MLM Attorney Kevin Thompson: MLM Detractor Blatantly Mischaracterizes the Law, Ignores Facts and Precedence

MLM Attorney Kevin Thompson wrote an article a couple of weeks ago, that could be the start of a very interesting conversation as we go into 2013. Especially with the current issues we are facing where critics and short sellers are misleading the public in many areas.

MLM Attorney Kevin Thompson

Retired Wisconsin litigator, Bruce Craig, wrote an article featured on Seeking Alpha titled, “An Investor’s Guide to Identifying Pyramid Schemes.” While the title certainly implies a hint of objectivity, it’s simply false advertising . In a nutshell, the author holds on to his long-standing, 30+ year view that all MLMs are pyramids. Unfortunately, Craig willfully omits several well-known facts that obliterate his entire argument. It’s this kind of willful omission that makes him guilty of the very behavior he claims to be against.

Bruce’s thesis is simple: When analyzing a MLM for legality, retail sales do not matter…at all. In fact, he essentially concludes that all MLMs are illegal. If there’s any sort of recruitment element to a program, it’s “inherently deceptive” due to their “exponential characteristics.” In other words, with no limits on recruitment, epic doom is inevitable. This “all MLMs are pyramids” rationale is made crystal clear in Bruce Craig’s 2009 letter to the FTC when he says, “[The Amway case] has effectively legitimized pyramids, now called MLM’s.”

True North

I always respect people’s right to voice their opinions. While I might disagree with the points, I think good, open dialogue is the only path to progress. But…in the Seeking Alpha article, Bruce crosses a line. He is not providing objective, well-researched information to investors, as implied in the title. He’s making a carefully crafted argument. The article is “Outcome Determinative,” meaning he begins with the end in mind (all MLMs are pyramids) and stitches quotes together in support his argument. While making his argument, he leaves out several material bits of information.

Bruce Craig’s “True North” is ultimately protection of consumers. When he says he cares about consumers, I believe him. But as Abe Lincoln said in the recent movie (“Lincoln”), “What good is True North if you end up stuck in a swamp?” At some point, critics like Bruce need to be practical. Taking the position that all MLMs are illegal immediately removes you from the conversation. Completely. And without influence, there’s no change. The industry is not going away. Instead of drawing hard lines and praying for a nuclear bomb to decimate the entire industry, wiping out even the cleanest of companies, he and critics like him should try to offer suggestions to make the industry better. I have a personal experience of being hammered with the political process. I tried to pass an anti-pyramid bill in Tennessee in 2010. The bill was killed by the DSA. Instead of whining about the political process (as done in nearly every article posted by critics), I joined the DSA. I’m a firm believer that the right ideas win over time. Bruce’s article lacks objectivity, which is why it will only serve to excite the critics and be largely ignored by everyone else, including regulators.

I’m going to address Bruce’s points in no particular order.

Market Uncertainty With Respect to MLMs

When writing about his motivation for the article, Bruce writes, “The recent incident involving David Einhorn and Herbalife (HLF) drew my attention to the stock market and the subject of pyramid schemes. It seemed that the significant drop in Herbalife’s stock price reflected a market uncertainty about the inherent stability and legality of this company.”

This is false. As a quick recap, Einhorn asked a few questions during an earnings call with Herbalife. During the call with Einhorn and shortly thereafter, Herbalife’s stock dropped 20%($1.7 Billion loss in value). The market was not reacting to uncertainties about Herbalife’s model, the market was reacting to Einhorn. Einhorn is a legend on Wall Street, having successfully shorted multiple companies, including Lehman Brothers and Green Mountain Coffee. The market perceived that Einhorn smelled blood with Herbalife. Herbalife’s stock dropped 10% during Einhorn’s 5 minute conversation on the earnings call. 5 minutes is hardly enough time for analysts to research MLM law and thoughtfully conclude that the Herbalife stock was junk. They were reacting to Einhorn. Despite this “market uncertainty,” the other publicly traded companies in the MLM industry are doing just fine. The average rate of return on the publicly traded MLMs is well over 30%, soundly beating the DOW, NASDAQ and the S&P 500. It’s not even close.

