Identifying Red Flags of Investment Fraud

Standard

There is no shortage of allegations of investment fraud since the stock market tanked in 2008.  Are there more investment scams occurring, or have market conditions just led to the discovery of more of these schemes? I’ll guess the latter, although no one really knows for sure.

The beauty of fraud is that so much of it goes undetected. Those involved in financial fraud actively conceal their schemes and their involvement, so it’s impossible for fraud investigators to know exactly how much fraud is happening. For example, perpetrators go so far as to pay others to participate in the scheme and cover up phony financials and non-existent promissory notes. This kind of concealment leads to more investors putting money in a scheme, and ultimately creates ever larger financial losses.

In the end, however, it doesn’t necessarily matter if we can put our finger on exactly how many of these investment schemes are out there. What really matters is being able to identify the hallmarks of such schemes so that investors can avoid them like the plague. Continue reading

MLM is Not a Business (It’s a Pyramid Scheme)

Standard

I’ve written many times about how multi-level marketing (MLM) is not a business. Don’t believe me? Others have said the same thing. Today Lazy Man and Money lays out the reasons why MLM is not a business. You’ll have to read the details at his site, but the reasons include:

  1. Businesses obey the Commandment of Control
  2. Business 101 Excludes MLM
  3. Businesses obey the Commandment of Entry
  4. MLM Doesn’t Obey the Laws of Supply and Demand
  5. More than 99% of people LOSE money
  6. MLM is Not like Any Other Small Business
  7. It Doesn’t Matter How Hard You Work

The bottom line that any job is better than MLM. In MLM, you’re almost guaranteed to lose money. With a job, even one paying only minimum wage, you’re still making money.

Herbalife $HLF Doesn’t Want You to See This Video

Standard

Herbalife (HLF) does not want you to see or hear the evidence that the company is nothing more than a recruiting scheme. Audio and video footage was obtained of CEO Michael Johnson talking about how Herbalife is a recruiting company:

It’s the recruiting, meaning bringing new distributors into our company, which is the most vital part of our bloodstream. We bring new distributors in, we grow. It’s that simple. It’s that simple. And the company has built its whole reputation, its whole life, on recruiting.

But every time someone publishes this audio or video footage, Herbalife makes a bogus copyright claim and has it taken down. Continue reading

Roca Labs Weight Loss with “Gastric Bypass No Surgery”

Standard

roca-labs-lawsuitLast year, I reported on Roca Labs and their “Gastric Bypass No Surgery” regimen. I criticized the advertising and public relations tactics employed by the company. I was skeptical of the safety and effectiveness of the Roca Labs product, and thought that the company might be scamming consumers.

Roca Labs has changed some of its tactics and seems to be treating customers better. I have had a chance to review some of the testimonials and opinions on the Roca Labs product. I encourage consumers to do their research on the Roca Labs regimen, including seeking out product reviews on sites like PissedConsumer and testimonials on YouTube.

Many have spoken about their opinions on the “Gastric Bypass No Surgery” regimen, both positive and negative. While some are unhappy, others claim the regimen changed their lives or saved them from gastric bypass surgery. Satisfied users of the Roca Labs product and plan say it helped them achieve a healthy weight, losing as much as 100 pounds. Darlene is a senior who lost 81 pounds and believes that she added years to her life. Roger lost 120 pounds and says Roca Labs is worth a try.

Herbalife CEO Michael Johnson on Recruiting

Standard

Michael Johnson, CEO of Herbalife, talks about how the company is based on recruiting. ” Today, we’re recruiting. We’re still a recruiting company, and we’ve got to never not be this [again pointing to the word “Recruiting” on the slide behind him]…”

This is the problem with multi-level marketing. The “business” is not about the product. It is about recruiting. The product is merely an inconvenience that is necessary to make it appear that these companies are not pyramid schemes. Read more at Quoth the Raven.

Update: Video is now available here.

Thompson Burton: Support Company of the Year from Academy of Multilevel Marketing

Standard

lolThompson Burton, a law firm providing services to multi-level marketing companies, provides our comic relief today, along with “The Academy of Multilevel Marketing” (TAMM).

The Academy of Multi-Level Marketing is an organization created by MLM industry supporters to make up some awards to give legitimacy to those involved in the grand scam that is called multilevel marketing, direct sales, network marketing, or other clever names (generally used to disguise the fact that these companies are nothing but endless chain recruiting schemes).

