Seeking Alpha

FTC vs BurnLounge ruling bolsters the legitimacy of Herbalife's business model

  • The U.S. Court of Appeals in San Francisco rules that digital music seller BurnLounge is an illegal pyramid scheme because its distributors pay for the right to sell products and are motivated primarily by payments by the company for recruiting new members. The income from merchandise sales is incidental to the income from recruiting. The court did not state that commissions paid to the sales force, rather than customers outside of the firm's distributor network, are illegal.
  • Observers of Herbalife (HLF -0.1%) have been closely watching this case. Many believe the court's ruling is a positive for the company because it clarifies the issue of paying commissions to distributors purchasing products. Multilevel marketing attorney Kevin Thompson says, "As long as the products have legitimate value the company will be in a good position to thwart off pyramid arguments."
Comments (74)
  • Jeffjacobjames
    , contributor
    Comments (457) | Send Message
     
    Great news for Herbalife longs!! It will be amusing to see shorts claim this is somehow NOT helpful to longs! LOL!! M.O.A.S.S. coming soon!!
    2 Jun, 08:31 PM Reply Like
  • Akmanscam
    , contributor
    Comments (2072) | Send Message
     
    It will be amusing but you can be assured they will try to spin this as a negative.
    2 Jun, 10:25 PM Reply Like
  • K. Herbert
    , contributor
    Comments (775) | Send Message
     
    I wouldn't count my chickens before they hatch (the HLF spin doctors were hard at work, but that won't negate the court ruling):
    We agree with the district court that
    "BurnLounge was an illegal pyramid scheme in violation of
    the FTCA because BurnLounge’s focus was recruitment, and
    because the rewards it paid in the form of cash bonuses were
    tied to recruitment rather than the sale of merchandise."
    "...also hold that the district court did not abuse its discretion by
    admitting Vander Nat’s testimony because his testimony was
    relevant and reliable."
    3 In addition to buying a package and paying the monthly Mogul fee, to
    become qualified to redeem BurnRewards for cash a Mogul had to:
    (1) sell two Exclusive or VIP product packages; (2) sell two music albums
    to non-Moguls; and (3) on a continuing basis, have sold at least two
    albums to non-Moguls in the previous month.
    “[Moguls] by default received compensation for recruiting
    others into the program.” The district court concluded that “a
    majority of the BurnLounge business (consisting of the
    Mogul program and related elements) was a pyramid
    scheme.”
    This is a good one:
    "In Webster v. Omnitrition International, Inc., our court
    approved the FTC’s test for determining whether a multilevel
    marketing (MLM) business is a pyramid scheme: a
    pyramid scheme is “characterized by the payment by
    participants of money to the company in return for which they
    receive (1) the right to sell a product and (2) the right to
    receive in return for recruiting other participants into the
    program rewards which are unrelated to sale of the product to
    ultimate users.” 79 F.3d 776, 781 (9th Cir. 1996) (quoting
    Koscot, 86 F.T.C. at 1180)."
    Sounds familiar?
    "B. Prong 2: BurnLounge participants paid money in
    return for the right to receive rewards for recruiting
    other participants into the program, which were
    unrelated to the sale of the product to ultimate users."
    "(1) Moguls were
    required to recruit new members in order to become eligible
    for all three types of cash bonuses and (2) Moguls were
    motivated by the opportunity to earn cash rewards, as shown
    by data illustrating the sharp difference in package purchasing
    patterns of Moguls and non-Moguls, and by the fact that
    BurnLounge’s sales plummeted after the Mogul program was
    enjoined."
    Recruiting and rewards for recruitment were integral to
    BurnLounge’s business structure, and there was ample
    evidence that Moguls were meant to be, and were, primarily
    motivated by the opportunity to earn cash rewards for
    recruitment. As in Omnitrition, the evidence in this case
    shows that BurnLounge’s “focus was in promoting the
    program rather than selling the products.”
    IV. CONCLUSION
    We affirm the district court’s holding that BurnLounge
    was an illegal pyramid scheme, in violation of § 5(a) of the
    FTCA. BurnLounge’s scheme satisfied both prongs of the
    Omnitrition test because Moguls paid for the right to sell
    products, the rewards BurnLounge paid were primarily for
    recruitment, and Moguls were clearly motivated by the
    opportunity to earn cash rewards from recruitment. We reject
    the argument raised by BurnLounge and Arnold that the
    district court abused its discretion when it admitted Vander
    Nat’s testimony because the testimony was relevant and
    reliable. The district court’s decision as to these two issues
    is AFFIRMED.

     

    http://1.usa.gov/1nJ3tSe
    3 Jun, 08:27 AM Reply Like
  • K. Herbert
    , contributor
    Comments (775) | Send Message
     
    "Today’s decision by the United States Court of Appeals for the Ninth Circuit in the FTC v. BurnLounge, Inc. validates product consumption by participants as a legitimate measure of demand for multi-level marketing companies and rejects Bill Ackman’s fundamental thesis against Herbalife."
    http://yhoo.it/1pCvEln
    Nowhere in the ruling is that statement supported. The PR is deceptive if anything
    3 Jun, 09:28 AM Reply Like
  • K. Herbert
    , contributor
    Comments (775) | Send Message
     
    Pershing square responds:

     

    "The notion that the Ninth Circuit’s decision is a vindication of Herbalife is absurd. The
    case certainly does not support Herbalife’s position that sales of products to distributors who
    tried – but failed – to succeed in their pursuit of the Herbalife business should be regarded as true
    retail sales."

     

    http://on.ft.com/1osaWRF
    3 Jun, 09:30 AM Reply Like
  • murc229
    , contributor
    Comments (243) | Send Message
     
    Burntlounge recruitment rewards
    3
    In addition to buying a package and paying the monthly Mogul fee, to
    become qualified to redeem BurnRewards for cash a Mogul had to:
    (1) sell two Exclusive or VIP product packages; (2) sell two music albums
    to non-Moguls; and (3) on a continuing basis, have sold at least two
    albums to non-Moguls in the previous month.
    3 Jun, 09:54 AM Reply Like
  • User 6461431
    , contributor
    Comments (651) | Send Message
     
    K. Herbert: "Nowhere in the ruling is that statement supported. "
    Page 18:
    "BurnLounge claims that when recruits bought packages,
    they were “ultimate users” and it argues that since these sales
    were to “ultimate users,” any rewards paid on these sales
    were related to the sales of products to ultimate users. The
    FTC counters that “internal sales to other Moguls cannot be
    sales to ultimate users consistent with Koscot.” Neither of
    these arguments are supported by the case law.

     

    Again "Neither of these arguments are supported by the case law."

