Herbalife is Not Like Vemma, Unless It Is

Standard

In light of the recent shutdown of multi-level marketing company Vemma (following allegations that it is a pyramid scheme),there has been much discussion of Herbalife. Is it a more legitimate MLM, or is it a pyramid scheme like Vemma and others that have been shut down before it (BurnLounge, Fortune Hi Tech Marketing, etc.)???

“Analyst” Tim Ramey, longtime Herbalife cheerleader, contends that Herbalife is not like Vemma:

Our opinion has always been that Vemma was likely an illegal structure – it has that endless chain feature where “Affiliates” are incentivized to buy a high-priced starter kit with minimal real value, only to turn around and very quickly find two, three or four others to do the same so that they can reap a quick profit and recoup their initial “investment,” said Ramey.

This is a familiar argument. MLMs left standing after one is shut down claim that THEIR company doesn’t pay for recruiting. And technically it appears that they don’t. Except they do. They may not have a “high priced starter kit” or may not pay a “commission” on the starter kit. Instead, they encourage distributors to buy a bunch of products up front and commission is paid on those. Since those products could theoretically be sold, I suppose that’s not paying for recruiting so much it is paying for getting the recruit to buy some overpriced, hard-to-sell products. MLM attorneys will tell you that you have to make it look like you’re not paying for recruiting or the kit. Continue reading

MLMs as Pyramid Schemes (Vemma Shut Down)

Standard

vemma logoMulti-level marketing companies – – MLMs for short – – go to great lengths to distance themselves from pyramid schemes. The Direct Selling Association (a lobbying group funded by multi-level marketing companies that helps ensure our government continues to allow MLMs to operate) says that legitimate MLMs have legitimate products or services for sale and base compensation primarily on the sales of projects. In contrast, they say that pyramid schemes focus on recruiting and base compensation on recruiting.

In reality, multi-level marketing companies have products that are simply a “front” for the real business, which is recruiting. They talk about all the riches distributors can earn, knowing that almost everyone who participates will lose money. (And when those losses inevitably occur, the companies say it is the fault of the distributors who must not have worked hard enough.)

And yesterday, the FTC took steps toward shutting down one MLM, Vemma, saying: Continue reading

The Price of Free Speech is $200,000

Standard

medifast-lawsuit-check-to-tracy-coenenFree speech is a privilege we enjoy in the United States. But it is anything but free. My personal price for the right to express my opinion about Medifast, Inc. was 5 years of my life and nearly $200,000. (Of course, that doesn’t include the emotional toll that the case took, as Medifast’s malicious pursuit of its meritless case against me was clearly designed to ruin me professionally.)

Case Summary

To summarize Medifast’s bogus case against  the defendants:

Continue reading

MLM Lawyer Kevin Grimes Pays $1.175 Million to Settle ZeekRewards Claims

Standard

Last year, infamous “MLM Lawyer” Kevin Grimes was sued by the receiver in the Zeek Rewards Ponzi scheme case. The gist of the suit was that Grimes knew or should have known that Zeek Rewards “…was perpetrating an unlawful scheme which involved a pyramid scheme, an unregistered investment contract and/or a Ponzi scheme.” The lawsuit alleged that Kevin Grimes and his firm Grimes & Reese PLLC  (that firm is now R&R Law Group, while Grimes has joined the scumbag MLM attorneys at Thompson & Burton) knew that ZeekRewards was perpetrating a Ponzi scheme and provided the company with a bogus “compliance program” meant to make the company look legitimate.

The case has been settled, and Grimes will pay $1.175 to the receiver. Via Patrick Pretty: Continue reading

Man on Top, a Film About Multi-Level Marketing (MLM)

Standard

man on top movieMan on Top is a documentary about multi-level markeing (MLM). It being directed and produced by Paul Mathieu. The film tells the story of MLM and how it has cheated consumers out of billions of dollars with its fake business opportunity:

Man On Top is the story of multi-level marketing, the world’s most notorious business model.

A product of the post-war 1950’s economic boom, the proliferation of these thinly veiled pyramid schemes has enabled companies such as Amway and Herbalife to prey upon the hopes, dreams, and ambitions of millions of unsuspecting citizens, both in the U.S. and worldwide.

