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February 29, 2004

Orrin Woodward should learn from Bo Short

By QBlog in

I've been pretty critical of the OrrinWoodward.com site for a couple of months. Besides the amateur design, I've criticized the movement of once public content behind a password protected cgi script. Such an action naturally raises eyebrows and is also contrary to the very nature of the Web, where information wants to be shared, not bound up behind a password. It's clear that Orrin doesn't "get" the Web and unfortunately, such Web ignorance is all too common.

That reality is why it's so refreshing to discover a business leader who "gets" the Web. Passport Founder and Former Amway/Quixtar Diamond Bo Short appears to be part of that "clued-in" minority who understand and even embrace the nature of the Web. FormerDiamond is Bo's personal Web site that shares his "experiences and opinions as a former Amway/Quixtar diamond."

The FormerDiamond site is built with TypePad, an excellent blog tool but it isn't exactly a blog, at least not as we've come to understand blogs. Instead of stringing posts together chronologically (as most blogs do) the site serves as a place for Bo to present his essays and comments about Amway, Quixtar and the various related systems, businesses and cultures. For Bo, such public commentary isn't new (his response to Orrin Woodward is but one of many examples), but presenting those comments on his personal Web site is new.

It will be interesting to see Bo's FormerDiamond site develop. Whether you agree or disagree with Bo, I believe it's extremely valuable to read the opinions of perceptions of a Former Quixtar Diamond.

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February 28, 2004

Neat Dad, Sloppy Dad

By QBlog in

Tiger Cafe appears to be the blog musings of a guy named Raymond G (R G). After a brief review it looks like the blog discusses Politics, Multi-Level Marketing and everything in between. The title of one particular post from Jan. 25, 2003 caught my attention.

Beware Multi-level Marketing & Rich Dad, Poor Dad explains "two schemes" that R G believes you should avoid: Multi-Level Marketing and Robert Kiyosaki.

The "warnings" about MLM are nothing new and R G provides links to a variety of Web sites critical of the business method. However, the criticisms of Robert Kiyosaki were new to me. I am familiar with John T. Reed's critical analysis of Kiyosaki but the Tiger Cafe cites an article allegedly from Money Magazine (the linked article requires registration however I think I've found a non-registration version here). According to R G, the article criticizes Kiyosaki for:

1) Being too simplistic with vague financial advice. He mainly encourages you to start you own business and invest in real estate. And he teaches some basic accounting. But few details or real financial education.
2) Being overly optimistic and ignoring risk. He preaches a feel-good philosophy that encourages you to take huge risks, without telling you what may go wrong.
3) Not being too open about how HE makes his money. About gaining more income than you might think from the sale of his books, videos, and tapes.
I'll be honest, I'm no fan of Kiyosaki but he has inspired me to write my own book which will be titled, Neat Dad, Sloppy Dad. It will describe my adventures with my real dad (sloppy dad) and how I learned that being sloppy isn't all it's cracked up to be. I'll explain how neat dad taught me to fold my underwear, keep a crease in my pants and use lemon juice to clean wood surfaces. I'm shopping it around right now but Simon & Schuster is interested.

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The Story of The Blakey Report

By QBlog in

I have pulled The Blakey Report from my site. If you would like a copy of the report, you can download the pdf from either Scott Larsen's AmQuix site or Dave Touretzky's Amway/Alticor/Quixtar Sucks! site.

Explanation Part I
When I posted a copy of The Blakey Report on Feb. 9, I had absolutely no idea it was under a Protective Order. Nothing in the report gave any indication that the information was confidential. There was no "CONFIDENTIAL" stamp on any of the documents and I just thought it was an interesting report from the guy who wrote the RICO Act. In fact, I felt that the most compelling thing about the report was not so much what it said but who wrote it.

Two days after posting the report I got a call from an Amway attorney named Brad Harrigan. Brad claimed that the report was sealed (under a Protective Order) and wanted to know how I got the report. At the time, I had no idea if Brad was really an Amway attorney or just some punk kid with too much free time. I mean, he didn't even send me an email or anything. Just called me up out of the blue and started requesting information. I generally don't give out info over the phone to complete strangers and I wasn't about to start with Brad.

On Feb. 20, I received a registered letter from an Amway attorney in Houston named Richard E. Griffin (go Hawgs!). The letter basically said that The Blakey Report was sealed and that I should remove it from my site. The letter also vouched for Brad Harrigan and explained that he wasn't some punk kid but an actual, real life, honest-to-God Amway attorney. Here's a copy of the letter if you'd like to read it.

Explanation Part II
Well, as much as I'd like to believe everything I read, as a journalist, I know better. I had already reviewed the Protective Order and my non-lawyer interpretation was that The Blakey Report was not sealed. But, since I'm no lawyer (thank God) I felt it was important to seek out the opinions of people closely involved with the court case. I made a list of people who should know whether or not the report was sealed. Here's my list:


  • G. Robert Blakey - the author of the report
  • The Attorneys for Proctor & Gamble - the plaintiffs

  • I called Professor Blakey and his immediate response was that the report was sealed and he was forbidden from even discussing it. Soon after talking to Blakey I called the office of P&G lawyer, Stanley Chesley. I didn't talk to him but one of his assistants confirmed that the report was sealed. I then spoke with Fay Stilz, another P&G attorney involved with the case, and she also said that the report was sealed. It was after speaking to Blakey and the P&G attorneys that I decided to pull the report from my site.

    Explanation Part III
    I'm not some lawless rebel seeking to wreak havoc on the world by posting every confidential document I can get my grubby hands on. If The Blakey Report had been clearly marked as CONFIDENTIAL then I never would have posted it. However, before pulling it from my site, I felt it was important to check with all parties involved and not just rely on Amway's interpretation of the Protective Order. It was only after verifying that the report was under seal that I decided to yank it from my site.

    I hope this adequately explains my actions. If you have any questions, feel free to ask.

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    February 26, 2004

    Sandra and the Quixtar Meeting

    By QBlog in

    Each day I get several emails from people visiting this site. Most of those messages usually fall into two basic categories:

    a.) You Suck
    b.) Good Work

    Those who know me will understand when I say that I enjoy both types of email. However, occasionally I'll get a message that really catches my attention. Last week, I received just such a message from a young woman named Sandra whose friend was interested in Quixtar and invited her to a meeting. I'd like to share that message with you (with Sandra's permission). I've made only minor edits for clarity:

    Hi,
    My friend called me up last night to tell me that she was starting a business. Since my friend has only just turned 19, this surprised me a bit, but of course I wanted to encourage her. A little bit of pressing made her reveal that it was Quixtar. I've been researching it online today and it sounds like a scam to me.

