-years-old. We are going to do these games, that’s what makes it legal and tax free.”

After games were played, the winnings were handed over to the Brides at the top of their charts in cash – with as much as £240,000 handed out in one evening.

But Mr Bennett said the celebration evenings were a “commercial practice”, with the committee holding meetings and entrants writing their names on a signing in book before entering.

“This wasn’t a bunch of ladies sitting around playing bridge,” Mr Bennett said. “This was a committee and Laura Fox ruled those nights with a rod of iron.”

“This wasn’t a kitchen hobby, this was a scheme that sucked a lot of people and which worked on the promise of them receiving riches way beyond their initial investment.”

Minutes from meetings show the committee required disposable cups for champagne and expressed concerns about attendees’ chewing gum.

There was “sheer indignation” that a Bride expected to bring champagne to celebrate her payout had brought cava instead, Mr Bennett said.

“What was being operated from May 26 2008 to April 29 2009 was a pyramid promotional scheme where people were invited to give £3,000 with the promise they would receive £24,000,” Mr Bennett said.

“Wouldn’t it be wonderful if life was that simple? But it’s a bit of a scam.

“It needs more and more people to be investing. To join a scheme you need two people who can in turn invest £3,000.

“It is usually recognised that 12 to 18% are winners and 82 to 88% are losers. They simply do not work.

“It is clear that, blinded by the possibility of riches and quick bucks, people were quite prepared to ignore the bleeding obvious pitfalls of a pyramid scheme.”

Pyramid scams reeled in victims

It sounded too good to be true.

Women were hooked with the promise of making £24,000 in just a few weeks for a £3,000 outlay.

Hundreds of women were reeled in at a time at pamper parties held at a hotel run by one of the organisers.

But what the unsuspecting women did not know was that they were being drawn into a scam where the vast majority would lose all their money – some as much as £15,000.

The pyramid scheme operating in the Bristol case, known as Give and Take or Key to a Fortune, was a classic one.

Schemes like Give and Take can destroy whole communities, who are seduced by the idea of a quick buck.

They are often advertised through mail, the internet, recruitment meetings or through word of mouth, and work by promising huge earnings if members recruit others.

In Give and Take, members joined by paying a fixed sum of £3,000 to head a syndicate of 15 people.

The rules stipulated they had to recruit two friends, who also paid up and then it was their turn to recruit more members.

Once the chart was filled, the eight people on the bottom of the chart paid their £3,000 to the person on the top – called the Bride.

The participants collected the money at glitzy prize-giving parties hosted at The Battleborough Grange Hotel in Burnham-on-Sea, owned by Carol Chalmers.

The celebration nights drew in crowds of up to 300 women, who sipped glasses of champagne and enjoyed a “girls’ night out”.

Committee chairwoman Laura Fox gave inspirational talks about the Give and Take scheme telling guests “you can’t lose”.

They would be asked a series of simple questions before being handed the £24,000 – an 800% profit in a matter of weeks.

A set £1,000 fee from the winnings was deducted and shared between charities and used to pay costs the organisation occurred.

There were also other fun games with cash prizes to reel in those who had not won the jackpot.

But in order for every participant to make money, there needs to be an endless supply of newcomers.

In order for the Bristol scheme to be sustainable, every man, woman and child in the UK would have needed to take part.

The women were banned from writing about the scheme or those behind it.

Some participants struggled to find enough people to fill their pyramid and broke the rules by sending emails to friends, family and colleagues – sometimes accompanied by pictures of winners in cash-filled bath tubs or perched on luxury motorbikes and cars.

Ultimately only the original members made any money and the rest lost out.

Prosecutor Miles Bennett told jurors at Bristol Crown Court: “This wasn’t a bunch of ladies sitting around playing bridge. This was a committee and Laura Fox ruled these nights with a rod of iron.

“What was being operated from May 26 2008 to April 29 2009, was a pyramid promotional scheme where people were invited to give £3,000 with the promise they would receive £24,000.

“Wouldn’t it be wonderful if life was that simple? But it’s a bit of a scam.

“It needs more and more people to be interested. To join the scheme you need two people who can in turn invest £3,000.

“It is usually recognised that 12% to 18% are winners and 82% to 88% are losers. They simply do not work.

“It is clear that, blinded by the possibility of riches and quick bucks people were quite prepared to ignore the obvious pitfalls of a pyramid scheme.”

The Office of Fair Trading estimates that pyramid scams collectively cost UK consumers £420 million every year.

They estimate that 480,000 adults fall victim to these scams each year, losing an average of £930 each, but only one in 100 people report their experiences to the authorities.

Often victims recruit family and friends to the scam, resulting in emotional as well as financial harm.

Pyramid schemes are unlawful under the Consumer Protection from Unfair Trading Regulations 2008 that prohibit the establishment, operation or promotion of a pyramid promotional scheme.

Victims' losses in pyramid scheme

A father-of-four who invested into the Give and Take scheme has been struggling financially for the last five years – after he failed to receive a payout.

Dave Gough, from Caldicot in South Wales, paid £3,000 to join the scheme in 2009 after being told “nobody would lose”.

The driving instructor, who has four sons, never reached the ‘Bride’ payout position so lost his investment and is still paying it off.

Mr Gough was initially dubious of the scheme but caved in after three months of persuasion and began to plan his future with his winnings.

“It sounded absolutely fantastic, there was no way I was going to lose,” he told BBC News.

“I was told it was backed by major solicitors and barristers in the Bristol area and it was all legal. Nobody would lose because the scheme would just keep going and going and going.

“They gave the impression there was nothing illegal about it. There was no con, nobody could lose.

“Initially, like anyone else I thought this sort of scheme was too good to be true, but when someone keeps going on and on and you hear from other people who have had payouts from it, then you do reach a point when you think, hold on, this is a good scheme.”

Mr Gough said he began to make plans with his family for the £23,000 they expected to receive once he reached the top of his chart.

“We thought were were going to get this money, definitely,” he said.

“We had a little dream that we could sort out our debts, because everyone has debts, loans and so forth, and perhaps have a clean slate to start again.”

Mr Gough issued a stark warning to others considering joining a pyramid scheme.

“Four years on I’m still living with the consequences. There’s still an amount of that money that I’m still paying back now,” he said.

“Obviously it affected my other finances, so for the last four years we’ve struggled and we’re still struggling now – all because of being conned out of £3,000.

“Don’t do it. If it’s too good to be true, it is too good to be true. It’s a big con. It doesn’t matter if it’s your friends or relative, you stand to lose your money.

“Some people will make some money from it but the majority will lose all their money.

“It makes you really angry that there are people out there who are prepared to do this to ordinary people who work hard and haven’t got a lot of money.”

Another victim, Shirley – not her real name – was invited to a meeting at Laura Fox’s home through a neighbour who had won £23,000.

At the meeting, Shirley watched as £69,000 in cash was paid out to three winners and heard a talk about how the scheme worked.

She was told the scheme was legal and a barrister had drawn up a statement confirming this, as it was classed as in-house gambling.

“I wasn’t sure about joining so I went to other meetings, where I heard the same explanation,” she said.

“I spoke to a number of people about how the scheme worked and how long it had taken them to get their payouts.

“Together with seeing the payouts, this is what convinced me to join the scheme.”

Shirley joined a chart in around June 2008 and paid £3,000 the following month, as well as £3,000 for two friends.

Shirley never received a payout, meaning she lost £12,000, her partner £3,000, while a friend who also paid onto the scheme lost £3,000.

Another victim, known as Liz, was introduced to the scheme by a work colleague, who sent a picture of herself receiving a payout of £23,000.

“I was told to come to a meeting and see how it worked for myself,” Liz said.

“At the meeting there was a presentation about the scheme and photographs of winners with their money.

“I was assured my investment would be bought out if the chart I was on was struggling and I would get help to keep the charts moving.

“I became convinced that the scheme was safe and legal, so I joined in July 2008 and handed over my £3,000.”

On the evening Liz paid out her first amount of money, she watched £184,000 in cash being paid to eight winners.

Liz was so convinced by the scheme that she joined a second chart, handing over another £3,000.

She then joined three more times, paying £9,000 more.

Liz attended a meeting at Battleborough Hotel, which was so full that potential recruits were split into two groups for presentations about the scheme.

Despite paying out £15,000, Liz never received any winnings.

Western Morning News (copyright 2014)

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Grenade Blast At 'Amway' Head Office, Imphal India.

October 2, 2014, 7:59 am

≫ Next: Fake 'bomb detector' gang jailed in UK, but the essentially-identical 'Scientology' racket sails on regardless.

≪ Previous: Gang of British women face jail for running a pyramid scheme

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Series of mysterious grenade attacks on 'Amway' Head Office, Imphal India.

http://www.business-standard.com/video-gallery/general/grenade-blast-at-amway-head-office-in-imphal-11940.htm

http://www.ibtimes.co.in/tv/grenade-blast-at-amway-head-office-in-imphal-23068

Fake 'bomb detector' gang jailed in UK, but the essentially-identical 'Scientology' racket sails on regardless.

October 3, 2014, 11:26 am

≫ Next: Alan Henning was murdered by a cult.

≪ Previous: Grenade Blast At 'Amway' Head Office, Imphal India.

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Some months ago, I posted an article about the tragicomic'Scientology'racket.

http://mlmtheamericandreammadenightmare.blogspot.fr/2013/10/the-french-republic-successfully.html

At that time, I received various anonymous comments asking me if I'd looked at a UK based global fraud run behind a legally-registered British company called 'Global 'Technical Ltd,'but which had originated as a 'novelty' (i.e. fake) 'golf ball finder'in the USA?

Former penniless UK police officer, Jim McCormick, turned multi-millionaire conman, posing as a historically-important, visionary scientist and philanthropic businessman who had developed a foolproof device for detecting explosives, drugs, etc. For more than ten years, McCormick travelled the world claiming that he wanted to protect civilization from terrorists and racketeers (for a price).
--------------------------------------------------------------------------------------------------------------------------------

My correspondents were convinced that, due to the nature of the effectively-valueless, and useless, comic-book'bomb/substance detecting' device which had been cobbled together, and peddled all over the globe (with the assistance of corrupt, and/or stupid, government officials), by the bosses of 'Global Technical Ltd.' (for several thousands dollars a piece), the company must have been yet another front for'Scientology.'

I have to say that the tragicomic racket that has recently been uncovered in the UK, does look frighteningly familiar.

Former penniless science-fiction author, turned multi-millionaire, cultic racketeer, L. Ron Hubbard, posing as a historically-important,visionary scientist and philanthropist who had discovered the secret of how ordinary humans can become healthy, wealthy happy and free super humans. Hubbard was also prepared to share this secret with anyone (for a price).

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Hubbard Mark Super VII Quantum E-Meter

For decades, the bosses of the 'Scientology' racket have reaped millions of dollars unlawfully all around the globe, by peddling a cheaply-procured, and effectively-valueless and useless, comic-book 'detecting' device known as the'E-meter.'

________________________________________________________________

http://www.luton-dunstable.co.uk/Dunstable-pensioner-Samuel-Tree-jailed-3-half/story-23039882-detail/story.html

A DUNSTABLE pensioner who claimed his 'Alice in Wonderland' bomb detectors could find missing schoolgirl Madeleine McCann was jailed for a total of three-and-a-half years today (October 3).

Samuel Tree, 67, and his wife Joan, 62, of Houghton Road, Dunstable, were part of a gang of five swindlers who made more than £100m selling bogus devices that put the lives of British soldiers at risk.

They both denied making an article for use in fraud.

Among their bizarre claims for the detectors was that the could sniff out hidden ivory at a distance of three miles.

The Trees also insisted they had tracked the missing three-year-old to a site on the M48 motorway.

In reality, the devices were cheap plastic boxes imported from China and assembled in the couple's garden shed in Dunstable at a cost of just £5.10.

Jim McCormick

Gary Bolton

Juries had previously convicted Jim McCormick, Gary Bolton, both 58, Anthony and Anthony Williamson, 59.

With the Trees they duped governments, armies, and even the United Nations into buying their useless devices.

Passing sentence at Kingston Crown Court, Judge Richard Marks QC said: 'You decided to market this device along with the other defendants previously convicted.

'Thereafter you commissioned the device's production in China, where the cost of an individual piece was just over £5.

'You had the device stamped 'Made in Britain,' which in my view is plainly dishonest.

'The device underwent various name changes over the years, but for all practical purposes it was the same thing.

'The modest production cost is a reflection of the fact that this device was effectively a black plastic box, one similar to what might look like a small radio.

'But this proceeded to be sold for as much as £2,000 per item.

'The way in which it worked was that a piece of card or paper would be attached to it, an image reflecting what it was proposed to be looking for.

'The ariel would then point to the vicinity or direction of the person or object being searched for.

'One only has to look at the bare facts to see this as a bizarre and fantastic proposition akin to something out of Alice in Wonderland.

'This device was completely ineffectual. The basis on which it worked was a complete fantasy.

'Even if you had not written line by line your own sales literature, the most customary glance at it would had put you on notice that all manner of scientific claims were mad.

'That you decided not to sell the products in this country and not expose it to closer scrutiny, suggests a great deal about your motives.'

The judge took pity on Joan Tree, who received a two-year suspended sentence.

Over the years the Trees made hundreds of thousands of pounds from the devices.

McCormick, who was jailed for ten years, raked in £60m selling his devices around the world, including 6,000 for use in the perilous Green Zone in war-torn Iraq.

He sold his machines to the UN in Lebanon, the military in Iraq and Belgium, and the Hong Kong prison service.

He paid £13 for the machines before modifying them and selling them for up to £27,000 a time.

Bolton, who was jailed for seven years, made £45m from the scam, duping British diplomats and Army officials with wild claims the devices could detect explosives, drugs, cash, tobacco and even humans at distances of up to three miles.

He used crackpot scientific theories to hoodwink Giles Paxman, the diplomat brother of celebrity journalist Jeremy Paxman, into supporting him while he was serving as the UK's ambassador to Mexico.

Bolton's devices were flogged to Saudi Arabia, India, Pakistan, Egypt, China, and Thailand, with officials convinced they were 'the best thing since sliced bread'.

The scam sold bogus products XK9, Alpha 6, GT200 and The Mole through the firms Global Technical Ltd, Tactical Electronic Services, CommsTrack, and Keygrove International.

Brendan Kelly QC, defending Samuel Tree, said:'It is agreed that Mr Tree played a significant role in this offending, there can be no doubt argument about that,' Mr Kelly said.

'Mr Tree is content for me to say on his behalf that the role played by Mrs Tree herself is substantially different to his.

'I submit on his behalf that had it not been for him she would not have involved herself in this plot.'

Judge Marks added: 'Financially this case will be disastrous for you because it will inevitably mean that you will lost all of your assets.'

The court heard that the Trees will likely lose their £180,000 house and £10,000 at a confiscation hearing set for 27 February 2015.

Joan Tree was also ordered to carry out 300 hours of unpaid community work.

Judge Marks QC concluded: 'Joan Tree, you are in a significantly different situation to the one of your husband in my view.

'It is undoubtedly the case that you played a significantly lesser role.

'You were concerned with assisting your husband, not marketing or selling like him or in training.

'You were, I am satisfied, acting under direction from your husband and would not have become involved in this situation had it not been for him.

'I have given anxious consideration as to whether there is scope for suspending your sentence, and I have by the narrowest of margins decided that by this lesser role this is just possible.

'You should consider yourself extremely fortunate as you have come as close to anyone to receiving a custodial sentence.'

She hugged her husband before he was led to the cells.

Detective Constable Joanne Law, who led the investigation for the City of London Police's Overseas Ant-Corruption Unit, said: 'Sam and Joan Tree were a couple driven by personal greed, manufacturing useless detectors which they knew were being marketed to police and security services around the world as being able to locate anything from hidden explosives to missing persons.

'The devices cost the couple only a few quid to make but were being sold on by agents for prices ranging from several thousand to half a million pounds, despite the fact they were nothing more than plastic boxes with a handle and antennae.

'The sentencing of the Trees is the concluding act in a highly complex investigation into a global criminal network, which over a ten-year period turned-over up to £80 million.

'Thousands of false substance detectors were produced and sold putting both the users and the people they were bought to protect in grave danger.

'The demise of these individuals sends a strong warning to anyone else who believes they can make criminal capital abroad while trading off the good name of British business.'

Luton on Sunday (copyright 2014)

________________________________________________________________________

http://www.bbc.com/news/uk-29477894

From their suburban home, "Treetops", Samuel and Joan Tree were involved in an extraordinary international scam that reached several continents and, according to the police, put lives in danger.