Misleading Analysis on BurnLounge

In his article, Craig referenced a definition in the judge’s final order against BurnLounge. This case represents the most recent case against a pyramid scheme. In the final order, the court defined “Prohibited Marketing Scheme” as:

An illegal pyramid sales scheme . . . in which participants pay money or valuable consideration in return for which they obtain the right to receive rewards for recruiting other participants into the program, and those rewards are unrelated to the sale of products or services to ultimate users. For purposes of this definition, ‘sale of products or services to ultimate users does not include sales to other participants or recruits or to the participants’ own accounts.

If you were to read this definition out of context, it would certainly seem that it’s illegal to pay commissions on product consumption generated by distributors (known as internal consumption). In fact, if interpreted literally, this sort of definition would spell the end of the network marketing industry, period. Bruce takes advantage of this quote and contrasts it with a seemingly contradictory statement the FTC made in 2004. In the FTC’s Advisory Memo to the DSA, it said, “In fact, the amount of internal consumption in any multi-level compensation business does not determine whether or not the FTC will consider the plan a pyramid scheme.

There are 3 key facts that Bruce fails to mention:

1) The definition in the BurnLounge order is IDENTICAL to the definition found in another case against a pyramid scheme twelve years ago (FTC vs. Equinox). The FTC’s advisory memo quoted by Bruce came well after the Equinox case. The FTC made its position clear: Paying commissions on internal consumption is fine.

2) The definition that Bruce quoted was specifically limited to the BurnLounge case. First, it’s clear when it reads, “For purposes of this Final Judgment….the following definitions shall apply.” Second, Bruce failed to reference the other part of the FTC’s memo…the one that clearly says that the definitions found in the Orders do not represent the “general state of the law.” It’s pretty important…and he left it out. The memo says,

[T]he FTC often enters into consent orders with individuals and companies that the Commission has determined have violated the FTC act. To protect the public from those who demonstrated unwillingness follow the law, these orders often contain provisions that place extra constraints upon a wrongdoer that do not apply to the general public. These ‘fencing-in’ provisions only apply to the defendant signing the order. . .”.

It’s crystal clear. Despite what Bruce was suggesting in his article, the FTC was not contradicting itself in the BurnLounge order. It’s doing exactly what it’s been doing over the past twenty years. Bruce Craig is not a disinterested reporter looking to provide help for investors. He’s an opportunist taking advantage of media generated by David Einhorn to lob a grenade at an industry he clearly hates.

3) Bruce fails to reference the BurnLounge Statement of Decision. Prior to the Final Order, the judge wrote a 31 page opinion where he stated his conclusion about BurnLounge. Isummarized this BurnLounge Statement of Decision on my site. While Bruce argues that retail sales have no place in pyramid scheme analysis, the judge in BurnLounge dedicated almost 10 pages to the value of the BurnLounge product (or lack thereof). He ultimately concluded that the products had SOME marginal value; thus, he discounted the amount of consumer harm. If everything hinged on the “exponential characteristics” of the marketing plan, as submitted by Bruce, there would be zero need to discuss the product. Bottom line: retail sales DO matter. If the products have legitimate value as demonstrated by retail sales, it’s indicative of a legitimate program. Speaking of retail sales, even the FTC’s own economist, Peter VanderNat, wrote about the importance of retail sales when distinguishing legitimate MLMs from pyramids. There’s just no way around it: retail sales matter.

The rationale that led Bruce Craig to reference a single sentence out of context while ignoring the 31 page Statement of Decision is beyond me.

Tolman Case

While Bruce was eager to reference two pyramid cases from over 35 years ago, he ignores a case that was published in 2004. In Tolman, the court held that paying commissions on downline purchases “does not, by itself, render a multi-level marketing scheme an illegal pyramid.” Paying commissions on internal consumption is perfectly legal.

Bottom Line

Critics are desperate. It’s not just Bruce Craig. There have been a number of negative reports lately, all having commonality on a certain line of thought: “MLMs say that everyone can win….and since people fail, it’s fraud.” They’ll use words like “destined to collapse” without referencing a single case of market saturation. And they’ll never reference the technology tools available today that eliminate all geographic barriers for distributors; thus, negating their saturation arguments. They simply hate the space and they want it gone. And now they’re growing angry because they’ve been largely ignored by the FTC over the past several years. It’s not a surprise: their position is logically, politically and economically untenable.