    While you do say that it's not a cult, it sounds like they employ the same methods as cults. A friend of mine went to a meeting with the girl I mentioned and one of the slogans was "Weiners vs Winners". What the hell kind of marketing is that? Follow us or you're not cool? It sounds like something that belongs on the playground, certainly not something I want to be involving myself in at 22.

    Sandra

    I responded to her message by saying, "I'd love to know how that meeting goes." Well, Sandra responded with a full accounting of her experience at the Quixtar meeting.
    Quixtar is dead! Or at least, it's out of the picture
    for the people I was concerned about. Jenna has been brought back from the brink of cultdom, and we have triumphed over Ray, the too-tanned too-slick ex-hockey player. Go us! Ray was using some easily recognizable (and in some cases, morally questionable) techniques to sway the crowd, which pissed me off.

    He said that anyone who didn't get excited about the plan didn't understand it, intimating that those who weren't jumping up and down about his scheme at that moment weren't capable of seeing the Quixtar Vision. I was getting annoyed because I was sitting there knowing exactly what he was doing and not having an opening to say what I wanted to (which, by the way, is an effective method of not letting someone disagree with you). However, finally he mentioned the term "pyramid scheme" and when he paused to breathe, I jumped in with my "What differentiates this from a pyramid scheme?" and that got the ball rolling.

    Ray was not overly fond of me to begin with 'cause I made a point of not laughing at his jokes, raising my hand to his queries or showing any kind of support for what he was saying. Now to have me interrupting his flow? Well! He did not seem pleased. I must say, he did try to handle me with humour and a wide-eyed "golly-gee" attitude, but his eyes were saying "Die! Die! Quixtar is my one true love!"... I tell ya, it was a riot.

    I also asked him what percentage of people dropped out or lost money, and he said he didn't know. He asked why I'd want to know about the losers instead of the winners, and I said that spending "a couple hundred dollars", as he put it, was a risk for most people. Also, that most people took calculated risks, and that meant knowing all the information. I told him that no one set out to fail at Quixtar, but it was inevitable that some people would, and I wanted some figures on that. He said he didn't know them, and I asked who would. He said I should come to another meeting and talk to "Brian."

    I asked him why he made statements that seemed designed to make other people feel stupid for not agreeing with him, and he made an innocent face, saying he hadn't intended to offend me. I let him know I wasn't offended, but that I did question his techniques for marketing his plan. Shouldn't people agree with him because they think it's a good idea and not because he has used passive bullying techniques? He didn't quite know what to say to that.

    Basically, I think Ray did not like me very much. He took that opportunity to suggest a break, and to ask who was a red, yellow or green light. I shot my hand up for red light, which came as no surprise to the assembled group, I'm sure. Ray also suggested that the red lights might like to leave. *ha!* I don't think Ray liked the questions coming from the red light contingent. My friends and I left, and the mission was accomplished, since Jenna was no longer going to give them her money or go to another meeting.

    - Sandra

    I have always admired people who aren't influenced by peer pressure in group settings. Maybe it's because I'm a bit of a social renegade myself or maybe it's because I don't have any peers ;o) Whatever the case, I love it when people don't follow the herd and speak their mind at the risk of being ostracized by the group. Whether you agree or disagree with Sandra I think we should all give her props for doing what she felt was right, even if it might have been unpopular at the time.

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    February 25, 2004

    Answers?

    By QBlog in

    This post contains part of an email response from my wife's direct upline (the woman who sponsored her). The message was an answer to some questions I asked about the Quixtar business. Her response was in addition to the answers I received from our upline in Dallas. I have only made edits to obscure identities and break up long blocks of text:

    (August 29, 2002) My husband and I have several people DIRECTLY under us such as you and your wife, who are REALLY doing this and under those people there are quite a few others really doing something and having that kind of spread of people in SEVERAL LEGS not just ONE ACTIVE LEG.....allows us to get a really great check......

    Where if you only have I person directly under you doing something and people under that person doing something and its all in one leg then that leg is basically draining your check so even if you went 1000 or 1500 your check wouldnt be NEAR what ours was.

    Its different for each person. No one can tell you EXACTLY what you will make at any given level. Fact is the company is DEFINITLY in good shape because no matter how big you get they are gonna get at least as much as you do. Maybe not forever but CERTAINLY in the beginning when you are getting started.

    I get back all that I spend on this website and then some EVERY MONTH since April.....and I am just now starting to buy "extras." In the beginning I recommend that you pace yourself and budget yourself, buy what you have to buy to keep yourself out of walmart but dont buy just to buy, spend only what you have to and purchase only what you NEED or HAVE to have.

    Then as you build and your business gets larger, then you can buy extras. Now I got all of our school supplies online and bday stuff and all that but i would have bought it elsewhere if not on here. I did not however get the kids uniforms on the website I clearly saved more money going elsewhere.

    Now if I were about to break a bracket and if my check would have covered the extra money I would have spent on the uniforms then ABSOLUTELY I would have spent more and got them on here, but such was not the case.

    I had our upline do a budget for us, heck we have a Financial planner that your wife counsels with weekly. SO I figured since we were laid off when we started this and have no credit cards, no credit and no savings whatsoever and live paycheck to paycheck then I need someone to budget me and show me how to do this. They did, it worked and we are doing better financially now in the business than we were without it. Go Figure huh? Ive rambled......tend to do that.....any more questions feel free....Im lovin this!!!
    - Upline

    I should note that I did not include the first half of the email because it mainly answered the "sock question" from my previous post.

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    February 24, 2004

    Scott Allen and the Problem with MLM

    By QBlog in

    Scott Allen writes for the Entrepreneurs section of About.com. According to his bio page, he's a "several-time successful entrepreneur, IT executive, and consultant with twenty years of experience." Recently, Allen wrote a column titled "The Real Problem with Network Marketing and Multi-Level Marketing (MLM)" with the subtitle, "HINT: It's not the business model."

    In the column, Allen takes a very pragmatic view of MLM and examines some of the problems and even offers a solution of sorts. According to Allen, the "real problem" with MLM is not the business but some of the people it attracts. It's really a good column written by a guy who seems to know his stuff but he makes a couple of points that I believe deserve scrutiny.

    Tiered Compensation Structure
    Allen asks "what is the problem with MLM?" His answer begins by comparing the "pyramid structure" of MLM to traditional commissioned sales:

    Maybe it's the pyramid structure? But you can't really take issue with the tiered compensation structure — almost every large sales organization in the world has that. Salespeople get commission, and sales managers get overrides or bonuses on top of that, and sales directors on top of that, and VPs on top of that.
    This is a common misconception. Yes, there are MANY similarities between MLM and commissioned sales but there is one critical difference — Expansion. Let me explain.

