(This blog post by quixtarisacult first posted on Quixtar Cult Intervention March 25, 2008)
Failing to learn from history dooms one to repeat it. One thing is clear about Amway, which plans to celebrate its first fifty years in existence, is that we have a clear view of what it is and has done. It is not the new kid on the block. We have seen it in action and results of its operation are known.
Regardless of the paid public relations "dream spinners" at Alticor, which paint Amway as a glorious success, the opposite is true. If you are in the founding family, you are looking down on a business that has made wealthy men of the founders, Rich Devos and the now late Jay Van Andel and their families. From their standpoint, business has been good.
From the standpoint of the major tool kingpins, looking down from their position at the pinnacle of distributors who feed upon tapes, books, DVD, Cd's and function tickets, life is good. They have benefited by selling a training system that continually "conditions" those people who buy them to keep on buying them over and over. These Business Service Materials are the Lays Potato Chips of the Network Marketing Industry. You just can't eat one. You must eat the whole bag and then buy another bag and on and on it goes. That is great if you are selling potato chips and Business Service Materials.
From the standpoint of the so called Independent Business Owner--a term that is incredibly misleading--business is not be so good. These folk do almost all the buying in this industry: the products and the tools. It is at their level looking up at the successful business tycoons above them that they see two different groups of people. They see the Amway Corporation and they see the Top Distributor "Kingpin" sellers of the Business Service Materials. Obviously they know these two groups are wealthy, and there is no secret how this wealth was made.
IBOs are the unpaid work horse in the Amway hierarchy. They purchase all the of the products and mostly self consume them. Might they be part of the small minority that actually retails some product to outside consumers, they still absorb most, if not all, the business expense involved in these sales. IBOs do all of the recruitment of new distributors and eat all of the costs. IBOs pay for their own training by buying the BSMs and attending meetings, functions and conventions. IBOs are the givers. They make the sacrifice of time and money which only benefits the successful people who provide the products and BSMs.
Where is the real compensation for this IBO group? This third group does not operate like normal business does because they are not a normal business. They operate not like a business, but as consumer in their relationship with the Corporation and the Motivational Tool Sellers.
I ask this question: What are the IBOs expecting to receive for all this devotion and sacrifice? Sacrifices are made to gods are they not? Will such incredible sacrifices be rewarded by their gods at some future time? Possibly, but in the case of Amway, most likely not. There is nearly fifty years of history to base a judgment of Amway results upon.
Are the supposed success stories in Amway to be believed? Why have so many so called successful people quit and are now revealing stories of deception and woe? Statistically, over the long history of Amway, less than 1% ever reach the Emerald pin level of the business. Of these, many have quit and/or are still working regular jobs. They may have had their moment in the sun so to speak at a big Amway Rally, but they are mere mortals and remain that way to this day. These people have been used in one of the largest Bait and Switch Deceptions ever devised by the imagination of man. The Selling of Broken Dreams is the Amway legacy.
(The following blog post by guest blogger and guide to the Amway Labyrinth, David Brear, first appeared on Quixtar Cult Intervention on November 3, 2008)
‘It is the wisdom of the crocodiles, that shed tears when they would devour.’
Francis Bacon (1561-1626)
In the Bible, a story is told of Jesus feeding 5000 people with just a handful of loaves and fishes, and of basketfuls of leftovers being gathered after the feast. However, it is important to understand that, in the biblical tale, all Jesus asks for in return, is unquestioning belief in ‘future redemption.’ Should some sanctimonious performer require of 5000 individuals the same unquestioning belief in ‘Jesus the Redeemer,’ but exploit their faith to extract $1000 per head entrance to ‘The Miracle Buffet,’ then he/she would gross $5 millions. Unless the sanctimonious performer really does possess the superhuman power to turn the finite into the infinite, then his/her activity is an ‘advanced fee fraud’ (a form of theft). Sadly the De Vos and Van Andel clans and their associates (with the Bible in one hand and the Stars and Stripes in the other) have not been alone in committing this, the most absurd, but nonetheless grotesque, of American crimes.
James (‘Jim’) Orson Bakker (b. 1939) is the son of Michigan ‘Dutch Pentecostalists’. In 1962, Bakker (aged 23), became a pastor in the ‘Assemblies of God.’ His diminutive wife was, Tamara (‘Tammy’)-Faye LaValley (1942-2007), the daughter of (divorced) Minnesota ‘Pentecostalists.’ The couple met at ‘North Central Bible College.’ They went on to found a ‘joint-ministry’ in N. Carolina. From 1964 until 1973, the fresh-faced young pastors worked in Virginia at ‘CBN’ (‘Christian Broadcasting Network’) for Pat Robertson. They were founder members of ‘The 700 Club’ (a televangelist programme in the style of a variety show). They also hosted ‘Come On Over’ - a daily programme for children, in which a glove puppet, ‘Susie Moppett,’ was used to explain ‘the Word of the Lord.’ However, the Bakkers’ enormous success and their intimate friendship with Pat Robertson created a lot of jealousy at ‘CBN.’ They decided to go to California where they coined the catch-phrase, ‘PTL’ (‘Praise The Lord’), for ‘TBN’ (‘Trinity Broadcasting Network’) owned by Paul and Jan Crouch. Within a year, the Bakkers moved back East and created their own show, ‘The PTL Club.’ This soon generated a multi-million dollar income; it was screened by around 100 television stations. The Bakkers went on to found their own ‘PTL Television Network’ a.k.a. ‘The Inspirational Television Network’ in Charlotte, N. Carolina.
In 1982, Jim and Tammy-Faye Bakker used their popular cable programmes, ‘The PTL Club’ and ‘The Jim and Tammy Show’ (which were eventually beamed into 13.5 millions American homes via 200 television stations), to launch ‘Heritage USA,’ the ‘World’s Largest Christian Theme-Park/Retreat Center’ to be built on a 4 square-mile site at Fort Mill, S. Carolina. To finance this, the Bakkers asked their television audience to send a minimum of one voluntary contribution per year to become a ‘Partner in Ministry’ (i.e. a person with the right to access ‘Heritage USA’). Jim Bakker created a series of corporate structures, including ‘Heritage Village Church and Missionary Fellowship’ to run the project. As the head of a tax-free religious organization, Bakker had no legal obligation to supply any material benefit in return for unspecified, voluntary donations. An estimated 1 million people contributed over a period of 6 years. The number of ‘Partners in Ministry’ stabilized at approximately 600 000. In this way, Bakker lawfully acquired absolute control of sufficient capital assets to build his Utopian project. Eventually, ‘Heritage USA’ employed almost 3000 people. After ‘Disney Land’ and ‘Disney World,’ it was the third most-visited theme-park in the USA - boasting a reconstruction of ‘Old Jerusalem,’ a ‘Crystal Palace’ 30 000 seat Conference Center, a 1 500 seat television studio, a ‘Crystal Tower’ Resort Hotel, a ‘Heritage Island Inspirational Water Park’ with Bible teaching on an artificial beach, etc. Bakker even bought the childhood home of Dr. Billy Graham, and had it rebuilt as a shrine at ‘Heritage USA.’
In 1984, the Bakkers made another ‘offer.’ In return for one mandatory minimum ‘contribution’ of $1 000, ‘Partners in Ministry’ could become ‘Lifetime Partners in Ministry’ (i.e. persons with the additional right to ‘3 nights free accommodation annually in exclusive luxury hotels on the Heritage USA site for the rest of their lives’). This Christian time-share scheme was open to the public and involved a sales contract. Although this stated (in small print) that ‘accommodation was subject to availability,’ the officers of ‘Heritage USA’ were bound by federal law to supply what they’d sold. However, ‘Heritage USA’ president, pastor Jim Bakker, and his vice-president, pastor Richard Dortch, set no limits on the number of contracts. Between 1984 and 1987, approximately 153 000 people paid the $1 000 (certain individuals are now known to have given as much as $7 000), but only one 500 room hotel was ever completed. The odds against getting a room were, in fact, more than 300/1. Not one single contributing participant filed a complaint — the truth was unthinkable. Bakker’s image stared directly out of the slick advertising material, smiling benignly with his wife, son and daughter around him. He styled himself as ‘America’s Favourite Televangelist… Spiritual Adviser to: Jimmy Carter, Ronald Reagan and George Bush.’ Tammy-Faye’s trademarks were her outrageous hairstyles, kitsch outfits and doll-like makeup. At the end of each ‘PTL’ show, she would sing a heart-rending hymn and pray that ‘God’ would ‘bless Heritage USA’ before fixing the camera and bursting into floods of mascara-stained tears. Behind this apparently absurd façade, between 1984 and 1986, the Bakkers awarded themselves over $5 millions in ‘salaries and bonuses.’ On one occasion, a private jet was chartered by the ‘PTL’ organization at a cost of $100 000, just to fly the couple’s wardrobes across the USA. They now advocated a ‘Gospel of Prosperity.’ This ostensibly ‘Christian’ doctrine was used as the false justification for buying a $200 000 Rolls-Royce, 3 Cadillacs, various condominiums in California and a $600 000 villa in Palm Springs. The gold plate in the bathrooms of the Bakkers’ 6 homes was alone, reputed to have cost $60 000 whilst their pet dog slept in an air-conditioned kennel. Tammy-Faye’s shopping addiction led to her being ridiculed as the ‘Imelda Marcos of televangelism.’