The space needs to improve. I agree on that point. I’ve written exhaustively about my ideas to improve the MLM space. The industry is not perfect, but it’s still a great space. And whether the critics like it or not, the business model is accelerating. Peer to peer advertising is a much more cost effective and efficient means of distributing unique products and services. While I agree that the space needs to improve, I take exception when another lawyer makes an argument while leaving out material information. It’s just poor form.

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About Kevin Thompson:

Kevin Thompson is one of the most sought after attorneys in the country in the direct sales industry. Named as one of the top 25 most influential people in the industry, Kevin Thompson has extensive experience and helps entrepreneurs launch their businesses on secure legal footing. As a Direct Sales Association supplier member, Kevin Thompson is actively involved on the Ethics Committee and Government Relations Board to help steer the industry into a promising future.

Kevin has published multiple ebooks accruing over 65,000 reads and 2,500 downloads. He has served as a keynote speaker at multiple conferences throughout the world.

Prior to starting his law practice, Kevin gained valuable experience while serving as Chief Counsel for Signature Management Team. Team is one of the largest providers of sales aids for marketers in the direct sales industry. While at Team, Kevin worked closely with Amway and MonaVie’s compliance departments to ensure all marketing materials passed regulatory review. He has the experience, knowledge, connections and tools necessary to help entrepreneurs launch their businesses on solid legal footing.

Kevin Thompson is a proud husband and father of three children. He serves on the Young Executive Leadership Team for Youth Villages in Nashville, Tennessee, and helps devise and execute programs to raise funds for the organization and create transitional living programs for abandoned and neglected teens. He garnered all-American honors while competing in the decathlon at the University of Tennessee.

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19 thoughts on “MLM Attorney Kevin Thompson: MLM Detractor Blatantly Mischaracterizes the Law, Ignores Facts and Precedence”

  1. Hello I would like to know where I can find advice for many who have paid out $5000 each to register in a MLM business, which has not only changed their name but also disregarded all the products which we bought into. They are still trading, with different products, which we can not promote in the UK Any advice will be greatly appreciated on how all of the people in the UK can gain their money back for a business, which now seems a Ponzi scheme.

  2. Well, so far you have not provided any basis of your argument.

    I understand you have an opinion, but please give some solid evidence of your argument.

  3. @Whistleblower,

    You must not have researched the losing numbers of the Fund prior to Ackman grandstanding on the Herbalife issue.

    I will read your other comments to see if you provide a basis to your argument.

  4. Troy,

    That is not the point. The point is that Herbalife, like most other MLM’s operate a Ponzi scheme. Congrats Mr. Ackman for having the balls to make a real stand.

  5. I agree completely. If Mr. Thompson stopped working for the criminals trying to make their scams look more legitimate he wouldn’t be able to feed his family. There are ethical lawyers and those that represent a portion of the marketplace that everyone with a shred of intelligence hates because they do more damage than good. Kevin and the DSA are helping the Ponzi industry (FKA MLM) survive and remain profitable for a handful and not the masses they supposedly claim to help.

  6. @Jason,

    First let me welcome you to our community. We love having new members add value to our conversations.

    Many industries promote compliance, they just creatively call it something else… like disclosures 🙂 Take the auto and drug industries. Each commercial has its disclaimers at the end to comply with federal laws.

    However, what we have seen is that since the turn of the Century, and especially since the FTC brought in the new Advertizing Rules, more and more “internet based companies” which in the majority of the cases would not meet the qualifications for DSA (Direct Selling Association) membership or even the NAICS industry code used by the IRS for Direct Selling companies.

    I have yet found a DSA (Direct Selling Association) member company claim on their website or even their distributors state… “We are complaint!” This happens when a company launches that from the start has red flags.

  7. Pardon my ignorance on this but as someone who is not familiar with the MLM industry, I would have to say that when a company states they are “compliant” with the laws this leads people to believe that the business must be legal.
    Perhaps it is the new MLM fad or tactic to get people to pull out there credit cards. If a business states it is compliant with the laws, then there should be no reason it gets shut down unless it is a misrepresentation.

    One would figure that the lawyers would know this.
    What’s really going on with all this compliance statements?
    Is it all a big lie? Is it another MLM lure? I don’t get it!