    Expansion, Contraction and Equilibrium
    Mom and Pop own a business. They, like thousands of other Moms and Pops, make a comfortable living at their business and have several trustworthy and loyal employees. As the economic environment changes Mom and Pop make adjustments to their business (maybe raising prices, diversifying inventory or services, etc.) but as a whole, the business remains unchanged and profitable for decades.

    Mom and Pop have reached a type of Equilibrium with their business, where they're neither growing nor shrinking. We've seen this scenario played out thousands, if not millions of times throughout American history. Mom and Pop earn money. The employees earn money. The managers earn money. The customers are happy. Grab a slice of Apple Pie.

    Now, contrast the Mom and Pop business with MLM. In MLM, a state of Equilibrium is like a cancer to the business. The only way for MLM to "work" is through constant Expansion. Why? Because those at the bottom, those new "salespeople," MUST recruit others (Expand) before they will start earning money. In a Mom and Pop business, a new employee earns the same (or nearly the same) as the guy who's been there a week, month or year and does so even if the business isn't Expanding. In MLM, those at the bottom won't ever money without Expansion.

    MLM Sometimes Attracts the Wrong People
    Allen continues by explaining that sometimes those least qualified or prepared to own businesses are attracted to MLM because of the low cost of entry and the enormous earnings potential.

    While I agree with Allen on this point, I do so only partially. He seems to indicate that the "bad apples" (my phrase not his) are the only ones perpetrating bad MLM practices and techniques. I believe that even some of the "good apples" are giving MLM a bad reputation simply because in MLM, recruiting is emphasized and sales are de-emphasized. This seems to encourage many with good business sense and good intentions to practice some of Allen's "bad MLM techniques" like:

  • Over-selling the opportunity
  • Inappropriately discussing business in social situations
  • Being either inaccurate or deceptive when talking about their business
  • My Solution?
    I wish I had a solution. Unfortunately, I don't. For those keeping score at home, I have yet to conclude my "The Trouble With Quixtar" series because I'm still trying to fully understand why I believe in my heart that MLM is a fundamentally flawed way of doing business. I feel a bit like a newly religious man who knows that there's a God but hasn't yet found a way to articulate why he knows it to be true.

    Addendum
    I find it fascinating that Allen never mentions the name Quixtar but instead refers to Amway. I liken it to a journalist continuing to refer to Altria as Philip Morris five years after the companies were restructured with new names. I dunno, I'm just weird I guess.

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    February 23, 2004

    Etc.

    By QBlog in

    Quixtar etc. site.

    Welcome to the quixtar etc. site.

    This page is the default page for the site and was simply put here to entertain anyone browsing to this site, until real content can be provided.

    Thank you for stopping by.

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    Individual statistics for Quixtar

    By QBlog in

    Here are the stats for "Quixtar" as reported on this day:

    Kills - 25
    Deaths - 13
    Suicides - 0
    Kills per hour - 34.95

    ;o)

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    February 22, 2004

    Listen to the Bloggers

    By QBlog in

    A blogger known as "Akira Hirose" has posted So, Who Knows Someone Who Wants To Make More Money?. The post reads almost like a script, a script I've read on dozens of other blogs during the past year. Hirose mentions the ambiguous "business opportunity," the "cult-like" vibe felt at the "opportunity meeting" and finally the "Quixtar is a Pyramid Scheme" conclusion.

    However, what really caught my attention was one of the final paragraphs:

    This is a blog (quixtarBLOG) written by a man formerly associated with Quixtar. It takes a neutral stance, which in (sic) refreshing, as most other sites are either super pro or con Quixtar.
    Hirose gets it. Do you?

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    Ben Dominitz and Amway

    By QBlog in

    Someone sent me a link to a Richard Poe column published in June, 2003. Can Liberals Publish Conservative Books? is a lengthy and detailed account of the now defunct Prima Publishing, a conservative publishing house in a world of liberal publishers.

    Poe reveals that Prima's founder, Ben Dominitz, is a Jewish immigrant who ditched his love of music (he studied violin at Juilliard) for a more financially rewarding career as an Amway "sales representative."

    Dominitz built a large "downline" or sales organization with Amway, generating a residual income that continues paying out to this day, years after Dominitz’s "retirement" from the Amway business.
    However, it wasn't the Amway riches that impacted Dominitz but the culture of "patriotism, family values and self-improvement" that shaped his conservative ideology.

    It was apparently that experience with Amway that helped encourage Dominitz to create Prima Publishing in 1984. By 2000, Prima had grown to $100 million in annual sales.

    The column isn't really about Amway at all but I thought it was interesting to see how Amway fit into the creation of Prima Publishing and Dominitz's entrepreneurial spirit. To many, Amway is simply a method to reach other goals. At the writing of the column Dominitz had officially retired and was playing his violin once again.

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    February 21, 2004

    Are You Living Paycheck to Paycheck?

    By QBlog in

    I've posted an actual scan of an actual "flyer" that was deposited on the actual windshield of my actual SUV during my visit to an actual mall this morning. I know a little bit about Guerrilla Marketing and think it's great to use flyers to promote a business but this particular example is a lesson of what NOT to do.

    First of all, if you want to promote a Web site, your URL should NEVER begin with Angelfire, Geocities, Tripod or any of the other "free" sites available on the Web. Spend $9 and get a solid domain that redirects to your free site if you must but don't publish a lengthy URL as this poor dullard has done.

    Secondly, and most important, be sure your business isn't a SCAM. This dude's site (or it could be a woman I guess) is basically a hybrid chain letter. Anyway, I thought it was humorous. No, it has NOTHING to do with Quixtar but not everything in life does ya know.

    Great Opportunity

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    February 20, 2004

    The Squeaky Wheel

    By QBlog in

    I received a copy of a letter via email yesterday. The letter is to Ken McDonald, Managing Director or Quixtar. It is basically complaining about the Quixtar group Team of Destiny and the prices of many Quixtar products. The letter is signed by Steven and Shari Kaldi and begins like this:

    I am writing you with some feedback on the Quixtar Business. We were introduced to the business through a long time friend via the Team of Destiny. We attended a Tuesday Night Open. It sounded great, building communities of people offline shopping online. We were told just to shop, not to worry about price comparing, some things are the same price, some a little more and some the same. So for nine months, that's what we did. We did not go to Costco or similar stores. We were told to get on the system if we wanted to succeed.
    Ordinarily, I probably wouldn't post a letter like this but I thought it serves to demonstrate the power of consumers. While this particular letter may not ever reach Ken McDonald's desk, it is vocal people like Steven and Shari that make our marketplace so exciting. Letters just like this one have caused giant corporations to rethink business strategies, modify products and even eliminate certain services. Recently, a movie about Ronald Reagan was moved from network television to pay cable as a result of similarly vocal consumers. While I'm sure many may not agree with the Kaldi's, they should respect them for voicing their complaints and attempting to initiate some sort of change.