In 1987, Jim Bakker was dragged into a sordid sex scandal by Jessica Hahn (b. 1959), the glamorous secretary of another ‘Pentecostalist’ pastor, Eugene Profeta. Hahn (who later bared-all in ‘Playboy Magazine’) claimed that, whilst attending a national conference of Christian ministers in Florida in 1980 (when she was 21), she’d been drugged and raped for 15 minutes by Bakker and another preacher, John Wesley Fletcher, and that Bakker and Fletcher had then taken it turns to sodomise one another in front of her. Hahn approached a journalist at the ‘Charlotte Observer’ and threatened to file a multi-million dollar civil lawsuit. Bakker denied rape, but admitted that, in 1980, he’d had a 15-20 minute (one to one) consensual sexual encounter with Hahn in a hotel room in Clearwater Florida. ‘PTL’ lawyers made a secret out-of-court settlement totalling $265 000 to keep Hahn from going to court. However, Bakker’s competitors (in the cut-throat televangelist business) acquired this intelligence. He was obliged to resign from his presidency and from his ministry. Jerry Falwell (1933-2007), ‘Baptist Minister,’ co-instigator and self-appointed leader of ‘The Moral Majority’ and the rising star of the ‘Religious Right,’ appeared to be taking over the ‘PTL’ Empire, but at Jim Bakker’s own request. However, at the last moment, Bakker changed his mind. A bitter struggle then ensued to seize Bakker’s television network which was, in effect, a licence to print money. Leading the pack was Jerry Falwell who now described Bakker as ‘a liar, embezzler, sexual deviant…the greatest scab and cancer on the face of Christianity in 2000 years of Church history.’ Falwell subsequently took over the ‘PTL Network’ and ‘Heritage USA.’ He promptly sacked all Bakker’s existing staff. With his Utopian dream-world falling apart (Tammy-Faye was in the ‘Betty Ford Clinic’), Bakker faced more, traumatic public revelations. He had been sexually-abused from the age of 11 by a male adherent of his parents’ church. When Jerry Falwell failed to have the ‘PTL’ Empire placed in voluntary receivership, he passed confidential, internal documents to federal agents proving there had been serious financial irregularities during Bakker’s rule. A series of investigations led to ‘Heritage USA’ being compulsorily placed in receivership and its tax-free status was revoked. All assets were sold-off at a fraction of their cost. Pastors Bakker and Dortch faced federal indictment for fraud, tax-evasion and racketeering.
In 1989, Bakker was convicted of fraud and conspiracy to commit fraud. He was fined $500 000 and sentenced to 45 years federal prison. In effect, Judge Robert Potter ruled that, although Bakker and Dortch had been fêted as philanthropic millionaires and exemplary Christian conservatives by an alarming number of unthinking observers in the US media, and the political and religious establishment, the pair had unlawfully obtained at least $158 millions by peddling ‘future accommodation’ in largely non-existent hotel rooms. In his defence, it was claimed that Bakker had reinvested most of these vast ill-gotten gains in ‘Heritage USA,’ and that he’d only received a $200 000 salary and kept $3.7 millions ‘bonus’ for himself. However, Bakker’s lawyer accepted that his client had deliberately attempted to conceal his illegal activities by maintaining two sets of accounts. Before he was led (in chains between two US Marshals) to a waiting car, Bakker was found crying and whimpering on the floor in the foetal position. He later claimed to have been experiencing hallucinations in which the crowds outside the Charlotte Courthouse had ‘transformed into demons and wild beasts.’ As Bakker tried to hide from reality on the back seat of the Marshal’s car, a small group of his most-bedazzled followers tried to throw themselves in its path. For a while, it was feared that there might be a collective suicide. In 1991, Bakker’s appeal against conviction for fraud and conspiracy was denied by another federal court, but his original sentence and fine were deemed too severe, and waved. At a later hearing, he was re-sentenced to 18 years federal prison.
Jim and Tammy-Faye divorced in 1992. In 1993, Tammy Faye married Roe Messner, one of the contractors who had built ‘Heritage USA.’ After serving less than 5 years behind bars, Jim Bakker was released on parole for ‘good behaviour.’ Billy and Franklin Graham (who had previously visited Bakker in prison) supplied him with a house and car. In 1995, Bakker spoke to a conference on ‘Christian Leadership’ and received a standing ovation from 10 000 clergymen. In 1996, a N. Carolina jury rejected a class action filed against the Bakkers on behalf of 160 000 people who had entrusted the pair with money. In 2005, it was calculated by the US Internal Revenue Service that the Bakkers still owed $3 millions in unpaid taxes, fines and interest from what they had falsely declared to be ‘non-profit-making’ activities back in the 1980s.
Copyright David Brear 2008
(Author David Brear has provided the following footnote):
The author of the article is fully-aware of the many direct connections between various 'Amway' Kingpins and the Bakkers; particularly, Dexter and Birdie Yager, Doug Wead and Don Storms. Before its demise, the 'Heritage USA Conference Centre' was the venue for countless pay-through-the-nose-to-enter 'Amway' events. Tellingly, Bakker himself, remains an enthusiastic supporter of the 'Amway' myth.
Blog post first appeared on Quixtar Cult Intervention on January 30, 2009)
Quixtarisacult:
Didn’t Amway recently complain to the Indian Government that regulations be invoked against their competitors for operating chain letter type scams that were competing unfairly against their supposedly legit business? Couldn’t happen to a better bunch of schemers and scammers?
David Brear:
Since the original police investigation of Amway in Andhra Pradesh became public knowledge, David Steadson (a.k.a. Insider a.k.a. IBOFightback etc.) has been steadfastly pretending on his multiple Websites that it was purely the result of a malicious complaint made by a vindictive individual involved in a marital dispute.
Since the criminal charge against Amway India was confirmed, which blows this sinister lie out of the water, Steadson/Insider/IBOFightback has been posting comments on numerous Websites in which he now pretends that ‘it’s business as usual for Amway in India.’
In reality, Amway’s Indian agents are abandoning the organization in droves, whilst the corporate officers of Amway India now risk prison sentences. Meanwhile, the American authors of the Amway myth cannot be touched by the Indian authorities.
Quixtarisacult:
Dave, obviously this David Steadson* fellow can not be trusted on any point of fact involving the Amway business. It seems like so much of what goes on in the Asian MLM market is like a black hole. Hopefully there are some Indian citizens that might read this blog post and keep us up to date on what exactly is going on over there with Amway. Sounds like Amway has been put out of business, at least in this one State.
Amway likes to portray itself as being something so much more superior than the run of the meal “money circulating” and “Ponzi” schemes that seem to be popular in Asia. Amway always tries to differentiate their product based pyramid schemes from other scams and schemes. Obviously at least the regulatory authorities do not buy their arguments, at least not yet. Maybe regulatory oversight isn’t for sale in India as it is in the US?
David Brear:
The terms: ‘money circulating’ and ‘Prize Chit’ are used in Indian law to identify what should be more accurately described as a ‘Premeditated Closed-Market Swindle’. In Boston in the 1920s, Carlo Ponzi sold bonds printed in denominations up to $50 000. These promised a 50% profit in 12 months. Ponzi claimed that he could take the investors money and buy international postal coupons in countries with weak economies and then ship them to the USA to be exchanged for 4 times what they’d cost. This was a lie. There were no external profits. Ponzi retained absolute control of the means of exchange Amway’s instigators.
Ponzi retained absolute control of the means of exchange in a premeditated closed-market. Amway’s instigators have made this type of swindle even more complex, but, essentially, it remains the same. There are no external profits, because Amway’s products have always been deliberately priced too high. Amway’s instigators have retained absolute control over not only the means of exchange, but also the means of production and distribution in a premeditated closed-market.
What lies behind Amway’s closed-market swindle is a secondary, much larger, ‘advanced fee fraud’ using essentially the same tactics as the Nigerian bank scam. This has been operated behind a labyrinth of (apparently independent) corporate structures in order to prevent, and/or divert, investigation and isolate Amway’s instigators from liability. If you read the written statement given to the High Court by a senior company officer of Amway UK, she pretended that she had no idea what was occurring and anyway Amway UK could not be held responsible for the illegal activities of other companies (IBS, etc.) and the individuals who run them. This was Perjury. I made the company officers of Amway UK fully aware of what was occurring as long ago as the mid 1990s. At that time, Amway’s UK lawyers described my accusations as ‘foolish notions’ and circulated a letter which pretended that I’d invented everything as a result of a family dispute.
n the UK in the early 1990s, Amway also pretended to be opposed to pyramid scams and money circulating schemes. The company employed a Conservative UK member of parliament, Andrew Rowe, as a consultant ($20 000 annually). Rowe made several misleading statements in the House of Commons (concerning Multilevel Marketing in general and Amway in particular) when changes to the UK law concerning pyramid scams were being debated. At the same time, hoards of deluded UK Amway adherents contacted their members of parliament. Since the early 1990s, Amway UK has also also employed the directors of two (apparently independent) UK charities (Ian howarth, ‘Cult Information Centre’, and Graham Baldwin, ‘Catalyst’) as consultants. These charities pretend to offer advice and accurate information to members of the public, journalists, academics about cultic groups. Both directors have never openly declared their connections to Amway, but they have openly refused to categorize Amway as a cult. It is certain that Amway has followed similar information monopoly tactics in India.
Quixtarisacult:
Why not say that Amway operates a monopoly product based pyramid scheme? Seems so much easier. Recently I’ve taken to calling Amway a monopoly business since their products do not really compete against similar products in a fair and free market.