The multi-level marketing industry is no stranger to ruses that make it look legitimate. The Direct Selling Association (DSA) that has held itself out as an MLM industry watchdog. In fact, it is essentially a lobbying organization whose job is to convince lawmakers to keep their scams legal. And so it follows that “TAMM” would give out silly awards to those who perpetuate multi-level marketing scams. Continue reading

Marc Randazza Free Speech Win for Dr. Steven Novella

Standard
Marc Randazza, The Legal Satyricon

Marc Randazza of Randazza Legal Group, First Amendment Attorneys

First Amendment attorney Marc Randazza of Las Vegas has scored a particularly important win in a case involving Steven Novella, MD and Edward Tobinick, MD. Dr. Tobinick sued Dr. Novella and Yale University in Florida, not for defamation, but for claims of false advertising and trademark infringement.

First, Randazza won an anti-SLAPP motion. Despite being a California plantiff, Tobinick filed suit in Florida. He may have hoped that California’s anti-SLAPP law wouldn’t follow him there. He would have been wrong. From the order (emphasis mine): Continue reading

Herbalife $HLF CEO Michael Johnson on Recruiting

Standard

michael-johnson-herbalife-recruitingLast week a video was posted to YouTube showing Herbalife CEO Michael Johnson talking about recruiting. Herbalife had the video pulled from YouTube on the basis of copyright infringement. That is most certainly a bogus claim. I’m not an attorney, but I’m smart enough to understand the concept of fair use:

In its most general sense, a fair use is any copying of copyrighted material done for a limited and “transformative” purpose, such as to comment upon, criticize, or parody a copyrighted work. Such uses can be done without permission from the copyright owner. In other words, fair use is a defense against a claim of copyright infringement. If your use qualifies as a fair use, then it would not be considered an illegal infringement.

The clip was a part of a longer video (about 71 minutes long) was first reported on in June 2015 by Michelle Celarier at the NY Post. The video clip posted last week was about a minute and a half long, and it was posted in order for people to comment upon it. No one was trying to steal some copyrighted materials from Herbalife and infringe on that copyright. Instead, the whole point was to expose what Michael Johnson said about Herbalife’s recruiting.

So why would Herbalife want to make a bogus copyright claim? Because the clip of CEO Michael Johnson put the company in a really bad light. And we can’t have that! Continue reading

Herbalife Report: “Pyramid Shakedown”

Standard

herbalifeThis week New York State Senator Jeff Klein and Public Advocate Letitia James issued a scathing report on multi-level marketing company Herbalife (NYSE: HLF). The report, The Amercian Scheme: Herbalife’s Pyramid ‘Shake’down, is based on complaints filed by 56 Herbalife victims. It definitively calls the company a pyramid scheme and highlights the company’s deceptive practices.

The key findings include:

  • Since 2004, only 56 Herbalife victims in New York have been brave enough to file complaints against the company. Most victims are afraid of betraying family, friends, and neighbors.
  • The 56 victims that have filed complaints reported nearly $1 million in financial losses ranging from $90 to $100,000. The average amount loss was approximately $20,000.
  • Over 60 percent of new members make initial investments larger than the required $60 to $100 for the new member kit. The average initial investment is $1,800, but some are as high as $10,000.
  • Herbalife distributors purport that supervisors can make as much as $20,000 in monthly income.
  • Of 56 complaints analyzed, only eight victims received a check directly from Herbalife for their royalty claims. The average amount was $100.

Continue reading

Advocare: What You Should Know

Standard

Written by: Advocare Facts

AdvoCare is a multi-level-marketing company (MLM), founded in 1993 by Charles Ragus. Charlie once worked as a regional vice president for Fidelity Union Insurance while being a distributor for Herbalife. In 1989 Charlie co-founded Omnitrition International. Similar to AdvoCare, Omnitrition sold nutritional supplements, vitamins and skin care products. Charlie sold out after only a few years when Omnitrition became embroiled in controversy for being a pyramid scheme. The resulting lawsuit, Webster v. Omnitrition International Inc has become a landmark case in the MLM industry.

AdvoCare claims to provide physical and financial wellness through the sale of sports performance, nutritional, weight control, and skincare products (AdvoCare). Similar to other MLM companies, such as Mary Kay, Vemma, and Herbalife, they recruit distributors to sell their products via word of mouth and face-to-face sales, all the while promoting the idea that wealth and success can be obtained by anyone that adheres to their business model. Continue reading