    As they say, "the squeaky wheel gets the grease."

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    February 19, 2004

    Not about Quixtar

    By QBlog in

    I found a column titled Understanding Multi-Level Marketing Firms on the New University Newspaper Web site last week. The author of the column, Hans Pang, describes (in detail) his experience with a "Multi-Level Marketing" company called World Financial Group.

    Near the end of the column Pans provides "warning signs" that should indicate if you're being propositioned by an MLM company:

    One, the company requests money from you up front to hire you...

    Two, when a company puts more emphasis on recruiting more sellers than selling the actual product...

    Three, a company that strongly coerces you into buying their own product that is not right for you...

    Four, a company that plays on your greed by telling you to sell their product on a commission basis to everyone you know.

    Five, a focus on how much money you can make. If a company keeps promising you will make tons of money, they are only playing on your greed and trying to make tons of money off of you.

    It was interesting to read this guy's experience with WFG and the "lesson" he claims he learned as a result of that experience.

    With that I'd like to make a generalized observation (look out!). It seems that most people who endorse and condone MLM are either actively participating in some sort of MLM business or are business veterans themselves.

    Conversely, it seems that a great deal of people who are critical of MLM are either former MLM participants or those with very little "real-world" business experience.

    Of course, as always, I may be wrong on this observation but it's just something I've been thinking about today.

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    February 18, 2004

    "tech support here at Quixtar"

    By QBlog in

    fuxupyo: And it pays well, too

    xupyo: did I tell you about my new job prospect?
    DCMisner: no, what?
    xupyo: tech support here at Quixtar
    DCMisner: oooOOOOoohhh, nifty

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    I've been asking for numbers for quite a while

    By QBlog in

    One year ago today I posted "Show me the numbers."

    (from 2003) My question right now is how many people drop out of Quixtar each month? I mean a solid verifiable number. Not some estimate. They have records. They know who is active or not. I want a solid number. They quickly tell you how many have made a million each month. Tell me who didn't. Thanks.

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    February 17, 2004

    Letter from Ron Mitchell

    By QBlog in

    My wife and I are no longer Quixtar IBOs. During the month of September, 2003, we began receiving emails urging us to renew with Quixtar before our IBO status expired. Since neither of us wanted to continue as IBOs, we chose not to renew (though my status as an IBO is another story - check the blog archives). We finally received communication in December that if we did not renew (pay the fee and fill out some form) by the end of the month then we would be "out" of Quixtar (my word, not theirs). We never paid any money, never filled out any forms and so on January 1, 2004, we were officially "ex-IBOs" or "former IBOs" or whatever.

    Confusion
    Imagine my surprise when I received a letter from Ron Mitchell, Supervisor of Quixtar Business Conduct and Rules. The letter is similar to traditional C&D letters with a few notable exceptions. Mitchell's letter was addressed to my wife and me as Quixtar IBOs. It is dated January 22, 2004, which is 22 days after our IBO status expired. Because neither of us have had any sort of affiliation with Quixtar since December 31, 2003, I thought it was curious that the letter accused us of violating Rule 9 of the Rules of Conduct.

    The letter is basically telling me that the domain quixtarblog.com (which I own) is in violation of Quixtar rules and causes "confusion in the market place." It asks that I "relinquish this domain name by not renewing it in the future." That's another variation from the traditional C&D letters that I've found in my research.

    I should point out that Rule 6 (Preservation of the Line of Sponsorship) discusses what's known as the "Six-Month Inactivity" Rule (page 60 of the Quixtar Business Compendium - pdf).

    6.4. Six Month Inactivity:
    An IBO who wishes to TERMINATE (by resignation or failure to renew) his or her IB under his or her present Sponsor and who thereafter becomes inactive for a period of six or more consecutive months shall cease to be an authorized IBO and may, following the lapse of said inactive period, register as a new IBO under a new Sponsor. The date on which the Corporation receives the letter of resignation begins the inactivity period. A letter of confirmation is sent by the Corporation to the IBO and his or her Line of Sponsorship acknowledging the start of the inactivity period. A person who has not renewed and has not submitted a letter of resignation will be considered to have submitted his or her intent on the date his or her IB expired and must remain inactive six months from that date. Applicants may not apply under this Rule to become a partner in an already existing IB.
    Some have suggested to me that it's this rule (and sub-rules) that possibly kept my name in the Quixtar "books" as an active IBO and ultimately led to Mr. Mitchell's confusion about our status. However, as I read the rule, failure to renew is "considered" termination even though (according to Rule 6.4) my wife and I are still in a sort of "limbo" whereas we can (should we choose to do so) sign up under a new IBO after six months of inactivity.

    The "comply" statement
    The letter ends with the "or else" sentence which spells out the type of action that will be taken if my wife and I fail to comply.

    "Failure to comply with our request could result in action being taken against your business, without benefit of your input, up to and including termination."
    That sentence specifically address our Quixtar business as IBOs, the business that we are no longer part of, the same business that we allowed to expire more than three weeks prior to the writing of the letter. Needless to say, I did not respond to this letter. I'm not an IBO and I don't see how I can have something terminated if it does not exist. Maybe I'm missing something here?

    An analogy
    To put this into perspective, I concocted a little analogy. It's not the greatest but I think it gets the point across. Let's say I have a job that requires me to wear a suit and tie all day. Then one day I walk up to my boss and tell him that I've found something else and that I quit (or, I put in my two weeks and then quit). After my final day as an employee, I shake everyone's hand and go along on my merry way.

    Three weeks later I see my old boss at a restaurant eating lunch. It's my day off at my new job so I'm dressed casually. Jeans, polo shirt and sneakers. My old boss asks me why I'm not wearing a suit and tie and tells me that I should not go around in casual dress. He then threatens to fire me on the spot if I refuse to go home and change. That seems a little strange to me. And that's what that letter sort of seems like, in a way.

    Domain Names
    For those wondering about the domain name issue I did a little bit of research to discover my rights in this matter. The first thing I should tell you is that I also own:

  • NOTquixtar.com
  • quixtarWATCH.com

    Next I went looking for other "criticism" (or "watch") and "fan" sites that have a trademarked name in the domain and found these as well as others:

  • www.microsoft-watch.com
  • www.google-watch.org
  • www.walmartwatch.com
  • www.walmartsucks.com
  • www.icannwatch.org
  • www.aolsucks.org
  • www.unwatch.org - Not entirely sure about the UN
  • www.enronsucks.com
  • www.quixtarsucks.com
  • www.walmartblog.com - Parked by Tech-Toc
  • www.nikeblog.com - Parked by Spinfree, Inc.
  • www.appleblog.com - Parked by AppleBlog
  • www.mlbblog.com

    I also found a few court cases that seem to indicate that using trademarks in the domains of "fan" or "criticism" (or "watch") sites like mine are protected as Free Speech. Check these out:

  • "Gripe Sites" and Free Speech
  • More about "Gripe Sites"
  • The "Ford Case"
  • FAQ about Domains and Trademarks from Chilling Effects

    Anyway, I thought this whole thing was quite interesting. I'm learning a lot about the Web as a result of this and that's pretty cool. The more I learn the more I realize that the Web is the most awesome thing since Gutenberg invented the printing press.