  8. @B. Radison,

    One correction to your response… YOU DO MATTER! All distributors matter. It doesn;t matter if they are part-time, full-time, just getting started or are pioneers in the network marketing community!

    Everyone matters!

  9. @ Kevin Thompson,

    Thank you for responding to my post. Apparently my opinion overstepped some bounds and struck a nerve with you. This was not my intention. You are not my enemy nor a target for my arguments.

    I was trying to point out the blurred reality in the MLM industry being caused by the influx of illegal programs (ponzis and pyramids) pouring onto the internet at an epic rate. I am actually hoping for your help. Some of your response has already shed some light.

    I’ll touch on your points:

    (1) I apologize for going off-topic and adding zero value to Troy’s post. (Sorry Troy)

    I agree Bruce Craig has no clue regarding the MLM industry. Bill Ackman is the “Gordan Gecco” of his trade. Just a bloodsucker out to make millions for himself with total disregard to all those he hurts
    because the law says he could. He still believes the motto “greed is good.”

    (2) My name adds nothing to my online opinion as I am no one of importance in this industry. Just one of millions of affiliates trying to make heads or tails of what’s right and wrong. I am not a full time marketer. I would be happy to discuss these issues offline with you anytime with full disclosure of my name. (Although I’m sure you have better things to do with your time)

    (3) Regarding Zeek’s compliance course. A quote from Zeek Rewards management: “Zeek Rewards have put together the world’s first Compliance Course that every Zeek affiliate is required to take and pass in order to receive daily rewards. – Created By MLM Attorney Kevin Grimes of Grimes & Reese”

    If this course was put together for companies around the country, Zeek affiliates were made to believe differently.

    (4) Although you may not charge hundreds of thousands of dollars individually to a client here is more from Zeek’s marketing arm:

    “Every affiliate of Zeek can feel absolutely secure knowing that Zeek Rewards is totally legal in every way and will continue to meet the highest legal standards of the industry.”

    “MLM Attorneys Gerald Nehra & Richard Waak – Hired to ensure compliance in all aspects”

    “Dr. Keith Laggos – Hired to review and modify Zeek compensation plan”

    “Greg Caldwell – WhiteHat Solutions aka Direct Sales Compliance to fight cyber fraud and compliance issues”

    “Bonefant & Weinberg – SEC and MLM Attorneys hired to cover all Securities and Exchange Commission compliance”

    “Howard Kaplan – Tax Attorney and IRS Specialist to handle all tax compliance”

    With all of them billing Zeek collectively over 2 years, I don’t think I am that far off.

    (5) I apologize for using the term “legal expert”. It was not meant to injure but to point out that I thought you would know the difference with some of these programs. Again, sorry for my choice of words.

    (6) Do I want the old model to come back in Bidify? Hell no, absolutely not! I want them to do the ONLY right thing there is to do and return everyone’s money that
    they illegally scammed BEFORE they reboot their comp plan for the 4th time. Then they can start over and do it legally or any way they choose. They can change their plan 100 times it will never change the fact that the money taken in through their ponzi was from investors in a passive plan that Bidify promoted. That’s why it is still a scam and a fraud and will eventually fail if not get busted first. What’s the difference if they close down or stay open? How does make them heroes? They will never return anyone’s money. Stealing is stealing and not all crooks run. Some hide behind the law and dare you to sue them. I see this as the advantage of operating abroad. So yes, until the illegal money is returned to the thousands of people that were defrauded I will forever call them crooks. See if the people who’s money is lost in Bidify disagree with that statement. Sorry we can’t agree on this one.

    (7) Yes. Having a few companies shut down under your advice merits a TON of favor! Especially the company owner that agreed to return Everyone’s money. Amazing! Again, I do realize the good you do and do not think of you as the villain. My anger is towards those programs that are defrauding so many and the professional, serial scammers that continue to prowl the industry. And with a voice and some persistence I do hope to share some responsibility for exposing Bidify.

    (8) I never made the connection between doctors and their patients and lawyers and their clients. My bad. That’s why discussion is good. It helps both parties to see each other’s sides. Again you are right, I don’t mean to judge you on one company nor did I intentionally mean to attack your character. It was wrong of me and just displaced anger at these programs and those who run them. I am sorry.