Distributors are taught to be product loyal customers and consumers of their own wares and therefore the products generally only compete against other products in the Amway catalog. When “negative” products are excluded from consideration, then high priced monopoly products are the obvious end result. For evidence we can turn to the Amway catalog prices which–even with the distributor discount–are priced exorbitantly higher than brick and mortar store products of similar value. ($78 retail for a one month’s supply of Double X vitamins. Even at distributor cost, this is a total money extracting ripoff!)
Since regulators refuse to recognize the obvious pyramid scheme aspects of Amway, they should then investigate the monopoly product aspects of the Amway scheme. The secondary tool and function business should be investigated in like fashion.
Amway has provided cash cow handouts to Congressmen who then stand in the shadows behind regulators, whom we all know to be asleep at the controls, allowing thousands upon thousands of American citizens along with citizens of the World to be victimized by this worst of all American Scams! Amway is a clearing house for political payoffs much the same way Al Capone was a clearing house for graft in Chicago in days of old.
Amway’s tactics of complaining about other pyramid, Ponzi, money circulating, prize chit scams is a cover to separate themselves from the pack of other predators chasing the same wildebeests! It just boggles my imagination that countries, states, courts, and regulative bodies haven’t stepped in and put an end to these criminal activities before now. Amway has deep pockets to buy hordes of lawyers and special interest lobbyists to keep the scheme rolling forward.
Politicians accept MLM money in a shameless manner. Even Presidents schedule sit down visits to the Ada, Michigan Amway Pooh Bah, Rich Devos, to accept political donations. What a shame for the Grand Old Party! To even consider accepting money that has been extracted by massive consumer fraud makes the magnitude of Amway corruption of insane proportions!
The same lack of regulative oversight which lead to the current fiscal nightmare currently allows any number of MLM pyramid schemes (to include Amway) to continue in operation long after they should have been shut down. The Federal Trade Commission does not enforce its own rules and allows Amway distributors to disregard retail selling rules which the FTC had imposed to insure that Amway does not operate as a pyramid scam.
David Brear:
The term ‘monopoly-based pyramid scheme’ is not sufficiently accurate. Even the more-accurate term, ‘Premeditated Closed Market Swindle’, only begins to explain the problem. In reality, what ‘Amway’ offers is a form of economic pseudo-science, but presented using a constant repetition of reality-inverting ‘commercial’ words and images. What ‘Amway’s’ deluded core-adherents actually believe is that a finite amount of their own money can be infinite. Since they are effectively unsaleable on the open market, ‘Amway’ products are irrelevant. In the final analysis, all closed-market swindles are based on shutting down victims’ critical and evaluative faculties in order to create a belief in essentially the same puerile fiction. Although blief in a ‘Ponzi scheme’ can be temporarily sustained by using the later victims’ cash to pay out the earlier victims, classically, the perpetrators are forced to abscond with the cash when the authenticity of their fictitious claims are challenged and too many victims re-enter reality and demand their fictitious profits.
The perpetrators of the ‘Amway’ fraud have sought to avoid this problem and sustain their activities by arbitrarily defining their victims as ‘Independent Business owners’. To casual observers it then appears that the victims are reponsible when they fail to make money. Victims are also conditioned to accept unconciously that they can only achieve prosperity, happiness and freedom if they believe totally in ‘Amway’. Consequently, when inevitably they fail most can be easily persuded that it was their own fault. This form of closed-logic trap is classic of many cultic movements and totalitarian regimes. Long-term adherents of the ‘Amway’ myth are, in reality, insolvent de facto slaves, but their own egos will not allow them to accept this. Core adherents who manage to break with ‘Amway’ and to confront the ego-destroying reality that they have been deceived and exploited are invariably destitute and dissociated from all their previous social contacts.
Quixtarisacult:
Cognitive dissonance either does one of two things. Allows victims of MLM schemes to continue on in the “Closed Market Swindle” (as you call it) or eventually see through the deception, blame themselves and flush themselves out of the scheme. I follow your reasoning and description of how it works very well. Adherents are conditioned to blame themselves for the failures of the system. Heavy mind manipulation must go on to keep people paying to play in a game so heavily stacked against them.
I have pointed out the deception of calling oneself an “Independent Business Owner” as well. There is nearly zero independence involved in signing a contract with Amway. They have carefully constructed these contracts to place themselves in nearly complete control of “their” business. To think one is operating their own independent business if a sign of insanity. Amway controls almost every aspect of the business arrangement to include product, pricing, and promotion. An independent businessman makes the rules, doesn’t abide by rules set in stone by another. Being an IBO is the biggest joke on the duped group of suckers that get fleeced by this scheme.
David Brear:
...You demonstrate a high-level of understanding how the trick is pulled. The essence of mental manipulation is gradually to take control of its individual subject’s means of thought (i.e. his/her words and images) shutting down their critical and evaluative faculties whilst giving them the illusion that they are making free-choices. The great paradox of cultic movements is that their core-adherents are totally convinced that no one is coercing or controlling them. However, the term ‘Amway’ (corruption of the American Way) is itself an inversion of reality. The mere fact that ‘Amway’ is still being dealt with by commercial regulators is already a victory for its instigators. In order to understand and expose any cammouflaged totalitarian movement it is vital to use accurate deconstructed terms at all times. Any commentator who repeats the reality-inverting shielding-terminology of any cultic group, but without detailed qualification (or heavy irony) demonstrates that he/she remains at a pitifully low level of understanding. sadly, it is impossible for many former cult adherents to describe their experieces using terms other than those which they were conditioned to use in their group. ‘The most powerful weapon in the hands of the oppressor is the mind of the oppressed’.
-07 Oct 08
If you enjoyed reading David Brear, there is more of his work that can be found by clicking on these links:
(Originally posted on Quixtar Cult Intervention on February 22, 2009)
...by QCI contributing guide to the Amway Labyrinth, David Brear:
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‘If you tell a big enough lie 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 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.
Joseph Goebbels (1897-1945)
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When I first began to examine the disturbing, ritual images (clean-cut, heterosexual couples with perfect smiles and perfect children, posing beside their shiny new ‘Dream’: cars, houses, pools, boats, etc.), which have been used to keep the vulnerable and unwary swallowing the ‘Amway’ myth, I was struck by the frightening similarity between this kitsch, Utopian propaganda and the sugary pictures once used to coat another poisonous lie. According to the ‘Amway’ myth: everyone, no matter what their class, profession or property can become the owner of an ‘Independent Business’ which (only through effort and unquestioning belief) has been proven to bring ‘Total Financial Freedom in 2-5 years.’ On closer inspection, this ambiguous fairytale turns out to have been adapted from a very specific, and revealing, pattern. In unambiguous terms, according to the same closed-logic of the movement’s controlling scenario: everyone who fails to achieve economic redemption in ‘Amway’, has only himself/herself to blame. Unfortunately (over a period spanning 6 decades), a veritable mountain of quantifiable evidence has proved the so-called ‘Amway Business Opportunity’ to be nothing more than a premeditated, closed-market swindle shielded by (effectively) unsaleable products and mystifying mathematics. The plain truth of the matter is that, behind all the reality-inverting ‘Amway’ propaganda, lurks a self-perpetuating, self-gratifying and progressively-more-expensive-to-play game of make-believe which has been rigged so that no one can win, except the sanctimonious little gang of charlatans who set it up. However, this soul-destroying, totalitarian racket is neither original nor unique. Therefore, it cannot be fully-understood in isolation.
Immediately after usurping absolute power in Germany, Adolf Hitler declared that ‘May 1st 1933’ would be the first ‘National Labour Day.’ Since the end of the 19th century, May Day had been the workers’ festival in Germany and many other European countries. Although the event was traditionally marked with mass-parades of trade-unionists, Socialists and Communists, Hitler now made a typically ambiguous promise - ‘National Labour Day would be celebrated as never before.’ During the final days of April 1933, the leaders of Germany’s trade-unions (agricultural and industrial), along with large delegations of workers, were summoned to Berlin. To give them the illusion that they were making a free-choice, many were offered airline, and train, tickets and accommodation, whilst (for the benefit of the totally positive ‘Nazi’ news-reels) a select few were welcomed at the Chancellery by a smiling ‘Führer’ with beer and sausages. On May 1st, Hitler gave one of his mesmerizing performances in front of an audience of over 100 000 cheering workers at Berlin’s Tempelhof airfield. His reality-inverting script was entitled: ‘Honour Work and Respect the Worker.’ The following morning, every German trade-union office was overrun by hordes of heavily armed ‘Nazi’ agents. At a stroke, all unions were demolished to make way for Hitler’s ‘National Socialist’ Utopia. Union funds were seized and democratically-elected union leaders captured en-mass, beaten-up and packed-off to ‘concentration camps.’ Hitler’s main partner in setting this treacherous trap was one of his most-obsequious acolytes, Dr. Robert Ley (1890-1945). Ironically, in German, Ley is pronounced ‘Lie’.