The couple appeared relieved at the leniency of their sentences, with Mrs Tree seen mouthing "thank you" to the judge.

They embraced and broke down in tears following the hearing, which marks the end of a series of trials of several British fraudsters who made and marketed bogus detectors to trouble spots around the world.

The profits were huge. The police say they will now attempt to recover their ill-gotten gains.

Police believe the scam began in 1999 and made the couple around £2m.

The investigation found the Egyptian government had ordered one million of the gadgets, while the Thai authorities are believed to have paid £25,000 for a single handle.

Officers said one Alpha 6, assembled out of plastic imported from China, was bought for £500,000.

The bogus contraptions were based on a novelty "golf ball detector" called the Gopher which sold for around $20 (£12) in the US.

In the US, the FBI declared another substance detector based on the Gopher a "fraud"

The couple's jailing brings to an end a series of trials following a four-year police investigation into what officers described as a "criminal network that turned over more than £80m".

Businessmen James McCormick and Gary Bolton were jailed last year for versions of the scam, which saw the devices used at check points in Iraq.

Bolton claimed his GT200 device could detect anything from cash and land mines to ivory and tobacco.

He worked closely with the Trees after meeting them at an arms fair, police said.

The fraudsters and their devices

The ADE-651 (supposedly shorthand for Advanced Detection Equipment) was sold to Iraq, Niger and other Middle Eastern countries by Somerset-based businessman, James McCormick, who is now serving 10 years in jail. The Iraqis spent £53m ($85m) on the devices at around £5,000 ($8,034) a time. Some sold for as much as £25,000 ($40,178).

The GT200 "remote substance detector", sold by Gary Bolton mainly in Mexico, Thailand, the Middle East and Africa. The device retailed at £5,000 ($8,034) but the highest price it achieved was £500,000 ($803,000). Bolton was sentenced to seven years.

The Alpha 6 manufactured by Samuel and Joan Tree and sold to Egypt, Thailand and Mexico, usually at £2,000 ($3,213) per device. The highest sale price was £15,500 ($24,906) Tree was given three and a half years behind bars while his wife was ordered to do 300 hours unpaid community work.

Det Con Joanne Law, from City of London Police, said the couple were "driven by personal greed".

"It's been a long and complicated enquiry and we've worked with law enforcement officers all over the world to make sure we disrupt this type of crime," she told BBC News.

"It can be incredibly dangerous if you're asking people to use equipment to detect explosives in the belief that that equipment works.

"They're putting their lives at risk and they're also putting members of the public at risk."

DC Law, who led the investigation, said the devices appealed to authorities because it was "an officer's dream" to find such an apparently cost-effective way of detecting a range of substances.

Despite the convictions, versions of the fraudsters' devices are still being used in many countries, including on Iraqi checkpoints and to protect sites in Pakistan, according to the BBC world affairs correspondent Caroline Hawley.

BBC (copyright 2014)

________________________________________________________________________

On September 8^th  2008, a decade after a series of familiar complaints were first filed, Judge Jean-Christophe Hullin (representing the people of the French Republic) finally signed the order for two American-controlled, French-registered corporate structures jointly to face a criminal charge of ‘escroquerie en bande organisée’  (literally, ‘fraud  in an organized gang’). Judge Hullin also ordered that six current, and former, senior corporate officers of these structures should face the same criminal charge and other charges relating to the ‘illegal operation of a pharmacy.'

At the outset of this ongoing affair, at the request of a defence attorney, certain of the plaintiffs were apparently persuaded by an Investigating-Judge, Marie-Paul Moracchini, to withdraw their criminal complaints. This was because of procedural irregularities i.e. the Judge had allowed a large quantity of confidential documentation to vanish from a Paris Court House. Judge Moracchini had apparently made the ‘mistake’ of leaving all the files relating to the case ‘unattended on a table for a clerk to collect,' but without verifying that the clerk, in question, had received the message. Although a criminal inquiry was pursued, and a likely thief identified, no charges were brought. Ironically, this was due to lack of evidence. Subsequently, after a typically-protracted judicial system internal inquiry, Judge Moracchini was officially found to have not behaved improperly and, consequently, she was not sanctioned. However, these farcical proceedings don’t explain why it then took a further decade before (what remained of) the original case was scheduled for trial. By 2009, this accident-prone prosecution - which certain commentators are convinced the French government wanted to disappear for reasons of Franco-American diplomacy - was considered to be so sensitive that the French Foreign Ministry felt it necessary to form a special team to deal with an expected deluge of international criticism.

The initial trial lasted over 3 weeks and 40 witnesses testified. When the verdict was delivered on October 27^th 2009, although an echelon of defence attorneys had steadfastly pretended their clients to be completely innocent of fraud, because they were being judged for their beliefs and not for their actions, whilst they had produced lots of satisfied clients and had voluntarily refunded the few dissatisfied clients, the two corporate structures, and their respective officers, and former officers, were duly found guilty as charged. The structures were ordered to pay fines totalling  600 000 Euros (approximately $1.1 million).

Deeply-deluded cheat, Alain Rosenberg, attempted to obstruct a journalist from lawfully filming his exit from court. Rosenberg has exhibited classic symptoms of totalistic paranoia - genuinely believing that he is an innocent martyr being hounded for his 'religious beliefs.' In reality, core-'Scientologists' are programmed to believe a self-righteous, comic-book narrative which has been used as the false justification for countless crimes since the 1950s. In this unoriginal, pernicious, cultic game of make-believe, high-level 'Scentology' initiates are a new Master-Race of morally, intellectually and physically superior humans who, alone, are engaged in a never-ending Holy-War against an invisible force of evil extra-terrestrials infesting the minds and bodies of inferior humans.

The most-senior officers, Alain Rosenberg and Sabine Jacquart, were each given two year suspended prison sentences and personally fined 30 000 Euros, whilst two others were given suspended prison sentences and (along with the remaining guilty party) personally fined lesser amounts. The trial Judge, Sophie-Helene Chateau, explained that she had decided not to grant the State Prosecutors' original request for custodial prison sentences, because the offenders had given undertakings that they would, henceforth, reform their activities. Despite the remarkably-lenient sentence, the defence attorneys immediately filed an appeal and (completely ignoring the suffering of the plaintiffs) continued to invert established-reality by indignantly portraying their clients as the victims of a witch-hunt. The trial Judge also explained that she was unable to grant the State Prosecutor’s original request for the corporate structures to be closed-down without further delay. This was due to another unbelievable ‘mistake.’ This time, a vital section of computer text had been ‘cut, but not pasted’  by a ham-fisted clerk drafting proposed French legislation (enacted just before the case came to trial) which should have made it a simple matter of procedure to dissolve any French-registered corporate structure(s) proven to have been engaging in a chronic pattern of criminal activity. However, it had been feared that closure of these particular structures might very well have been counterproductive, in that the attempted prohibition of what they were peddling could have driven this criminal activity underground. Consequently, the outcome of the original trial was described by many well-informed commentators as ‘intelligent.'

Mme. Aude Claire Malton

According to the evidence which made it to court, it was in May 1998, that a 33 year old hotel governess, Mme. Aude Claire Malton, was approached on her way home from work (outside the Opera metro station in Paris) by a group of friendly individuals. They had no authorization to be soliciting in the street and did not fully-identify themselves, but they invited her to ‘agree to participate’ in (what they insisted was) a ‘Free Personality/Stress Test.’ Mme. Malton, who had never heard of 'Scientology' and who had been suffering from depression (due to a relationship breakdown the previous year), found herself unable to refuse, and she accompanied the individuals to an address in the rue Legendre. However, Mme. Malton's subsequent ‘failure’ in the ‘Test’  led to her becoming convinced that she had significant  problems which could only be resolved through the purchase of an exclusive, special offer ‘Self-Betterment Course.’ She had, in fact, been deceived into allowing herself to be subjected to coordinated devious techniques of social, psychological and physical persuasion (designed to identify vulnerable individuals, destabilise their self-esteem and provoke an infantile total dependence to the detriment of themselves).

In this way, Mme. Malton was given the illusion that she was making free-choices, but she was effectively-coerced into buying a collection of progressively more-expensive, but ultimately-worthless, publications, recordings, treatments, medicines, esoteric accessories, etc. Fortunately (with the help of her family), Mme. Malton was able to come to come to her senses, but not before she had parted with more than 20 000 Euros (some of which she had been advised to borrow by an individual who was presented as a 'Scientology financial consultant').

One of the most-outrageously over-priced single 'Scientology' items (approximately 4000 Euros) is a handheld gadget, labelled ‘E-meter’ (capable of detecting tiny fluctuations in natural, corporal electrical resistance), which countless victims have been assured is part of a ‘proven technology’ for measuring and improving the clarity and functioning of a person’s mind and body.

The gang of high-pressure charlatans whom this unwary Frenchwoman had met, were from the Paris branch of a legally-registered, privately-controlled corporate structure, known as ‘The Church of Scientology Celebrity Centre,’ ostensibly 'directed' by Alain Rosenberg. 

The pseudo-scientific paraphernalia Mme. Malton bought, was the just the start of a potentially-limitless advance fee fraud to which certain victims have been proven to have lost amounts totalling millions of dollars over periods spanning decades. These fraudulent materials were mostly supplied in France via another legally-registered, privately-controlled corporate structure, known as ‘The Church of Scientology Book Shop.’ 

[Readers should note that, despite their misleading labels, neither of these ostensibly'commercial/cultural' corporate structures has any official 'religious' standing or privileges in France, where they have been required by law to disclose their financial activities and pay taxes on any net-earnings]. 

Sadly, this French prosecution is just one piece of a vast and confusing puzzle, because there are thousands more corporate structures around the globe (some of which have obtained official 'religious/charitable' standing and have been granted a tax-exempt status) engaging in unlawful, and/or lawful enterprises, which comprise the pernicious cultic organization most-commonly referred to as ‘Scientology.’ 

These apparently autonomous 'Scientology' groups have their own paramilitary hierarchy of leaders who, in reality, answer to the organization’s supreme leadership.

When this typically-distracting tangle of Gordian Knots is ignored, and the wider-picture examined with intellectual rigour, ‘Scientology’ sub-groups are revealed as the spokes of a rimless wheel, all obediently feeding cash (and intelligence) back to the central hub. 

This vast corporate labyrinth is neither original nor unique; for the shifty ‘Scientology’ edifice has been maliciously constructed to a well-known esoteric/hermetic pattern in order to prevent, and/or divert, investigation and isolate the organization’s wealthy bosses (in the USA) from liability. By its very nature,‘Scientology’ never presents itself in its true colours. Consequently, no one ever becomes involved with the movement as a result of his/her fully-informed consent. 

http://mlmtheamericandreammadenightmare.blogspot.fr/2012/05/racketeer-influenced-and-corrupt.html

The setting up (and sustaining) of such a criminogenic system is defined as a ‘pattern of ongoing, major racketeering activity’ by the US federal Racketeer Influenced and Corrupt Organizations Act , 1970 (clarified by subsequent US Supreme Court rulings).

Why the French authorities (who have access to a veritable mountain of evidence stretching back decades) did not file suit against the real bosses of ‘Scientology’ in the USA under RICO, is not such a mystery when one realises the unhealthy influence ‘Scientology’ has wielded over certain thoughtless officials at the US State Dept and US Internal Revenue Service.


David Brear (copyright 2014)

Alan Henning was murdered by a cult.

October 4, 2014, 4:33 am

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Alan Henning LONDON (Associated Press) — Alan Henning, a British volunteer aid worker slain by the Islamic State militant group, was described by friends as a hard-working family man who felt compelled to help people suffering from the civil war in Syria. Henning, 47, had joined an aid convoy and was taken captive on Dec. 26, shortly after crossing the border between Turkey and Syria. A cab driver from northwest England, Henning got involved in taking aid to Syria through a colleague. Friends said he had traveled to the Turkey-Syria border several times in the two years before his capture, leaving behind a wife and two teenage children to help people whose lives were shattered by war. "He's just a taxi driver with a heart of gold who basically wanted to help people," said a friend, Martin Shedwick. Henning, nicknamed "Gadget," reportedly joined a convoy organized by an Islamic charity, Al-Fatiha Global, based in Worcester, England. "I asked why he wanted to do it, because it was dangerous and he had family here. And he just said 'it's what I love to do,'" said friend Orlando Napolitano, recalling a conversation in his cafe just before Henning left in December. "It was his passion. He'd been there twice before and would tell me about all the people there who have nothing, about all the difficulties they face. It was his passion to help them, he didn't care if it was dangerous," the Manchester Evening News quoted Napolitano as saying. Henning, his wife Barbara and two teenage children lived in Eccles, near Manchester in northwest England. A neighbor Debbie Ashton, described him as a "lovely guy." "He was always asking us if we knew anyone who was throwing their clothes away," the Daily Telegraph newspaper quoted her as saying. "He told me they would go to the border and they would have to take everything out of the van and go in ambulances, otherwise they wouldn't let him in. "He was really emotional about it all and he used to say those kids need all the help they can get," she said. "He told me 'You wouldn't believe the life they live over there.'" Harald Doombos, a Dutch reporter who interviewed a Syrian activist who had briefly been held in the same place as Henning, said the British man believed he would soon be released. "Don't worry about me, I'll be out in no time because I'm just an aid worker. They will release me," Doombos said his Syrian contact quoted Henning as saying. "He rather naively, maybe, thought it was all going to be OK, that it was some kind of misunderstanding." Doombos said. In April, Britain's Charity Commission announced it had begun an inquiry into Al-Fatiha Global because of "serious concerns about the governance and financial management of the charity." Among other things, the inquiry was examining allegations of "inappropriate links between the charity and individuals purportedly involved in supporting armed or other inappropriate activities in Syria." There was no indication that the investigation was related to Henning's case. Many British Muslim groups had called for Henning to be released. Shuja Shafi, secretary general of the Muslim Council of Britain, said Henning had traveled to Syria to help people, mainly Muslims, whose lives had been ravaged by war. "Such a man should be celebrated, not incarcerated," he said of Henning. Robert Barr (copyright 2014)

http://bigstory.ap.org/article/c5e4b7cd3b6f402fbf0e96afdf54d8a1/british-hostage-alan-henning-aimed-help-syrians

Abu Bakr al-Baghdadi

An organization ostensibly led by Abu Bakr al-Baghdadi, which claims to have volunteer fighters from all over the globe, has arbitrarily declared the establishment of a 'Caliphate' (an 'Islamic State') - comprising parts of Iraq and Syria, forcing many minority communities to flee their homes.

Professor Robert Jay Lifton 

http://en.wikipedia.org/wiki/Robert_Jay_Lifton

In 1961 (after many years of field-research, interviewing US servicemen held prisoner during the Korean War), Robert Jay Lifton (b. 1926) published, ‘Thought Reform and the Psychology of Totalism.’ In this standard, medical text-book, Lifton identified 8 ‘themes’ which, if present in any group, indicate that its members are being subjected to a mixture of social, psychological and physical pressures, designed to produce radical changes in their individual beliefs, attitudes and behaviour.

1). ‘Milieu control’ — the attempted control of everything an individual experiences (i.e. sees, hears, reads, writes and expresses). This includes discouraging subjects from contacting friends and relatives outside the group and undermining trust in exterior sources of information; particularly, the independent media.

2). ‘Personal or mystical manipulation’ — charismatic (psychologically dominant) leaders create a separate environment where specific behaviour is required; leading to group members believing that they have been chosen and that they have a special purpose. Normally group members will insist that they have not been coerced into group membership, and that their new way of life and beliefs are the result of a completely free-choice.

3). ‘Demand for purity’ — everything in life becomes either pure or impure, negative or positive, etc. This builds up a sense of shame and guilt. The idea is promoted that there is no alternative method of thinking or middle way, to that promoted by the group or by those outside it. Everything in life is either good or bad and anything is justified provided the group sanctions it as good.

4). ‘Confession’ — personal weaknesses are admitted to, to demonstrate how group membership can transform an individual. Group members often have to rewrite their personal histories and those of their friends and relatives, denigrating their previous lives and relationships. Other techniques include group members writing personal reports on themselves and others. Outsiders are presented as a threat who will only try to return group members to their former incorrect thinking.

5). ‘Sacred science’ — the belief in an inexplicable power system or secret knowledge, derived from a hierarchy who must be copied and who cannot be challenged. Often the group’s leaders claim to be followers of traditional historical figures (particularly, established political, scientific and religious thinkers). Leaders promote the idea that their own teaching will also benefit the entire world, and it should be spread.