     

    Continuing on Page 19, the decision discusses some of the precedents with Amway and Koscot and summarizes by stating:
    "BurnLounge is correct that when participants
    bought packages in part for internal consumption (to obtain
    the ability to sell music through BurnPages and to use the
    package merchandise), the participants were the “ultimate
    users” of the merchandise and that this internal sale alone
    does not make BurnLounge a pyramid scheme."

     

    Again: "the participants were the “ultimate users” of the merchandise and that this internal sale alone does not make BurnLounge a pyramid scheme."

     

    So why was BurnLounge determined to be a pyramid scheme Page 19:
    "As discussed above, the rewards BurnLounge paid to Moguls
    were primarily in return for selling the right to participate in
    the money-making venture—the Mogul program. The
    merchandise in the packages was simply incidental."

     

    Ackman's response shows that he is diverging away from his original thesis. In his response he says that sales of failed distributors don't represent retail sales. He makes a fair argument, except, Herbalife offers a complete refund for up to 12 months. After that time, a "failed" distributor could sell the product on eBay or similar if they wanted, and presumably, someone purchasing product on eBay is an ultimate consumer of the product.

     

    I recently purchased a pair of Reebok shoes from a shoe store that was going out of business. The retailer could be considered a failed distributor, but whether I paid $150 or $15 for my new shoes does not matter, I was the ultimate user, and the retailer made a valid retail sale.
    3 Jun, 10:33 AM Reply Like
  • K. Herbert
    , contributor
    Comments (775) | Send Message
     
    User 6461431, you are leaving out the good stuff
    Page 18:
    "Such an outcome would be clearly contrary to our case law:
    a pyramid scheme “cannot save itself simply by pointing to
    the fact that it makes some retail sales.” Omnitrition, 79 F.3d
    at 782."
    page 19:
    But it is incorrect to conclude that all rewards paid on these sales were
    related to the sale of products to ultimate users.
    page 20:
    The fact that some sales occurred that were unrelated to the opportunity to earn cash rewards does not negate the evidence that the opportunity to earn cash rewards was the major draw of the BurnLounge Mogul scheme.
    3 Jun, 10:53 AM Reply Like
  • herbs4mike
    , contributor
    Comments (2066) | Send Message
     
    Obviously both Herbert and PS have not read the law..... Any reward that is tied to the sale of a product (whether it is now or later), is a sales reward. That is not verbatim but is the gist of the law. So I don't know who you think you are fooling Herbert with your "sound Familiar" comment in your first post. Cause that TOTALLY backs Herbalife. Just read the law.
    3 Jun, 01:40 PM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi herbs,

     

    Technically, you're not 100% right.

     

    The Court left open an interesting "play" on product based rewards. In HLF's case, it could work like this...

     

    "A" recruits "B". "A" gets "B" to join at the Supervisor Level.

     

    Sales commissions paid to "A" based upon product purchased by "B" as necessary to support "B"'s Supervisor Level, could be considered compensation paid for recruitment not product sales.

     

    This is so, because only "B" can earn commissions based upon retail sales or personal consumption of the product he buys.

     

    Now, I'm not saying that this is how it will go down, but if you examine the Court's decision, they left that door open.
    3 Jun, 02:37 PM Reply Like
  • powershake
    , contributor
    Comments (1176) | Send Message
     
    Ken,

     

    When "A" recruits "B"
    - first "B" will buy membership kit to register with HLF (Zero comm.)
    - "B" will sign the Gold Standard to inform "B" that if s/he wishes to resign for any reason, s/he can return any unsold products in good condition back to HLF within 1 yr of purchase. Free return shipping charges.

     

    The amount of members doing the $3300 investment in 1 month is IMO less than 5%. However, the safeguard is in place just in case.

     

    As Meredith Alder of Barclays points out - HLF has changed from selling larger orders sporadically to selling many smaller order more frequently.
    3 Jun, 04:31 PM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi Powershake,

     

    Thanks for the info it helps clarify. You may be missing the point.

     

    When "B" orders product to sell (or consume) "A" receives compensation.

     

    One can argue that "A"s over-ride on "B" is recruitment pay, not product pay.

     

    It isn't exactly correlated to the Mogul's in BurnLounge, but it is a door that is open.
    3 Jun, 05:18 PM Reply Like
  • ben_nimaj
    , contributor
    Comments (916) | Send Message
     
    Reel Ken,

     

    you wrote: >>>
    Sales commissions paid to "A" based upon product purchased by "B" as necessary to support "B"'s Supervisor Level, could be considered compensation paid for recruitment not product sales.
    <<<<

     

    Only if it can be shown that commissions were paid on sales unrelated to a sale to the ultimate user. If "B" sells at wholesale and/or retail, or consumes the products "B" purchased to achieve Supervisor status, then commissions paid to "A" are based on sales to the ultimate consumer, and would not satisfy the 2nd prong of the Omnitrition test (as used by the 9th circuit and the District court and identical to the Koscot test). No inventory loading.
    3 Jun, 05:32 PM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi Ben,

     

    Not correct.

     

    If you read the Court's decision very carefully, they say that commissions paid on product can be a form of recruitment pay if they are related to the recruitment.

     

    It isn't, exactly, translatable to HLF, but a door is open. What the Court was concerned with, is that by paying product over-rides to the upstream, one can disguise recruitment pay.

     

    By example, instead of paying $1000 for recruitment, you pay $25 and then $975 on products purchased by the recruit. It was not relevant if the down-line sold or didn't sell the product. In the instant case, the Court held exactly that, except that the product was a required purchase. The door that is open is whether or not "required" really matters as one can side-step it pretty easily.

     

    Commissions paid to "B" when "B" sells to the end user is fine. But one can make an argument, with merit, that over-rides are paid on account of recruitment. "A" for instance, did not sell the product to the end user.
    3 Jun, 06:01 PM Reply Like
  • ForTheTruth
    , contributor
    Comments (730) | Send Message
     
    Oh yes, P.S. responds. Wow. Am I surprised!! What else would you expect from P.S. and Ackman? Agree with it? He has a 41 billion bet and is already down -$700 million. His attack in April barely caused Herbalife to flinch.

     

    Ackman may act cool and pretend this doesn't matter. It does. It is only a matter of time before Ackman caves in and covers.
    3 Jun, 06:01 PM Reply Like
  • CrimeBustersNow
    , contributor
    Comments (1587) | Send Message
     
    Reel Ken

     

    Hi Powershake,

     

    Thanks for the info it helps clarify. You may be missing the point.

     

    When "B" orders product to sell (or consume) "A" receives compensation.

     

    One can argue that "A"s over-ride on "B" is recruitment pay, not product pay.

     

    It isn't exactly correlated to the Mogul's in BurnLounge, but it is a door that is open.
    ~~~~~~~
    Now folks.... Is some unsophisticated struggling Indian, African, or North American student supposed to understand that??? Particularly when these guys are still arguing over it!!!