Robert Ley was born in rural Westphalia. He was the 7th child of 11 children in a family of poor peasant farmers. As a youth, he had escaped his humble origins and attended the Universities of Jena and Bonn to study chemistry. At the outbreak of WWI, Ley (aged 24) was one of the first to volunteer to go to the Western Front. After 2 years in the artillery, he then volunteered to become a pilot, but in the summer of 1917 he was shot down and taken prisoner. It is generally believed that Ley (who returned home with an incurable speech impediment) suffered brain damage when his aeroplane crashed. Despite gaining a shameful reputation as an overbearing, and vindictive, lecher, drunkard and bully, in 1920, Ley received a Doctorate in chemistry from the University of Westphalia. He went on to work as a food chemist for an arm of the I. G. Farben Chemical company in Leverkusen in the Ruhr. However, he couldn’t live with the fact that the Treaty of Versailles had awarded this region to the French. Thus, in 1924, Ley turned to extreme nationalism. When he lost his job (because of his drinking), he became a full-time ‘Nazi’ proselytizer. With his respectable academic title, Ley was welcomed into the fledgling movement with open arms. He immediately found himself in a position of power in a organization presented externally as a ‘political party’, but which internally was totalitarian (i.e. it was centrally-controlled and required of its core-adherents an absolute subservience to the group and its patriarchal leadership above all other persons). ‘Nazi’ recruiters generally targeted alienated veterans. They could be more-easily persuaded to buy into the self-gratifying delusion that Germany and Austria hadn’t lost WWI militarily…. The ‘Aryan race’ had been betrayed and forced to surrender in 1918, by industrial strikes which crippled arms production and supply…. These strikes were instigated by trade union leaders who were the agents of an evil international Communist/Freemasonic conspiracy controlled by sub-human Jews. In 1925, Hitler appointed Robert Ley ‘Gauleiter of the Southern Rhineland.’ He was subsequently appointed ‘Reichsorganizationsleiter’ (‘party organization chief’) and elected to the Reichstag. The celebrated American journalist and author, William L. Shirer (1904-1993), who met Ley on numerous occasions, described him as:
‘repulsive… tough, excitable, vulgar - a brawling roughneck. He seemed to me to have the instability, the sense of insecurity, that was common to most of the men around Hitler.’
Before the end of 1934 (as part of Hitler’s secret plan to tear up the Treaty of Versailles to reignite, and win, WWI), the defunct German unions were replaced by a single corporate structure. This was headed by Ley (who could not be held to account by his membership), presented externally as a non- profit-making association protecting the rights of all workers and arbitrarily defined by the ‘Nazi’ leadership as the ‘Deutsche Arbeitfront’ or ‘German Labour Front’ (‘DAF’). Over 25 millions workers, business owners and professionals were effectively forced to join - no one could legally work in the ‘Nazi’ Utopia without a ‘DAF Work Book.’ In reality, this document was part of a vast intelligence-gathering operation. At the same time, ‘Nazi’ labour-laws took away workers’ rights and reduced them to the position of serfs in a latter-day feudal system. As German employers were given the right to retain ‘DAF Work Books,’ employees were (effectively) barred from changing jobs. Collective bargaining was ended and strikes were outlawed. Powerless German workers could now be allotted an increasingly smaller share of the national income (i.e. the cost of living increased, but wages were frozen). Eventually, most were obliged to live at little better than subsistence level. By 1939, the total annual figure being systematically extracted from ‘DAF’ members in ‘dues’ has been estimated to have exceeded 1 billion Reichsmarks (about $200 millions). The ‘DAF’ had 7000 employees, but it relied on 135 000 ‘volunteers.’ In this way, the ‘Nazi’ leadership eventually acquired absolute control over a capital sum estimated at 5 billions Reichsmarks (about $1 billion).
In order to distract the population from reality, the ‘Nazi’ leadership created a parallel corporate structure, ‘Kraft durch Freude’ (‘Strength Through Joy’ ) or ‘KdF’ — a non-profit-making association providing a range of benefits and amenities for the German working-classes and their families. In 1937, this organization received 29 millions Reichsmarks from the ‘DAF.’ Obviously, this was mostly the workers’ own money. An avalanche of thought-stopping words and images was used to maintain the illusion that redemption was on hand. Concerts, operas, art exhibitions, etc. were organized. Many workers were given ‘free’ gymnastics and football training, whilst others received access to previously exclusive sports (golf, tennis, sailing, etc.). A number of gigantic ‘classless holiday-camps,’ etc., were also constructed. These gained prizes in international, architectural competitions. Hundreds of beach, lake and ski resorts were requisitioned along with ten ocean liners to take German workers on Atlantic, Baltic and Mediterranean cruises. The ‘Nazi’ Propaganda Minister, Joseph Goebbels, focused everyone’s attention on what were described as ‘the world’s first, purpose-built, classless cruise-liners,’ the ‘Wilhelm Gustloff’ and the ‘Robert Ley.’ The launch of the 25 000 ton ‘Wilhelm Gustloff’
in Hamburg on May 5th 1937, was an international event attended by tens of thousands of bedazzled believers along with a flock of bleating propagandists. ‘Nazi’ news-reels, newspapers, brochures, magazines, posters, etc., all reflected the same ritual images of prosperous workers and their happy families enjoying the pure air and freedom of the high seas onboard their dream boats. For a short period, ‘KdF’ was the largest travel agency in the world. The holidays it supplied, although Spartan and tightly regimented, were amazingly cheap. Meanwhile, the ‘Nazi’ leadership was free to embezzle huge amounts of workers’ cash from the ‘DAF.’ Robert Ley gave himself an enormous salary. As well as private railway carriage, a fleet of luxury cars and villas in a number of cities, Ley bought himself a country estate near to Cologne and began hoarding art and antiques. His drinking, womanizing and boasting now knew no bounds.
In February 1933, whilst attending the Berlin Motor Show,
Hitler had made another ambiguous promise: Only 1 in 50 men owned an automobile in Germany, compared with 1 in 5 in America.… every German would, therefore, be given the opportunity to own a car… these would be sold for less than 1000 Reichsmarks (the cost of a motorcycle at that time) and make no profits. Although most free-thinking observers recognised this as being impossible (the cheapest, German-produced car on the open-market was 1 500 Reichsmarks), over the next few years ‘Nazi’ propagandists elaborated the ‘Volkswagen’ or ‘People’s Car’ lie until the truth became almost unthinkable. Obviously, many oppressed workers needed to believe in the ‘People’s Car,’ and the concept had existed prior to the Hitler usurping power. As early as 1927, the renowned Austrian automotive engineer, Dr. Ferdinand Porsche (1875-1951),
published a series of sketches of a proposed, lightweight, low-maintenance, rear-engine, family vehicle, capable of 100 kph. By the early 1930s, some prototypes had been built to his designs; first by Zündapp (whose directors withdrew because of problems with the 3 cylinder water-cooled engine), then by NSU (whose engineers introduced a revolutionary torsion suspension and a flat 4 cylinder, air-cooled engine, but whose directors withdrew because of the depressed economic climate). At this time, Ferdinand Porsche seems to have been deliberately targeted by the ‘Nazi’ leadership. All alone and with his design company on the verge of liquidation, he was encouraged to request a meeting with the ‘Führer’ himself. Porsche was easily seduced. In 1934, he signed a government contract containing the following terms:
1). 3 prototype cars had to be available within 10 months.
2). They had to have a carrying capacity of 4 adults, or 2 adults and 3 children,
or 3 soldiers and a machine gun.
3). They had to be able to cruise at 100 kph.
4). Average fuel consumption had to be no more than 8 litres per 100 km.
5). The engine had to be air-cooled.
6). The retail price had to be less than 1000 Reichmarks.
Hitler was completely unqualified to design a car. He couldn’t even drive, but, for obvious reasons, Porsche felt obliged to play along with the story that the ‘People’s Car’ was originally the Führer’s own concept. At the same time, the ‘Nazi’ regime massively expanded the construction of the high-speed, Autobahn, road system. Again, this project (although touted as the part of the ‘Führer’s great vision to free the masses and unify the Reich’), had existed (albeit in a reduced form) prior to Hitler usurping power.
Predictably, Porsche’s design company, in reluctant partnership with the ‘German Auto Manufacturers Association’ (RDA), found it (effectively) impossible to remain within the 1000 Reichsmarks price limit. The 3 prototypes didn’t appear until 1936; thus, missing the 10 month deadline. The Porsche company and the RDA were in breach of contract, so the project could be conveniently restructured under the banner of a further off-shoot of the ‘DAF’, ‘Gesellschaft Zur Vorbereitung des Deutschen Volkswagen’ or ‘German People’s Car Planning Group Inc.’ (‘GeZuVor. GmbH.’). The ‘Nazi’ propaganda machine went into overdrive - 300 millions marks of accumulated ‘DAF’ funds would be committed to building the ‘Largest Automobile Factory in the World’, it would employ 70 000 people and be capable of producing ‘1.5 millions vehicles a year; Greater Capacity than Ford.’ Daimler-Benz was subcontracted to build 30 test-vehicles. In 1937, the Stuttgart coachbuilders, Reutter, delivered 30 exhibition prototypes in the form of saloons, drop-head coupés and open-tourers. Meanwhile, the workers’ ‘DAF’ money financed a team of architects and engineers (some of whom had been recruited from Ford in the USA) to plan the construction of a vast Utopian factory/metropolis. On May 26th 1938, Hitler laid the cornerstone at the little town of Fallersberlen (birthplace of Heinrich Hoffman, the composer of ‘Deutschland uber Alles’). A flock of around 150 ‘Nazi’ propagandists were in attendance along with a claimed 70 000 people. A smiling ‘Führer’ was filmed in the passenger seat of an open-tourer mobbed by his deluded admirers.
To wild cheering and thunderous applause, Hitler proudly declared that his new car would be called the ‘KdF-Wagen,’ and his new factory/metropolis, ‘KdF-Stadt.’