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    February 16, 2004

    Not quite Quixtar

    By QBlog in

    Check out Quixta.com. One letter shy of being Quixtar. So close, yet so far away.

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    February 15, 2004

    Is a Sea Lion a Seal?

    By QBlog in

    Here's an apparent copy of the Protective Order (pdf) from the P&G v. Amway case (Case No. H-97-2384) signed by United States District Judge Vanessa D. Gilmore on June 12, 1998. This document was obtained from PACER and is obviously part of the public record. What's interesting about this Protective Order is it seems to indicate that The Blakey Report is not a "sealed document" which is contrary to the claims made by the "alleged Amway lawyer."

    I'm No Lawyer
    I'm no lawyer (thank God) and legalese sends my journalist-trained mind into a tailspin. I've read through the Protective Order a few times and while I don't fully understand all of it (it seems like it just repeats itself over and over again) I do get the impression that "sealed" or Protected documents need to be labeled as "CONFIDENTIAL MATERIAL" or "CONFIDENTIAL." From page 2 we read:

    (page 2) Documents and things produced without a legend designating the material confidential shall not be CONFIDENTIAL INFORMATION subject to this Protective Order unless agreed by all Parties or ordered by this Court, or otherwise designated confidential in accordance with the provisions of Paragraph 4 of this Protective Order.
    Clearly The Blakey Report is NOT marked CONFIDENTIAL, at least the copy I posted has no such designation. If it had such a marking, I would never have posted it. Contrary to popular belief, I'm not a total fool.

    There's also another interesting sentence in the Protective Order. From page one we read that documents are protected only if they contain "confidential financial, commercial, marketing or business information, trade secrets, know-how or proprietary data relating to financial, commercial, marketing business and other subject matter within the meaning of Rule 26(c)(7)."

    After examining The Blakey Report I've read several comments from folks complaining that the Report doesn't really disclose anything that we don't already know or that it doesn't reveal any information that isn't already in the public domain. In fact, most commentors say that it's only Blakey's credentials that make the Report worth reading.

    Was this sealed?
    I really don't know if The Blakey Report is (or was) under a Protective Order. Just reading the Protective Order gives me the impression that it never was "sealed." The only person saying that it was sealed (to my knowledge) is a guy claiming to be an Amway lawyer on the telephone. I encourage you to wade through the 11 pages of legalese and make your own judgment about what is and isn't protected. Maybe some lawyers out there can give me their input. I'm just some goofy blogger trying to understand this crazy mess. Sometimes I feel a bit like Alice right after she tumbled through the looking glass.

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    February 14, 2004

    Joe and Lynn Land Dot Com

    By QBlog in

    According to Network Solutions the domain joeandlynnland.com was registered on Feb. 12, 2004 by The Midsom Group. The joeandlynnland.com site is currently parked at Network Solutions so I have no idea how it will end up being used.

    Why am I posting this?
    Wrong! I'm not some crazed Joe Land stalker watching the Web for "all-things-Land." What actually happened is that I received some of that dreaded "virus spam" apparently generated by the email virus du jour. I was about to delete the offending email (as is now a daily ritual) when I recognized the From field as steve@joeandlynnland.com. Well, Joe Land is a name I recognize so I did a little Web sleuthing. That's how I found out about the domain name registration.

    Now, the reason I thought this was curious is because if it is actually connected to Joe Land of Quixtar then it would fit in with the entire Personal Home Page thing we see from Team of Destiny. I have no way of knowing whether this site is connected with that Joe Land or someone else but it's an interesting Web tidbit... at least it's interesting to me.

    I guess we'll see what happens to the site in the coming months. It may turn out to be the work of some sort of cyber-squatter or worse yet, a freaky porn site or something. Who knows?

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    February 13, 2004

    Bill's Opinions

    By QBlog in

    Found Bill's Opinions today which, as one might expect, is a Web site devoted to sharing the opinions of a guy named Bill (see how that works). According to the site, Bill is a college student studying criminology and recently had an encounter with some Quixtar IBOs. He recounts this experience in the cleverly titled post:
    Never trust a dude with only one eyebrow!

    The page explains how he met a Quixtar IBO at school and the subsequent meeting where he was "shown the plan" by another IBO.

    He calls me sunday afternoon and starts rambling on and on about all these people he works with and how cool they are etc. I am thinking this has something to do with the campus organization so I am not really paying too much attention to him. He wants to meet with me so we can talk in person. Whatever. He asks to set up a meeting so I can meet some of his associates. In the back of my mind I am thinking this is all related to the organization I am trying to join. Aparrently it isnt. He kisses my ass and tells me I seem sharp, outgoing, well spoken etc. I am thinking he is either trying to sell me something, trying to convert me to mormonism, or a total flamer who wants something else entirely.
    One of the more interesting aspects of Bill's story is that the IBO showing him "the plan" did not own a computer. While owning a computer is not necessary to show the plan or become a successful IBO, it sure does help when attempting to sign up new recruits. At the least it helps emphasize that Quixtar is an "Internet Business."
    Now here is the part I find the most ironic. The dude is up there talking crap about money this and money that. He is telling me how I should dream big and want to make a lot of money, and associate with people who made it. Then he tells me how I need to check out this website. I need to go check it out because he can;t show us. He cant show us because he DOES NOT OWN A COMPUTER!!! Nor does he own furniture! A man with no computer and no furniture is telling me how much money I can make with HIS plan. What the crap? So I ask the other guy that seems to be in the know as much as the speaker a few questions.
    As always, I don't make this stuff up. I have no idea who Bill is and he doesn't know me (I don't think). From what I can tell, Bill has never participated in any sort of "anti-Quixtar" Web discussion or spent months researching "the business" on the Web. He's just a college kid who posted his opinions about Quixtar for the entire world to read.

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    February 12, 2004

    The "Amway Lawyer" phone call

    By QBlog in

    I got a phone call last night from a guy claiming to be attorney Brad E. Harrigan of Brinks, Hofer, Gilson & Lione. He said he was representing Amway but since the call interrupted my dinner I took a message and promised to call him back.