     

    While they fiddle, millions are being continuously defrauded world-wide.
    3 Jun, 08:29 PM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi SA Readers,

     

    Apparently some people not only equate slavery with HLF, but they now question the comprehension abilities of Indians, Africans and people around the world.

     

    Frankly, I don't think many people, educated or not care a whole lot about this issue. But for those seeking to understand it, the language is plain enough for anyone to gain insight....well, I guess almost anyone.

     

    p.s. I address my remarks to SA readers, as I find it impossible to acknowledge the existence of someone that likens themselves to those that risked life and limb to fight against slavery.
    3 Jun, 08:38 PM Reply Like
  • CrimeBustersNow
    , contributor
    Comments (1587) | Send Message
     
    Reel Ken

     

    "Hi SA Readers,

     

    Apparently some people not only equate slavery with HLF, but they now question the comprehension abilities of Indians, Africans and people around the world.

     

    Frankly, I don't think many people, educated or not care a whole lot about this issue. But for those seeking to understand it, the language is plain enough for anyone to gain insight....well, I guess almost anyone."
    ~~~~~~~~~
    Really folks? When of course we know and many longs have made a point of it, and it is clear by news reports, posting all over the Internet; the battles between media etc, that even Harvard business graduates, former and current regulators, law makers etc, etc, do not understand Herbalife and the MLM so-called industry.

     

    Whatever the split, 50/50 20/80, there is a massive number of top educated, even with business degrees and years of experience that do not understand Herbalife and MLM.

     

    i.e. How can two clever billionaires be on opposite sides of the same question? One has to be wrong. That being said.… again… how are unsophisticated struggling Indian, African, or North American student, at this very moment being recruited into this fraud supposed to understand it???

     

    That argument is pretty elementary stuff.

     

    But some individuals themselves unable to come to a determination as to the legality of Herbailfe and whether it a business opportunity or a rip-off want you to believe that the unsophisticated, the poorly educated, students etc, can understand the legalese gibberish that is Herbalife and the MLM so-called Industry.

     

    And there is one who appears to believe that there are no Indians, Africans and people around the world, or North American students who lack the comprehensions skill to figure out what he himself admittedly can’t. He waits for regulators to settle the question for him.
    3 Jun, 09:18 PM Reply Like
  • ben_nimaj
    , contributor
    Comments (916) | Send Message
     
    Hi Reel Ken,

     

    You wrote: >>>>
    Commissions paid to "B" when "B" sells to the end user is fine. But one can make an argument, with merit, that over-rides are paid on account of recruitment. "A" for instance, did not sell the product to the end user.
    <<<<

     

    Possibly, but one could also make the argument that the purchase by "B" was not merely incidental with the purchase of the right to participate in the money making venture. If "B" sells (I'm correcting my above statement) all the product at retail and/or consumed it themself, then the commissions paid to "A" were related to the sale to the ultimate user. If I decide to exit the plan and I haven't retailed and/or consumed any product, I can return that product to Herbalife and the commissions paid on the unretailed or consumed inventory is clawed back, resulting in commissions only being paid on sales to the ultimate consumer.
    4 Jun, 01:34 PM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi Ben,

     

    Don't get me wrong. I'm not suggesting the "A";"B" thing is foregone.

     

    This is just a hypothetical argument. I offered it, because it can illustrate that nothing should be taken for granted.

     

    That said, here's the logic...

     

    "B" buys products and "A" gets over-rides, whether "B" sells them or not. So "B" selling to an eventual user, or for personal consumption, is not a determinate of "A"s compensation, therefore "A"'s compensation is not related to sale to an end user, but, rather, on account of recruitment. If "B" sells the product, or consumes it, only effects "B", not "A".

     

    This is exactly the finding of the Court...with one major exception... in the case of BurnLounge, "B" was required to purchase product.

     

    My point is simply that the requirement to purchase can be "dodged" by clever means. Just as "product=No-Pyramid" is a dodge. A subsequent Court finding may address this situation. So, I don't think it would be wise to argue that since HLF does not require product it can't be applied. The Court could hold that it is not material. That is the "door left open".

     

    p.s. I find it interesting that the anti-HLFers come up with such nonsense in trying to spin the Court's opinion, that they are blinded to the real arguments. They so want to believe that MLMs are all frauds, yada, yada, that they are incapable of understanding exactly what is said and exactly how it can be applied to HLF. A good lesson for us all on how bias effects or ability to reason.
    4 Jun, 01:47 PM Reply Like
  • ben_nimaj
    , contributor
    Comments (916) | Send Message
     
    "B" buys products and "A" gets over-rides, whether "B" sells them or not. So "B" selling to an eventual user, or for personal consumption, is not a determinate of "A"s compensation, therefore "A"'s compensation is not related to sale to an end user, but, rather, on account of recruitment. If "B" sells the product, or consumes it, only effects "B", not "A".
    <<<<

     

    I would agree that what "A's" commission is not due to a direct retail sale, however I don't think such an argument would hold up, since the funds used to sustain the system are derived from retail sales driven by real demand for the product by the ultimate user (in the case of "B" selling or consuming the product). This is consistent with the model proffered by VanderNat.

     

    While we may not come to agreement on this point, I think we can agree that the net net of the BL decision is that under the right circumstances, internal consumption can be considered a sale to the ultimate user for the purposes of the 2nd prong of the Koscot/Omnitrition pyramid test. The "shorts" have long relied on the belief otherwise, amazingly in the face of the clear case law, the FTC's Advisory Letter to the DSA and, quite frankly, the common sense definitions of retail customer, ultimate user and consumer.

     

    Thanks.
    5 Jun, 12:16 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi Ben,

     

    No question the BL helped HLF, because it helped, at least "B".

     

    But don't be so sure "A" will hold up. The only difference in BL vs. HLF was that the product purchased by "B" was required, not optional.

     

    I think the fact that the ultimate user may be a retail customer doesn't change the fact that it doesn't have to be, and in some cases, to some extent it may not be.

     

    Just supposin'.
    5 Jun, 05:38 AM Reply Like
  • User 6461431
    , contributor
    Comments (651) | Send Message
     
    Ackman's puppet Michelle Celarier linked to a Bloomberg article on her twitter feed. The Bloomberg article was titled "BurnLounge Ruling in FTC Case Seen as Good for Herbalife"

     

    Celarier wrote "Not good news for $HLF-- BurnLounge Shutdown by FTC Upheld by Federal Appeals Court"

     

    Yeah Michelle, I can totally see how you got that...NOT!
    2 Jun, 08:59 PM Reply Like
  • CrimeBustersNow
    , contributor
    Comments (1587) | Send Message
     
    "Akmanscam" alerts everyone....