In reality, this carefully stage-managed event was just a cruel charade, because (whilst it remained in ‘Nazi’ hands) the ‘People’s Car’ was the bait in one of the most-devious advance-fee frauds in history. The switch soon appeared — a counterfeit direct sales scheme or ‘savings plan’ instigated and controlled by the ‘Nazi’ leadership. At this time, there were about 75 exhibition prototypes in existence and they were constantly being shipped around to fairs and festivals all over Germany. Millions of convincing brochures and magazines were circulated. These featured strangely-familiar, ritual images of prosperous workers and their smiling families enjoying the pure air and freedom of the open road in their dream cars. Similar posters appeared in factories and public places.
‘Strength Through Joy announcement (August 2nd. 1938)’
1. ‘Each German, no matter what their class, profession or property can become the buyer of a People’s Car’.
2. ‘The minimum weekly payment, including insurance, will be 5 marks. Regular payment of this sum will guarantee, after a period which is yet to be determined, the acquisition of a People’s Car’.
3. ‘Application for the People’s Car savings plan can be made at any DAF or KdF office, where further details can also be obtained. Factories and shops can submit collective orders’.
‘A People’s Car for every German — let that be our goal. That is what we want to achieve. Will all of you help in that; it shall be our way of saying thank-you to the Führer’;
During the latter months of 1938, masses of Germans felt obliged to apply for the ‘savings plan;’
no one was refused. The propaganda steadfastly pretended that 10 millions Germans would have a car by 1948. The authenticity of this fairytale could not be challenged in the totally positive world according to Hitler. However, the same fiction was widely-reported as fact internationally which, sadly, made it appear even more convincing. In this way, the ‘Nazi Propaganda Minister’ easily maintained an absolute monopoly of information. In reality, many Germans never actually began to pay for their ‘KdF Wagens’ whilst a huge percentage soon dropped-out, simply because the average worker had barely enough money to survive. It was then announced that, after 3 years, ‘regular savers’ would receive a ‘priority contract’ guaranteeing a ‘KdF-Wagen (subject to availability)’… production would ‘begin in September 1939.’ In the spring of 1939, Robert Ley gave a typically sanctimonious speech:
“Our God is the wonderful Law of Creation whose amazing unity of all things shows itself in wonderful flowers, in growing trees, in new born children, in the secrets of a mother, in the growth of our people, in work and accomplishment and creation, in life itself. It is joy we have in everything. How beautiful everything is. Do you feel the same way? I am so happy to be alive. A priest recently asked me: ‘but what about eternity?’ I replied: ‘A day in National Socialist Germany is better for me than all your Heaven.”
At the start of September 1939, less than 350 000 unquestioning Germans were actually still struggling to make their payments, convinced that in 2 more years they would be driving down an Autobahn in a shiny new ‘KdF’ dream car. The propaganda soon claimed that 50 ‘KdF Wagens’ had already been delivered (albeit to ‘special customers’). Even if these had been available to regular ‘contract holders,’ then the odds against getting one would have been almost 7000/1. In reality, Hitler was busy ensuring that the fulfilment of his ‘KdF’ fantasies would be postponed indefinitely, because, at precisely this moment, his long-planned invasion of Poland (facilitated by the Autobahn system) forced the leaders of Britain and France to declare war on the ‘Third Reich.’ The ‘Nazi’ leadership immediately posed as innocent victims – the Fatherland was being attacked by the agents of an ‘evil international Jewish/Freemasonic conspiracy’…. To save the ‘Aryan race,’ ‘KdF-Stadt’ would have to be turned-over to armaments manufacture…. The classless cruise ships, ‘Robert Ley’ and the ‘Wilhelm Gustloff’ (which had already been requisitioned to bring ‘Nazi’ volunteers home from the Spanish Civil War), would have to turned-over to the navy. In this way, not one of Hitler’s ‘KdF’ offers was honoured and not one cent was refunded. The majority of victims couldn’t face the ego-destroying reality that their admired and respected ‘Führer’ had deliberately cheated them. Those who could were obliged to remain silent. All free-thinking individuals challenging the authenticity of the closed-logic ‘Nazi’ myth risked systematic categorization, exclusion and destruction as ‘Traitors.’
During the early 1940s, some 65 000 all-terrain and amphibious, ‘type 82’,
‘type 128’ and type ‘166’ military vehicles (converted from Porsche’s designs) were supplied to the German army. There was also a ‘type 87’ military saloon car for high-ranking ‘Nazi’ officers. By 1943, ‘KdF Stadt’ was principally fulfilling the secret military objective for which it had always been intended - an aircraft repair factory, safe from attack because it did not feature on most RAF maps. However, during 1945, production of the notorious ‘V1’ flying-bomb began at ‘KdF Stadt.’ More than 3500 of these hit London, and the factory became a priority target for the RAF and USAF. After the War, the remains of ‘KdF-Stadt’ and the ‘People’s Car’ project were discovered by a British army officer, Major Ivan Hirst.
He was looking for ideas to rebuild the German economy, but which wouldn’t threaten British jobs. Although several people, including Robert Ley and Ferdinand Porsche, were arrested as a war criminals (12 000 – 20 000 POWs had been forced to work as slaves at ‘KdF-Stadt’ and many deaths had resulted) the ‘Volkswagen Beetle’ eventually became a world-beating product. Porsche was held without indictment for 20 months in Dijon, whilst Ley hanged himself in Nuremberg before his trial. ‘KdF-Stadt’ was renamed Wolfsburg.
In 1961, after a protracted lawsuit, the surviving victims of the ‘People’s Car’ swindle were offered the choice of a cheque for 100 Deutche marks or a discount of 600 Deutche marks on a new ‘VW Beetle.’ Also in 1961, Volkswagen paid the Ringhoffer-Tatra group of Czechoslovakia 3 millions Deutsch marks. In the face of overwhelming evidence, members of the Porsche family accepted that a significant amount of the original ‘People’s Car’ design (particularly, the body styling, torsion suspension and rear-mounted air-cooled engine) was, in fact, copied by Ferdinand Porsche from the revolutionary designs of Professor Hans Ledwinka. These had been patented by Tatra in the early 1930s, and had featured on the ‘T97 Tatra’, first produced in 1936. Prior to WWII, although faced with a mystifying labyrinth of corporate structures which was deliberately designed to isolate the ‘Nazi’ leaders from liability, the directors of the Tatra company had filed a lawsuit against ‘KdF,’ but this automatically disappeared when Hitler’s forces rolled down his nice new Autobahns into Czechoslovakia.
In 1998, to avoid several immense lawsuits filed in the USA, Volkswagen set up a $12 millions private relief-fund to compensate the slaves whose misery had helped establish the corporation in world markets during the ‘Nazi’-era. Conveniently, by this time, only a few former-slaves remained alive.
As for Joseph Goebbels: In the spring of 1945 (as the Red Army approached Berlin), along with his wife, Magda, and 6 children,
he withdrew into the ‘Führerbunker.’ When Hitler shot himself on April 30th 1945, Goebbels was named as ‘Reich Chancellor’ in the ‘Führer’s’ will. The following day, Goebbels ordered an SS doctor, Helmut Kunz, to inject his 6 children with morphine and then break an ampoule of cyanide in each of their mouths. Kunz later claimed that Hitler’s own doctor and the children’s mother had actually administered the poison. About 15 minutes afterwards, Goebbels (probably) shot himself whilst his wife (probably) took cyanide. Their bodies (which were only partially burned due to a lack of petrol), were later identified by Vice Admiral Hans-Erich Voss.
Copyright David Brear 2008
(End)
'If you tell a big enough lie and keep repeating it, people will eventually come to believe it.'
(First appeared on Quixtar Cult Intervention Blog on July 7, 2009)
By David Brear, well known Corporate Frauds Blog guest Critic and Guide to the Amway Labyrinth:
‘If something sounds too good to be true, it probably is.’
(Anon. 20th century proverb)
I’d long-since given up being scandalised by the dozens of hard-pressed hacks who, during 2009, have parroted (without qualification or heavy irony) the following reality-inverting propaganda broadcast by the ‘Amway’ Ministry of Truth:
‘The Billionaire Owners of the Amway Corporation have created 3 Millions Independent Business Owners Worldwide with Total Annual Sales of $8.2bn.’
However, the ‘Amway’ mob must have fallen about laughing when a UK High Court Judge and three UK Appeal Court Judges also repeated (without qualification or heavy irony) elements of the same script in long-winded judgements which (apparently) took them many months to formulate. Sadly, the sanctimonious little gang of Bible-thumping charlatans who dreamed-up the comic-book ‘commercial’ fiction entitled: ‘Amway - the World’s Largest Direct Selling Company,’ have been allowed to peddle it as fact for the past 50 years. They have presented themselves as ordinary men turned selfless capitalist supermen and infiltrated traditional culture -surviving all less-than-intellectually-rigorous challenges whilst continuing to expand the scale of their lies year on year, until the ugly truth (lurking behind their seductive yarn) has become almost unthinkable to casual observers (including many politicians, regulators, Judges and journalists). In the adult world of quantifiable reality, the ‘Amway’ mob are economic alchemists whose miraculous ever-growing Multi-Billion Dollar Sales have never existed. Furthermore, the endless chain of wide-eyed dreamers who have temporarily become totally convinced that they owned a share of them, can in no way be accurately described as ‘Independent Business Owners’. This reality-inverting term is merely the ‘Amway’ mob’s own arbitrary definition of their victims (some of whom have lost everything and committed suicide).
Let’s face it, how (in the cold light of day) can the world continue to accept that:
Richard DeVos and Jay VanAndel (a couple of ambitious, but penniless, WWII veterans), became billionaires by inventing a new form of infallible, philanthropic capitalism based on the ‘Christian-inspired principle of helping others to succeed?’