6). ‘Loading the language’ — a separate vocabulary used to bond the group together and short-circuit critical thought processes. This can become second nature within the group, and talking to outsiders can become difficult and embarrassing. Derogatory names, or directly racist terms, are often given to outsiders.

7). ‘Doctrine over persons’ — individual members are taught to alter their own view of themselves before they entered the group. Former attitudes and behaviour must then be re-interpreted as worthless, and/or dangerous, using the new values of the group.

8). ‘Dispensing of existence’ — promotion of the belief that outsiders — particularly, those who disagree with the teaching of the group — are inferior and are doomed. Therefore, they can be manipulated, and/or cheated, and/or dispossessed, and/or destroyed. This is justifiable, because outsiders only represent a danger to salvation.

Prof. Margaret Singer http://en.wikipedia.org/wiki/Margaret_Singer

Another giant in the field of academic research into the cult phenomenon, is Prof. Margaret Singer (1921-2003).  Her major work which was published in 1996, is 'Cults in Our Midst.' (http://en.wikipedia.org/wiki/Cults_in_Our_Midst). In this, Prof. Singer set out 'six conditions' in which totalistic thought-reform can be achieved:

• 1). Keep the person unaware of what is going on and how attempts to psychologically condition him or her are directed in a step-by-step manner.

Potential new members are led, step by step, through a behavioural-change program without being aware of the final agenda or full content of the group. The goal may be to make them deployable agents for the leadership, to get them to buy more courses, or get them to make a deeper commitment, depending on the leader's aim and desires.

• 2). Control the person's social and/or physical environment; especially control the person's time.

Through various methods, newer members are kept busy and led to think about the group and its content during as much of their waking time as possible.

• 3). Systematically create a sense of powerlessness in the person.

This is accomplished by getting members away from their normal social support group for a period of time and into an environment where the majority of people are already group members.

The members serve as models of the attitudes and behaviours of the group and speak an in-group language.

Strip members of their main occupation (quit jobs, drop out of school) or source of income or have them turn over their income (or the majority of) to the group.

Once the target is stripped of their usual support network, their confidence in their own perception erodes.

As the target's sense of powerlessness increases, their good judgement and understanding of the world are diminished (ordinary view of reality is destabilized).

As the group attacks the target's previous worldview, it causes the target distress and inner confusion; yet they are not allowed to speak about this confusion or object to it - leadership suppresses questions and counters resistance.

This process is sped up if the targeted individual or individuals are kept tired - the cult will take deliberate actions to keep the target constantly busy.

• 4). Manipulate a system of rewards, punishments and experiences in such a way as to inhibit behaviour that reflects the person's former social identity.

Manipulation of experiences can be accomplished through various methods of trance induction, including leaders using such techniques as paced speaking patterns, guided imagery, chanting, long prayer sessions or lectures, and lengthy meditation sessions.

The target's old beliefs and patterns of behaviour are defined as irrelevant or evil. Leadership wants these old patterns eliminated, so the member must suppress them.

Members get positive feedback for conforming to the group's beliefs and behaviours and negative feedback for old beliefs and behaviour.

• 5). The group manipulates a system of rewards, punishments, and experiences in order to promote learning the group's ideology or belief system and group-approved behaviours.

Good behaviour, demonstrating an understanding and acceptance of the group's beliefs, and compliance are rewarded while questioning, expressing doubts or criticizing are met with disapproval, redress and possible rejection. Anyone who asks a question is made to feel there is something inherently disordered about them to be questioning.

The only feedback members get is from the group; they become totally dependent upon the rewards given by those who control the environment.

Members must learn varying amounts of new information about the beliefs of the group and the behaviours expected by the group.

The more complicated and filled with contradictions the new system is and the more difficult it is to learn, the more effective the conversion process will be.

Esteem and affection from peers is very important to new recruits. Approval comes from having the new member's behaviours and thought patterns conform to the models (members). Members' relationship with peers is threatened whenever they fail to learn or display new behaviours. Over time, the easy solution to the insecurity generated by the difficulties of learning the new system is to inhibit any display of doubts—new recruits simply acquiesce, affirm and act as if they do understand and accept the new ideology.

• 6). Put forth a closed system of logic and an authoritarian structure that permits no feedback and refuses to be modified except by leadership approval or executive order.

The group has a top-down, pyramid structure. The leaders must have verbal ways of never losing.

Members are not allowed to question, criticize or complain. If they do, the leaders allege the member is defective, not the organization or the beliefs.

The targeted individual is treated as always intellectually incorrect or unjust, while conversely the system, its leaders and its beliefs are always automatically, and by default, considered as absolutely just.

Conversion or remolding of the individual member happens in a closed system. As members learn to modify their behaviour in order to be accepted in this closed system, they change—begin to speak the language—which serves to further isolate them from their prior beliefs and behaviours.

_______________________________________________________________________

Building on Lifton's and Singer's solid foundation (and after much research) I concluded that pernicious cultism is an evolving criminogenic phenomenon which can be briefly defined as:

'any self-perpetuating, non-rational/esoteric, ritual belief system established or perverted for the clandestine purpose of human exploitation.'

However, since phenomena cannot be accurately defined; I set down the following, essential, and universal, identifying characteristics of a pernicious cult and I published these in 2005:
  

1). Deception. Pernicious cults are presented externally as traditional associations. These can be arbitrarily defined by their instigators as almost any banal group (‘religious’, ‘cultural’, ‘political’, ‘commercial’, etc.). However, internally, they are always totalitarian (i.e. they are centrally-controlled and require of their core-adherents an absolute subservience to the group and its patriarchal, and/ or matriarchal, leadership above all other persons). By their very nature, pernicious cults never present themselves in their true colours. Consequently, no one ever becomes involved with one as a result of his/her fully-informed consent.

2). Self-appointed sovereign leadership. Pernicious cults are instigated and ruled by psychologically dominant individuals, and/or bodies of psychologically dominant individuals (often with impressive, made-up names, and/or ranks, and/or titles), who hold themselves accountable to no one. These individuals have severe and inflexible Narcissistic Personalities (i.e. they suffer from a chronic psychological disorder, especially when resulting in a grandiose sense of self-importance/ righteousness and the compulsion to take advantage of others and to control others’ views of, and behaviour towards, them).* They steadfastly pretend moral and intellectual authority whilst pursuing various, hidden, criminal objectives (fraudulent, and/or sexual, and/or violent, etc.). The admiration of their adherents only serves to confirm, and magnify, the leaders’ strong sense of self-entitlement and fantasies of unlimited success, power, brilliance, beauty, ideal love, etc.

________________________________________________________________________

* ‘Narcissistic Personality Disorder,’ is a psychological term first used in 1971 by Dr. Heinz Kohut (1913-1981). It was recognised as the name for a form of pathological narcissism in ‘The Diagnostic and Statistical Manual of Mental Disorders 1980.’ Narcissistic traits (where a person talks highly of himself/herself to eliminate feelings of worthlessness) are common in, and considered ‘normal’ to, human psychological development. When these traits become accentuated by a failure of the social environment and persist into adulthood, they can intensify to the level of a severe mental disorder. Severe and inflexible NPD is thought to effect less than 1% of the general adult population. It occurs more frequently in men than women. In simple terms, NPD is reality-denying, total self-worship born of its sufferers’ unconscious belief that they are flawed in a way that makes them fundamentally unacceptable to others. In order to shield themselves from the intolerable rejection and isolation which they unconsciously believe would follow if others recognised their defective nature, NPD sufferers go to almost any lengths to control others’ view of, and behaviour towards, them. NPD sufferers often choose partners, and raise children, who exhibit ‘co-narcissism’ (a co-dependent personality disorder like co-alcoholism). Co-narcissists organize themselves around the needs of others (to whom they feel responsible), they accept blame easily, are eager to please, defer to others’ opinions and fear being seen as selfish if they act assertively. NPD was observed, and apparently well-understood, in ancient times. Self-evidently, the term, ‘narcissism,’ comes from the allegorical myth of Narcissus, the beautiful Greek youth who falls in love with his own reflection.

Currently, NPD has nine recognised diagnostic criteria (five of which are required for a diagnosis):

•       has a grandiose sense of self-importance.
•       is preoccupied with fantasies of unlimited success, power, brilliance, beauty, ideal love, etc.
•       believes that he/she is special and unique and can only be understood by other special people.
•       requires excessive admiration.
•       strong sense of self-entitlement.
•       takes advantage of others to achieve his/her own ends.
•       lacks empathy.
•       is often envious or believes that others are envious of him/her.
•       arrogant disposition.

____________________________________________________________________

3). Manipulation. Pernicious cults employ co-ordinated, devious techniques of social and psychological persuasion (variously described as: ‘covert hypnosis’, ‘mental manipulation’, ‘coercive behaviour modification’, ‘group pressure’, ‘thought reform’, ‘ego destruction’, ‘mind control’, ‘brainwashing’, ‘neuro-linguistic programming’, ‘love bombing’, etc.). These techniques are designed to fulfil the hidden criminal objectives of the leaders by provoking in the adherents an infantile total dependence on the group to the detriment of themselves and of their existing family, and/or other, relationships. Pernicious cults manipulate their adherents’ existing beliefs and instinctual desires, creating the illusion that they are exercising free will. In this way, adherents can also be surreptitiously coerced into following potentially harmful, physical procedures (sleep deprivation, protein restriction, repetitive chanting/ moving, etc.) which are similarly designed to facilitate the shutting down of an individual’s critical and evaluative faculties without his/ her fully-informed consent.

4). Radical changes of personality and behaviour. Pernicious cults can be of any size, duration and level of criminality. They comprise groups, and/or sub-groups, of previously diverse individuals bonded by their unconscious acceptance of the self-gratifying, but wholly imaginary, scenario that they alone represent a positive or protective force of purity and absolute righteousness derived from their leadership’s exclusive access to a superior or superhuman knowledge, and that they alone oppose a negative or adversarial force of impurity and absolute evil. Whilst this two-dimensional, or dualistic, narrative remains the adherents’ model of reality, they are, in effect, constrained to modify their individual personalities and behaviour accordingly.

5). Pseudo-scientific mystification. The instigators of pernicious cults seek to overwhelm their adherents emotionally and intellectually by pretending that progressive initiation into their own superior or superhuman knowledge (coupled with total belief in its authenticity and unconditional deference to the authority of its higher initiates) will defeat a negative or adversarial force of impurity and absolute evil, and lead to future, exclusive redemption in some form of secure Utopian existence. By making total belief a prerequisite of redemption,adherents are drawn into a closed-logic trap (i.e. failure to achieve redemption is solely the fault of the individual who didn’t believe totally). Cultic pseudo-science is always essentially the same hypnotic hocus-pocus, but it can be peddled in an infinite variety of forms and combinations (‘spiritual’, ‘medical’, ‘philosophical’, ‘cosmological,’‘extraterrestrial’, ‘political’, ‘racial’, ‘mathematical’, ‘economic’, ‘New-Age’, 'magical', etc.), often with impressive, made-up, technical-sounding names. It is tailored to fit the spirit of the times and to attract a broad range of persons, but especially those open to an exclusive offer of salvation (i.e. the: sick, dissatisfied, bereaved, vanquished, disillusioned, oppressed, lonely, insecure, aimless, etc.). However, at a moment of vulnerability, anyone (no matter what their: age, sex, nationality, state of mental/ physical health, level of education, etc.) can need to believe in a non-rational, cultic pseudo-science. Typically, obedient adherents are granted ego-inflating names, and/or ranks, and/or titles, whilst non-initiates are referred to using derogatory, dehumanizing terms. Although initiation can at first appear to be reasonable and benefits achievable, cultic pseudo-science gradually becomes evermore costly and mystifying. Ultimately, it is completely incomprehensible and its claimed benefits are never quantifiable. The self-righteous euphoria and relentless enthusiasm of cult proselytizers can be highly infectious and deeply misleading. They are invariably convinced that their own salvation also depends on saving others.

6). Monopoly of information. The leaders of  pernicious cults seek to control all information entering not only their adherents’ minds, but also that entering the minds of casual observers. This is achieved by constantly denigrating all external sources of information whilst constantly repeating the group’s reality-inverting key words and images, and/or by the physical isolation of adherents. Cults leaders systematically categorize, condemn and exclude as unenlightened, negative, impure, absolutely evil, etc. all free-thinking individuals and any quantifiable evidence challenging the authenticity of their imaginary scenarios of control. In this way, the minds of cult adherents can become converted to accept only what their leadership arbitrarily sanctions as enlightened, positive, pure, absolutely righteous, etc. Consequently, adherents habitually communicate amongst themselves using their group’s thought-stopping ritual jargon, and they find it difficult, if not impossible, to communicate with negative persons outside of their group whom they falsely believe to be not only doomed, but also to be a suppressive threat to redemption.

7). False justification. In pernicious cults, a core-group of adherents can be gradually dissociated from external reality and reformed into deployable agents, and/or de facto slaves, and/or expendable combatants, etc., furthering the hidden criminal objectives of their leaders, completely dependent on a collective paranoid delusion of absolute moral and intellectual supremacy fundamental to the maintenance of their individual self-esteem/identity and related psychological function. It becomes impossible for such fanatics to see humour in their situation or to feel pity for, or to empathise with, non-adherents. Their minds are programmed to interpret the manipulation, and/or cheating, and/or dispossession, and/or destruction, of inferior outsiders (particularly, those who challenge their group’s controlling scenario) as perfectly justifiable.

8). Structural mystification. The instigators of pernicious cults can continue to organize the creation, and/or dissolution, and/or subversion, of further (apparently independent) corporate structures pursuing lawful, and/or unlawful, activities in order to prevent, and/or divert, investigation and isolate themselves from liability. In this way, some cults survive all low-level challenges and spread like cancers enslaving the minds, and destroying the lives, of countless individuals in the process. At the same time, their leaders acquire absolute control over capital sums which place them alongside the most notorious racketeers in history. They operate behind ever-expanding, and changing, fronts of ‘limited-liability, commercial companies,’ and/or ‘non-profit-making associations,’ etc. Other than ‘religious /philosophical’ and ‘political’ movements and ‘secret societies,’  typical reality-inverting disguises for cultic crime are:

‘charity/ philanthropy’; ‘fund-raising’; ‘lobbying’ on topical issues (‘freedom’, ‘ethics’, ‘environment’, ‘human rights’, ‘women’s rights’, ‘child protection’, ‘law enforcement’, ‘social justice’, 'peace,' etc.); ‘publishing and media’; ‘education’; ‘academia’; ‘celebrity’; ‘patriotism’; ‘information technology’; ‘public relations’; ‘advertising’; ‘medicine’; ‘alternative medicine’; ‘nutrition’; ‘rehabilitation’; ‘manufacturing’; ‘retailing’; ‘direct selling/ marketing’; ‘multilevel marketing’; ‘network marketing’; ‘regulation’; ‘personal development’; ‘self-betterment’; ‘positive thinking’; ‘self-motivation’; ‘leadership training’; ‘life coaching’; ‘research and development’; ‘investment’; ‘real estate’; ‘sponsorship’; ‘bereavement/trauma counselling’; ‘addiction counselling’; ‘legal counselling’; ‘cult exit-counselling’; ‘financial consulting’; ‘management consulting’; ‘clubs’; etc. 

9). Chronic psychological deterioration symptoms. The long-term core-adherents of pernicious cults are psychotic (i.e. suffering from psychosis, a severe mental derangement, especially when resulting in delusions and loss of contact with external reality). Core-adherents who manage to break with their group and confront the ego-destroying reality that they’ve been systematically deceived and exploited, are invariably destitute and dissociated from all their previous social contacts. For many years afterwards, recovering former core-adherents can suffer from one, or more, of the following psychological problems (which are also generally indicative of the victims of abuse):

depression; overwhelming feelings (guilt, grief, shame, fear, anger, embarrassment, etc.); dependency/ inability to make decisions; retarded psychological/ intellectual development; suicidal thoughts; panic/ anxiety attacks; extreme identity confusion; Post-Traumatic Stress Disorder; insomnia/ nightmares; eating disorders; psychosomatic illness ( asthma, skin disorders, headaches, fatigue, etc.); sexual problems/ fear of forming intimate relationships; inability to trust; etc.