     

    "Look for Crime Busters aka David Baear or whatever to start citing the same similiarities, talking about slavery, Enron and a host of other things which have absolutely nothing to dow tih Herbalife and then he'll explain why only he can see through the scheme. Everyone else is ignorant and living in a fairytale, Utopian world. lol."
    ~~~~~~~
    I really believe you are beginning to grasp most of it there "Akmanscam."

     

    Except the "Everyone else is ....living in a fairytale, Utopian world. lol."

     

    Now, from Cesspool to fairytale, Utopian world IS a bit of a stretch!!!!.
    3 Jun, 01:12 AM Reply Like
  • King Rat
    , contributor
    Comments (564) | Send Message
     
    While the Ninth Circuit Court is the most overturned court in the US, this will likely stand legally. Ackman's legal case is weak and personally motivated.

     

    It does not change the fact that as a product Herbalife is way overpriced and only sells successfully to ignorant people who don't effectively comparison shop. Herbalife depends on customers not researching the value of their purchases. If I look on ebay or any other online retailer for any Herbalife product, then compare the price to any other similar health product on any online market, I find I that Herbalife costs 3-5x as much. Herbalife better hope that its customers do not smarten up. Even Whole Foods (locally) costs 1/2 Herbalife prices.

     

    As an investor, I only invest in the products I can believe in. I haven't shorted a stock in years, directly or through derivatives and I will never short Herbalife. What stops me from investing in Herbalife is not the quality of supplements that they sell, but their pricing model. Specifically, if the product is so good, why not sell it even in boutique retail stores unless the MSRP is too high even for them? What is Herbalife afraid of? If their product is the best out there, why not prove it? If nothing's rotten in the state of Denmark, why not open shop?

     

    CEO Michael Johnson's non-answers present a better case for not believing in Herbalife than Ackman ever could.
    2 Jun, 10:56 PM Reply Like
  • mgaser
    , contributor
    Comments (6) | Send Message
     
    Pricing and retail channel are two different, albeit related issues. On the first, higher quality of ingredients means higher costs, and there is a lot of price dispersion in the dietary supplement industry. But on the second issue, I think that it is important to understand that the price reflects not only the quality, but also the efficacy of Herbalife products. Big part of this efficacy is due to the personal coaching and follow up that the Herbalife Independent Distributor offers to his customers. That's why you cannot compare an Herbalife shake's price to a similar product bought in GNC. The GNC clerk is not an experienced user with results, does not provide personalized assessment, nor will call you regularly AFTER you bought the shake to ensure you are using the product correctly, nor will encourage and coach you to adopt a healthier lifestyle. This service is included in Herbalife product's prices.
    3 Jun, 04:40 AM Reply Like
  • Herbalifestudy
    , contributor
    Comments (163) | Send Message
     
    I guess Apple should go bankrupt then along with the entire luxury sector in the world. Is it so difficult to grasp that MLM distrubution reaches into societies in a different way than retail does? Along with the social setting/support, the products can be priced up. It is admirable and great business.
    3 Jun, 07:51 AM Reply Like
  • User 6461431
    , contributor
    Comments (651) | Send Message
     
    If whether a product were overpriced was the only factor, the following companies would have been out of business a long time ago:
    Apple Computer
    Beats Headphone (which by the way, Apple purchased for 3 Billion dollars)
    Monster Cable
    Lamborghini
    BMW
    Mercedes
    Tupperware
    Dom Pérignon
    HP & Epson (and others), for selling ink jet ink at $75/oz
    etc. etc.

     

    Cost is not a determining factor in the sale-ability of the product, it is value. I regularly purchase high end products from a supplier that tends to charge a bit more than their competitors. Why? Because of the service that they offer. They provide me with fast delivery, and a convenient returns policy as well as updates on when my product will arrive. Other vendors charge a little less, but their customer service is horrible, and they rarely update me on the status of my order. The slight extra cost is worth the excellent customer service.

     

    Are Mercedes cars superior to Ford? They will both get you from point A to point B, but a Mercedes might be a bit more luxurious, perhaps with a better, quieter ride, and my Mercedes dealer offers me extra benefits when I have my vehicle serviced. Is the extra tens of thousands of dollars for the Mercedes worth it? To some, yes, to others, no, but using your logic, Mercedes "is way overpriced and only sells successfully to ignorant people who don't effectively comparison shop."
    3 Jun, 08:34 AM Reply Like
  • David Brear
    , contributor
    Comments (501) | Send Message
     
    Mercedes builds and sells mid-range and luxury vehicles which probably are quite expensive in the USA, but no one reports Mercedes vehicles to be several times the price of equivalent mid-range and luxury vehicles on the open market.

     

    There only are between 320 and 350 Mercedes distributorships in the USA, not hundreds of thousands of them.

     

    Presumably, most (if not all) of these 320-350 traditional retail businesses, have regularly declared overall net trading profits; whilst more than 60% of them do not disappear annually to be replaced by another temporary crop of hopeful, but insolvent, Mercedes distributors.

     

    As far as I'm aware, Mercedes do not offer to pay commissions to a never-ending chain of distributors if they buy their own Mercedes cars and recruit other distributors who also buy their own Mercedes cars upon which they will also be paid commission, etc. ad infinitum.
    3 Jun, 11:37 AM Reply Like
  • CrimeBustersNow
    , contributor
    Comments (1587) | Send Message
     
    "Herbalifestudy"

     

    "I guess Apple should go bankrupt then along with the entire luxury sector in the world. Is it so difficult to grasp that MLM distrubution reaches into societies in a different way than retail does? Along with the social setting/support, the products can be priced up. It is admirable and great business"
    ~~~~~~~~~
    Right!!!
    3 Jun, 01:28 PM Reply Like
  • herbs4mike
    , contributor
    Comments (2066) | Send Message
     
    @King Rat..... you are more ignorant as you proclaim my customers are. You say my product is over priced? really? I'll use GNC as an example, but the company can be any (weider, muscle tech, EAS, etc) you buy a product like Herbalife from....

     

    When was the last time GNC called you, King Rat, the day AFTER you bought their product? When was the last time GNC called you 3 days after you bought their product (to follow up)? When was the last time a GNC rep went to your house to re-tape and reweigh you to monitor your progress. Shall I go on??? I can.... Herbalife has a service included in it's price, and it adds value. I doubt you have ever called a plumber or somebody like that to make a house call. If you have, you'll know the price for custom service.

     

    Herbalife offers a personal touch that other cannot match, and that's why Herbalife is the #1 weight loss company in the world. Every one of my customers have my personal cellphone number. They can call me if they have a problem like..... I'm getting close to my period and I want to eat everything, HELP! And I help. I wonder if a GNC employee will give out their personal Cell phone number and then field a call like that at 11pm.