    So, this afternoon I dialed up the number and talked to "Brad." Basically "Brad" wanted to know who gave me The Blakey Report. According to "Brad" it's some sort of sealed document or something.

    Anyway, I recorded our telephone conversation and have posted it here for your listening pleasure. It's an mp3 and around 12.5 minutes long.

    » "Phone Conversation With An Alleged Amway Lawyer"

    A Note About Recording Phone Conversations
    Before you kids get any crazy ideas about making your own cool phone recordings please learn what the laws are in your state. Check out my helpful guide that gives a couple of tips and a brief explanation of the law.

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    February 11, 2004

    Amway Spotlights

    By QBlog in

    I recently posted about the PHP links on the Quixtar.com homepage and a friend mentioned to me that Amway had tried something sort of like this before. They called it Amway Spotlights. If you can figure out the point of those "spotlight" pages I'd be interested in hearing your idea. I don't have a clue.

    And in case you're wondering, I checked and yes, those domains are owned by Alticor.

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    February 10, 2004

    Sue Myrick, Amway and HR 1220

    By QBlog in

    Scott Larsen has posted some interesting info about NC Representative Sue Myrick and the HR 1220 bill. Opponents of the bill say it will "legalize pyramid schemes" while the bill's supporters say it "will give legitimate American direct sellers needed protection from maverick and rogue interpretations of the law impacting direct sellers."

    Sue Myrick is co-sponsor of the HR 1220 bill and Larsen's page states that "Myrick has been the recipient of hundreds of thousands of dollars in contributions from Amway/Quixtar distributors." One of Larsen's concerns seems to be that the apparently substantial contributions and support of Amway (and now Quixtar) distributors (or IBOs) may represent a conflict of interest for Myrick.

    Larsen is not the only one concerned about Myrick's ties to Amway. A MotherJones.com article titled "She Did It Amway" (1996) reveals Amway's substantial support (via independent distributors) of Myrick (and other Republicans) and raises questions about the legality of some of that support. While there is no disputing Myrick's ties to Amway, I should point out that to my knowledge, Myrick has never been charged with violation of any federal election laws.

    But what about the bill? Is it a good bill or not? Does it help consumers or does it help "direct sales" organizations at the expense of consumers? To find the answers to those important questions it often helps to look at the list of supporters and opponents. As stated previously, the bill is opposed by Pyramid Scheme Alert and supported by the Direct Selling Association. DSA counts Amway and Quixtar among its many members though I haven't found any public statement from Amway (or Quixtar) either supporting or opposing HR 1220. In fact, the only "direct sales" organization I've found that publicly opposes the bill is Passport.

    Passport founder (and former Amway/Quixtar Diamond) Bo Short says in a press release that:

    "In my opinion, this (the HR 1220 bill) can do nothing but further hurt this industry's image... more importantly, its byproduct could hurt good, unsuspecting people," Short states. He adds, "I believe there are far too many abuses that go unpunished already. It seems to me that this has the potential of making it even more difficult to prosecute behavior that can cause great financial and emotional harm to the public."
    If you know of other "direct sales" organizations that oppose this bill please contact me.

    Whether you support or oppose this bill I think it's important to understand all the information. Larsen and MotherJones.com ask some good questions about Myrick and HR 1220 and I believe such inquiries are what makes this country great. When we stop asking questions and seeking the truth, we stop being free.

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    February 9, 2004

    Who is G. Robert Blakey and what did he say?

    By QBlog in

    UPDATE: I've recently learned that The Blakey Report is under a Protective Order. If I had known the report was under seal, I never would have posted it. This post explains why I've removed the report from my servers. Thanks for understanding.

    -----------------

    According to a bio page from Notre Dame, Professor G. Robert Blakey is the nation's "foremost authority on the Racketeer Influenced and Corrupt Organization Act (RICO)."

    Blakey�s extensive legislative drafting experience resulted in the passage of the Crime Control Act of 1973, the Omnibus Crime Control Act of 1970 and the Organized Crime Control Act of 1970, Title IX of which is known as "RICO". He has been personally involved in drafting and implementing RICO-type legislation in 22 of the more than 30 states that have enacted racketeering laws. He frequently argues in or consults on cases involving RICO statutes at both the federal and state levels, including several cases before the United States Supreme Court.
    What is the RICO Act?
    I know, you're probably asking "What exactly is RICO?" Well, in a nutshell the RICO Act "was passed by the United States Congress to enable persons financially injured by a pattern of criminal activity to seek redress through the state or federal courts" (from the extremely informative RICO Act site).

    So what does Blakey have to do with Quixtar?
    Blakey was retained by Proctor & Gamble to provide "expert opinion" in the case styled Proctor & Gamble Company, et al, v. Amway Corporation, et al, Case No. H-97-2384. Blakey provided his opinion to P&G in the form of a report simply titled, "Report of Professor G. Robert Blakey."

    Now, I have read through all of the report and have pulled a few interesting quotes with the hope that you'll read the entire report when you have time.

    Introduction to The Blakey Report
    The introduction of Blakey's report states that:

    (page 4) It is my opinion that the Amway business is run in a manner that is parallel to that of major organized crime groups, in particular the Mafia. The structure and function of major organized crime groups, generally consisting of associated enterprises engaging in patterns of legal and illegal activity, was the prototype forming the basis for federal and state racketeering legislation that I have been involved in drafting. The same structure and function, with associated enterprises engaging in patterns of legal and illegal activity, is found in the Amway business.
    Blakey defines a "Syndicate"
    Later, as Blakey describes the definition of "organized crime" he makes this interesting observation of a "syndicate."
    (page 6-7) A "syndicate," therefore, is a cartel or business organization. It fixes prices for goods and services, allocates markets and territories, acts as a legislature and court, sets policy, settles disputes, levies "taxes," and offers protection from both rival groups and legal prosecution.
    Blakey compares Amway to "organized crime"
    After describing "organized crime" in detail Blakey begins to make a comparison to Amway on page 14.
    (page 14-15) The Amway business has a "family" structure parallel to that found in organized crime. With respect to both organizations, the family orientation is twofold. First, every participant in the business is considered a member of a "family," led by a particular individual at the top of the chain of command. Second, the business stresses involvement by participant's family members, such that wives and children are drawn into the business to perpetuate their family influence over time. Family dynasties result that may be passed from generation to generation.
    Blakey describes the "association-in-fact" between the Amway Corporation, the "independent contractors" (IBOs) and the Tool Business.
    (page 18) ...in the early 1980's DeVos and Van Andel saw the tremendous income and power accruing to large family leaders through their tool businesses. The income from the tool business of the major uplines reportedly far eclipses their income from the Amway plan. DeVos spoke strongly against this over-emphasis on tools, and warned that it might damage the Amway business as a whole. DeVos and Van Andel were apparently hamstrung, however, in taking action because the large distributors such as Yager could simply take his downline out of Amway, with potentially devastating results...
    Blakey's "14 Families" graphic
    In the report Blakey submits this graphic outlining "14 Families" in Amway. His use of the graphic is to demonstrate what he perceives to be similarities between the "families" in Amway and the "families" in organized crime.