    (9) It’s obvious you work damn hard for your clients and have earned your well-deserved reputation. But that is where our fundamental difference lies. The Companies are your clients. Not the affiliates that are being sucked into a ponzi by a fraudulent company. It’s your job to protect your client, good or bad, not their affiliates. So at the end of the day it’s up to everyone looking to join a program to do their own due diligence.

    But it just muddies the water when a novice looking to join a company, attempts to do their due diligence online and are met with a video by Kevin Thompson on a cruise with his client, Frode Jorgensen, discussing this incredible, opportunity of a lifetime known as Bidify. Again please don’t take this wrong or personal but this is going on everywhere. It doesn’t mean you were part of anything deceptive but whether you accept it or not, it leaves the impression that this is a program thats credible.

    Keith Laggos and his NMBJ.net website. From his homepage it reads: “Network Marketing Business Journal is the industry leader with the largest
    circulation, both in the U.S.A. and throughout the world. Network Marketing Business Journal is 100% targeted to the right people at the right place. -Keith Laggos, President – Network Marketing Business Journal”

    Looks professional, 3rd party and from a trusted resource. Turns out that after all the positive write-ups and reprints on Zeek Rewards and their management team, Keith Laggos turned out to be nothing more than a top money earning affiliate of Zeek Rewards. Can I use the word double-dipping?

    I am simply hoping that you can see this from the side of the people that get hurt by joining these programs and not just from the side of those who run them.

    You are the one attorney I do think can help because I believe you care about this industry and your heart is in the right place. And what you see as complaining, I see as a voice reaching out to someone with the power to create change. There is little I can do except walk away with a lesson learned. It was just money, I’ll make more. But it’s not about me as an individual but about millions of individuals as a whole with little help in navigating this industry outside of a few people like Troy that work hard at keeping affiliates informed. How many more people have to get conned out of their money before there is no one left to join the legimate companies? To those not paying attention this is a growing cancer thats reaching epidemic proportions.

    To Jessie M, this is not about “ones failure” but rather about millions of failures. The nearly 1 million victims of Zeek, the thousands upon thousands of people being screwed by Bidify, the soon to be story of 2013 when Banners Broker goes down and could eclipse Zeek in damages, the global nightmare of TVI Express or the future disasters coming soon like “Offer Hub”.

    You asked, “Can you think of ANYONE, yourself included, that has pitched a single meaningful idea to help distinguish good companies from bad companies?”

    Well here is my idea and advice to everyone considering joining any program.

    When doing your research and due diligence on a new business opportunity do not believe anything you read, watch or hear from the company, its marketing materials or members. Do not be influenced by who their attorneys are as they represent the company’s interests, not yours and do not believe any hype promoted online by any 3rd parties since they are likely benefitting from the information they are sharing.

    Research the background of the owners, if you can find them. Many use straw men to hide the truth, others just don’t care. And most importantly, FOLLOW THE MONEY and let common sense be your guide! If there is doubt, just get out!

    I hope we can agree to disagree on certain issues and possibly gain some further perspective moving forward. I am staying positive that this industry can overcome the evils that are ripping it apart with the help and efforts of people like yourself.

    Thank you Kevin for all you do for the industry as a whole and I wish you continued success. The MLM industry needs more people like you (and you too Troy). I hope you can read past some of my anger. I realize some of it comes off a little misdirected. I will continue to be a fan.

  10. Just want to say thank you Kevin and Troy for your response. Well said Kevin, it seems some people think it’s always easier to blame others for ones failure. Best to stay positive and keep moving forward as we learn from our mistakes. I think MLM is in a places of transition as we are learning from the mistakes, the same goes for life in general. 2013 is our year everyone to show the world MLM is a viable business/opportunity!

  11. I did not respond to the original comment, due to the fact it was addressed directly to Kevin Thompson and I knew when he had time he would respond.

    I can personally say that I know most of Kevin’s clients, and I can support the fact, that over the last 12 to 18 months Kevin’s advice has been taken by several companies whom decided to shut down instead of looking for loopholes in the laws, or worse yet, not take any of his legal counsel.

    I can also support the fact Kevin Grimes compliance course was not created for Zeek. However, he did tweak at their request and cost some of his videos to make their exclusive to Zeek Rewards business model.