10). Repression of all dissent. The leaders of the most-destructive cults are megalomaniacal psychopaths (i.e. suffering from a chronic mental disorder, especially when resulting in paranoid delusions of grandeur and self-righteousness, and the compulsion to pursue grandiose objectives). The unconditional deference of their deluded adherents only serves to confirm, and magnify, the leaders’ own paranoid delusions. This type of cult leader maintains an absolute monopoly of information whilst perpetrating, and/or directing, evermore heinous crimes. They sustain their activities by the imposition of arbitrary contracts and codes (secrecy, denunciation, confession,justice, punishment, etc.) within their groups, and by the use of humiliation, and/or intimidation, and/or calumny, and/or malicious prosecution (where they pose as victims), and/or sophism, and/or the infiltration of traditional culture, and/or corruption, and/or intelligence gathering and blackmail, and/or extortion, and/or physical isolation, and/or violence, and/or assassination, etc., to repress any internal or external dissent.

David Brear (copyright 2014)

Indian government helping 'MLM' racketeers to rob Indian citizens.

October 7, 2014, 12:52 am

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Narendra Modi (b. 1950), is the current Prime Minister of India

Indian Journalists ask: 

Is the Modi govt helping Ponzi, MLMs become legal?


Ordinary people are the biggest losers in the Ponzi, MLMs, chit fund and money circulation schemes like Saradha, Speak Asia and QNet. Yet, under 'pressure' from powerful MNCs operating as direct selling companies, the Modi government is reportedly proposing to dilute the PCMCS Act. Will it impose stringent conditions on them or merely help them to escape scrutiny?

It is reliably learnt that Department of Banking and Financial Services under the Ministry of Finance is moving a Cabinet Note on 7 October 2014 to bring exceptions to Prize Chits & Money Circulations Schemes (Banning) (PCMCS) Act, 1978.

By using this amendment, several multi-level marketing (MLM) companies, like Amway, QNet may get a free run in this country and become completely legal, when they were operating in a grey area so far.  The lobbyists of these companies in Delhi have been extremely active in New Delhi to get the Narendra Modi government support by diluting the Act. The irony is that while the Finance Ministry is quietly working at diluting the Prize Chits Act, the very same government and its capital market regulator has been going after the Saradha scamsters with renewed vigour and the chairman of MPS Greenery has been arrested following action by the capital market regulator. Ponzi schemes have been bursting on the national scene with great regularity and in most cases, there is political collusion. A major scam is also being investigated in Orissa after tens of thousands of people were duped of their life savings.  

So why is the dilution of the PCMCS act such a priority for the new government? Why is it being discussed so quietly, without a public engagement and seeking of feedback from stakeholders? Those who have persistently fought to protect people or highlighted activities of these MLM companies are surprised that the government has time to discuss dilution of this act, when at least six nationalised banks are headless for months and many do not even have executive directors. 

EAS Sarma, former secretary to the Government of India (GoI) has written to Cabinet Secretary Ajit Seth and the Banking Secretary Mr Sandhu in response to reports that the Ministry of Finance has circulated a Cabinet note with respect to proposed amendments to the PCMCS Act, 1978.

He says, “There are issues that impinge on several court cases and any dilution of the Act will prejudice the Centre's and States' cases before the Courts. Such a dilution will allow the delinquent MLM companies and their promoters to escape scot-free to the detriment of the public interest”.

The Cabinet note cited by Mr Sarma comes in the wake of regular chit fund scams, like Saradha, breaking all over the country and the government's as yet ineffective efforts to bring these chit funds under control.

By aping the model of MNCs, many indigenous companies are promoting illegal money circulation schemes in every nook and corner, thus ruining the fiscal system of this country. Rough estimates till now has revealed that financial consumers have lost a whopping Rs3 lakh crore by ‘investing’ or ‘buying products’ from these MNCs and local indigenous companies.

Even, the Intelligence Bureau (IB) in October 2012, written to the government about the illegal financial activities of chit fund companies. The IB reported "fresh" illegal financial activities of chit fund companies and multi-level marketing schemes that were cheating lower middle class and poor people, especially from rural and semi urban areas. Of the four firms named, two companies - Rose Valley Estate Construction Ltd, Kolkata and MPS Greenery Developers Ltd, Jhargram are in West Bengal, says a report from Hindustan Times.

The provisions of the PCMCS (Banning) Act, 1978 deals with such activities.  Section 2(c) of the Act defines ‘Money Circulation Scheme’ as a scheme by whatever name called for making of quick or easy money on any event or contingency relative or applicable to enrolment of new members into the scheme; for receipt of any money or valuable thing as consideration for a promise to pay money on any event or contingency relative or applicable to enrolment of new members into the scheme. This section further clarifies that it is immaterial whether the commission derived from entrance fee of new members, renewal of periodical subscriptions, conducting of seminars and sale of products or not.

Section 3 of the Act bans (i) Promotion or conduct of these schemes, (ii) enrol of members into such scheme, (iii) Participate or otherwise involvement in these schemes and (iv) remit or receive of the money relating to these schemes.

Mr Sarma, says, “I wish to underline the fact that ‘economic liberalisation’ should not mean welcoming firms that add no value to the economy. Most MLMs, the world over, belong to that category. Many of them are high and mighty, as they are MNCs supported by their parent countries. Their parent governments lobby on their behalf as they profiteer at the cost of the public in the developing world. These companies have, time and again, tried to sneak into the country, through the questionable FIPB route. The smaller MLMs and Chit Funds, hand-in-glove with the regulatory authorities, function merrily without registering under the Companies Act and swindle people. Several of these companies have financial links with terrorist groups, drug traffickers and so on. There is no place in India today where some family or the other is not shedding tears for having got robbed by one of these Ponzi companies! Do you want this unfortunate situation to continue and become worse?”

“If this report is true and if the Act is diluted in anyway, it will not only prejudice the ongoing court cases against MLM companies like Amway but also help more and more unethical Ponzi companies to derive strength and rob millions of unwary households of their meagre savings. There will be a mushrooming of Saradha-like companies having their sway over unsuspecting public and destroying their lives. Instead of curbing the MLMs, then the Central Government will have the unenviable distinction of being an abettor of the MLMs' anti-social activity,” the former Secretary said in his letter.

What is urgently needed today is not any dilution of the PCMCS Act but making it more stringent so that any company that tries to carry on activities that add no value to the economy but syphon off the savings of the small households are brought under rigorous regulatory oversight. The need of the hour is to secure coordination among regulators like SEBI, Registrar of Companies, Enforcement Directorate, Serious Fraud Investigation Office (SFIO), the State police and so on. Similarly, there is need for coordination among Central Ministries such as Finance, Corporate Affairs, Consumer Affairs and the State governments.

Moneylife has been writing and exposing thousands of MLMs, including Speak Asia, QNet(earlier version Gold Quest and Quest Net), StockGuru India, NMart, Minerals for All, and so on. Even Moneylife Foundation, the voice of over 31,000 financial consumers across the country, sent a Memorandum to the then Prime Minister Manmohan Singh urging him to either to ban out rightly or put in place a regulator in-charge to monitor such MLM companies and their schemes.

Moneylife (copyright 2014)

http://www.moneylife.in/article/is-the-modi-govt-helping-ponzi-mlms-become-legal/39016.html


p://www.moneylife.in/article/is-the-modi-govt-helping-ponzi-mlms-become-legal/39016.html

The tobacco industry uses the same tactics as 'MLM' bosses

October 9, 2014, 3:01 am

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For Decades, right under the noses of independent law enforcement agents, prosecutors, journalists, etc., a syndicate of US-based'Multi-Level Marketing income opportunity'racketeers has been using a significant proportion of its members' ill-gotten gains to pay an army of 'lobbyists'as well as to co-opt academics, politicians and former senior law enforcement agents. These naive, and/or corrupt, intellectual prostitutes have then infiltrated, and subverted, the democratic process in various countries around the world in order that their paymasters can continue to commit fraud (on a scale which beggars belief). If the mainstream media was ever to launch a rigorous enquiry into'MLM income opportunity'racketeering, then it would discover that the tactics which its billionaire bosses have been employing, are neither original nor unique. 

The current President of the European Commission, José Manuel Barroso, has arrogantly refused to answer simple questions concerning his key-role in forcing Health and Consumer Policy Commissioner, John Dalli, to resign over unproven allegations that he (John Dalli) was under the influence of the tobacco industry.

John Dalli (an opponent of the tobacco industry) is convinced that he was set up by agents of the tobacco industry to make it appear that he was under the influence of the tobacco industry so that José Manuel Barrosa could effectively expel him from the European Commission without trial. The Internet has also been used to broadcast black propaganda about John Dalli: repeating as fact the unproven accusation that he was under the influence of the tobacco Industry and ridiculing as fiction the far-more-plausible accusation that the current President of the European Commission might himself be under the influence of the tobacco industry.

This week, in its award winning series, 'Cash Investigation,' French network television channel 2 broadcast a chilling documentary, Industrie du tobac: le grande manipulation (Tobacco Industry: the great manipulation')' which revealed the extraordinary (some would say criminal) lengths, the bosses of world's major cigarette companies have gone to, to infiltrate, and subvert, the democratic process in Europe.

http://pluzz.francetv.fr/videos/cash_investigation.html




Each Year, at least 7 millions people are dying around the world as a direct result of smoking cigarettes (including approximately 700 000 citizens of the European Union). The exact financial cost of treating tobacco-related illness remains almost impossible to calculate. However, the world's major tobacco companies have been declaring approximately $50 billions profits annually out of their deadly industry. 

Acting on a 600 page dossier produced by 'Phillip Morris International' and supplied  via whistle blowers, 'Cash Investigation' revealed that the tobacco Industry has been employing an army of more than 100 agents to gather intelligence about, and groom, a significant minority of members of the European Parliament in order to introduce its own favourable amendments to European Directives ostensibly designed to control its own deadly activities and protect the citizens of Europe. The programme also revealed that, apart from being a major source of tax revenue, the tobacco industry has been directly financing the European Commission, and individual European governments, to the tune of billions of dollars annually on the pretext that tobacco companies want to help to protect the citizens of Europe by controlling the rise of counterfeit cigarette smuggling. 




David Brear (copyright 2014)

'Al Jazeera' begins to investigate 'MLM' racketeering.

October 16, 2014, 3:16 am

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http://projects.aljazeera.com/2014/multilevel-marketing/index.html 

http://projects.aljazeera.com/2014/multilevel-marketing/herbalife.html

http://projects.aljazeera.com/2014/multilevel-marketing/explainer.html

http://projects.aljazeera.com/2014/multilevel-marketing/mlm.html

How did 'MLM' start?

October 17, 2014, 2:57 am

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This week, a young journalist asked me the following question:

'How did MLM start?'

To which I replied:

'In the same way as any other fairy story.'

For the benefit of my enquirer, here (yet again) is a more detailed account of the absurd origins of blame the victim  'MLM Income Opportunity'racketeering.

The original 'MLM income opportunity'racketeer, Carl F. Rehnborg (1887-1973), posing as a historically-important, visionary-scientist, autodidactic scholar and multi-millionaire, philanthropic businessman who helped thousands of people to start their own business.

The parallels between the 'Nutrilite' fairy story, originally peddled as reality by Carl F. Rehnborg, and those fairy stories peddled by the instigators of countless other so-called'MLM direct selling'companies, are quite remarkable. In brief, all 'MLM' racketeers have played the unoriginal role of ordinary men, turned super men - prepared to share their secret of unlimited health, wealth, happiness, freedom etc., with anyone (for a price). However, this is hardly surprising, because ‘Nutrilite Products Company Inc.’ was, after all, the prototype corporate-front for all subsequent 'Multi-Level Marketing Income Opportunity' rackets.

In the 1950s, 'Nutrilite' was a highly-controversial trademark owned by Carl F. Rehnborg a.k.a. 'Dr.' Rehnborg, a previously-penniless, American toothpaste-salesman (of German origin) who'd acquired a considerable fortune by reinventing himself as a historically-important, visionary-scientist, autodidactic scholar and philanthropic businessman. Lawyers from the US Food and Drug Administration Bureau of Enforcement, who successfully-challenged the authenticity of some of Rehnborg's many absurd lies in the federal courts during two decades, privately knew him to be nothing more than one of a trio of sinister quacks protected by an echelon of shyster attorneys, who’d combined, and updated, the medicine show and Ponzi-scheme to reflect the spirit of the age. However, Rehnborg was no ordinary charlatan. He almost certainly suffered from severe and inflexible Narcissistic Personality Disorder. 

Former penniless science-fiction author, turned multi-millionaire, cultic racketeer, L. Ron Hubbard, posing as a historically-important,visionary scientist and philanthropist who had discovered the secret of how ordinary humans can become healthy, wealthy happy and free super humans. Hubbard was also prepared to share this secret with anyone (for a price).

Tellingly, Rehnborg's own comic-book version of his life and achievements (set-down in various published documents, including a book signed by his son and heir, Sam Rehnborg), reads uncannily like the autobiography dreamt-up by 'Scientology' instigator, L. Ron Hubbard - a man who was once famously described as 'a combination of  Baron Münchausen and Adolf Hitler.'

Unfortunately, just as with the followers and casual observers of Hubbard, the only information made available to the followers and casual observers of Rehnborg, has been carefully controlled.

Carl F. Rehnborg circa 1915

Thus, to date, the world has been led to believe that Rehnborg (who was born in 1887 in St. Pitersberge, Florida) :- 

- was a noted-child-prodigy who read voraciously and who amazed his teachers with his detailed knowledge of: philosophy, religion, history, politics, astronomy, mathematics, aerodynamics, chemistry and human rights. 

- was  fluent in many languages, including Chinese. 

- was not a believer, but he studied Christianity, making a boyhood pilgrimage to Palestine and Egypt.

- had a great passion in his teen-age years - the study of planet Earth, its population, its food reserves, and the 'technology of conservation of natural products, but his first love was always the science of nutrition. 

 - was, by the tender age of 27, already a 'doctor of chemistry' who had moved to Tianjin in China to work as an accountant for an American Oil company.

- ran a shipbuilding company, before becoming the representative of the 'American Dairy Company' and, eventually, the representative of 'Colgate Products Company' in Shanghai.

 - witnessed ‘mass-starvation’ in China, before surviving a ‘siege of Shanghai’ by supplementing his diet (and that of his starving friends) with an improvised, vitamin and mineral-enriched broth made from grasses, vegetables, powdered limestone, ground-up bones and rusty nails, etc.

- sailed across the Pacific (studying its many island-cultures on the way) and landed on the West Coast of the USA, where, despite having no money, he managed to establish a 'research laboratory’ in his modest loft-apartment on California’s Balboa Island.

- selflessly dedicated 6 years of his life (1927-1934) to develop a ‘Revolutionary New Food Supplement’ to save mankind from starvation, assisted only by his dutiful young wife, Edith.

- first naively tried to give his wonderful new formula away, but the cynical world wasn’t interested, so, in 1934, he reluctantly decided to create ‘California Vitamins Inc.’ 

- moved his flourishing  ‘Business’ to a ‘Manufacturing and Processing Facility’ in Buena Park, California, and created the ‘Nutrilite Products Company Inc.’ in 1939. 

- acting in association with a ‘Network Sponsoring Company’, ‘Mytinger and Casselberry Inc.’ (to whom he’d sold ‘Exclusive Nutrilite Distribution Rights’) created the ‘World’s First Multi-Level Marketing Scheme’

- had lived the American dream, starting from nothing to become an admired and respected millionaire through ‘Helping 15 thousands fellow Americans to build their own MLM Businesses.’ 

Carl F. Rehnborg  circa 1936

  

Exactly like L.Ron Hubbard, scant quantifiable evidence has been produced to prove that Rehnborg was qualified (let alone expert) in anything, other than lying to people to get their money. There is even reason to doubt that Rehnborg (who apparently did once work for 'Colgate & Co') was in China in the exact period he claimed during, and after, WW I; whilst all the other exciting episodes in his various occidental and oriental odysseys are largely anecdotal. However, the truth about Rehnborg’s convoluted ‘Rags to Riches’ American fairy story is an entirely different matter. In 1934, Rehnborg (aged 48) created ‘California Vitamins Inc.’,allegedly to manufacture and distribute what he arbitrarily defined as 'the World’s First Multi-Mineral/Multivitamin Plant-Based Food Supplement - a Unique Combination of Vitamins and Minerals in a Special Base.’ At first, this so-called ‘Health Tonic’ was brewed up, and peddled as 'Vita-6' a.k.a. 'Vitasol,' in insignificant quantities. Consequently, it was of no particular interest to regulators. However, anyone with an ounce of common sense could immediately tell that Rehnborg’s ‘invention’ was just another essentially-inert potion (in the absurd tradition of the medicine show); a random mixture of cheaply-procured common substances with an expensive price tag. It had probably taken Rehnborg 6 hours to concoct, not 6 years.