    As always, if you have any info that would help explain, clarify or correct what has been presented please contact me immediately. Also, I make no claims about this document. It is the opinion of Blakey, and does not necessarily represent my opinion. It's just interesting to read what the author of the RICO Act has to say about Amway (which later became Quixtar... sort of).

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    Who's Who Photo

    By QBlog in

    A friend sent me this photo of several Amway/Quixtar Organization leaders. I've labeled the identifiable people. I make no claims about the accuracy of the labels. If you see an error, please let me know and I'll correct it.

    Click For Bigger Image

    Click here to view the large photo. I should warn those with slow connections that this photo is a rather large file.

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    February 8, 2004

    Is Team Of Destiny Quixtar's "Chosen People?"

    By QBlog in

    I just realized a "new" feature on the quixtar.com home page. At the bottom of the page you'll notice the acronym "PHPs" (which stands for Personal Home Pages) followed by four links. The links are:

  • A-F
  • G-N
  • O-S
  • T-Z

    Each linked page is a listing of various "Q-12" home pages. After looking through most of the sites it appears that all of them are from Team of Destiny. This may explain the recent shenanigans at the Orrin Woodward site. Maybe Quixtar told him to restrict access to his "articles?"

    Quixtar explains the directory pages this way:

    This directory provides links to separate independent Personal Home Page (PHP) websites of some Independent Business Owners (IBOs) who have achieved Quixtar business levels of "Q-12" or higher. While the PHPs below have been reviewed and authorized by Quixtar, readers should not assume that the content on any webpages/sites listed or linked from the PHP site are either required to be reviewed or have been reviewed by Quixtar.
    That makes some sense. Any business would probably want to feature the personal home pages of such successes (no matter how awful those pages may look). However, there is something mighty curious about all four directory pages. None of them sit on Quixtar.com. In fact, each directory page sits on a completely separate domain name. That's highly unusual. If you know anything about Web development you'll know that it's extremely rare for a business to create a seemingly unified set of pages (such as the PHPs directory) across multiple domains. Why? Well, it makes it more difficult to manage and it can create confusion when linking to those pages. It would seem that there are reasons, other than those stated, for the creation of the directory pages.

    Let's look at them for a moment. The pages are:

  • http://www.quixtarworld.com/
  • http://www.ourquixtar.com/
  • http://www.quixtarconnect.com/
  • http://www.quixtarunlimited.com/

    The sole purpose of each domain (it would appear) is to simply house a single directory page and their images. Why would Quixtar diversify its branding (by creating multiple domains) to simply house a single (and partial) directory page? My best guess (and this is only a guess) is that the pages are to manipulate Google rankings. Any page linked from the Quixtar home page (which has a very high Google rank) will subsequently receive a page rank boost simply because of the link. Additionally, pages linked from there will receive a similar (though less substantial) boost in page rank. The end result may be (and this is no certainty) that in the near future a Google search for the word "quixtar" will result in only Quixtar-favorable sites listed in the first few pages of search results.

    There is nothing wrong with any of this (if this is one of Quixtar's reasons behind the directory). It makes perfect business sense but I believe it also provides a bit of insight into the collective mindset of the Quixtar corporate culture. It seems to reveal that the "Quixtar decision-makers" are genuinely concerned about sites that provide a less than favorable view of Quixtar.

    Finally, I'll just say that this is all pure speculation on my part. I really don't know Quixtar's motive behind the directory pages. I'm only guessing. But those guesses are educated and based on my years of experience in Web development. Make your own decisions about the significance of all this.

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    February 7, 2004

    The Orrin Woodward Web Bloopers

    By QBlog in

    UPDATE
    Orrin finally decided to take my advice and move his images. He also decided to swap the existing images with a humorous "Stop Hotlinking and Bandwidth Theft" graphic. I did not expect that and it shows that Orrin and the gang are learning about the Web. Way to go guys. I'm proud of you. Seriously. That's just the kind of irreverence that makes the Web so cool.

    And I should mention, I'm no stranger to the old "Hotlinking" thing. At any given time there are 5-10 images from my sites that are linked on some forum, blog or personal site. It's not that big a deal. Sometimes I pull the old "switcheroo" but mostly I just yank the image, move it or rename it if the linking bothers me. It's also amazing how effective a simple email can be towards resolving any "Hotlinking" issues.

    So, I'm glad Orrin and the gang moved the "super secret" graphics from the public arena. I'm really happy to have helped. And that's what it's all about really, people helping people... spreading the knowledge.

    God I love the Web. Isn't it great!

    -----------------------------------------


    Pssst. Hey Orrin. Little tip for you. If you want to suddenly restrict access to your "super secret" content then you might want to make ALL of that content restricted. Or not.

    I honestly can't figure out what you're trying to do with your site but based on recent actions my guess is that you don't want the graphics from your restricted How The Money Works page to be publicly available. But that's just a guess. Maybe the graphics don't need to be kept secret? Who knows?

    Below I've simply linked to the 4 graphics displayed on the original "How The Money Works" page. The graphics are sitting on the OrrinWoodward.com servers and are publicly available. Access to the graphics is not restricted in any way. There is nothing preventing anyone on the planet from simply pulling up those graphics in their favorite Web browser. Don't believe me? Try it yourself. Just type the URL printed under each graphic into the address bar of your browser and see what happens.

    Anyway, Orrin, if this stuff is really supposed to be "super secret" then do us all a favor and restrict access to everything, including the graphics.

    Your Web friend,
    - QBlog

    IMAGE MOVED. Glad to have helped.
    http://www.orrinwoodward.com/img8.jpg
    IMAGE MOVED. Glad to have helped.
    http://www.orrinwoodward.com/img9.gif
    IMAGE MOVED. Glad to have helped.
    http://www.orrinwoodward.com/img10.gif
    IMAGE MOVED. Glad to have helped.
    http://www.orrinwoodward.com/img12.gif

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    February 5, 2004

    Obsession

    By QBlog in

    Am I obsessed with this "Quixtar" stuff?

    That's a question I've been asking myself a lot recently. Over the past year I've been spending progressively more an more time posting to this site, researching Quixtar and talking to people about Quixtar (either on the phone, via email or in the Forum).