    As a community, we (distributors and company founders) must STOP looking for the loopholes to justify our actions, and start working towards creating the best practices that can provide everyone the same opportunity of providing products and services to the general public in a fair and ethical manner.

  12. B.Radison,

    (1) The post was a response to Bruce Craig’s article on Seeking Alpha. In your comment, you added zero value to the points in the post.

    (2) I respect your right to communicate anonymously. However, when you attack anonymously and use such broad strokes, I’m not able to take you seriously. Put your name next to your comment and I bet you show more restraint.

    (3) Kevin Grimes did not develop his course just for Zeek. He sells the same course to clients throughout the country, as do I (my own course).

    (4) “Hundreds of thousands of dollars over two years.” Those were your words. I know what my competitors charge and I know what I charge. I can tell you this…nobody makes that kind of money from a single client!

    (5) While you refer to me as a top MLM attorney, you later use quotations i.e. “legal expert.” It was tacky and it shows your colors. You’re clearly out to injure.

    (6) You complain that “nobody is making money in Bidify.” Do you want the old model to come back? Bidify never had to change the plan. If they were the crooks as you describe, they could have easily packed up and left town.

    (7) There have been a few companies in 2012 shut down their operations “under advice of counsel” (my advice). Does that merit any favor in your rigid world of right and wrong? How many troubled programs have you been responsible for ending?

    (8) If doctors only worked with healthy patients, there would be no doctors. I assess models and provide information. Judging me based on your critique of one company (while you have limited facts) and attacking my character anonymously is wrong.

    (9) I work tremendously hard for my clients. I’d go so far to say that I work DAMN hard. I’ve built my reputation in the industry one satisfied client at a time. I get on base more than I strikeout. Sure, I make mistakes. But I’m in the game and I’m in a much better position to effectuate change in the space than you are or any other MLM critic out there. Can you name another attorney that’s drafted an anti-pyramid bill? Can you think of ANYONE, yourself included, that has pitched a single meaningful idea to help distinguish good companies from bad companies?

    Instead of just complaining, I go about solving.

  13. Jesse,

    Herbalife will be presenting its side of the argument on January 10th at a meeting with analysts and investors. I’m confident they’ll do a great job explaining the laws in the space. Ackman’s arguments are old and weak. Also, it appears that Ackman is not the most popular person on Wall Street lately. There have been quite a few investment firms announce their long positions on Herbalife. They disagree with Ackman’s thesis that Herbalife’s stock is on the verge of collapse. And if you look at the stock value over the past week (30%+ gains), the market appears to be sobering up after the Ackman hangover. Check out this guest post on my site. It’s from a financial firm that’s taken a large position in HLF after Ackman’s attack. It’s a very insightful read. Take care.

    http://thompsonburton.com/mlmattorney/2013/01/01/herbalife-why-i-made-it-a-35-position-after-the-bill-ackman-bear-raid/

  14. I would like to address what I see as an “elephant in the room” with Kevin Thompson.

    I know he’s a good attorney. A top MLM attorney. I know he fights for the industry and believes in it, I get all that.

    But you can’t believe in heaven if you don’t believe in hell.

    You can’t understand all the legalities of the industry at an expert level and not see the obvious when it is the opposite. Ponzi’s and illegal pyramids are disguised to fool the average layman and the inexperienced, not the industry “legal experts”.

    So why is that someone as intelligent as Mr Thompson would willingly take on obvious criminal ponzi schemes such as Bidify and others as clients? And keep them on even after they have been exposed? Please don’t use the argument that “we’re not sure if such programs are illegal pyramids or ponzi schemes. People like Oz, K. Chang, Don Ryan, Patrick Pretty and the rest can flush out an illegal program with deadly accuracy and they aren’t lawyers representing the MLM industry.

    Bidify was the identical ponzi of Zeek. Kevin Thompson has been their attorney since their pre-launch. They took millions from people with the promise of passive returns. Just buy lots of bids, purchase a few customers and watch your money grow for 120 days!

    Immediately following the Zeek crash they shut down their ponzi (probably at the advise of Mr Thompson) and created a unsellable comp plan while falling back on their “affiliate terms” that they have the right to change the comp plan any time they wish (no refunds, we just pocket all your money).