By 1939, Rehnborg had spotted the existing term, 'Nutrilites' (probably in an old scientific magazine). So he legally-changed the name of his pay-to-play game of make-believe to the technical-sounding ‘Nutrilite Products Company Inc.’ and moved his quackery onto an almost unprecedented scale. Soon, Rehnborg was legally employing dozens of white-coated workers in purpose-built industrial buildings in Buena Park, California. He also acquired an alfalfa farm near to the city of Hemet in California's San Jacinto valley, but it is unclear exactly where he suddenly found all the necessary capital to pay for these impressive sites and their modern equipment. To his followers and casual observers, Rehnborg’s activity looked like any other lawful enterprise. His staff were ordinary honest folk, to whom the truth was also unthinkable. At this time, Rehnborg rechristened his potion ‘Nutrilite Double X (‘XX’) Supplement.’ He now proposed to offer it as two ‘complimentary products’ in one pack -  comprising little green bottles of bright red ‘Multivitamin Capsules’ and boxes of pale-coloured ‘Multi-Mineral Pills.’ The product was deliberately designed to look modern and scientific (like a proprietary medicine), but, tellingly, the price was fixed at just less than $20 a box (the equivalent of several hundred dollars today). Rehnborg claimed that the ‘XX’ brand-name was derived from the Roman numeral representing twenty. It should have been read as ‘double cross;’ for when the former toothpaste salesman’s pricey wampum was routinely analysed by independent chemists working for the FDA, it was discovered that (although it contained essentially what it said on the labels and was quite harmless) ‘XX Supplement’ really did mostly comprise a random mixture of cheaply-procured, common substances (dried vegetable extracts: alfalfa; parsley; watercress; yeast; etc.). FDA experts later estimated that ‘XX Supplement’  cost no more than a few cents a pack to produce. Thus, FDA lawyers must have known that Rehnborg was, in fact, using authentic pharmaceutical equipment to mass-produce a precisely-measured, harmless placebo, but labelled as a ‘Health Tonic’ (a meaningless term), and peddling it at an exorbitant mark-up (certainly, more than 1000%). This crack-pot pseudo-scientific swindle, which was tantamount to a self-styled 'alchemist' stamping a valueless amalgam of base-metals, 'Pure Gold,' and selling it for the price of pure gold, could have been quickly nipped in the bud, simply by charging Rehnborg with criminal fraud. Apparently, prosecutors never considered the possibility that they might be dealing with someone with severe psychological problems whose own inflexible delusions were contagious. Instead, at first, FDA lawyers felt obliged to take no action; reasoning that, by truthfully listing the banal ingredients, but avoiding making any specific therapeutic claims, on his packaging, Rehnborg had found a loophole in federal laws concerning criminal misbranding of medicines. As result, an up-dated version of an age-old fiction was permitted to be mass-marketed as fact to an unsuspecting public. Unfortunately, the lack of any rigorous, official challenge only brought its author more credibility. Not surprisingly, a host of copy-cat 'Unique Vitamin and Mineral Health-Tonic’ scams quickly sprang up.

As WWII drew to its close, ‘Nutrilite’ had lost its novelty, so Rehnborg (who was approaching 60) had teamed-up with two respectable-looking associates, Lee S. Mytinger and William S. Casselberry (later described by FDA officials as a ‘cemetery-plot salesman’ and a ‘psychologist’). The result was ‘Mytinger and Casselberry Inc.,’ a second corporate structure peddling ‘Exclusive Commission-Agency Rights’ to ‘Distribute XX Supplement’ using (what was first defined by the company’s owners as) a ‘New Business Model.’ In theory… you could try to sell ‘XX  Supplement’ to your social contacts for a small profit, but, if you wanted to make big money, you didn’t need to sell anything… you could buy a monthly quota of ‘XX Supplement’ yourself and sign-up your social contacts to do the same… your ‘Sponsored Recruits’ would then ‘Sponsor’ their own social contacts, etc., ‘compensation’ would automatically multiply in an infinitely-expanding geometric progression. 

‘Mytinger and Casselberry Inc.’ offered a mind-numbing ‘contract’ in which the ‘company’ undertook to pay its ‘Independent Distributors’ an escalating ‘monthly commission’ on the totality of their escalating ‘Business Volume’ [i.e.their own regular monthly purchases (falsely defined as ‘sales’), added to the regular monthly purchases (falsely defined as ‘sales’), of their ‘Sponsored Recruits’, and those of the recruits of their recruits, etc. etc. ad infinitum].

In reality, the new set-up was merely the original lie with a second chapter added, but to casual observers ‘Nutrilite Products Company Inc.’ appeared to be exclusively manufacturing for, and wholesaling ‘XX Supplement’ to, ‘Mytinger and Casselberry Inc.,’ whose commission agents, in turn, appeared to be retailing it to the public for a profit. Although ‘XX Supplement’ was presented as ‘Unique,’ it mostly comprised substances which could easily be bought at a fraction of their exorbitant, assembled fixed-price, in traditional retail outlets. The product was effectively-impossible to sell to the public for a profit on the open market. Therefore, the overwhelming majority of its final customers were merely the non-salaried agents of the second corporate structure, which itself was the sole agent of the first corporate structure. In order for them to maintain the false hope that if they signed-up further contributing participants they would automatically become rich, the participants in this dissimulated money game were obliged by its rules to keep handing-over a monthly payment to Mytinger and Casselberry, to be shared with Rehnborg. From all rational points of view (medical, economic, legal, etc.), ‘XX Supplement’ might have well not existed; for it was just a convenient means of laundering illegal payments in a closed-market swindle based on the crack-pot, non-rational theory that endless-chain recruitment + endless payments by the recruits = endless profits for the recruits. New victims were supplied with a $49.50 ‘Business Kit’ (i.e. a large cardboard box stuffed with a month’s supply of ‘XX Supplement’ and a fat folder containing page after page of mystifying pseudo-economic/medical presentations and diagrams, and instructions in how to go about remembering, contacting and recruiting everyone they’d ever known during their lives). These presentations contained the concrete evidence which FDA lawyers could use to prosecute Rehnborg, Mytinger and Casselberry. Contributing participants were being instructed to smile, project excitement and enthusiasm, and to recite a precisely-worded script which proclaimed ‘Nutrilite XX Supplement’ to be ‘good value,’ because it could ‘cure or prevent,’ virtually any known human illness.

William H. Goodrich

Interview with William W. Goodrich, Office of General Counsel, 1939 - 1971

Even though it wasn’t his area of responsibility, FDA Legal Counsel (1939-1971), William H. Goodrich, was probably the first senior US law enforcement agent to deduce that the innocent baby that Rehnborg, Mytinger and Casselberry had baptised a ‘New Business Model’ (later to become known as: ‘Multi-Level Marketing’) was actually the same old delinquent previously known a 'pyramid scam.’ Again, anyone with an ounce of common sense could work out immediately that, since Rehnborg had been peddling medical alchemy, the strong likelihood was that Mytinger and Casselberry were peddling economic alchemy. The sinister trio of quacks were obviously acting in association, but agents of the Food and Drug Administration and those of the Federal Trade Commission acted independently. At this time, anti-racketeering legislation did not yet exist in the USA. However, in the late 1940s, the rapidly-expanding ‘XX Supplement’ dossier was already in the hands of FTC lawyers. Apparently, prosecutors still never considered the possibility that they might be dealing with persons suffering from severe psychological problems and whose own inflexible delusions were contagious. Instead, they still felt obliged to take no action; this time reasoning that Mytinger and Casselberry appeared to have found a loophole in federal law prohibiting fraud. For even today, the fundamental identifying characteristic of all pyramid scams and Ponzi schemes, has not yet been accurately defined by legislators. As a result, another updated version of an age-old fiction was permitted to be mass-marketed as fact to an unsuspecting public. Yet again, the lack of any rigorous official challenge only brought its authors more credibility. Not surprisingly, a host of copy-cat 'income opportunity' swindles (camouflaged by banal, but pricey, wampum) quickly sprang up.

By 1947, Rehnborg, Mytinger and Casselberry were steadfastly pretending  ‘15 000 Successful Distributorships in the USA,’ with ‘sales’ totalling ‘$500 000 dollars per month.’ They had also organised the production of a ‘Free’ booklet, ‘How to Get Well and Stay Well’, in which they further pretended that ‘Nutrilite Double X Supplement’ had ‘cured or greatly helped such common ailments’ as : ‘Low blood pressure, Ulcers, Mental depression, Pyorrhoea, Muscular twitching, rickets, Worry over small things, Tonsillitis, Hay Fever, Sensitivity to noise, Underweight, Easily tired, Gas in stomach, Cuts heal slowly, Faulty vision, Headache, Constipation, Anaemia Boils, Flabby tissues, Hysterical tendency, Eczema, Overweight, Faulty memory, Lack of ambition, Certain Bone conditions, Nervousness, Nosebleed, Insomnia, Allergies, Asthma, Restlessness, Bad skin colour, Poor appetite, Biliousness, Neuritis, Night blindness, Migraine, High blood pressure, Sinus trouble, Lack of concentration, Dental caries, Irregular heartbeat, Colitis, Craving for sour foods, Arthritis, Rheumatism, Neuralgia, Deafness, Subject to colds.’

Carl.F. Rehnborg circa 1950

Rhenborg now cast himself in the role of ‘Scientific Adviser’ to ‘Mytinger and Casselberry Inc.’ He toured the USA preaching the gospel to wide-eyed ‘Distributors’ - ‘for less than $20 a month’, ‘Nutrilite Double X Supplement’ was the ‘Answer to Man’s Search for Health.’ After both companies’ owners were approached by FDA officials and warned that they could face criminal prosecution for misbranding, the booklet was ‘revised.’ Specific therapeutic claims were supposed to be eliminated. ‘All illnesses’ suddenly became a ‘state of nonhealth’ produced by ‘chemical imbalance’.… ‘Nutrilite XX Supplement’ cured nothing, it merely ‘enabled people to Get Well and stay Well’ by themselves. However, pages 41-52 of the booklet still recounted alleged case-histories explaining that ‘Nutrilite brought relief from such ailments as diabetes, feeble mindedness, stomach pains, sneezing and weeping.’ Not surprisingly, the FDA officials were not impressed, so they finally launched a number of raids, and seizures of ‘Nutrilite XX Supplement’ and associated publications.

In 1951, after a series of lawsuits, appeals and counter suits (in which Mytinger and Casselberry hired top lawyers who portrayed their clients as American capitalist heroes being crushed by Soviet-style bureaucracy), the FDA obtained (on behalf of the people) a permanent Supreme Court injunction against ‘Mytinger and Casselberry Inc.’ preventing ‘Distributors’ from referring to 50 publications making false claims about ‘Health Tonics and Food Supplements’ (including various ‘Revised Editions’ of ‘How to Get Well and Stay Well’). FDA agents soon found that the injunction was being flouted. As a result of mounting complaints, they infiltrated the organization (as potential recruits) and recorded deluded proselytisers chanting the same cure-all mantra about ‘XX Supplement.’ Faced with more litigation and fearing that their monopoly of information might be lost, in 1954, Rehnborg, Mytinger and Casselberry hired a leading advertising agency which handled the clean-cut Hollywood star, Alan Ladd. Along with his wife and children, Alan Ladd then briefly-featured in a kitsch 'Nutrilite' advertising campaign - published in various mainstream magazines right up until 1959.  

 

The charlatan-trio, 'Mytinger, Casselberry and Rhenborg,' also paid a team of Hollywood professionals to produce a 20 minute colour propaganda film, ‘From the Ground up’ (featuring themselves as three nice ordinary American guys turned philanthropic scientists and industrialists), and they began to publish their own propaganda magazine, ‘Nutrilite News'’ (stuffed with colour photos of happy, healthy and wealthy ‘Distributors'’). Soon, they were organizing ‘Rallies and Seminars'’ (addressed by ‘Successful Christian Distributors’ like Rich De Vos and Jay Van Andel). No quantifiable evidence (in the form of audited accounts) was ever produced to prove what percentage of claimed ‘sales'’ were authentic retail transactions to the public for a profit (based on value and demand), or how many people who’d signed a ‘contract'’ with ‘Mytinger and Casselberry Inc.'’ had actually received an overall net-profit from the operation of what its instigators arbitrarily defined as an ‘MLM income opportunity’. Excluding the tiny percentage of grinning schills at the top of the pyramid, the hidden, rolling insolvency/churn-rate was 100%. Since there was no significant or sustainable external revenue, participants were actually buying infinite shares in their own finite money. 

Richard DeVos                                                    Jay Van Andel Circa 1950

circa 1965

In 1959, when it seemed that ‘Mytinger and Casselberry/Nutrilite Products Inc.’ might finally be shut down (under the ‘Federal Food, Drug and Cosmetic Act 3381-3383’, rather than anti-fraud legislation) De Vos and Van Andel hid behind familiar, patriotic words and images stolen from contemporary popular culture. They created the ‘American Way Association’ - the first of what was to become a shoal of red, white and blue herrings.

The classic movie, 'Elmer Gantry' (released in 1960), was written and directed by Richard Brooks and is loosely-based on a novel of 1927 by the Nobel prize-winning author, Sinclair Lewis. In the Movie, 'Gantry' (played by Burt Lancaster) is a grinning charlatan in a loud suit - a hard-drinking whore-chasing travelling-salesman, who, for sexual and financial motives, attaches himself to the beautiful 'Sister Sharon' (played by Jean Simmons), the focus of a profitable 'Tent Revivalist' group working the Bible-Belt during Prohibition (1920-1933). 'Elmer Gantry' keeps his grin, but he dons a sombre suit and black hat, and is reborn as 'Brother Gantry' 'Charismatic Preacher' and 'Moral Crusader'. He soon discovers that he has the power to create mass-hysteria, and reap tens of thousands of dollars, by manipulating individuals' existing beliefs and instinctual desires. At a key-moment in the movie, a Protestant Minister (bedazzled by 'Brother Gantry's' offer to fill his church coffers) abandons the traditional Christian message and proclaims: 'Business is business, that's the American Way'.

Perhaps it's just a coincidence, but at almost exactly the time that the ‘

American Way Association' 

’first appeared, ‘Elmer Gantry' was playing to packed movie-theatres all over America.

Initially (and with an irony that is close to exquisite), in order to dodge being drawn into the ongoing FDA investigation of 'Nutrilite,' De Vos and Van Andel now laundered all the unlawful investment payments into their copy-cat, dissimulated, closed-market swindle, behind the claim that they were selling detergents  (i.e. banal, but effectively-unsaleable, non-'medicinal' pseudo-scientific wampum of their own fabrication) and not pills and potions. Again, the updated snake oil stain remover was deliberately designed to look modern and scientific, whilst De Vos and Van Andel grinned from ear as they too steadfastly pretended that these strangely-familiar, cheaply-procured mixtures of common substances, were all-American, exclusive, good-value and unique.

The original 'Nutrilite' lie was progressively-absorbed back into the spin-off 'Amway' lie, 1972-1994, where it still is peddled as the truth.

Only after the'MLM'virus had spread to almost every State of the Union, did the US Federal Trade Commission finally make a half-hearted attempt to close-down 'Amway.' After receiving a significant number of complaints,  FTC prosecutors, advised by specialist economists, recognised that what they were faced with, was not a direct selling scheme, but as a classic pyramid scam, without a significant or sustainable source of revenue other than its own victims, but hidden behind a smokescreen of effectively-unsaleable products. However, after years of investigations and hearings, in 1979, a naive, and/or corrupt, federal judge ruled that although 'Amway' had previously been massively in breach of the law and would have to pay fines, the company would be allowed to continue to trade. This was because the judge accepted the latest unbelievable chapter of the 'MLM' fairy story. i.e. That 'Amway' s owners were respectable Christian businessmen who were vehemently opposed to  pyramid schemes and that, consequently, they had stopped fixing prices and introduced their own rule which would, henceforth, oblige the members of 'Amway's' sales force to sell at least 70% of the products which they had bought wholesale from the company, to at least 10 customers, before they could receive commission payments. Amazingly, no independent, common-sense mechanism was created to ensure that this latest twist in the fairy story was true, and that 'Amway' would now be in compliance with the law.

Not surprisingly, this tragicomic judgement was seen as an open-invitation to thieve, and, consequently, a whole host of 'Amway' copy-cat 'MLM' rackets soon began to appear.   