Recently, however, I didn’t know whether to laugh or cry when I read the following thoughtless headline on the BBC News Website:
'Bernard Madoff has been given the maximum prison sentence of 150 years for masterminding a massive fraud that robbed investors of $65bn (£40bn).’
Even now, with the benefit of hindsight, the majority of commentators have completely failed to grasp that what Madoff steadfastly pretended to be the ‘World’s Largest Hedge Fund’ was nothing more than a comic-book ‘commercial’ fiction which, for the best part of 20 years, he was allowed to peddle as fact. He presented himself as an ordinary man turned selfless capitalist superman and infiltrated traditional culture - surviving all less-than-intellectually-rigorous challenges whilst continuing to expand the scale of his lies year on year until the ugly truth (lurking behind his seductive yarn) became almost unthinkable to casual observers (including many politicians, regulators, Judges and journalists). In the adult world of quantifiable reality, Madoff was a economic alchemist whose miraculous ever-growing multi-billion dollar trading profits never existed. The wide-eyed dreamers who became totally convinced that they owned a piece of them, can in no way be accurately described as ‘Investors.’ This reality-inverting term was merely Madoff’s own arbitrary definition of his victims (some of whom lost everything and committed suicide). In fact, when Madoff was finally arrested, less than $1bn remained under his control.
Let’s face it, how (in the cold light of day) could the world have accepted that:
Bernie Madoff (an ambitious, but penniless, lifeguard), became a billionaire by inventing a new form of infallible, philanthropic capitalism which enabled him to invest on the stock market and always show a profit, no matter what the overall trading conditions were?
or that:
Bernie Madoff was prepared (because of his Jewish-inspired Principles) to share the secret of his success with others?
At the risk of stating the obvious, if ten individuals each give you ten coins, then, no matter how you divide the resulting one hundred coins, it is impossible for you to give all your contributors a greater number of coins than they started with. In technical terms, this is an elementary example of an unviable, centrally-controlled, closed system of economic exchange; in that, since it has no consistent source of external revenue, it can have no possibility of generating a profit for the bulk of its contributing participants. The same incontrovertible logic applies if your contributors number one hundred, one thousand, one hundred thousand, one million or even one hundred millions. Unless the person(s) receiving the coins possesses the superhuman power to suspend the laws of physics and miraculously create more coins from nothing, then their number remains finite. Any claim to the contrary is a lie, and lying to people to get their money is fraud which is a form of theft.
A pyramid scam can be essentially defined as:
1). Any systematic fraud wherein an unviable, centrally-controlled closed-market is maliciously promoted as a viable, decentralised, open market from which any contributing participant can expect to receive a future material benefit.
2). Any self-perpetuating deception wherein the self-gratifying group-delusion that an authentic system of economic exchange exists which can keep generating an incremental material benefit for all its contributing participants if they just find further contributing participants, who, in turn just find further contributing participants, etc. in an infinitely expanding, geometric progression, is maliciously established for the purpose of human exploitation.
A pyramid scam can, therefore, be more accurately described as a ‘premeditated closed-market swindle.’ In everyday terms, it is the peddling of the finite as infinite, or ‘Alchemy’ applied to economics. Consequently, there can be no doubt that Bernie Madoff ran the most-widely understood form of ‘closed-market swindle.’ These can be technically defined as:
Those without tangible specificity (popularly known as: ‘Snowball,’ or ‘Ponzi,’ schemes or ‘Money Games’); wherein the instigators counterfeit, and/or subvert, a simple corporate structure in which they arbitrarily, and falsely, define themselves as ‘Commercial Sponsors’, ‘Fund Managers’, etc. Then, by maintaining an absolute monopoly of information presented using a constant repetition of further, thought-stopping ‘commercial’ key words and images combined with pseudo-economic mystification, deceive members of the public into becoming, and to deceive others into becoming, the unconscious victims of, and contributing participants in, a counterfeit ‘Investment Scheme’ without a consistent source of external revenue (due to the fact that the instigators’ hidden motive is merely the acquisition of victims’ money) in which victims are arbitrarily, and falsely, defined by the instigators as ‘Investors,’ but over which the instigators retain absolute control of its means of exchange.
The graphic description, ‘Snowball scheme,’ stems from the fact that when the number of victims reaches a critical mass, belief in the Utopian myth of a miraculous system to multiply money, begins to roll-along and grow under its own momentum. ‘Closed-market swindles’ can, therefore, also be described using any traditional allegory illustrating collective delusion: the ‘Emperor’s New Clothes’; the ‘Blind Leading the Blind’; the ‘Ship of Fools’; etc. However, the phenomenon is now perhaps best described as an organic computer virus - a contagious parasite that needs human minds to give it existence. Once it has found a vulnerable point of entry, the virus proliferates and survives in traditional culture, because carriers systematically pass it on via their social contacts. When explained in these accurate deconstructed terms, the psychology driving ‘closed-market swindles’ is indistinguishable to that driving any other self-gratifying, pseudo-scientific delusion. New adherents often exhibit euphoria, but certain converts can become completely dissociated from external reality; experiencing a prolonged psychotic episode. That said, in their most well-known form, ‘closed-market swindles’ are unsustainable. Although a proportion of illegal gains can be used to maintain the temporary illusion of authenticity, when the supply of new converts runs out, and/or too many adherents begin to demand their fictitious profits, the virus writers (unless they become deluded themselves) are forced to abscond with the cash. The authorities are only hit by a storm of complaint when the core-group of victims suddenly reconnects with external reality.
Bernie Madoff is an almost unique case, in that (although he has apparently withheld the whole truth about his activities in order to protect his criminal associates) he gave himself up to the authorities, pled guilty to fraud and allowed himself to be held to account. The once mighty Madoff has now been described as ‘the most-hated man in America.’ However, given the wider evidence, next to the ‘Amway’ mob he looks like a boy scout. Behind their sanctimonious act, what the ‘Amway’ mob released on a vulnerable 1950s America was a virulent new strain of premeditated closed-market swindle, which (today) can be defined as:
Those with tangible specificity (known as ‘Multilevel Marketing,’ or ‘MLM,’ or ‘Network Marketing,’ or ‘Networking,’ or ‘Direct Selling,’ or ‘Self-Directed Income,’ or ‘SDI,’ scams); wherein the instigators create, and/or subvert, a mystifying series of (apparently independent) corporate structures in which they arbitrarily define themselves as ‘Manufacturers,’ and/or ‘Suppliers,’ of ‘Exclusive Products,’ and/or ‘Services,’ and as ‘Commercial Sponsors’ then, by maintaining an absolute monopoly of information presented using a constant repetition of further thought-stopping ‘commercial’ key words and images combined with a cocktail of pseudo-scientific mystification, deceive members of the public into becoming, and to deceive others into becoming, the unconscious victims of, and contributing participants in, a counterfeit ‘Direct Sales Scheme’ (without a consistent source of external revenue due to the fact that the products, and/or services, are kept at such a banal quality, and/or high price, as to render them effectively unsaleable on the open market) in which victims are arbitrarily defined by the instigators as: ‘Independent Business Owners, Self-Employed Distributors,’ etc., but over which the instigators retain absolute control of not only its means of exchange, but also over its means of production and distribution and its system of dispute-resolution.
In effect, the ‘Amway’ mob originally instigated a more mystifying (and, therefore, more sustainable) version of a Ponzi scheme where illegal internal payments were arbitrarily and falsely defined by them as ‘sales.’ Victims were generally honest, law-abiding Christian folk manipulated by their existing beliefs and instinctual desires. When, inevitably, they lost money, on paper (because they were arbitrarily and falsely defined as ‘Independent Business Owners’) it appeared to be the participants own fault. Many were too financially weakened, and/or embarrassed, and/or guilt-ridden, to confront external reality and complain. They’d often been recruited by a friend or relative, and, in turn, they’d tried to recruit their own friends and relatives (making the truth even more unthinkable).
Unfortunately, the ‘Amway’ mob didn’t stop there.
Copyright David Brear July 2009
Bernie Madoff at the helm of his 'ship of fraud' in happier times, all represented as legitimate business:
(Originally Posted on Quixtar Cult Intervention on September 25, 2009)
By David Brear, Guide to the Amway Labyrinth: _________________________________________________________
‘It is my opinion that the Amway business is run in a manner that is parallel to that of major organized crime groups, in particular the Mafia. The structure and function of major organized crime groups, generally consisting of enterprises engaging in patterns of legal and illegal activity, was the prototype forming the basis of federal and state legislation that I have been involved in drafting. The same structure and function, with associated enterprises engaging in patterns of legal and illegal activity, is found in the Amway business.’
Professor G. Robert Blakey (b. 1936)
‘Every time Europe looks across the Atlantic to see the American eagle, it observes only the rear end of an ostrich.’