     

    Now King Rat, you are informed why Herbalife gets people their results and is #1
    3 Jun, 02:05 PM Reply Like
  • User 6461431
    , contributor
    Comments (651) | Send Message
     
    David,

     

    Thank you for pointing out that Mercedes is not an MLM.

     

    The comparison of Ford and Mercedes was meant to address the issue of a higher cost vs value. King Rat asserted that HLF products were overpriced. If price were the only deciding factor in any purchases, high end clothing stores and high end automobiles would not exist. We would all be wearing clothes made out of recycled burlap sacks and we would all be driving Yugos.
    3 Jun, 03:02 PM Reply Like
  • eekonomist
    , contributor
    Comments (102) | Send Message
     
    Herbalifestudy, did you really just compare Herbalife to Apple? I can hear Steve Jobs rolling in his grave...
    3 Jun, 03:27 PM Reply Like
  • eekonomist
    , contributor
    Comments (102) | Send Message
     
    herbs4mike, so what you are saying is YOU the distributor are the reason why Herbalife users get better results? Sounds to me like you're the one getting ripped off, since HLF sees fit to charge you double what they should for the supply of their products. If all the value added comes from you, why are they taking a piece of your pie?
    3 Jun, 03:32 PM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    "Overpriced" is a slippery slope.

     

    It would mean more than it is worth, however, supply and demand often makes items overpriced.

     

    Is gasoline overpriced at $4gallon when it could just as easily sell for $3? If gas goes to $5, is it overpriced?

     

    We must often go beyond what price is in a vacuum and instead go to what a willing buyer would pay to a willing seller.

     

    In the "retail" world, most merchants would consider an item overpriced if it is not selling. In fact, merchants love hi-margin products that are in demand.

     

    That brings us to HLF. If the products are selling (and they seem to be) then it is difficult to classify them as overpriced. This contrasts with the BurnLounge, where products were not selling, except as part of the recruitment.
    3 Jun, 03:37 PM Reply Like
  • eekonomist
    , contributor
    Comments (102) | Send Message
     
    "If the products are selling (and they seem to be) then it is difficult to classify them as overpriced. "

     

    I'm not sure where this assumption is coming from. The big problem in this case is that HLF steadfastly refuses to implement a retail sale tracking system. Companies like Tupperware provide a simple solution to this problem by only compensating upline distributors for documented retail sales. HLF, on the other hand, is happy to compensate for distributor inventory purchases.
    3 Jun, 04:11 PM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi eekonomist,

     

    I think it is proper to say ... IF the products are selling (and they seem to be) ... It is not an assumption, at all.

     

    I predicated with "IF" and then followed with "seem". This is about as far away from an assumption as one can get.

     

    Your statement would be correct if I had said "they are".

     

    With furtherance of the investigations we will see IF sales are real or just SEEMED to be real.
    3 Jun, 04:20 PM Reply Like
  • eekonomist
    , contributor
    Comments (102) | Send Message
     
    Reel Ken, you are right it is not an assumption. The phrase "and they seem to be" is conjecture. And now I will ASSUME you make this statement on the basis of HLF's surveys and statements. I am not willing to take that leap of faith.
    3 Jun, 05:47 PM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    HI eekonomist,

     

    I make the statement because I know that substantial amounts of product has been distributed.

     

    I said "IF" because I don't take leaps of faith either.

     

    By the way, my statement is not conjecture, it is a premise.
    3 Jun, 06:07 PM Reply Like
  • powershake
    , contributor
    Comments (1176) | Send Message
     
    MLM expert and lawyer Kevin Thompson gives us a quick head-ups video on why the BurnLounge decision is good news for HLF
    http://bit.ly/1nJpVL3

     

    Things are favoring the HLF longs
    Ackman must be close to the ends of the earth by now. With the SEC subpoena he is in deep trouble
    2 Jun, 11:44 PM Reply Like
  • David Brear
    , contributor
    Comments (501) | Send Message
     
    'MLM expert and lawyer Kevin Thompson'

     

    ----------------------...

     

    To date, Mr Thompson has been the equivalent of a qualified horse expert carefully examining the exterior of the Greeks' wooden horse (already dragged well inside the walls of Troy), and declaring it probably to be a horse.
    3 Jun, 03:49 AM Reply Like
  • CrimeBustersNow
    , contributor
    Comments (1587) | Send Message
     
    "powershake"

     

    MLM expert and lawyer Kevin Thompson gives us a quick head-ups video on why the BurnLounge decision is good news for HLF
    http://bit.ly/1nJpVL3

     

    Things are favoring the HLF longs
    Ackman must be close to the ends of the earth by now. With the SEC subpoena he is in deep trouble
    ~~~~~~~~~
    Kevin Thompson....... Right!!!!
    3 Jun, 01:32 PM Reply Like
  • CrimeBustersNow
    , contributor
    Comments (1587) | Send Message
     
    David Brear
    Comments (410)

     

    'MLM expert and lawyer Kevin Thompson'

     

    ----------------------...

     

    To date, Mr Thompson has been the equivalent of a qualified horse expert carefully examining the exterior of the Greeks' wooden horse (already dragged well inside the walls of Troy), and declaring it probably to be a horse.
    ~~~~~~~~
    That pretty well sums up that MLM "legal beagle." I soundly defeated a whole 24 lawyer law firm of those in 2006 as you know, David
    3 Jun, 01:37 PM Reply Like
  • Yteeld
    , contributor
    Comments (1025) | Send Message
     
    The justices may have been influenced by mind control. It seems that anyone and everyone that does something not in agreement with certain SA authors are unduly influenced.
    3 Jun, 12:03 AM Reply Like
  • David Brear
    , contributor
    Comments (501) | Send Message
     
    The usual 'Herbalife' claque immediately posts its blanket denials of reality and attempts to trivialize, and/or ridicule, the common sense-analyses of all well-informed observers.

     

    Plainly, the so-called 'Herbalife MLM Income Opportunity' has (exactly like 'BurnLounge', 'FHTM', and others) been based on converting ill-informed persons to the self-perpetuating, crackpot, pseudo-economic belief that endless-chain recruitment + endless payments by the recruits = endless profits for the recruits.

     

    The typically over-priced, and dubious, 'Herbalife' pseudo-medical wampum, has been effectively-unsaleable on the open market to members of the general public, and has been a means of laundering unlawful payments into a dissimulated blame the victim closed-market swindle, or pyramid scheme, run in conjunction with various dissimulated blame the victim advance fee frauds (particularly, the peddling of so-called 'leads').

     

    The absolute proof of this common-sense analysis, is to be found in the total overall number of persons who have been churned through the so-called 'Herbalife Income Opportunity' since its instigation more than 30 years ago. We are already into the tens of millions of so-called 'Herbalife Businesses' that have mysteriously vanished, and there is no evidence (in the tax record) that any of them declared an overall net-profit.