More than 30 years later, the so-called 'Direct Selling Association,' is a demonstrable lie financed and controlled by the bosses of a classic, organized crime syndicate.

David Brear (copyright 2014)

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Warning: 'Herbalife (HLF)' Kills!

October 30, 2014, 1:48 am

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Readers should note that even when a'Herbalife'adherent drops dead, the mainstream media still doesn't have the beginnings of clue that 'Herbalife' has been the corporate front for a blame-the-victim cultic racket, or that this racket continues to poison the lives of millions of vulnerable persons around the globe.

David Brear (copyright 2014)

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http://1clicknews.com/young-woman-died-after-becoming-addicted-to-weight-loss-shake-diet/

Lorena Peralta Baltazar, 28, was rushed to hospital complaining of kidney pains but she died later that day

A young woman who lived off a diet of miracle weight loss shakes for six months died after being taken to hospital complaining of kidney pains.

Lorena Peralta Baltazar, 28, from Mexico, was ‘becoming addicted’ to Herbalife products in a bid to lose weight, her father Luis Peralta told local media.

But after several months she began to feel pain all over her body which became so severe that she was admitted to hospital on Tuesday, October 14, in Chiapas, in the south of the country, he claimed.

She failed to recover from her aches and later died the same day.

Upon examining her body, doctors found she had a large amount of lead in her blood, which caused kidney failure and may have damaged her liver, pancreas and other organs, reports La Policia.

Youtube / AlejandraSOPITAS AsPrensa 

Herbalife are a health company endorsed by Cristiano Ronaldo that offers nutritional programmes for people to lose weight and gain other benefits through a range of methods, including meal replacement shakes.

Back in 2008 Reuters reported Spain issued a warning on the consumption of some of Herbalife products, due to ‘suspicious cases of liver damage’.

But a company spokesperson hit back at the time and said: "For more than 28 years, tens of millions of Herbalife consumers worldwide have been safely using Herbalife products with an extremely low incidence of serious adverse event reports citing liver function abnormalities."

Herbalife chief scientific officer Steve Henig Ph.D added: "It’s a fact that many natural and processed foods including vegetables and dairy products as well as our products, which are made with natural ingredients, contain extremely small amounts of naturally occurring lead that can be detected by today’s highly sensitive analytical methods but are insignificant in posing any risk to consumers.”

In an advertisement posted to Herbalife’s YouTube page in March this year, Cristiano Ronaldo said: "I see part of my work it’s the body. It’s a weapon for me, you can have a fantastic talent but if you don’t do the proper things you’re not going to be the best.

"It was a fantastic honour to be a part of the family of Herbalife, they like to work with me and I like to work with them, they are professional and they are honest."

Weight loss shakes have become increasingly popular over the past few years as people try to regain a healthy figure.

Under a typical programme, users can expect to lose several pounds by substituting meals with nutritious shakes or bars.

There has been no suggestion that products made by companies involved in the weight loss shake industry can be harmful to your health.

Mirror Online has contacted Herbalife for a comment.

'Herbalife (HLF)' Wall Street Bubble finally about to burst.

November 6, 2014, 12:14 am

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More than two years ago, I posted some articles in which I clearly explained why, despite the dense wall of thought- stopping 'American Dream'jargon and imagery, the nightmare-enterprise lurking behind two so-called 'Multi-Level Marketing Direct Selling'companies, 'Herbalife'and 'NuSkin,'has been unlawful, and why, consequently, shares in these corporate-fronts for fraud, are effectively-valueless.

http://www.bloomberg.com/news/2014-11-01/herbalife-to-pay-15-million-to-end-pyramid-scheme-suit.html

http://www.latimes.com/business/hiltzik/la-fi-mh-herbalife-is-tanking-20141104-column.html

Faced with a further significant loss of its monopoly of information, it now seems that the Wall Street 'MLM' bubble is finally about to burst. Yet it would appear that I remain almost alone in publishing a clear explanation of why 'Herbalife,' and various other essentially-identical organizations, should be investigated, and prosecuted, not as wayward multi-national commercial companies in breach of civil legislation, but as subversive fronts for an up-dated form of ongoing, major, racketeering activity (as defined by the US federal Racketeer Influenced and Corrupt Organizations Act, 1970). That said, a significant part of my published analysis of the 'Herbalife MLM income opportunity' racket has been in broad agreement with various other informed observers, notably Robert FitzPatrick of the Pyramid Scheme Alert and, lately, Bill Ackman of Pershing Square Capital.

In December of 2012, Bill Ackman called the outrageous 'Herbalife' bluff, and announced that he had bet $1.2 billion that the company's shares are effectively-worthless, because, although legally-registered in the USA and elsewhere, 'Herbalife' is a fundamentally unlawful enterprise run by manipulative charlatans who, for decades, have been allowed to withhold key-information from the regulators and from the public, and who have never faced an intellectually-rigorous, independent inquiry.

In simple terms, Bill Ackman's central charge against the so-called 'Herbalife MLM Direct Selling Income Opportunity' is that, since common-sense, +  the available independent evidence, indicates that the scheme's revenue can only have largely-derived internally from its own participants (based on their false expectation of future reward) rather than from authentic profitable external retail sales to the general public (based on value and demand), 'Herbalife'has been hiding a giant pyramid scheme in plain sight, in which billions of dollars of unlawful, losing investment payments have been laundered as 'sales,' simply by giving a never-ending chain of ill-informed participants banal, but over-priced products, of a dubious pseudo-medical nature, which virtually no rational customer would choose to buy on the open-market, and which, therefore, might as well not exist.

Like all 'MLM Income Opportunity' racketeers, the 'Herbalife' mob have never said that  their company makes its profits by retailing anything directly to the general public. For decades, if challenged, they have steadfastly pretended that their company makes its money lawfully by selling its exclusive good-value products to its distributors at a discount, who then can sell these highly-desirable materials for a profit themselves, to their own customers and end-users. Amazingly, even though certain key-information would obviously reveal to regulators whether 'Herbalife' is a dissimulated pyramid fraud, the company's bosses initially responded to Bill Ackman's central charge that 'Herbalife's' profits have largely been unlawful, because they have derived from the company's own non-salaried agents, by making the extraordinary claim that they have never tracked and, therefore, do not know for sure, what percentage of their company's own products sales have actually been resold by their company's distributors, but that they believed that this percentage of outside retail sales (to customers and end users) has always been significant.  

The common-sense key-questions which the 'Herbalife' bosses have always avoided answering, are as follows:

Since the instigation of your company: 

• Exactly how many people overall have signed up to become so-called 'Herbalife Distributors?' 

• What percentage of all these many millions of former so-called 'Herbalife Distibutors' (whom you lately have attempted to re-define as'Herbalife Members/Customers'), have actually got back more money from the so-called 'Herbalife MLM Direct Selling Income Opportunity,' than they invested in it?

• What possible lawful reason can you put forward for withholding full, and truthful, answers to the above questions, from regulators and the public?

David Brear (copyright 2014) 

'Herbalife (HLF)' Shill, Pedro Cardoso, charged with money laundering.

November 14, 2014, 12:52 am

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N.B.   'Shill' or 'Schill' (a.k.a. 'Outside Man'), is American slang for one of a crew of charlatans who is used to lure victims into frauds, particular rigged gambling games, by appearing to be an ordinary everyday guy in the crowd who keeps winning or (sometimes) losing. In the classic sleight-of-hand scam known as, the 'Shell Game', (a.k.a. 'Three Card Monte', 'Three Card Trick', 'Three Card Molly', 'Chase The Lady', 'Chase The Ace', etc.), victims are deceived into believing that the game is genuine and they can win, by the use of innocent-looking shills, often with highly-distracting females on their arms. In the end, no victim can win, because they are up against a team of experienced criminals who all act-out a carefully-scripted, closed-logic scenario which inverts reality. If a losing victim begins to challenge the honesty of the front man 'Handler' (a.k.a. 'Tosser'), other muscle-bound criminals, also pretending to be ordinary members of the crowd, will falsely-accuse the victim of cheating, kick over the table, start a fight or an argument, etc., all these are distractions created just to enable the 'Tosser' to run away with the money. Complaining-victims can also be silenced by telling them that they cannot go to the police, because they were breaking the law by gambling in the street.

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Interestingly, if you disregard what finally happened to 'Enron,' then this multi-billion dollar shell game, and the multi-billion dollar version of the 'MLM Income Opportunity' fairy story entitled, 'Herbalife', are remarkably similar, in that they both survived for many years by hiding in plain sight; for right under the noses of a flock of dunces with diplomas, the market price of shares in both these effectively-valueless corporate structures was maliciously inflated, and maintained, by the constant repetition of mystifying lies, and half-truths, and the withholding of key-information. In both cases, the racketeers behind 'Enron' and 'Herbalife' were assisted by echelons of attorneys (some of whom were former US regulators), accountants, stockbrokers, stock analysts, bankers, economists, academics, financial journalists, politicians, etc., and it became against the interests of almost everyone concerned (particularly, major investors) even to consider the truth in private, let alone face reality and blow the whistle in public. We all now know that, in reality, 'Enron's' massive, and chronic, hidden trading losses were merely being off-loaded onto an expanding labyrinth comprising hundreds of legally-registered corporate structures, which (to casual observers) gave 'Enron' itself the appearance of perpetual expansion and prosperity. Similarly, some of us have long-since worked out that in the 'Herbalife' racket, massive, and chronic, hidden losses have been off-loaded onto an endless-chain comprising millions of ill-informed persons whose unlawful investment payments have been laundered as 'sales,' and who have been (until very recently) arbitrarily defined in their take-it-or-leave-it contracts as 'Independent Distributors.' Yet again (to casual observers), these crimes have given 'Herbalife' itself the appearance of perpetual expansion and prosperity. Just as in the case of 'Enron', there are far too many intellectually-rigorous observers who now know exactly how the 'Herbalife' racket has functioned. Thus, making it an inevitability that it too will eventually collapse. Readers should also be aware that, in the late 1990s, the bosses of the 'Enron' racket hatched a deal with the bosses of the 'Amway MLM income opportunity' racket, and the two gangs then used numerous deluded adherents of the 'MLM Income Opportunity' fairy story, to commit related-frauds in California.  http://bit.ly/1m9y7SX Although briefly-reported by the media, these particular crimes have never been fully-investigated, let alone prosecuted.

'Herbalife MLM Income Opportunity'Tossers (left to right):  Michael O. Johnson Chairman and Chief Executive Officer  Brett R. Chapman General Counsel Des Walsh President Richard P. Goudis Chief Operating Officer Y. Steve Henig Chief Scientific Officer John DeSimone Chief Financial Officer

'Herbalife MLM Income Opportunity' shill, Pedro Cardoso According to the latest version of the'Herbalife' fairy story: 'Mr. Cardoso has been an independent Herbalife Member for 22 years and a member of the Company's Chairman's Club since 2005. Mr. Cardoso has built a successful organization of Herbalife independent Members in several countries. He has been active in training Herbalife Members around the world, and is a member of various strategy and planning groups for Herbalife.' Pedro Cardoso is also a company officer of'Herbalife.' Herbalife Ltd Director Compensation for 2013 Fees earned or paid in cash $87,000 Stock awards $110,000 All other compensation $1,362,340 Total Compensation $1,559,340

Pedro Cardoso + trophy wife, Juliane.

Pedro Cardoso + trophy automobile.

Behind the kitsch 'Herbalife Rags to Riches' fairy story, and all his impressive-sounding (made-up) ranks and titles, Pedro Cardoso is only one of the organization's expendable under-bosses. For years, he has been constantly presented in the reality-inverting 'Herbalife' propaganda as an exemplary role-model of limitless 'MLM' prosperity, happiness and freedom - earning $millions annually from commissions on the sales of products by hundreds of thousands of 'Distributors' automatically-multiplying beneath him in the organization. In the adult world of quantifiable reality, Cardoso is a typically-excited, and avuncular, motor-mouthed shill dressed up as a businessman.

http://www.buscape.com.br/a-viagem-ao-sucesso-licoes-do-vendedor-que-ficou-milionario-pedro-cardoso-8573125551.html#precos

It almost goes without saying that Cardoso is yet another (otherwise-mediocre) little, grinning charlatan play-acting the unoriginal comic-book role of ordinary poor man: turned multi-millionaire 'MLM' superman (admired by men and desired by women) who is prepared to share his miraculous secret knowledge with anyone (for a price). However, due to the fact that they have to keep acquiring, and flaunting, the kitsch trappings of wealth (trophy: cars, helicopters, planes, yachts, houses, wives, etc.), 'MLM' shills like Pedro Cardoso invariably turn out to be living the lie that they are financially free, when they are actually up to their eyeballs in a sea of mounting debts.

David Brear (copyright 2014)

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NEW YORK/SAO PAULO (Reuters - November 13th 2014)) - A director of U.S. nutrition company Herbalife is among 12 people charged in a years-old Brazilian embezzlement case that has never been mentioned in Herbalife public disclosures, according to court documents and company filings.

Herbalife has become one of America's most closely-watched companies after billionaire investors William Ackman and Carl Icahn squared off with enormous bets on its future, with Ackman betting on its demise and Icahn on its success.

Prosecutors in Brazil charged current Herbalife board member Pedro Cardoso with money laundering in 2008 for allegedly participating in an embezzlement scheme a decade earlier that siphoned 26.7 million Brazilian reais ($10.4 million) from the state government in Espirito Santo.

The 8th Criminal Court of Vitoria ordered bailiffs to serve him with a subpoena in 2010, but they did not locate him and the case remains open, according to court filings and a court source.

According to the U.S. Securities and Exchange Commission's rules on disclosure, companies must report legal proceedings that are material to evaluating the integrity of a director. Herbalife has not made the information about Cardoso's case public, according to proxy statements it has filed since 2009 when Cardoso joined the company's board.

Cardoso said in a statement dated this week emailed to Reuters by an Herbalife official that the lawsuit was a private matter dating back to 1998 which had no bearing on his work for the company, and that he was unaware he was being sought in the case.

"I have received no official notification of any kind with regards to this matter," he said.

Herbalife declined requests for additional comment. The SEC declined to comment.

AP Images

The company is under investigation by the SEC, the Federal Trade Commission, and the Federal Bureau of Investigations after billionaire Ackman began publicly accusing it of running a pyramid scheme that targets minorities, a charge Herbalife vehemently denies.

After Ackman announced a $1 billion short bet against the company in December 2012, other prominent Wall Street investors took the opposite side of Ackman's position, including Carl Icahn who has since become Herbalife's biggest shareholder.

Herbalife stock has tumbled 51 percent this year on weaker-than-expected earnings and guidance.

Cardoso is a member of Herbalife's Chairman's Club of top distributors and has been a board member since 2009.

According to the court, Jose Carlos Gratz, who was president of the Assembleia Legislativa do Espírito Santo (ALES) led a criminal operation that stole public funds by pretending to allocate donations to community centers, schools and hospitals. Instead the money was used to pay for private events that had no public interest.

Gratz has been sentenced to prison time but remains free while pursuing an appeal. He said in a statement posted on a personal blog that his signatures on checks issued by the local legislature were forged.   

Prosecutors say Cardoso was part of the embezzlement scheme because a firm in which he was a partner cashed an ALES check for 6,000 Brazilian reais that was signed by Gratz in 1999, according to the court documents.

If found guilty by a judge, he could face anything from a fine to up to 10 years in prison, a court official in Vitoria informed Reuters in a written statement.

The court official said authorities have been unable to find Cardoso because he has moved several times without notifying the court as required by law.

Brazil's judicial system has a reputation for being disorganized and it is common for court cases to languish for years without being resolved.

Read more: http://www.businessinsider.com/r-herbalife-board-member-a-target-in-long-running-brazilian-fraud-case-2014-11#ixzz3J1uC6sTj

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I will confidently predict that Pedro Cardoso will be air-brushed out of the 'Herbalife' fairy story in the very near future.

David Brear (copyright 2014)

BBC reports the Rise of Ponzi schemes in India.

November 25, 2014, 12:27 am

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Readers are reminded that (currently) US based'MLM Income Opportunity'racketeers are attempting to have their own brand of dissimulated Ponzi scheme exempted from India's Prize Chits and Money Circulation Schemes (banning) Act.

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http://www.bbc.com/news/business-29916178

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Unsuspecting Indians lose billions to bogus investments

By Anu AnandWest Bengal, India

"When he realised he'd lost all our money, more than $9,000 [£5,661] in savings, he had a massive heart attack," says Gita Mandal tearfully.