    Now nobody makes any money with Bidify except a few top, planted “leaders”. (think Disner & Kettner with Zeek) and the few that are owed money can’t get it out (payment processor hasn’t worked in months).

    Everyone else has had their investment stolen from them. Investment money that Bidify has been paying to Kevin Thompson to help them stay one step ahead of the law. And those that attempt to do a credit card charge back are met with full resistance by Bidify (the only complaint they answer by the way) and then are promptly terminated (all monies stolen) for breaking some other “term” of their agreement (probably written by Mr Thompson).

    Please correct me if I’m wrong but it looks to me like if you can’t make money by joining a ponzi, then make your money off the ponzi. Kevin Grimes, another “great” MLM attorney actually produced the compliance videos to disguise Zeek’s ponzi to help keep it going by appearing more legitimate. I’m sure he was well compensated by Zeek for the awesome job he did with that.

    Now the receiver wants “all the money” back. Will the lawyers (there were many) return every penny they were paid? How do you make the victims hole if the lawyers get to keep the hundreds of thousands of dollars they were paid over 2 years?

    Good business practice from a lawyers standpoint I suppose. After all, how much can you charge a legitimate business that will probably run on its own merits after it gets going, where as a ponzi, run by a convicted felon like Frode Jorgenson with Bidify, will be leaning on their legal council for advise quite a bit.

    But who’s money has Bidify, Zeek and others been paying the lawyers with? Like all good internet ponzi’s Bidify built their war chest with founders and pre-launch money (victims). It appears to me lawyers like Kevin Thompson are simply pocketing their portion of the “ill-gotten gains” with every invoice.

    So how does that make them any better than the criminals that run these programs?

    These programs and the scammers that run them are destroying this industry and a lot more. MLM has become a very dangerous place to reside. The disguises are evolving and becoming more complex making it harder for the average person, especially a newbie, to tell the difference between a legitimate MLM and a ponzi/illegal pyramid. At least the average Joe can spot a Nigerian 419 scam a mile away.

    If Kevin Thompson really wants to make a difference and put his talents to good use to save this industry then maybe it’s time he took a stand and just said “No” to the next ponzi program that wants to attach his name to it. Maybe it’s time he stopped helping the criminals look more “legitimate”.

    Ron White, the comedian always says, “You can’t fix stupid!” But hey, what do I know. This is all just my opinion.

  15. One thing that did amaze me was in the end of conference in the Q&A no one really asked about MLM at all accept one guy a little bit. Mostly it was all talk about how the stocks would be affected, it was like the room was full of investors that is it. It would have been awesome to see Troy Dooly on there going “Hey, Bill wanna meet me out back and we talk about what you doing to MLM?” lol

    @Kevin Thompson, do you know of anyone or even you have any plans to challenge Mr.Ackman publicly on his report? I think someone should call him out on this if what he is saying is not all true and watch the “Cotton Candy” melt.

  16. Thanks for sharing the article, Troy. These critics like Bruce Craig and people like Ackman are well-versed enough to where their arguments APPEAR legitimate without actually BEING legitimate. When you test their arguments, they dissolve like cotton-candy.

  17. @Jesse,

    There is no doubt Mr. Ackman is a pro at what he does. However, in watching the video conference and taking pages of notes from his other interviews, I can also say he is clueless in many areas on direct selling.

    Give this a thought… If Mr. Ackman is correct and Herbalife is Ponzi or Pyramid, then the $1 billion his firm will make on the short, and the $25 million he personally will put him directly in the crosshairs of the SEC and FTC and he could face the same clawback issues that Zeek promoters are facing.

    However, many of his facts are not correct, and when you review his background, you see that he has made a career of shor selling businesses and hurting the common person.

  18. I just want to say thank you Troy for all you do for the MLM industry. I just watched the 3hr video conference of Bill Ackman on Herbalife and have to say I am divided on what I watched. What he said makes sense to me but there are two sides to a story. I have to say if Herbalife being huge in MLM turns out to come crashing down shortly after the fall of Zeek, I am unsure how people will be able to trust MLM again. I agree there are many legit MLM companies out there Avon being one of them, this would be a huge blow to MLM in my opinion.

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