Who Loves Multi-Level Marketing?

For more than a week, I have been enjoying the discussion ignited by Virginia Sole-Smith’s article on the pink pyramid scheme, Mary Kay Cosmetics. Naturally, Mary Kay Inc. has come forth with some flimsy excuses that do nothing to help them save face. These excuses included things along the lines of “most women don’t want to make money in Mary Kay!” and “we buy back the products if they want to quit!”.

Sadly, these excuses don’t even scratch the surface regarding the problems with multi-level marketing. The gigantic problem is that MLM is a system designed for failure. A tiny fraction of 1% of distributors make a respectable living, but only do so because the 99% below them are losing money in the scheme.

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Pink Pyramid Scheme: Harper’s Magazine on Mary Kay Cosmetics

In the August issue of Harper’s Magazine, investigative reporter Virginia Sole-Smith examines Mary Kay Cosmetics in an article entitled The Pink Pyramid Scheme. It is well-written, and in my opinion, it paints a very fair and truthful picture of life as a Mary Kay lady.

In this blog post about the magazine article, Virginia talks about the dream that Mary Kay Inc. is selling to unsuspecting women under the guise of “empowering women.” She talks about my website, Pink Truth, which is aimed at educating women about the evils of Mary Kay and other multi-level marketing companies:

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MckMama Bankruptcy Case Update

There is little news to report in the bankruptcy case of Jennifer Sauls McKinney and Israel McKinney. In May, bankruptcy trustee Gene Doeling filed Case 12-06024, objecting to the discharge of the McKinney’s bankruptcy and alleging that the McKinneys made false and misleading disclosures in their bankruptcy filing.

The summons in the case gave the McKinneys 30 days to file an answer. According to Pacer, the site on which documents in federal cases are made available to the public, no response has been filed. Why not? It’s hard to say, but the logical conclusion might be that MckMama and MckDaddy have no real defenses to the allegations made by Mr. Doeling.

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American Greed: Cracking the Façade of Fraud

Jenna Martino, CNBC Associate Producer

When Sandy Smith of Stevenville, Texas, purchased her home, she never dreamed there would be any issue taking out a mortgage with Taylor, Bean & Whitaker, a lending company based in Ocala, Fla. The previous homeowners had used them. This wasn’t Sandy’s first time taking out a mortgage and she thought she knew what she was getting into. She made her payments on time each month, but before she knew it, she started receiving foreclosure notices. She had unknowingly become a victim to a multibillion-dollar scam and was one of more than 500,000 homeowners who fell prey to mortgage mogul Lee Farkas.

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The Psychology of White Collar Criminals

Toby Groves is a fraudster turned researcher, having served time for mortgage fraud in income tax fraud committed while running Groves Funding Corporation. He was sentenced to two years in federal prison, and it was in prison that he began researching the psychology behind white collar criminals. Earlier this year, Toby posted a five part … Read more The Psychology of White Collar Criminals

Denver Post Copyright Infringement

Remember the Denver Post? The one that used Righthaven to sue a bunch of bloggers? (Unsuccessfully, but nevertheless, the litigation has dragged on for some time.)

It seems that the Denver Post is engaged in a little copyright infringement of its own. Posted at this link is an entire article from the 10-Q Detective, David Phillips. There is no link to the original article, only a little by-line that doesn’t even link to David’s site. It merely goes to another page on the Denver Post site, which then links to David’s site.

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Milwaukee Spent HOW MUCH on a New Housing Project?

This week, I read with interest an article about Westlawn, a City of Milwaukee housing project that was torn down an rebuilt. And a little bit of research led to an astounding discovery.

In recent years, an idea was hatched to tear down an old housing project built in the 1950s, and replace it with new apartments and townhomes that would be better for residents. The first phase of the project cost $88 million. But that’s not the best part. The best part is that for this $88 million, the city built 250 units. That’s a construction cost of $352,000 per unit.

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Similarities Between Herbalife and Pyramid Scheme BurnLounge

In March, the Federal Trade Commission entered an order against multi-level marketing company BurnLounge, prohibiting the company and its founders from making certain misrepresentation and requiring them to disclose certain things in the future. Over the last few months, the heat has been on Herbalife, after short seller David Einhorn asked some important questions on a conference call. (Don’t let HLF tell you the questions were elementary or not important. They are very important.)

There is no doubt that Herbalife has had much financial success over the years. It is the largest publicly traded MLM, and its stock price has increased greatly since 2007. But are there things to be worried about? If you know something about multilevel marketing, the answer is YES.

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