These economic cults, disguised as legitimate business opportunities, use coercive psychological tactics to trap the unsuspecting participants into a culture of deceit that promises a false American Dream. The results: empty bank accounts, shattered friendships, and billions of dollars of annual profit for the founders of MLM’s.

The film will feature whistleblowers, industry experts, government regulators, and MLM participants who detail their experiences within the tumultuous, dog-eat-dog business of multi-level marketing.

Our help is needed! Please contribute to the Man on Top Kickstarter campaign here.

Jennifer McKinney Fraud Update

Standard

It’s been a while since we have looked at the many legal troubles of Jennifer McKinney (aka “MckMama”) and her husband Israel McKinney. In short, Jennifer and her husband have repeatedly stiffed creditors for hundreds of thousands of dollars, losing FOUR houses and having their bankruptcy filing denied after trustee Gene Doeling busted them for lying in their court filings.

This week, the McKinneys lost the fourth house. Marine Credit Union obtained a default judgment against them after they failed to even respond to the lawsuit filed against them for failing to make payments on their house. The bank got a judgment of $334,105 (plus interest) for the house, and $2,528 for attorneys’ fees. The McKinney’s (well, really the bank’s) house at W5441 Innsbruck Road in West Salem, WI will be sold at a sheriff’s auction. Marine Credit Union can pursue the McKinneys for any deficiency (if the sale price of the house does not cover the total that they owe). Continue reading

Medifast is Ordered to Pay Fees…. Five Years After Filing a SLAPP Suit

Standard

It’s taken more than five years and hundreds of thousands of dollars to dispose of the frivolous and unethical lawsuit Medifast Inc. (aka Take Shape For Life) and their dishonest attorneys filed against Tracy Coenen and Sequence Inc.

You will recall that I won my anti-SLAPP motion to dismiss, and Medifast appealed, ensuring that the suit would drag on for years. In June 2014, the appeals court affirmed my dismissal and told Medifast to suck it. But of course, Medifast STILL wanted to fight… this time about the attorneys’ fees they were legally obligated to reimburse.

Yesterday the court ordered Medifast to pay nearly $200,000 and never darken my door again:

In accordance with those orders and decisions, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that:

(1) This action is dismissed as to defendants TRACY COENEN and SEQUENCE, INC., and judgment is hereby entered in their favor;
(2) Plaintiffs BRADLEY MACDONALD and MEDIFAST, INC. shall take nothing by way of their First Amended Complaint against defendants TRACY COENEN and SEQUENCE, Inc.; and
(3) Judgment is entered in favor of defendants TRACY COENEN and SEQUENCE, INC., and against plaintiffs BRADLEY MACDONALD and MEDIFAST, INC., jointly and severally, in the amounts of $190,520.50 for attorney’s fees, $7,502.00 for nontaxable costs related to the proceedings in the District Court, and $855.00 for costs in the Ninth Circuit (for a total of $198,877.50).

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that plaintiffs, jointly and severally, shall be obligated to pay defendants TRACY COENEN and SEQUENCE, INC. the aforesaid sums, each with interest accruing at the legal rate from the date of entry of judgment until paid in full.

IT IS SO ORDERED.
DATED: April 20, 2015

Continue reading

Multi-Level Marketing is not a Business (It’s a Pyramid Scheme)

Standard

direct-selling-pyramid-schemeOver the weekend, cracked.com posted an insightful article about the realities of multi-level marketing. Simply put, MLM is the same thing as pyramid scheme. It’s not a business. Almost everyone loses money. The behaviors are cult-like. And you will NOT be successful with MLM, so don’t bother trying to recruit your friends and family.

Author Kathy Benjamin calls pyramid schemes the world’s fastest growing industry, and she is right. You see the evidence all over Facebook. Several of you friends are inviting you to their party, or they’re posting staged before and after pictures and leaving cryptic messages that say “ask me how!” They often will not mention the name of the product they’re pushing, because they know they’ll lose you as a potential victim if you Google the product before they can fill your head with lies about how good the product is. Continue reading