Seven Gifting Scheme Women Charged with Felonies — Millions More at Large?

A Michigan newspaper reports that “seven Newaygo County women have been arraigned… on felony charges in connection with a pyramid scheme targeting women.” The article states that the women are facing charges of pyramid chain promotions, which carries up to a seven-year sentence and a $10,000 fine.  These are not necessarily ringleaders, it reports. Each one participated in a different part of the pyramid, unrelated to each other. In short, they are just one of many, many others. The article continues, “Michigan State Police … said scammers, working under names such as the Women Integrity Group, invite women to give $5,000 cash, with the potential of gaining $40,000.” It then includes an appeal from the police for citizens to come forward and, effectively, inform on friends or neighbors who might be involved in the scheme, which is apparently widespread in this area of Michigan. What’s wrong with this story? It would seem to have been written by Rip Van Winkle. Gifting schemes did not just pop up in Michigan this year. In reality, Gifting Schemes are all the rage all over America and Canada. They have been pervasive for more than 15 years. A flurry of prosecutions and news media coverage occurred in 2000-2001. Then, under the George W. Bush administration,  the US government closed its eyes to “gifting” pyramids as it also, coincidentally, took a holiday from prosecuting “product-based” pyramid schemes (multi-level marketing). The states followed the FTC’s direction and essentially looked the other way. The protection of multi-level marketing, which was bought and paid for with millions in campaign contributions, has had the unintended consequence of spawning the spread of “gifting schemes” and other types of pyramid fraud such as “matrix” selling. The MLM schemes have also expanded tremendously and moved into more areas of commerce from real estate to meal replacements and public utilities. The false and misleading “income promise” of the pyramid is now treated as a “marketing tool” just as predatory “gifting” is sold as a way to “help women.” For the last  8 years, pyramids of any type have not  been prosecuted to any significant extent in the USA or Canada. When  the Bernard Madoff Ponzi scheme collapsed (it was never prosecuted while it operated, despite repeated whistleblower warnings) the police and media began to suddenly focus on “investor” pyramids on Wall Street.  Consumer pyramids schemes on Main Street, however, were allowed to run wild. They have...

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Analysis: Montana/ACN Settlement Displays the MLM Loophole, Once Again

The state of Montana played David against the multi-level marketing (MLM) Goliath, ACN, when it recently accused that company of operating a pyramid scheme. ACN’s boastful promoter is the millionaire, Donald Trump, and the scheme’s product, a video phone, is promoted on Trump’s national TV show. ACN claims to have 200,000 sales reps worldwide. Montana is a state with less a million people, a severely limited prosecution budget, and was all by itself in calling ACN out as a pyramid scheme. In this modern battle, unlike the mythological one, Goliath easily won. The state dropped its cease and desist order and then settled the case quickly by blaming its own citizens. Apparently, according to the settlement,  ACN recruiters and distributors – in Montana – did not know how to follow rules. They were also incapable of installing and using ACN’s phones.  The resolution? ACN will offer more training to Montana’s uneducated participants. The problem was with Montanans, not ACN’s business model, the settlement indicated. Anyone who has followed MLM’s trajectory from a scorned, shady and often prosecuted corner of the marketplace to a powerful Washington lobby, a force on Wall Street, and a nearly universal scavenger on Main Street has seen this sad spectacle before. Regulators back down and let the MLMs prey upon their citizenry. Despite the Trump endorsements and all the hype about income, Montana’s case against ACN was compelling: virtually all ACN distributors in Montana  had lost money. It is also known that the advertised “average” income of “active” ACN distributors in Canada (where ACN must make an income disclosure) is less than the cost of participating. Additionally, questions have been raised about whether the ACN company is even growing any longer (making  “Get in now!” a deceptive lure) and whether there is market demand for its hyped-up phones (meaning  that purchases may be driven not by direct selling to consumers but  “primarily” by ACN’s solicitations to join the pay plan, i.e., “Buy the phone to make money!”). How do MLMs  escape? Some argue that  political influence-buying (money), high paid and aggressive legal defense and deceptive PR enable MLMs to slip through the bars each time they are arrested. These backroom forces are clearly at work, but there must also be a public rationalization to allow the schemes to plead innocence and to give cover to politicians and regulators who are forced to let the pyramids drain...

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Gifting Schemes

Gifting Scheme Mathematical Progression The “Original Dinner Party” New Wrappings for Old Gift Who Joins Gifting...

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