The lawsuit states:
* Quixtar’s (Amway and Quixtar are both part of the same company) products are so overpriced they cannot be profitably retailed.
* Only 3.4% of product sales are made to customers outside of the Quixtar distribution network.
* The sole way to make money is for a (distributor) to continually recruit new distributors who are also willing to buy and self-consume, or give away, the Quixtar products.
* Quixtar a classic recruitment pyramid scheme.
From The BizOp News blog by Michael Webster, Tri Energy: Massive Affinity Fraud And Ponzi Scheme.
A U.S. District Judge in California ruled against Tri Energy Inc., H&J Energy Company Inc., and several others last week. The defendants are permanently enjoined from committing violations of Securities and Exchange Commissions rules. Specifically, they may not solicit investments of the type at issue in the case. Defendants were also ordered to pay disgorgement and civil penalties.
Ponzi demonstrated to himself that he could achieve astronomical profits with the postal reply coupons, a far better return on investment than interest paid by the banks or profits created in the stock market.
His investment pitch included the mention of the International Reply Coupons, as he was depending upon the legitimacy of the U.S. Postal Service to bolster his image. However, Ponzi was careful not to give away too many details of his plan, lest potential investors would become skeptical or steal his idea and start companies of their own.