She pauses as grief chokes her throat mid-sentence. Gita, 55, is recounting how her husband Sunil died suddenly last year, leaving her penniless with six mouths to feed.

Gita's family is one of 300 in Daspara village, an hour's drive south from Calcutta, which were swindled in a variety of unregulated "investment" schemes that have swept across India - swallowing up the life savings of some of the country's poorest citizens.

Some estimates suggest that such Ponzi or pyramid schemes have already cost unsuspecting Indian investors $160bn.

West Bengal, where investors like Gita's husband were caught up in the biggest schemes were based, has been dubbed the "Ponzi capital of India".

Gita's husband Sunil was swindled out of all the family's savings

As she sits surrounded by other victims, including farmers, labourers and milkmen, all of whom lost the modest sums they'd scrimped to save, Gita struggles to articulate how angry she feels.

"That money was everything to us. It came from selling our land and it was supposed to be for our granddaughters' future.

Now it's all gone - the land, the money, my husband, everything," she says.

India's new Prime Minister, Narendra Modi, has been on a charm offensive to attract global business to the country.

His government has also launched major legal, social and economic reforms at home.

Complex frauds

But the scale of India's Ponzi schemes reveals the enormity of the task of protecting the country's vast illiterate, financially vulnerable population, as well as the epic loopholes in enforcement of existing law.

Ponzi schemes work by pooling money from new investors to pay off existing investors. The seemingly good returns fuel new business, but eventually most schemes collapse, leaving ruin in their wake.

Continue reading the main story

“Start Quote

We already have a total of about half a million individuals or entities that have either been indicted or been declared non-compliant”

Prithvi Haldea,watchoutinvestors.com

Ultimately there are more existing investors to be paid than there are new investors coming in.

India's biggest Ponzi scheme uncovered so far involved more than $3bn in losses when the Saradha Group, a consortium of about 200 companies including factories, newspapers and television channels, was shut down two years ago.

The name Saradha played on messages of religious good fortune and the company used images of popular politicians and movie stars to build trust.

Its company structure was so complex that regulators took years to untangle it. It offered agents, recruited from local communities, up to 40% commissions - making them crucial evangelists for the company.

So far, according to media reports, at least 80 people linked to the scam have committed suicide. Its chief executive and other officials are in prison.

An investigation is probing the company's links with top officials in West Bengal and other states in eastern India.

Of the 400 families in Gita's village - 300 fell victims to fraudulent investment schemes

Regulatory failures

In neighbouring Bangladesh, ministers have raised questions on whether Saradha money was brought into their country by extremist organizations seeking to destabilise the government.

But while Saradha and other major scams have been shut down, few investors have been refunded, and experts say despite new laws, hundreds of other unregulated schemes - involving ones involving emu farms, mango orchards, fake hospitals and resorts - are still operating across India.

Continue reading the main story

“Start Quote

Hundreds of thousands of people have been cheated”

Sujan ChakrabortyChit-Fund Sufferers Unity Forum

"We already have a total of about half a million individuals or entities that have either been indicted or been declared non-compliant by regulatory bodies," says Prithvi Haldea, who runs watchoutinvestors.com, a website dedicated to naming and shaming fraudsters.

He blames the ignorance and greed of investors seeking unrealistic returns, combined with India's regulatory framework, which is too unwieldy for the current mess.

More than 20 bodies oversee financial transactions in India, including the Securities and Exchange Board of India, or SEBI.

However in August, SEBI was given permanent powers to search companies, seize records and property, freeze assets and fast track investigations and prosecution.

So far, with its new powers, SEBI has issued orders against some 40 companies, compared to only a handful last year.

Although SEBI did not respond to numerous interview requests, they did give the BBC access to recent public awareness TV ads, which warn investors not to trust word of mouth or fanciful claims when scrutinising companies.

But according to Prithvi Haldea, India's regulatory regime is failing.

"There are too many bodies and too many gaps," he says. "They have not been empowered enough, or they're not manned well. Their investigative or surveillance mechanisms are poor, so they are not able to deliver."

Protesters say India's investor protection rules are inadequate

Lack of bank accounts

In central Calcutta, more than 200 people who lost their money in a variety of companies, block traffic as they protest at both the state and central government's response to their plight.

Despite arrests, continuing investigations and a state commission formed to probe the situation, few victims have seen their money returned.

"Hundreds of thousands of people have been cheated. It has totally been endorsed by this state government," says Sujan Chakraborty of the Chit-Fund Sufferers Unity Forum, which represents the victims.

"It's a very precarious situation. There are still lots of scams. How many? Nobody knows. Nothing has changed."

When it comes to the proliferation of scams, there is another elephant in the room.

Currently, more than half of India's population has no access to banks. Prime Minister Modi's Jan Dhan Yojana scheme, or Bank Accounts for All, aims to rectify that, by streamlining procedures and reducing the onerous paperwork needed to access accounts.

According to the government, 64 million people have opened new accounts so far, a tenth of those who lack accounts overall.

All that Sanjib Naskar has left for his $3,000 investment is this certificate

For victims like Sanjib Naskar, 27, who works in a guesthouse in Kolkata, it is too little too late.

He lost more than $3,000 - saved over seven years - to a bogus investment scheme precisely because he lacked the ability to open a bank account. Ponzi schemes offered him a convenient alternative.

"The agent would come from my village all the way to Calcutta to collect my savings because he knew I had nowhere to keep it safe," he says.

Despite the prime minister's drive to make accounts easier to open, Sanjib says rural banking remains problematic.

"Banks in villages are no good, there are so few to begin with. Villagers are illiterate and depend on bank clerks to help them.

"But the clerks deliberately take their time and make people wait all day, or tell them to come back later," he says.

Tougher deterrents needed

Prithvi Haldea, who tracks investment fraud, also blames the lack of political will to prosecute fraudsters, as well as a worship of entrepreneurs.

"Because we were a capital starved country, we put people who set up companies on a pedestal. They are our gods.

"They are the providers of employment, capital and entrepreneurship and therefore there has been a hesitancy to take action against them," he says.

"My view is that unless we come down very heavily on these offenders, including life imprisonment, disgorgement of all the gains they have made, giving it back to small investors - unless we create that kind of a deterrent, the human ingenuity to create new scams will continue because the greed for money is there."

Here more from Anu Anand on India's Ponzi schemes in Business Daily on BBC World Service at 08:32 GMT on 25 November 2014 - or you can download the Business Daily podcast here.

(Copyright BBC 2014)

British 'Herbalife' shills, David Bevan and Jane Clark

November 27, 2014, 1:48 am

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'Herbalife'has been the corporate front for a classic blame-the-victim'MLM Income Opportunity' cultic racket, in which a series of grinning shills have all duplicated the kitsch example of the group's narcissistic instigator, Mark Hughes, and steadfastly pretended to be ordinary poor humans who have suddenly transformed into happy, healthy and wealthy superhumans - due to their acquisition of a secret knowledge which they are prepared to share with anyone (for a price). 

The following links have been posted in response to recent requests for detailed information about how the 'Herbalife' racket has functioned in the UK.

http://www.dailymotion.com/video/x2731xj_david-bevan-herbalife_lifestyle 

(In this amateur video, a former electrician from S. Wales, David Bevan, boasts that he became converted to 'Herbalife'whilst he was in a highly-vulnerable state after the tragic death of a young colleague. Mr. Bevan also boasts that 'Herbalife is a business you don't build with your head: it's a business you build with your heart').

David Bevan and Jane Clark have been amongst Britain's most visible, and dangerously-deluded, 'Herbalife'shills. 


David Brear (copyright 2014)


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http://www.herbalifepyramidscheme.com/perpetrators/david-bevan-jane-clark/

David Bevan and Jane Clark

Dates of Herbalife Distributorship: 1990s – present
Status in Herbalife: Chairman’s Club
Business Methods: Training Videos, Calls and Presentations; Online Recruiting Businesses; Recruiting Scripts

All statements in this report are made pursuant to Pershing Square’s disclaimer, available at http://factsaboutherbalife.com/disclaimer/.

Background on Herbalife-Related Businesses

• B.I.G. Business Systems Ltd. (“B.I.G.”) is a business operated by David Bevan and Jane Clark that provides members with digital tools for recruiting new Herbalife distributors, training services, and guidance on how to shelter Herbalife-related earnings from taxation authorities.  B.I.G. stands for “Bevan International Group.” Bevan Exhibit A at 62.  The business was incorporated in February 2013 (Company Number:  08514845, registration filing attached as Bevan Exhibit B)[1], and is believed to be a successor to B.I.G. Entrepreneurs U.K. Limited (see infra).  While publicly available U.K. business registrations do not include names of owners, Bevan and Clark are listed as the company’s sole directors at http://companycheck.co.uk/company/08514845/BIG-BUSINESS-SYSTEMS-LIMITED.  In addition, an “Herbalife Business Prospectus” issued by B.I.G. in 2010 states that “The Bevan International Group was founded by David Bevan and Jane Clark 10 years ago.”  Bevan Exhibit A at 62.  The registration filing uses the address Botanical House, 15 Guy’s Cliffe Road, Leamington Spa, Warks, England CV32 5BZ.  Bevan Exhibit B.  The registration filing lists the company’s status as “Active.”  Id.  The company’s website is available athttp://www.joinbig.co.uk/index.htm.
  • Herbalife-related businesses Herbalife Home Business Tour (http://www.hbitl.net/) and Arriba! Wellness Clubs (http://www.arribaclubs.co.uk/) (see infra), both state on their websites that “These materials were prepared by and are the responsibility of independent distributors – B.I.G. Marketing, 44 Dover Rd, Walmer, Kent, CT14 7JW, UK.”  We believe B.I.G. Marketing may simply be shorthand for Bevan’s and Clark’s B.I.G. Business Systems entity.
  • The following additional business are believed to be part of Bevan’s and Clark’s “B.I.G.” brand:[2]
    • B.I.G. Entrepreneurs U.K. Limited (Company Number:  06459396, registration filing attached as Bevan Exhibit C), which is believed to be a predecessor to B.I.G. Business Systems, was liquidated due to insolvency on December 19, 2011, and effectively merged into B.I.G. Business Systems.  The registration filing uses the address 24 Conduit Place, London W2 1EP.  Id.
    http://www.london-gazette.co.uk/issues/60132/pages/8470.
    • B.I.G. Investments Limited was a holding company that was incorporated in 2001 and dissolved in 2009 (Company Number:  04182419, registration filing attached as Bevan Exhibit D).
    • B.I.G. Chartering Limited was a boat chartering business that was incorporated in 2001 and dissolved in 2011 (Company Number:  04182197, registration filing attached as Bevan Exhibit E).  The registration filing uses the address 24 Conduit Place, London W2 1EP—the same address listed on the registration filing for B.I.G. Entrepreneurs U.K.
    • B.I.G. Heli-Charter Limited was a helicopter chartering business that was incorporated in 2001 and dissolved in 2011 (Company Number:  04275208, registration filing attached as Bevan Exhibit F).  The registration filing uses the address 24 Conduit Place, London W2 1EP—the same address listed on the registration filing for B.I.G. Entrepreneurs U.K.
• Arriba! Wellness Clubs (“Arriba!”) is an Herbalife nutrition club business operated by Bevan and Clark, through B.I.G.  The business was incorporated in 2010, and is presently “Active” (Company Number:  07286277, registration filing attached as Bevan Exhibit G).  The registration filing uses the address Botanical House, 15 Guy’s Cliffe Road, Leamington Spa, Warks, England CV32 5BZ—the same address listed on the registration filing for B.I.G. Business Systems.  The company’s website is available at http://www.arribaclubs.co.uk/.
  • Additional links to B.I.G. can be found on both the Arriba! website, which, as mentioned above, states that the site’s “materials were prepared by and are the responsibility of independent distributors – B.I.G. Marketing,” and the 2010 B.I.G. Herbalife Business Prospectus (the “Business Prospectus”), which lists “Arriba! Magazine” as a B.I.G. “business tool.”  See Bevan Exhibit A at 66, 71.

Primary Source Data on Business Practices

Videos

• Bevan and Clark appear in videos promoting B.I.G. and the Herbalife business opportunity.[3]
  • In part one of a series of B.I.G. promotional videos entitled “Work From Home—Herbalife Network Marketing,” Bevan and Clark tout the extravagant lifestyle the Herbalife business opportunity has afforded them.  The video opens with Bevan and Clark driving a red Ferrari to their large country home.  After recounting his rags-to-riches Herbalife story, Bevan states that without Herbalife, “we probably wouldn’t be in a half-a-million pound house driving quarter-a-million pound cars as we do today.”  (2:10.)
  • Bevan and Clark then present their audience with claims of immediate income growth upon their entry into the Herbalife business opportunity.  Bevan notes that “within my first nine days, I’d made an extra £360.  And the first month, an extra £1,500.  I just couldn’t believe it.  Now from the £1,500, within four months, I got my income up to well over £3,500.  It was absolutely incredible   (2:39-2:54.)  Bevan later states that they have now taken their “turnover to nearly half-a-million a month.”  (6:11.)  Clark notes that “in my first month, I made about £400, again like David . . . .  And in my third month, I couldn’t believe it, but my profit was £4,800 around my existing job (4:24-4:46.).  Referencing his former profession, as compared to Herbalife, Bevan further claims that “my probability for success is a lot greater with this company than it is ever being an electrician.”  (3:24.)
  • Bevan and Clark continue on to describe, in greater detail, the Herbalife “lifestyle.”  Clark profiles the couple’s new house.  (6:36-7:33).  “I just walk around the house and, sort of, I can’t believe how lucky I am,” says Clark.  “And really, if it wasn’t for this business, we certainly wouldn’t be enjoying what we’re enjoying with this property if we hadn’t taken advantage of [the Herbalife business opportunity].”  (6:58-7:11.)  Bevan than describes their “toys.”  “[I]t was crazy, it was unbelievable, I mean, we were able to pay cash for a £80,000 pound Ferrari.  It was a lifelong dream of mine.  And then we were able to buy, well as a Christmas present for Jane, her favorite car in the entire world, a 911 Porsche Carrera.  It was absolutely fantastic.  We had it built specially for us.  And, you know, you should have seen her face.  It was one the best presents I think I could ever have bought anybody.  And we do play a lot, and we socialize a lot, we go out jet-skiing a lot.  And it’s absolutely fantastic.  It really is a life, it’s all you dream, really.”  (7:34-8:25.)  Clark concludes by telling the audience, “It’s unbelievable what you can have with this company.”
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• Transitioning into the second part of the video series (though still in the first video), which focuses on the B.I.G.  “support systems,” Bevan notes that Clark and he “chose the fastest growing company in one of the fastest growing industries in the world—health and nutrition.”  (9:17-9:24.)

• In the second part of the video series, Bevan tells potential recruits about the “support” system provided by B.I.G., including regional “training seminars,” “organization weekends,” “interactive TouchFON communication system” enabling members to make “one call and speak to your whole organization,” and “full e-commerce and internet packages” operated by an entity called Business Coach (described at 1:38-2:16) which, as the owners explain, “work[s] closely with David and Jane, and the B.I.G. organization, to establish the real benefits of the internet to the group.  The internet package consists of a suite of three websites focused on recruitment, retailing, and training.”  Bevan then goes on to tout the organization’s “proven direct mail order system.”  “From the mailing lists, the leads that came in with quality people was absolutely mind-boggling,” Bevan says.  Bevan attributes the growth in his “turnover” to £350,000 per month to the supposed efficacy of this mail order system over which B.I.G. has “exclusive rights.”  (2:18-3:24.)
• Bevan then notes that the organization set up a “credit card facility . . . that allowed a lot of our guys to get started very, very quickly.”  (4:21-4:51.)  Encouraging new recruits to go into debt is a common tactic among senior Herbalife distributors recruiting new people who may not be able to afford the Herbalife business opportunity.  See, e.g., Bergs Report, pp. 9-10 (e-Team recruiting scripts encourage recruits to go into debt in order to “qualify” for higher levels of the Herbalife marketing plan); Michael Burton Report, p. 9-10 (referring to his wife and himself, Burton notes that “we decided to leverage ourselves and put our 4000 volume point supervisor order on the one and only credit card that we had left and now as I look back, that is the smartest business decision I ever made in my life.”).
• Bevan continues, introducing the organization’s accountant, from a firm called DSL accounting, and investment advisor, from a firm called the J. Rothschild Partnership.  The accountant tells the audience that he will make sure “that the money you are earning is kept away from the hands of [HM] Revenue [& Customs].”  Similarly, the investment advisor states that he will ensure “the capital [distributors are] earning . . .  is being invested in very tax-efficient on-shore and off-shore investments.”  (4:54-7:09.)

