Got another letter from anti LB supporter, which gives an overview of the MLM industry, and how it could be turned into a great time scam.
If Koscot Interplanetary founder is now sitting behind bars, Steven Yeam should also be in jail.
And I believe this month sales has dropped tremendously due to the 45k for Count.
Lampe Berger business is certainly going sour.
Kudos for both of your blogs. Please feel free to edit/delete anything if anyone of you are going to publish this email.
I have several comments which is (somehow) related to SYN/DCHL and pyramid schemes. Most of the arguments are old which I just consolidate from some sources. I won't elaborate much but instead encourage you guys to read up the links and do so (if you haven't seen the links before).
The first point is the concept of this so-called 'network marketing' wasn't something new, which many of SYN/DCHL's followers believe in. Please note that SYN/DCHL's operational similiarity to Koscot Interplanetary's strategy 30 years ago. Koscot mainly sells cosmetics and to have the right to 'distribute' it, you are 'encouraged' to buy $5.4k of cosmetics. Please take a look at http://www.ftc.gov/speeches/other/dvimf16.htm
. Excerpts below:
One of the Commission's first cases was In re Koscot Interplanetary, Inc.,(14) which involved a company that offered the opportunity to become a "Beauty Advisor" and sell cosmetics. The company's incentive structure really did not encourage retail sales. Instead, it encouraged people to pay $2000 for the title of "Supervisor" and purchase $5400 in Koscot cosmetics, and then to earn bonuses by recruiting others to make the same investments.(15) The Commission found that Koscot operated an illegal "entrepreneurial chain" and articulated a definition of illegal pyramiding that our agency and the federal courts continue to rely on.(16) The Commission found that pyramid schemes force participants to pay money in return for two things. First is "the right to sell a product", second is "the right to receive, in return for recruiting other participants into the program, rewards which are unrelated to sale of the product to ultimate users. (emphasis added)"(17) The Commission explained that paying bonuses for recruiting:
. . . will encourage both a company and its distributors to pursue that side of the business, to the neglect or exclusion of retail selling. The short-term result may be high recruiting profits for the company and select distributors, but the ultimate outcome will be neglect of market development, earnings misrepresentations, and insufficient sales for the insupportably large number of distributors whose recruitment the system encourages."(18)
More information like old and new plans are explained in detail in http://www.mlmlaw.com/library/cases/mlm/state/txkoscott.htm
. Compared to SYN/DCHL, Koscot's structure is more complex and consists of multiple companies, including sister company 'Dare To Be Great' which charges for trainings. The stable of companies are brought down and its founder, Glenn Turner, was eventually jailed.
Here, we can see that the weakness stem from fundamental of the system instead of 'the unethical behaviour of the distributors'. Pyramid scheme, which I would explain as a system which is mathematically flawed and unsustainable, instead of the grey areas claimed by sites like http://cactaur.blogspot.com/2006/01/afterthoughts-on-mlm.html
The second point that many people may not know is, a large scale pyramid scheme may be hazardous for even a big entity like a country, as shown here: http://www.worldbank.org/html/prddr/trans/so97/albania2.htm
. The article discusses failure of action by the authorities causing pyramid scheme funds balloons to 50% of Algeria's GDP before crashing the economy.
Thanks and keep up the good work.