     

    Laughably, since the FTC began to investigate, the bosses of 'Herbalife' have been trying like mad to persuade the world that this growing mountain of damning evidence (comprising many millions of insolvent so-called 'Independent Business Owners') actually comprises members of 'Herbalife' who only joined to buy the products at a discount.

     

    Common-sense also reveals that this dodge is yet another malicious attempt by yet another gang of blame the victim 'MLM income opportunity' racketeers, to obstruct justice in order to continue to commit fraud.
    3 Jun, 03:32 AM Reply Like
  • Cestlavie
    , contributor
    Comments (131) | Send Message
     
    You obviously did not understand that HLF has huge amounts of customers buying the products and don't care a thing about joining the network but don't stop writing your comical comments.
    3 Jun, 04:56 AM Reply Like
  • David Brear
    , contributor
    Comments (501) | Send Message
     
    'You obviously did not understand that HLF has huge amounts of customers buying the products and don't care a thing about joining the network but don't stop writing your comical comments.'

     

    ----------------------...

     

    Just as I predicted, the usual 'Herbalife' claque immediately posts its blanket denials of reality and attempts to trivialize, and/or ridicule, the common sense-analyses of all well-informed observers.

     

    Unfortunately for 'Cestlavie,' for the previous 30+ years, all these millions of persons whom he now steadfastly pretends were 'Herblife customers,' signed take-it or leave-it contracts which falsely, and arbitrarily, defined every last one of them as: 'Herbalife Distributors' and 'Herbalife Independent Business Owners.'

     

    Thus, according to Cestlavie's' tragicomical logic, if we now simply read the words 'direct seller' as 'direct buyer' (several million times) the 'Herbalife' fraud is perfectly legal.
    3 Jun, 05:14 AM Reply Like
  • User 6461431
    , contributor
    Comments (651) | Send Message
     
    The recent cases of FHTM and BurnLounge have two basic similarities that led to the decision to classify the company as a pyramid scheme and not legitimate MLM. While both companies sold "real products" (or more accurately had "real products" that were for sale), the pay structure was setup such that the selling of products yielded the distributor insignificant commissions/profit, while the selling of the right to sell products and the right to recruit actually yielded comparatively significant profits.

     

    Based on the text contained in these 2 recent cases, the core of Ackman's original thesis has been pulled out from under him. Sales of product to the end user (inside or outside the network) are legitimate provided the sale of products is not simply incidental to the right to recruit. The needle has significantly moved in Herbalife's favor.
    3 Jun, 07:10 AM Reply Like
  • David Brear
    , contributor
    Comments (501) | Send Message
     
    All blame the victim 'MLM income opportunity' rackets, indeed all pyramid and Ponzi schemes exhibit, a universal identifying characteristic:

     

    No matter what thought-stopping labels their instigators hang on their losing participants ('customers', 'investors', 'members', 'distributors', 'independent business owners', etc.) all these frauds hide economically-unviable closed-markets which have no significant, or sustainable, source of revenue other than their own losing participants.

     

    In other words, the instigators of 'FHTM', 'BurnLounge', 'Herbalife', 'Amway' , 'Forever Living Products', 'Xango', 'Nu skin,' etc., have all been pursuing, and dissimulating, essentially the same unlawful enterprise of peddling endless-chains of victims infinite shares in their own finite money.
    3 Jun, 07:26 AM Reply Like
  • K. Herbert
    , contributor
    Comments (775) | Send Message
     
    This is what will happen if you take the distributor/reward structure away from Herbalife and replace it with straight forward sales:
    "After the parties entered into a stipulated
    preliminary injunction in July 2007 that stopped BurnLounge
    from offering the ability to earn cash rewards, BurnLounge’s
    revenues plummeted. BurnLounge still offered packages, but
    its revenues decreased from $476,516 in June 2007 to $10,880 in August 2007." http://1.usa.gov/1nJ3tSe
    You just have to scale it up a bit.
    3 Jun, 08:42 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi David Brear,

     

    And how, exactly, does this relate to the Court's decision?
    3 Jun, 12:05 PM Reply Like
  • David Brear
    , contributor
    Comments (501) | Send Message
     
    'And how, exactly, does this relate to the Court's decision?'

     

    ----------------------...

     

    'Reel Ken' is asking a rhetorical question, because he knows that, even today, there is still no common-sense (plain language) law in the USA which clearly identifies, and prohibits, any alleged 'opportunity to earn income,' but which exhibits the universal identifying characteristic of all pyramid, and so-called Ponzi, schemes. i.e. The alleged 'opportunity to earn income' is hiding an economically-unviable closed-market which has no significant, or sustainable, source of revenue other than its own losing participants.

     

    Faced with this fully-deconstructed analysis, exactly the same rhetorical question could have been asked in 1921 after Charles Ponzi had been found guilty, because when Ponzi was arrested, and put on trial, there was no specific law in the USA which clearly identified the above crime, but which Ponzi had been committing. However, there had been plenty of Ponzi schemers prior to Charles Ponzi.

     

    It is interesting to note that one of Ponzi's 'business' associates/employees, a sharp-witted publicist, William H. McMasters (who, for 10 days during 1920, helped Charles Ponzi, to expand his fraud dramatically by arranging for him to be interviewed by wide-eyed journalists who then published articles which were the equivalent of free advertisements), sold the theoretical explanation of what Ponzi was really doing to the 'Boston Post,' and that this publication later received the 1921 Pulitzer Prize for its reporting of the story. At first, McMasters didn't have any evidence, other than the fact that he saw that Ponzi was a posturing clown who couldn't even add up. He applied common sense, and deduced that what Ponzi said (that his 'Securities Exchange Company' had been sending millions of dollars of its investors' money to a network of agents who had been buying international postal reply coupons in countries with currencies weakened by WWI, and then shipping them to the USA, where he had exchanged them for equivalent US postage stamps which he had then sold for a 400% profit) was far too good to be true. McMasters, who was not an economist, simply reasoned that all Ponzi could be doing was taking his later victims' money to pay out imaginary 'profits' to his earlier contributors. Ponzi wasn't actually sending money abroad or trading in anything. He was peddling his victims infinite shares of their own finite money.

     

    It was later discovered that Ponzi had only ever bought a handful of international postal coupons (which could not be redeemed for a profit), and that the entire world supply of these documents was vastly-inferior to the phenomenal quantity which Ponzi had claimed to have traded.
    3 Jun, 01:12 PM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi David Brear,

     

    This thread is about the Court decision. Suggest you read the Title and content.

     

    I asked a simple question giving you a chance to relate your comment to the topic under discussion. You answer by inserting yet another comment that I have to ask...