To the eternal shame of the United States of America, for more than 50 years, successive grinning generations of the ‘Amway’ mob have been permitted to build a mind-numbing labyrinth of legally-registered corporate structures (pursuing lawful, and/or unlawful, activities) in order to peddle a fake ‘Business Opportunity’ which they (and their bleating flock of apologists) steadfastly pretend to be authentic. During this period, tens of millions of individuals around the globe (arbitrarily defined as ‘Independent Business Owners’) have been gradually churned through an ongoing closed-market swindle and associated advanced fee fraud. However, a significant minority (usually with access to independent funds) have had their minds hijacked by a typical totalitarian perversion of traditional, dualistic (‘positive versus negative’), ritual belief systems. Although these unquestioning core-adherents were manipulated by their existing beliefs and instinctual desires (giving them the illusion that they were making a free-choice), they were, in fact, subjected to co-ordinated, devious techniques of social, psychological and physical persuasion designed to facilitate the shutting down of an individual’s critical, and evaluative, faculties without his/her fully-informed consent. In this way, the worst-case ‘Amway’ victims have been (effectively) coerced into dissipating all their mental, physical and financial resources to the benefit of self-proclaimed ‘Multilevel Marketing’ gurus whom they continued to trust and follow no matter what suffering this entailed. An unknown number of de facto ‘Amway’ slaves have killed themselves. Only a handful of the numerous core-group survivors have refused to be intimidated, and/or bought off, and become whistle blowers. Major criminal organizations were identified by federal legislators 40 years ago (when extended criminal penalties, and powerful civil remedies, were provided to hold their bosses to account). Yet federal prosecutors have (so far) done nothing to prevent the ‘Amway’ mob, and their associate enterprises, from amassing billions of stolen dollars. Indeed, certain leading US political figures and law enforcement agents have enthusiastically assisted in protecting the group’s kitsch front and obstructed full exposure of the pernicious racket that lurks behind it. Tellingly, the sanctimonious rulers of the ‘Amway’ mob have invested some of their ill-gotten gains to infiltrate, and corrupt, traditional culture to a degree which makes even the most notorious ‘Mafia Bosses’ look like a bunch of amateurs. It is no wonder that they continue to grin from ear to ear.
On September 6th 1949 (along with Michael Pacetti), two hitherto-unremarkable USAAF veterans of Dutch Protestant origin, Richard De Vos (aged 23) and Jay Van Andel (aged 25), registered the ‘Ja-Ri Corporation.’ However, this (apparently independent) enterprise was wholly the agent of another one, the ‘Nutrilite Products Company Inc.’
‘Nutrilite’ was (to say the least) a highly-controversial trademark owned by a certain Carl F. Rehnborg a.k.a. ‘Dr.’ Rehnborg,
a one-time penniless toothpaste salesman of German origin who’d acquired a considerable fortune by reinventing himself as an ordinary man turned selfless capitalist superman – a visionary autodidactic nutritionist, chemist, and industrialist who had not only invented a miraculous means of saving mankind from malnutrition and sickness, but also a miraculous ‘New Business System’ (based on the Christian-inspired principle of helping others to succeed) capable of bringing anyone freedom, prosperity and happiness. Officials from the Food and Drug Administration Bureau of Enforcement, who challenged the authenticity of Rehnborg (and his de facto associate enterprises) in the federal courts during two decades, privately knew him to be nothing more than the leader of a little gang of absurd charlatans (protected by an aggressive echelon of convincing attorneys) who’d combined, and updated, the medicine show and Ponzi scheme to reflect the spirit of the age. However, Rehnborg (who posed as the innocent victim of big government) almost certainly suffered from severe and inflexible Narcissistic Personality Disorder. According to the ‘Diagnostic and Statistical Manual of Mental Disorders,’ 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.
Tellingly, the authorized (‘Amway’ ) version of Rehnborg’s life sounds like a thrilling comic-book yarn written by L. Ron Hubbard:
In 1915, Rehnborg (aged 25) voyaged to China on business. After 12 years of living in the Far East (where he witnessed ‘mass-starvation’ and survived starvation himself whilst besieged in Shanghai by supplementing his diet with an improvised ‘vitamin and mineral-enriched broth made from grasses, powdered limestone, animal bones, rusty nails,’ etc.) Rehnborg sailed across the Pacific and landed on the West Coast of the USA. Despite having no money, he managed to establish a research laboratory in his modest loft-apartment on California’s Balboa Island. Assisted by his dutiful wife (Edith), Rehnborg then dedicated 6 years of his life to develop a ‘Revolutionary New Food Supplement.’ He first naively tried to give his secret formula away, but the cynical world wasn’t interested. So, in 1934, he reluctantly decided to create ‘California Vitamins Inc.’ In 1939, Rehnborg moved his ‘Business’ to a ‘Manufacturing and Processing Facility’ in Buena Park, California, and created the ‘Nutrilite Products Company Inc.’ By 1947, acting in association with a ‘Network Sponsoring Company’, ‘Mytinger and Casselberry Inc.’ (to whom he’d sold ‘National Exclusive Nutrilite Distribution Rights’) Rehnborg (aged 57) had created the ‘World’s First Multilevel Marketing Scheme.’ Starting from nothing, he had become an admired and respected millionaire by ‘Helping thousands of Americans to start their own Businesses.’
There is no reason to doubt that Rehnborg (who worked as a commercial agent for Colgate &Co) was in China during, and after, WW I. Whilst the various exciting episodes in his oriental odyssey (although highly implausible) can be neither proved nor disproved, the truth about Rehnborg’s convoluted ‘Rags to Riches’ American fairy-tale is an entirely different matter. Perhaps its just a coincidence, but in 1934 — less than 12 months after the world’s most blood-thirsty vegetarian, Adolf Hitler, had established his ‘National Socialist’ Utopia — Rehnborg (aged 44) created ‘California Vitamins Inc.’, 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 produced and peddled (in private) by Rehnborg himself in insignificant quantities. Consequently, it slipped past regulators. However, anyone with an ounce of common sense could immediately tell that his ‘invention’ was just another inert potion (in the absurd tradition of the medicine show); a random mixture of cheaply-procured common substances with an unjustifiable price tag.
It had probably taken Rehnborg 6 hours to concoct, not 6 years. Up to 1939, Rehnborg avoided the attention of government agents. He relied only word of mouth to sustain and expand his little game of scientific make-believe. Then (apparently after discovering the well-known advertising maxim, ‘if you want to hide something: make as big as you possibly can’), Rehnborg suddenly changed the name of his game to the technical-sounding ‘Nutrilite Products Company Inc.’ and he moved his quackery onto an almost unprecedented scale. Soon, he was legally employing dozens of white-coated workers in purpose-built industrial, and laboratory, buildings in Buena Park, California. He also acquired some farmland near to Hemet in the San Jancinto valley, but it is unclear exactly where he found all the necessary capital.
To casual observers, Rehnborg’s collection of new props looked like any other lawful enterprise. His staff were rational and honest folk whose own innocence brought credibility. At this time, Rehnborg rechristened his ‘invention’, ‘Double X (a.k.a. ‘XX’) Supplement.’
He now proposed to offer Californians two ‘complimentary products’ in one box - a jar of red ‘Multivitamin Capsules’ and a packet of bluish green ‘Multi-Mineral Pills.’ The whole package was deliberately designed to look pure 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. Interestingly, it could also be read as ‘double cross.’ When the deluded former toothpaste salesman’s pretty products were routinely analysed by qualified scientists at the FDA, it was discovered that (although they contained essentially what it said on the labels and were quite harmless) ‘XX Supplement’ really did mostly comprise a random (but precisely measured) mixture of cheaply-procured, common substances (yeast, minerals and dried vegetable extracts: alfalfa; parsley; watercress; etc.). FDA experts later estimated that ‘XX Supplement’ cost no more than a few cents a box to produce. Thus, FDA lawyers knew that Rehnborg was, in fact, using authentic pharmaceutical equipment to fabricate a placebo, labelling it as a ‘Health Tonic’ (a meaningless term) and peddling it at a huge mark up (at least 1000%). This crack-pot pseudo-scientific swindle, which was tantamount to selling a bedazzling amalgam of valueless base-metals for the price of pure gold, might have been quickly nipped in the bud simply by charging Rehnborg with fraud. Apparently, prosecutors never considered the possibility that they might be dealing with someone with severe psychological problems and whose own inflexible delusions were contagious. Instead, they 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 the criminal misbranding of medicines. As a result, an updated version of an age-old fiction was permitted to be mass-marketed as fact. Unfortunately, the lack of any rigorous official challenge only brought its author more credibility. Not surprisingly, a host of copy-cat ‘Health Tonic’ scams quickly sprang up.
As WWII drew to its close, ‘XX Supplement’ had lost its novelty, so Rehnborg (aged 55) acquired two well-chosen associates who resembled favorite uncles, Lee S. Mytinger and William S. Casselberry (described by FDA officials as a ‘cemetery-plot salesman’ and a ‘psychologist’). The result was ‘Mytinger and Casselberry Inc.,’ a second (apparently independent) 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 (defined as ‘Sales’), added to the regular monthly purchases (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 another chapter of Rehnborg’s typical, narcissistic fantasies, 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. Although ‘XX Supplement’ was presented as an ‘Exclusive, Unique and Secret Formula’ which couldn’t be found in drug stores, its constituents could easily be found at a tiny fraction of their fixed assembled-price. To anyone with an ounce of common sense, Rehnborg’s products were (effectively) worthless and impossible to sell on the open market. Therefore, the overwhelming majority of final customers were the non-salaried agents of the second corporate structure, which itself was the sole customer and 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 eventually become rich, the participants in this camouflaged money game were obliged by its rules to hand over a regular payment to Mytinger and Casselberry to be shared with Rehnborg. From all points of view (medical, economic, legal, etc.), ‘XX Supplement’ might have well not existed. New converts 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 would later use to take action. Contributing participants were being instructed to smile, project 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.