• In the third part of the B.I.G. video series, Bevan and Clark profile members of their organization, featuring first-person testimonials.  The testimonials first focus on the effectiveness of the products (with one participant noting that her partner, who was “very underweight,” actually “gained weight on the products”).  (0:00 – 2:14.)  The testimonials then shift to the “transformation in lifestyle” experienced by B.I.G. distributors.  Participants describe the upgraded homes and cars, as well as increased free time, the Herbalife business opportunity has provided them.  (2:15-5:43.)  The video concludes with Bevan and Clark standing next to their red Ferrari in front of their home and telling potential recruits that “opportunity is never lost, it’s just found by someone who’s more ready.  You are ready.  Otherwise you wouldn’t have watched the video.  So make the call today.  Let’s go.  We look forward to working with you.”  (6:38-6:47.)

Recruiting Materials

• B.I.G. offers a number of recruiting tools through the website http://www.bigtrainingsite.com:
  • Training calls with Bevan (e.g., http://www.bigtrainingsite.com/t1029-recruitment-calls-training-with-david-bevan#2433)
  • Training webinars (e.g., http://www.bigtrainingsite.com/t7898-update-herbalife-opportunity-webinar)
  • Advertisements for Herbalife Opportunity Meetings (HOM) (e.g., http://www.bigtrainingsite.com/t6615-dublin-premium-hom-thursday-1st-august).
• Herbalife Home Business Tour is another B.I.G. recruiting website (http://www.hbitl.net/), which provides scripts and other recruiting-related tools to members of the B.I.G. organization.

http://www.joinbig.co.uk/recruit_sites.htm.

• In one recruiting script entitled “Getting the most from your Conversations,” attached as Bevan Exhibit H and available athttp://www.hbitl.net/training3.0/buildingbusiness/PDF/BYB%20-%20Succesfull%20Conversations.pdf, Bevan and Clark tell distributors that “[b]efore you can get people to do what you want them to do, you must find out WHAT will motivate them to do it. . . .  You then simply tell them what THEY want to hear.”  They encourage distributors to “[a]sk YES questions” and “[d]evelop the skills of designing questions, which finish with you RECEIVING THE ANSWERS YOU WANT TO HEAR,” noting that such questions “result in PAYMENT.”  The script concludes with guidelines “to help [distributors] with making a successfull [sic] conversation . . . ,” including:  “Let [the target] know its [sic] natural and commen [sic] sense to do as you suggest”; and “Make it very attractive by staking up everything THEY WANT on the side of agreeing to do what you suggest.”
• In another set of recruiting scripts, Bevan and Clark focus on training their distributors to “build[] rapport, build[] trust” with potential recruits.
  • In the script entitled “Recruitment – 1st Call,” attached as Bevan Exhibit I and available athttp://www.hbitl.net/Training3.0/recruiting/recruit2/HBT/Home%20Business%20Tour%20Site%201st%20Call%20Script.doc, Bevan and Clark note that “[t]he aim of this call is to build rapport with the prospect, qualify them, explain enough to get them interested and direct them to your Home Business Tour Site with a sense of urgency.  This is a short call approx 5 mins!”  After providing some introductory testimonials about his or her life and supposed experience with the Herbalife business opportunity, the distributor is told to say, “Now I am helping find serious, teachable, hard-working people and show them how to earn a p/t income of just £500-£1500 per month and right now I am looking for just a handful of people who want to do that.”
  • In the script entitled “Recruitment – 2nd Call,” attached as Bevan Exhibit J and available athttp://www.hbitl.net/Training3.0/recruiting/recruit2/HBT/Home%20Business%20Tour%20Site%202nd%20Call%20Script.doc, Bevan and Clark tell distributors not to answer questions like, “How does it work?” and “What do I have to do?”  The script also encourages recruits to join the “Business Launch Programme” (BLP) by going to the website www.joinbig.co.uk.  The script concludes by telling distributors to “Sell [recruits] product – Book them into an ROM [Regional Opportunity Meeting] – take them online to sign up for BLP RIGHT THERE AND THEN!”
• Additional recruiting scripts and audio training tools can be found at http://www.hbitl.net/Training3.0/ConversationsAndScripts/index.asp.
• In 2003, Bevan and Clark prepared an e-book for potential recruits, attached as Bevan Exhibit K and available athttp://www.hbitl.net/presentationsitev1/ebook/rEbook.pdf.  The e-book sets forth the substantial—and immediate—progression of Bevan’s income after he undertook the Herbalife business opportunity.  Id. at 2 (“If an Ex-electrician like David Bevan can build monthly cheques like these: . . .  You can too!  Regardless of YOUR background!”).  The e-book further presents deceptive claims about the success of “home-based businesses,” asserting that “90% – of all work at home businesses succeed in their first year.”  Id. at 10.  At the conclusion of the e-book, Bevan and Clark “DARE [potential recruits] TO SUCCEED,” saying, “Here’s the bottom line.  You either want to be wealthy or you don’t, you either want to provide for yourself and your family with the time freedom you deserve or you don’t. . . .  Deleting this e-book and doing nothing will not change your life.  If you thought you had all the answers you simply would not have read this e-book. . . .  PREPARE TO SUCCEED!”  Id. at 25.

• B.I.G. produced an Herbalife Business Prospectus in 2010, attached as Bevan Exhibit A and available athttp://www.hbitl.net/Training3.0/Retailing/retail2/Pitch%20Book/Pitch%20Book%20Updated%2011_10_10.pdf,  highlighting the “benefits” of becoming an Herbalife distributor within the B.I.G. organization.  The Prospectus provides “Example Income” scenarios for distributors seeking to build a downline and receive “Passive / Residual” income through “Duplication.”  Id. at 52, 53.  The Prospectus continues, noting the “Potential Monthly Incomes” as you rise up the Herbalife marketing plan, listing, for example, “£8,000-£20,000” for Millionaire Team members and “£20,000+” for President’s Team members.  Id. at 55.  Readers are then shown “B.I.G. Success Stories,” where Bevan and Clark advertise the alleged substantial incomes of B.I.G. participants working from home, ranging from £2,000 to £18,000 per month.  Finally, the Prospectus turns to the “The B.I.G. Advantage,” listing the organization’s marketing and recruiting tools, online and business management systems, and training events all in an attempt to sell the B.I.G. “Business Launch Programme” to new recruits for £199.  Id. at 61-67, 71-72.

• Bevan maintains active Twitter (https://twitter.com/DavidBevanHLF) and Facebook (https://www.facebook.com/DavidBevanUK) websites to communicate with his downline distributors.  Bevan and Clark maintain an additional joint Facebook site to do the same (https://www.facebook.com/DavidBevanHerbalife).
  • These public-facing websites are also used to aggressively promote the Herbalife lifestyle:

https://www.facebook.com/photo.php?fbid=1083774026923.

https://twitter.com/DavidBevanHLF/status/300699527978037248/photo/1.

Nutrition Clubs

• Bevan and Clark operate Arriba! Wellness Clubs—a business that offers marketing/branding and recruiting tools to B.I.G. distributors seeking to pursue the Herbalife nutrition club business model.  According to the B.I.G. website, the Arriba! Wellness Clubs website (http://www.arribaclubs.co.uk/) provides distributors with the means to recruit additional club leaders:

http://www.joinbig.co.uk/recruit_sites.htm.

• There are three “qualification” levels that determine a distributor’s “Arriba! system privileges.”  See Bevan Exhibit L, available athttp://www.hbitl.net/Training3.0/ArribaQs/pdf/Arriba!%20-%203%20Levels%20Of%20Qualification%204.pdf.  A B.I.G. distributor’s access to Arriba! marketing and recruiting tools (including “[p]ermission to use the Arriba! Brand to enhance the marketing and running of [the distributor’s] Weight Loss Challenge”) is dependent on that distributor’s placement in the Herbalife marketing plan and whether that distributor has met other specific B.I.G. organizational requirements.  In other words, a distributor’s ability to utilize the Arriba! system is tied to how much money that distributor makes for Bevan and Clark.
• A video promoting the Arriba! Wellness Clubs opportunity, available at https://vimeo.com/94015610 begins by introducing the Herbalife business opportunity generally.[4]  With rain and lightning in the background, the video spells out the following sentences:  “Once in a life time something comes along.  A perfect storm of opportunity   . . . .  [B]etween 2008 and 2016 10 Million New Millionaire Households will be created by the converging trends of Wellness and Network Marketing.”  Under the label of “Support,” the video flashes “B.I.G. Business System,” showing screenshots of B.I.G. websites.  The video then says, “Imagine if There was a way to harness this perfect storm.  Welcome to Arriba! Wellness Clubs.”  There is a montage of photo-shopped images of Arriba! advertisements across the U.K.  This montage is followed by specious claims regarding income potential for Arriba! participants, as the video states that “[i]n the next 12 months We will help 1,000 people create 30,000 a year part time incomes and We will help 25 people create 300,000 a year income and become presidents team members!”  The video then concludes, telling the viewer that “[t]he choice is yours.  What do you want to be?”

• A poster for a 2010 Arriba! event explicitly links the business to Herbalife and B.I.G.

http://www.hbitl.net/training3.0/febbyb.pdf.

• The Herbalife Home Business Tour website also provides a sample “Nutrition Club Party Agenda,” attached as Bevan Exhibit M and available at http://www.hbitl.net/Training3.0/Retailing/retail2/Nutrition%20Clubs/training%20your%20team/monthly%20party/Eng_Agenda.pdf.  The Agenda begins by introducing new recruits to Herbalife products before later transitioning to a sales pitch of the Herbalife business opportunity.  Distributors are told to “sell [recruits] the Herbalife opportunity, the future, their dreams and goals. . . .  Have [recruits] pay IBP [International Business Package] right away on the spot . . . refer guests who invited them and Distributor gets the cash; then we explain we are going to show how to get the different discounts and how to make money . . . no time to do the paper work.”  The Agenda concludes by encouraging distributors to plug the multi-level Herbalife marketing plan.  “[F]ocus on the big picture . . . then celebrate the higher places on the marketing plan.”

Links to Other Senior Distributors

• B.I.G.’s Herbalife Home Business Tour website hosts a number of documents from Financial Success System (FSS), the business operated by Chairman’s Club member Doran Andry.  See http://www.hbitl.net/Training3.0/Retailing/retail2/Nutrition_Clubs130510.asp.  These FSS documents include:
  • The schedule for the FSS “call and training system” (http://www.hbitl.net/Training3.0/Retailing/retail2/Nutrition%20Clubs/training%20your%20team/fss/FSS_System.pdf)
  • Andry’s presentation on training for nutrition club operators (http://www.hbitl.net/Training3.0/Retailing/retail2/Nutrition%20Clubs/training%20your%20team/nc%20training/Eng_OperatorsTraining.ppt)
  • Andry’s “Herbalife Success University” training documents (http://www.hbitl.net/Training3.0/Retailing/retail2/Nutrition%20Clubs/training%20your%20team/university/HSU_Outline.pdf)
  • Guides for starting a nutrition club (e.g. (http://www.hbitl.net/Training3.0/Retailing/retail2/Nutrition%20Clubs/how%20to%20start/pre%20grand%20opening/NC_GrandOpening.pdf)
  • Code of Conduct (http://www.hbitl.net/Training3.0/Retailing/retail2/Nutrition%20Clubs/how%20to%20start/codes%20and%20processes/Eng_CodeOfConduct.pdf)
• Bevan and Clark state that there are three other President’s Team members that are part of the B.I.G. organization:  Jeff & Debbie Williams,Tony & Gerry Mears, and Derrick & Jo Sladden.  See http://www.hbitl.net/login/big.html.  Bevan and Clark are Chairman’s Club members.
• Bevan and Clark also frequently appear at Herbalife-sponsored events with other Herbalife senior distributors.

Clark with Founder’s Circle member Leslie Stanford (right), available athttps://www.facebook.com/DavidBevanHerbalife/photos_albums#!/DavidBevanHerbalife/photos/a.199037813448217.49686.198996730118992/199043693447629/.

Bevan with Chairman’s Club member and Herbalife board member John Tartol (right), available athttps://twitter.com/DavidBevanHLF/status/301997103469711362/photo/1.

Bevan and Clark with Chairman’s Club member Dan Waldron (left), available athttps://www.facebook.com/DavidBevanHerbalife/photos_albums#!/DavidBevanHerbalife/photos/a.199037813448217.49686.198996730118992/199043720114293/.

Bevan with Chairman’s Club member Pedro Cardoso (left), available at https://www.facebook.com/DavidBevanHerbalife?fref=ts#!/DavidBevanHerbalife/photos/pb.198996730118992.-2207520000.1395070780./199043823447616/.

Bevan with Chairman’s Club member Alan Lorenz (right), available athttps://www.facebook.com/DavidBevanHerbalife/photos/a.199037813448217.49686.198996730118992/199043593447639/#!/DavidBevanHerbalife/photos/a.199037813448217.49686.198996730118992/199043626780969/.

Bevan with President’s Team member Russell Gain (left) and Chairman’s Club member Stephan Gratziani (right), available athttps://www.facebook.com/DavidBevanHerbalife/photos_albums#!/DavidBevanHerbalife/photos/a.199037813448217.49686.198996730118992/199043593447639/.

• President’s Team member Chris Birks is Bevan and Clark’s upline.

https://twitter.com/DavidBevanHLF/status/312982306946162688.

• Birks’ LinkedIn website, attached as Bevan Exhibit N and available at http://www.linkedin.com/pub/chris-birks/34/330/239, states that he has “been active with Herbalife for over 20 years [since 1993].”  The site further notes that Birks has “over 300 team leaders that spans 24 countries, and generates multi-millions in monthly sales.”
• In November 2013, Herbalife announced that Bevan and Clark had qualified for Chairman’s Club status.  See Bevan Exhibit O, available athttp://www.herbalifemail.com/1new/flyers/2013_newcc_davidbevan_janeclark_usen.pdf.

Links to Herbalife Corporate Leadership

• In November 2013, Herbalife announced that Bevan and Clark had qualified for Chairman’s Club status.  See Bevan Exhibit O, available athttp://www.herbalifemail.com/1new/flyers/2013_newcc_davidbevan_janeclark_usen.pdf.

Bevan and Clark receiving Chairman’s Club pins from Herbalife President Des Walsh at the Herbalife Honors event in Hawaii on March 20, 2014, available at https://www.facebook.com/sharon.peterman.9/posts/10152284012674417?stream_ref=10.

• Herbalife has awarded Bevan and Clark the Mark Hughes Bonus Award—a large, discretionary bonus that Herbalife awards to top distributors—multiple times, most recently in 2013.

https://twitter.com/DavidBevanHLF/status/313045516843884544.

• Bevan and Clark have appeared many times at Herbalife-sponsored events with top Herbalife executives.

Bevan and Clark with Herbalife Chairman and CEO Michael O. Johnson (right), available athttps://www.facebook.com/DavidBevanHerbalife#!/DavidBevanHerbalife/photos/a.198996943452304.49660.198996730118992/378019935550003/.

Bevan with Michael O. Johnson, available at  https://www.facebook.com/DavidBevanUK#!/photo.php?fbid=1083892789892.

Bevan and Clark with Herbalife founder Mark Hughes, available at https://www.facebook.com/photo.php?fbid=1083792067374.

Bevan and Clark with Mark Hughes, available at https://www.facebook.com/DavidBevanHerbalife#!/DavidBevanHerbalife/photos/a.198996943452304.49660.198996730118992/378017328883597/.

[The photos of Bevan and Clark with Mark Hughes were posted on Facebook in 2009 and 2011, but obviously were taken some time prior to Hughes’ death in 2000.]

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[1] All registration filings listed for Bevan and Clark are publicly available by searching the U.K. Companies House website athttp://wck2.companieshouse.gov.uk//wcframe?name=accessCompanyInfo.

[2] According to http://companycheck.co.uk/director/907513865/MR-DAVID-WAYNE-BEVAN andhttp://companycheck.co.uk/director/907513861/MS-JANE-LESLEY-CLARK, Bevan and Clark were both directors of B.I.G. Entrepreneurs U.K., B.I.G. Investments, B.I.G. Chartering, and B.I.G. Heli-Charter.

[3] All three videos are available at http://factsaboutherbalife.com/?s=david+bevan.

[4] To the extent that any of the videos in this report requires a password, the password is “bevan”.

Pershing Square Capital (copyright 2014).