     

    How does this second comment relate to my first comment which asked you to relate to the topic under discussion?
    3 Jun, 01:26 PM Reply Like
  • CrimeBustersNow
    , contributor
    Comments (1587) | Send Message
     
    "Cestlavie"

     

    You obviously did not understand that HLF has huge amounts of customers buying the products and don't care a thing about joining the network but don't stop writing your comical comments.
    ~~~~~~~~~~
    RIGHT!!!!
    3 Jun, 01:39 PM Reply Like
  • CrimeBustersNow
    , contributor
    Comments (1587) | Send Message
     
    User 6461431

     

    The recent cases of FHTM and BurnLounge have two basic similarities that led to the decision to classify the company as a pyramid scheme and not legitimate MLM. While both companies sold "real products" (or more accurately had "real products" that were for sale), the pay structure was setup such that the selling of products yielded the distributor insignificant commissions/profit, while the selling of the right to sell products and the right to recruit actually yielded comparatively significant profits.

     

    Based on the text contained in these 2 recent cases, the core of Ackman's original thesis has been pulled out from under him. Sales of product to the end user (inside or outside the network) are legitimate provided the sale of products is not simply incidental to the right to recruit. The needle has significantly moved in Herbalife's favor.
    ~~~~~~~
    RIGHT!!!!!
    3 Jun, 01:41 PM Reply Like
  • David Brear
    , contributor
    Comments (501) | Send Message
     
    Contrary to what 'Reel Ken' steadfastly pretends to be reality, the fundamental question lying at the heart of every investigation /prosecution of a so-called 'MLM income opportunity,' is exactly the same question which lay at the heart of the investigation/ prosecution of Charles Ponzi:

     

    Where has the bulk of the money flowing into this alleged 'income opportunity' actually been coming from?

     

    Since Ponzi's time, the verbal and mathematical hocus-pocus hiding closed-market swindles, has become increasingly dense and difficult to penetrate, but essentially the crime remains the same.
    3 Jun, 02:09 PM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi David Brear,

     

    I asked how your comment related to the Court decision, not some investigation and certainly not Mr. Ponzi.

     

    Are you unable to relate your comment to the Court decision? or is there something else that stands in your way?
    3 Jun, 02:41 PM Reply Like
  • Cestlavie
    , contributor
    Comments (131) | Send Message
     
    I now realize after reading the above comments just how many dumb persons are out there, its no wonder most cant make profits investing. HLF isn't an understood business model and most are not capable of understanding it due to ignorance and not willing to learn or just dumb bozos. Who cares if the products are priced high, look at a Harley CVO Ultra Classic vs the Honda Goldwing and load both down with all options and the CVO cost 13 grand more but they have a name and even the bozos shorting HLF pay the money to ride one. Ackman is a typical Harvard moron and those commenting above many not be Harvard but they are just as dumb as Ackman in my opinion.
    3 Jun, 04:55 AM Reply Like
  • David Brear
    , contributor
    Comments (501) | Send Message
     
    'HLF isn't an understood business model and most are not capable of understanding it due to ignorance and not willing to learn or just dumb bozos.'

     

    ----------------------...

     

    This will make a marvelous defence for 'Herbalife's' attorneys to present to any court; particularly, if the organization's bosses ever face federal racketeering charges:

     

    'Your Honor, unless, you read the words 'direct seller' as 'direct buyer' (several million times) and find my clients completely innocent, you are a dumb bozo!'
    3 Jun, 05:25 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    In reading the full Court decision, it is apparent that....

     

    1) The Court, while denouncing Pyramids, affirms the legality of MLMs

     

    2) The Court lends credence to "personal consumption"

     

    3) The ultimate test of Pyramid vs. MLM will revolve around whether or not product sales are a major source of earnings potential

     

    4) The Court noted, but DID NOT take issue with, the fact that 96% lost money

     

    5) The Court did not consider, at all, false statements promising huge rewards to entrants. It was all about where revenue streams are derived

     

    This does not exonerate HLF as a legal MLM, as they still must produce evidence of significant retail sales, but it takes the steam out of most of the arguments being put forth, at least, here on SA.

     

    It also doesn't remove the specter that some Distributors may be guilty, individually, of fraud or misrepresentation.

     

    I have no position in HLF, but if I was short, I'd see this as unfavorable to my position.
    3 Jun, 06:12 AM Reply Like
  • eekonomist
    , contributor
    Comments (102) | Send Message
     
    Based on the market's reaction to the ruling, I would say nothing has changed. Like you said, the case hinges on one argument:

     

    3) The ultimate test of Pyramid vs. MLM will revolve around whether or not product sales are a major source of earnings potential

     

    I think that the short thesis from the beginning has been that the answer to that is no. The other points (promises of huge rewards, failure rates, internal consumption) are just supporting arguments to the main thesis.
    3 Jun, 03:43 PM Reply Like
  • Yteeld
    , contributor
    Comments (1025) | Send Message
     
    As was expected, the usual cult scaring individuals have initiated their scare tactics. Tactics that they despise when used by others are now a normal part of their agenda.
    3 Jun, 06:39 AM Reply Like
  • David Brear
    , contributor
    Comments (501) | Send Message
     
    Self-evidently, this judicial decision was restricted to the limited charges brought against 'BurnLounge,' but it doesn't exclude the much wider analysis that:-

     

    - Certain members of the 'Herbalife' board of directors have been habitually committing fraud, and obstructing justice, for many years, in breech of the US federal Racketeer Influenced and Corrupt Organizations Act, 1970.

     

    - 'BurnLounge' and 'Herbalife' are both examples of the evolving criminogenic phenomenon of blame-the victim 'MLM income opportunity' racketeering - an as yet, largely-unrecognized form of major organized crime, but which traces it absurd origins back to the 1940s and 'Nutrilite' / 'Mytinger and Casselberry.'
    3 Jun, 06:53 AM Reply Like
  • jbound
    , contributor
    Comments (41) | Send Message
     
    Multilevel marketing attorney Kevin Thompson says, "As long as the products have legitimate value the company will be in a good position to thwart off pyramid arguments."

     

    What else could Kevin the lawyer say?

     

    Might I suggest an alternative reply"...as long as people are stupid enough to believe in the "Multilevel" structure of our company, we will continue to suck the life out of the naive."
    3 Jun, 07:13 AM Reply Like
  • David Brear
    , contributor
    Comments (501) | Send Message
     
    jbound - Unfortunately, 'MLM' attorney, Kevin Thompson, is one of the last people on Earth to accept the reality lurking behind the Utopian 'MLM' fairy story, because, if he did so, his current main source of income would probably vanish.