Even though it wasn’t his area of responsibility, FDA Legal Counsel (1939- 1972), William H. Goodrich, was probably the first 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: ‘Multilevel Marketing’) was actually the same old delinquent previously known as ‘pyramid selling.’ Again, anyone with an ounce of common sense could work out immediately that, since Rehnborg was a medical alchemist, the strong likelihood was that Mytinger and Casselberry were economic alchemists. The dubious trio were obviously acting in association, but, unfortunately, agents of the FDA and those of the FTC and FBI acted independently. However, in the late 1940s, the rapidly-expanding ‘Mytinger and Casselberry Inc.’ dossier was already in the hands of prosecutors. Apparently, they still never considered the possibility that they might be dealing with persons with severe psychological problems and whose own inflexible delusions were contagious. Instead, they still felt obliged to take no action; this time reasoning that, by arbitrarily defining illegal internal payments as ‘Sales,’ Mytinger and Casselberry had found a loophole in federal laws concerning pyramid scams and Ponzi schemes. As a result, another updated version of an age-old fiction was permitted to be mass-marketed as fact. Yet again, the lack of any rigorous official challenge only brought its authors more credibility. Not surprisingly, a host of copy-cat swindles (camouflaged by banal, but pricey, products) quickly sprang up.
By 1947, Rehnborg, Mytinger and Casselberry were steadfastly pretending ‘15 000 Successful Distributorships across the USA,’ with ‘Sales’ totalling ‘$500 000 dollars per month.’ They had also organized 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.’
Rehnborg now played the wise paternal role of ‘Scientific Adviser’ to ‘Mytinger and Casselberry Inc.’ He toured the USA preaching the gospel to crowds of unquestioning admirers — ‘for less than $20 a month, Nutrilite XX 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, their lawyers promised that the booklet would be ‘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 comic-book still recounted alleged case-histories explaining that ‘Nutrilite brought relief from such ailments as diabetes, feeblemindedness, stomach pains, sneezing and weeping.’ Not surprisingly, FDA officials were not impressed, so, in 1948, they finally launched a co-ordinated plan of raids, and seizures of ‘Nutrilite XX Supplement’ and associated publications, with the intention of forcing the counterfeit ‘company’ to close down or go to trial.
In 1951, after a series of protracted lawsuits, appeals and countersuits (in which Mytinger and Casselberry hid behind slick attorneys who cleverly manipulated one conservative judge’s existing beliefs by portraying their clients as freedom-loving American entrepreneurs being unjustly attacked by jealous bureaucrats with sinister hidden motives), the FDA eventually 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 lawyers proved Mytinger and Casselberry to have lied on oath when they testified to the Supreme Court that no further false claims were being made. FDA agents had, in fact, infiltrated the organization (as potential recruits) and recorded deluded proselytizers chanting the same cure-all mantra about ‘XX Supplement.’ Fearing that their monopoly of information might be lost, in 1954, Rehnborg, Mytinger and Casselberry produced a kitsch 20 minute colour propaganda film, ‘From The Ground Up’ (featuring themselves as three ordinary guys turned philanthropic farmers, scientists and industrialists), and they began to publish their own propaganda magazine, ‘Nutrilite News’ (stuffed with kitsch colour photos of happy, healthy and wealthy ‘Distributors’). At this time, more than ‘80 000 Distributorships’ conducting Multi-Million Dollar ‘Total Annual Sales’ were being claimed in the USA, whilst flag-waving ‘Rallies and Seminars’ (addressed by clean-cut, young ‘Christian Distributors’ like Rich De Vos and Jay Van Andel) were regular events. Yet, no independent quantifiable evidence was ever produced to prove what percentage of so-called ‘Nutrilite Sales’ were authentic retail transactions, or how many people who signed a ‘contract’ with ‘Mytinger and Casselberry Inc.’ actually received an overall material benefit from the operation of what its instigators arbitrarily defined as an ‘Independent Business.’ Excluding the tiny percentage of grinning schills at the top of the pyramid, the rolling failure-rate was 100% . Already tens of thousands of Americans were being churned through the pyramid’s base annually. Since there was (effectively) no external revenue, participants were actually buying infinite shares in their own finite money. Mysteriously, the FTC’s only visible interest in ‘Mytinger and Casselberry Inc.’ came as a result of complaints by a rival company alleging breaches in civil laws concerning restraint of trade. Tellingly, even though they were defined in their contracts as ‘Independent Business Owners,’ unpaid proselytizers for ‘Nutrilite’ were forbidden (on pain of unilateral termination of their contracts) to offer any other brand of products.
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-pyramid scams legislation) De Vos and Van Andel created the ‘American Way Association’ (soon rechristened ‘Amway’) - the first of what was to become a shoal of red, white and blue herrings. Indeed, countless, de facto associate enterprises continue to be created, dissolved and subverted. Cheekily, the ‘Nutrilite’ company was itself absorbed into the ‘Amway’ labyrinth in the early 1970s. For more than half a century, this shifty edifice has successfully prevented, and/or diverted, investigation of an ongoing criminal organization and isolated its beneficiaries from liability.
The Racketeer Influenced Corrupt Organizations (RICO) Act (enacted by section 901 [a.] of the Organized Crime Control Act) is a United States federal law which (in theory) provides extended criminal penalties for, and powerful civil remedies against, the leaders and agents of ongoing criminal organizations and their de facto associate enterprises. In the early 1960s, after Robert Kennedy
was appointed Attorney General, the US Dept. of Justice was given a significant role in a co-ordinated national ‘Strike Force,’ established under the direction of the Inspector General of the US Dept. of Labor. This new initiative was the product of an overt joint-congressional policy to hold the leaders of major organized crime groups to account, as well as dismantle their webs of corrupt political figures, judges, attorneys, trade union officials, senior law enforcement agents, etc. Sadly, the long-time Director of the FBI, J. Edgar Hoover
is now known to have been under the influence of racketeers (who were certainly bribing, and probably blackmailing, him).
Despite a growing mountain of conclusive evidence, for decades it was the official policy of the FBI to deny the existence of the ‘Mafia’ and ‘National Crime Syndicate.’ Yet, the average American knew full-well that a pernicious, criminal underworld had been steadily gnawing its way into traditional culture since the federal government had foolishly passed an unenforceable law prohibiting the sale of alcohol (1919-1933), and (effectively) handed a multi-billion dollar industry, and half billion dollar source of tax-revenue, to hitherto small-time gangsters. However, although the Democratic administration’s will to protect US citizens was apparently hardened by the assassinations of President Kennedy and Robert Kennedy, existing legislation was inadequate. Paradoxically, the US Justice Dept. had an ‘Organized Crime and Racketeering Section,’ but technically no such offences existed. Thus, RICO was signed into law in 1970 by the new Republican President, Richard Nixon, but only as a result of ground-breaking recommendations made in the late 1960s by President Johnson’s Commission to Examine Crime in America. The Bill was drafted by Prof. G. Robert Blakey
(former Special Attorney in the Organized Crime and Racketeering Section of the Justice Dept.) under the close supervision of the veteran Democratic Senator for Arkansas, John Little McClellan. Subsequently (guided by Prof. Blakey), a number of individual States enacted similar legislation.
RICO was, in many respects, an unprecedented law for a democracy in time of peace. Indeed, opponents still limply claim that it steps beyond the bounds of the US Constitution. Ironically, it was designed to protect the US Constitution and address an enduring, internal threat to the Republic that remains as dangerous as any external menace. However, in 1970, RICO appeared for all the world to be directed only against the Italian American ‘Mafia’ (although its authors steadfastly refuted this). Whether intentional or not, the Italian-sounding acronym, RICO, is unfortunately the same as that of the anti-hero of the classic 1931 Hollywood gangster movie, ‘Little Caesar’ (starring Edward G. Robinson,
directed by Mervyn LeRoy and based on the 1929 Novel by William R. Burnett). RICO was drafted by lawyers for lawyers, and is, therefore, legalistic, but, at first glance, it can appear to be written in plain language; mainly because it also contains many popular terms. Even when deconstructed, the Act (like the phenomenon it addresses) cannot be fully-understood in isolation. In reality, in respect of the ‘Mafia,’ RICO legislators were trying to shut the stable door long after the horse had bolted. Indeed, another full decade was to elapse before a ‘Mafia Boss,’ Frank Tieri, was actually convicted.
Under RICO, an individual who is a member of any enterprise that has committed any two of 35 crimes (27 federal and 8 State) within a period of 10 years can be charged with ‘racketeering activity.’ The penalty for this crime is a fine of $250 000, and/or 20 years in prison, per racketeering count. In addition the convicted racketeer must forfeit all benefits and any interest on these benefits derived from a ‘pattern of racketeering activity.’ RICO also allows for any individual victimized by the actions of a criminal organization to file a civil suit against the racketeers and, if successful, claim triple damages. Furthermore, when a person is indicted under RICO, the US Attorney has the option of seeking a pre-trial restraining order, or injunction, to seize the defendant’s assets and, thus, block the transfer of property which might be forfeited in the future. RICO violations include: embezzlement, theft, fraud, obstruction of justice, money laundering, kidnapping, extortion, drug trafficking, dealing in obscene material, slavery, murder, arson, acts of terrorism, etc. The US Supreme Court decided that a ‘pattern of racketeering activity’ is proved when criminal acts are related (i.e. ‘they have the same or similar purposes, results, participants, victims or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.’). RICO can be applied in cases where retributive, and/or retaliatory, civil, and/or criminal, prosecutions are brought by racketeers against individuals (or corporate structures) who co-operate with federal law enforcement, and/or intelligence, agencies. Thus, the malicious utilization of the courts (by racketeers, and their attorneys) to punish, and/or silence, whistle blowers, and/or victims, is also in breach of RICO.