    When I first began this blog I spent about an hour or two posting and reading messages every week. That couple of hours quickly became 3 or 4 and now I sometimes spend 3 or 4 hours a day dealing with this Quixtar stuff on some level (thinking about it, posting about it, researching, etc.). And I often ask myself, "WHY?" And while there are usually several answers to that question the one response that pops up the most is that nobody did this for me.

    No disrespect to Don, Scott, Ruth, Sidney and the rest but when I was searching for Quixtar info I wanted something fresh, something personable and something NOW. I didn't want to read a bunch of old stories about Amway and boring lawsuits. I just wanted to get honest perceptions from a real person about this "mysterious business" that my wife seemed so excited about. I tried some of the "discussion boards" but had trouble sorting through the chaos to find anything worth reading (I didn't know about MLMSC or the Memory Hole Dreambook then). To make a long story short, I felt very alone.

    Since I'm not one to sit around feeling mopey and because I had a desire to read a fresh, vibrant and timely perspective on Quixtar I decided to create this blog. Now, there were other reasons for this blog's creation (detailed in the extensive archives) but the primary one is that I wanted to fill a perceived void on the Web.

    Since I started this blog and have invested a LOT of time learning about Quixtar I've come to realize and fully appreciate the value of many sites that I originally avoided. Some of that "old" stuff is extremely informative and those "chaotic discussions" contain some genuine truths. I also understand that different people have different needs. Some people need (and even enjoy) relatively static, well-researched sites while others like something a bit more free-flowing and conversational. It is for those people, people like myself, that I continue posting this blog and dealing with Quixtar stuff. At the risk of sounding overly corny (and to borrow from a popular commercial), This Blog's For You!

    See, I can be a real dork sometimes.

    Oh, and the answer to my initial question is "Yes. I'm obsessed. But so what? Somebody's gotta do it right?"

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    February 4, 2004

    One year ago today...

    By QBlog in

    My how things have changed. Read my post from Feb. 4, 2003 and see what I mean. Here's an excerpt:

    So I called my upline and basically just ask for any tips, guidance or advice on how to present the reality of our situation to my wife in relation to Quixtar. I was just asking because he's a "friend" and "mentor" and NOT because he has any sort of responsibility for my present financial situation. I made this extremely clear, that I was simply looking for pointers and didn't know who else to call. He got a bit aggressive and began telling me that he undoubtedly spent as much or more money coming to my home and helping my wife build our business than we had in the past month. This did not make me happy.

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    February 3, 2004

    How To Contact Dateline NBC

    By QBlog in

    Would you like to contact Dateline NBC and express your interest in the planned story about Quixtar? Well, here are some ways to contact people at Dateline NBC:

    Dateline NBC
    30 Rockefeller Plaza
    Room 510
    New York, NY 10112
    Email: dateline@nbc.com
    Phone: 212-664-7501 or 212-664-4444 (main NBC switchboard)

    Marc Rosenwasser - Executive Editor

    David Corvo - Executive Producer
    Email: david.corvo@nbc.com

    Bob Gilmartin - Producer

    Edie Magnus - Correspondent

    I will update this information as it becomes available.

    UPDATE: I removed Neal Shapiro's name. Apparently he's no longer specifically with Dateline.

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    February 2, 2004

    Words from Georgetown

    By QBlog in

    I recently received a pdf copy of a 1972 article from "The Georgetown Law Journal" titled Pyramid Schemes: Dare To Be Regulated (pdf). The article examines several aspects of pyramid schemes, some of the problems resulting from such schemes and explores various remedies to the "growing problem."

    The article was written by lawyers, for lawyers and can be a little difficult for non-lawyer types (like me) to digest. However, after repeated readings I began to get a better understanding of pyramid schemes and how they are defined by our U.S. legal system.

    What are you saying?
    Some who read this post will wrongly assume that I'm making some sort of statement about Quixtar or Amway. The truth is, I don't feel qualified to make any sort of claims about Quixtar and Amway as they relate to pyramid schemes or the linked article. Also, the article itself predates the famous 1979 Amway vs. FTC case and to my knowledge makes absolutely no mention of Amway (though I haven't thoroughly reviewed the footnotes). The primary reason for this post is help others understand the historical and legal background of pyramid schemes.

    Below you'll find that I've directly quoted some interesting (to me) passages from the article. As always, I recommend that you read the quoted passages within their intended context by thoroughly examining the source. My comments appear in italics.


    Definition of Pyramid Schemes
    (page 1-2)
    Pyramid schemes, a relatively new sales concept, bear a striking resemblance to franchising, a widely utilized marketing technique. Pyramid schemes began to proliferate in size and number during the late sixties, the same period the franchising frenzy was sweeping the nation. Because franchising appeals to individuals with little capital and little or no business experience, not only have legitimate franchises grown but corporations which resemble franchises have been able to capitalize on franchising's popularity. Pyramid schemes, though they operate very differently from the ordinary franchise, are among this latter group.

    Federal Trade Commission Action
    (page 11)
    The FTC has alleged that various pyramid scheme operations violate section five by misrepresenting the potential earnings of investors, by false, misleading and deceptive representations regarding the commercial feasibility of the scheme for all participants, and by misrepresenting the earnings of existing members. The Commission also has alleged that the schemes fix wholesale and retail prices and bonuses, restrict sellers and distributors to certain company-approved outlets, and refuse to refund money to participants who have been induced to invest and have failed to recover their investment...

    (page 12) ...While pyramid schemes may rely more on deceptive statements than on actual untruths to recruit new participants, failure to state material facts, overbroad representations, and creation of false impressions may constitute violations of section five...

    ...The FTC has alleged that the entire marketing program of pyramid schemes violates section five because it contemplates a virtually endless recruiting of participants in which later purchasers necessarily must lose their investment as the supply of new participants is exhausted.
    FTC recognizes the reality of market saturation?

    The article goes on to discuss the dilemma surrounding pyramid scheme regulation. One of the proposed remedies is to define pyramid schemes as a security and thus be regulated by the SEC. This is where it gets most confusing (to me) and spends a lot of time examining specific cases where the SEC became involved at some capacity.

    SEC Action Against Pyramid Schemes
    (page 35)
    If the structure of the scheme were altered to eliminate the elements isolated by Judge Skopil, investors would not need protection. If only experienced, knowledgeable investors were recruited, they presumably would be aware of the risks of the investments. If the investor's sales efforts were relied upon rather than promoter-run meetings, the investor might be found to have sufficient control over the venture to negate a security relationship. This, of course, would require that market saturation be controlled by setting a realistic limit on the number of franchises that could be sold in a given market area.
    Again, the recognition of market saturation as a reality.

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    February 1, 2004

    Super Bowl

    By QBlog in

    Today is Super Bowl Sunday. No thoughts about Quixtar or MLM for me. Just food, friends and football! Go Pats.

    Comments (2) TrackBack (0)