     

    You should also remember that various commentators on SA are actually persons who are under contract to, and financially dependent on, 'Herbalife.' These take-it or leave-it 'Distributor' / 'Member' contracts have been so written that anyone (including 'Herbalife' shills) who has foolishly signed one and who says anything dissenting from the inflexible 'Herbalife' line, risks unilateral excommunication from the closed-logic 'MLM' game of make-believe, along with (in the case of 'Herbalife' shills) the withdrawal of their main source of income.
    3 Jun, 07:40 AM Reply Like
  • Yteeld
    , contributor
    Comments (1025) | Send Message
     
    RICO:

     

    .....The shorts, most notably David Brear, Matt Stewart, T. Salvatore, et. al have all offered up the RICO Statute as an avenue of recourse for the regulatory bodies when an organization operates a pyramid scheme.
    .....Maybe one of them can now explain why BurnLounge has been found to be an illegal pyramid which was upheld on appeal was not subjected to the RICO Statute.
    .....Could it be that these so called RICO experts have no clue. My seventh grader could even figure this out.
    3 Jun, 08:27 AM Reply Like
  • David Brear
    , contributor
    Comments (501) | Send Message
     
    Clearly, I hold neither a short nor a long position in what I consider to be an abusive, clandestine, criminal enterprise, and, ultimately, not a fit and proper thing to make money out of.

     

    Probably, the reason why RICO has (so far) never been invoked by US federal prosecutors, is because blame the victim 'MLM income opportunity' racketeering has survived for so long, and been allowed to infiltrate so deeply into traditional culture, that, if ever one (or more) of these US-based organized criminal gangs was rigorously investigated by wholly independent law enforcement agents armed with a full analysis of how the wider 'MLM' phenomenon has operated, and been dissimulated, then there are plenty of persons in the USA (including leading politicians and former government officials) who would risk prosecution on multiple counts of corruption / obstruction of justice. These crimes have clearly formed part of an overall pattern of ongoing major racketeering activity as defined by RICO.

     

    Some of the people on the list of beneficiaries of, and apologists for, 'MLM' racketeering, include:

     

    Mitt Romney
    Orrin Hatch
    Madeleine Albright
    Timothy Muris

     

    Few people in the USA, let alone the current crop of political leaders, want to open the 'MLM' can of worms. However, the political, financial and diplomatic repercussions of the USA facing reality, would be nothing compared with the damage this would cause to what remains of America's standing in the international community.

     

    For decades, an expanding group of US-based racketeers have been allowed to thieve from countless millions of people all around the globe. Ironically, foreign-based blame the victim 'income opportunity' rackets, like 'Lyoness' and 'FlexKom,' have lately begun to infest the USA.
    3 Jun, 09:59 AM Reply Like
  • Yteeld
    , contributor
    Comments (1025) | Send Message
     
    The KEY words in your reply: WHAT I CONSIDER, says it all. Your personal feelings have tainted your ability to look objectively at anything involving direct selling. What you try to pass off as fact is little more than your personal dislike for the subject at hand. Further more, anyone who dares challenge your views is dismissed as part the cult. Sad but true.
    3 Jun, 10:40 AM Reply Like
  • CrimeBustersNow
    , contributor
    Comments (1587) | Send Message
     
    Yteeld

     

    RICO:

     

    .....The shorts, most notably David Brear, Matt Stewart, T. Salvatore, et. al have all offered up the RICO Statute as an avenue of recourse for the regulatory bodies when an organization operates a pyramid scheme.
    .....Maybe one of them can now explain why BurnLounge has been found to be an illegal pyramid which was upheld on appeal was not subjected to the RICO Statute.
    .....Could it be that these so called RICO experts have no clue. My seventh grader could even figure this out.
    ~~~~~~~~
    I would have thought that your seventh grader, if as smart as you say.... would have turned to mother and said.... mommy, mommy, daddy's out recruiting but he doesn't have any clothes!!!!
    3 Jun, 01:59 PM Reply Like
  • CrimeBustersNow
    , contributor
    Comments (1587) | Send Message
     
    Yteeld

     

    The KEY words in your reply: WHAT I CONSIDER, says it all. Your personal feelings have tainted your ability to look objectively at anything involving direct selling. What you try to pass off as fact is little more than your personal dislike for the subject at hand. Further more, anyone who dares challenge your views is dismissed as part the cult. Sad but true.
    ~~~~~~~~~~
    Right!!!!!
    3 Jun, 02:03 PM Reply Like
  • User 6461431
    , contributor
    Comments (651) | Send Message
     
    "Probably, the reason why RICO has (so far) never been invoked by US federal prosecutors, is because blame the victim 'MLM income opportunity' racketeering has survived for so long..."

     

    But regulators have recently shut down several pyramid schemes trying to look at legitimate MLM companies. None of these companies was affiliated with the DSA, and I am not aware of any significant political campaign contributions by the companies or its leadership. Politically, FHTM and BurnLounge were not well connected, so one has to ask, if RICO is so obvious, why not pursue it? Regulators generally tend to look at a perceived fraud and ask what is the easiest way to stop this fraud (lets pick the low hanging fruit). In all recent cases, regulators picked trying to demonstrate the companies were a pyramid scheme using the ambiguous requirements outlined in regulations and case law rather than the (according to critics) obvious RICO violations.
    3 Jun, 04:15 PM Reply Like
  • Yteeld
    , contributor
    Comments (1025) | Send Message
     
    A seventh grade student can see what you missed:

     

    You define "to consider" when you stated "I CONSIDER".
    Your total lack of reading comprehension is now evident for all. It's the word I that changes everything but you already know that or should and then deviated from the subject at hand.
    3 Jun, 11:27 AM Reply Like
  • David Brear
    , contributor
    Comments (501) | Send Message
     
    'A seventh grade student can see what you missed:

     

    You define "to consider" when you stated "I CONSIDER".
    Your total lack of reading comprehension is now evident for all. It's the word I that changes everything but you already know that or should and then deviated from the subject at hand.'

     

    ----------------------...

     

    Unfortunately, no matter what 'Yteeld' steadfastly pretends to be reality, the English transitive verb,' to consider,' even when conjugated in the first person singular (present tense), i.e. 'I consider,' still means :

     

    Think carefully about (something), typically before making a decision or arriving at a conclusion.

     

    e.g. I consider that 'Yteeld' is so embarrassed after demonstrating his lack of comprehension of the English language, that he is now denying reality like a child.
    3 Jun, 11:47 AM Reply Like
  • CrimeBustersNow
    , contributor
    Comments (1587) | Send Message
     
    Yteeld

     

    A seventh grade student can see what you missed:

     

    You define "to consider" when you stated "I CONSIDER".
    Your total lack of reading comprehension is now evident for all. It's the word I that changes everything but you already know that or should and then deviated from the subject at hand.
    ~~~~~~~~~
    As I say..... I would have thought that your seventh grader, if as smart as you say.... would have turned to mother and said.... mommy, mommy, daddy's out recruiting but he doesn't have any clothes!!!!
    3 Jun, 02:05 PM Reply Like
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