Cult News

Some have wondered whatever happened to notorious “get-rich-quick” guru Bill Gouldd?

He ran something-called Equinox; a multi-level marketing (MLM) business that once pulled $194 million dollars in annual sales.

However, a judge ruled that Equinox was a “pyramid scheme” and the Federal Trade Commission (FTC) shut it down.

A receiver was appointed and Gouldd’s financial empire was quite literally liquidated.

Once the high-profile MLM guru sought status and attention through his mansion, luxury cars and a yacht, but when his business crumbled it seemed Bill vanished from sight.

A Gouldd victim called Equinox, “One of the best planned and rehearsed scams I have ever seen!”

The mantra often recited by Bill’s seemingly brainwashed distributors was “Fake it till you make it.”

But Gouldd found out you can’t fake the books to the FTC.

Two of the MLM guru’s disciples, Kale Flagg and Rich Von (previously known as Richard Vonalvensleben) cooked up there own scheme essentially copying the master. That effort was called Trek Alliance. And the FTC shut them down too.

So whatever happened to the master planner, or “scammer”?

It seems that it’s hard for MLM gurus like Bill Gouldd to move on to a normal life. More often they appear to prefer working a crowd, rather than really working.

So the aging Gouldd is back on the road again, this time with a new weekend seminar called “Peak Performance,” designed “exclusively” for a yet another venture called “Avant-garde Marketing Solutions.”

Bill will be holding forth tomorrow morning through Sunday evening at the Los Angeles International Airport Marriott Hotel, it’s all day and all Gouldd (10:00 AM till 6:00 PM).

And for those on the East Coast Bill is bound for Philadelphia.

Next weekend Gouldd is scheduled to perform his traveling show at the Loews Hotel on Market St. in the city known for “brotherly love.”

Oh brother!

It should be noted that Pennsylvania’s Attorney General once said that Gouldd’s “illegal business practices deceived consumers into spending thousands of dollars when it knew the vast majority of participants would never recover their money.”

If you call the LAX Marriott there is still room at Bill’s seminar. According to the events manager at the hotel registration has been slow.

Can it be that Bill is past his “Peak Performance”?

But could the coming seminars still be an opportunity anyway?

That is, for Equinox victims to confront Bill Gouldd face-to-face.

Bill probably won’t appreciate this, though some of those attending his seminars might benefit from a few Equinox testimonials.

After all, there was a time when Gouldd encouraged Equinox participants to speak out at his meetings.

MLM schemes are so often little more than smoke and mirrors.

Applying basic business and marketing principles to an MLM proposition is an invaluable tool to discern its worth and/or risk. Such due diligence is also a means of avoiding the heartache, financial losses and humiliation that so many former Equinox distributors have endured.

But it seems that no matter how many people are victimized by “get-rich-quick” schemes, there will still be someone like Bill Gouldd selling “dreams.”

FYI—Bill says he wants seminar participants to “come prepared with pencils, paper and a calculator.”

Hopefully they will be “prepared” by researching the facts about Bill’s last business plan before becoming involved in his new enterprise.

BTW—Meals will not be included, but there is likely to be bologna delivered.

Americans seem to routinely lose both money and self-esteem through multi-level marketing (MLM) schemes year after year, caught up in dreams that eventually become nightmares.

Equinox and Trek Alliance are just two examples

But the direct marketing approach of Mary Kay Cosmetics certainly bucked that trend and achieved for thousands of women what many MLMs only promise.

A new book More Than a Pink Cadillac shares the management principles of founder Mary Kay Ash, who died at 83 in 2001, reports USA Today.

Mary Kay’s legendary success like many corporate gurus included a “cult-like” following of true believers. But unlike so many MLMs, she did not garner a legion of lawsuits, federal regulators, class action grievances and/or bad press.

Ash focused on positive but realistic thinking, practical inspiration and made sure that her product line was sensible, desirable and competitive. She clearly saw herself as a role model for women who wanted a better life through hard work.

That hard work paid off for many Mary Kay devotees through the much-touted pink Cadillac, given to top sellers by the company. Whether women worked full-time or part-time, there was real hope for an honest income through Mary Kay.

Many women found greater independence and self-esteem through Ash and her company, which became a 2 billion-dollar empire.

Ash proved that clever marketing and devotion could pay off for both top management and a sales force working effectively together.

Mary Kay’s minions, that eventually included almost a million worldwide, got a square deal from a lady who knew the bottom line in business was not only profits, but also integrity.

Many people lose money on schemes that involve multi-level participation. Such programs have often been described as “pyramid schemes,” due to the disproportionate amount of people who lose at the bottom as opposed to the elite few who reap benefits at the top.

Laws in the United States are often ambiguous, riddled with loopholes or weak regarding multi-level marketing (MLM) schemes. The Federal Trade Commission has on occasion shut down such businesses like Equinox and Trek Alliance, an Equinox spin-off that was recently shut down by court order.

Sadly, most often by the time such companies are closed by the authorities; many people have already lost money.

Some of those caught up in MLMs say there is a kind of “cult like” process of coercive persuasion, which takes place through the recruitment, seminar and conference formats used by such businesses. Spouses and friends have at times described distributors as “brainwashed,” when explaining their seemingly irrational commitment and conduct.

A recent article appeared in the Portsmouth Herald, which spelled out how and why these schemes are simply “mathematically improbable” and therefore fail.

Assistant Attorney General Connie Stratton, of the New Hampshire Consumer Protection and Antitrust Bureau explained this succinctly. She said, “The reason they don’t work is because they have so many levels of distributors. If you work out the math, what happens is that a very few people make money and the majority do not. All the money goes to the top, so you’d have to recruit your way to the top. The problem is that so many people are needed to get there that the market gets saturated and the scheme falls apart.”

One expert stated that the loser rate typically exceeds 93% and in some schemes 99%. And that product-based programs are the most damaging.

Here are a few comments from people who were damaged by MLMs.

“I lost all I had, great job, my financial future, my wife, children, and soul.”

‘I lost $5,000.00 and some of my dignity.”

“I became a Director with the firm several years ago–eventually my sales force did over $100,000 per month in product sales. Despite this I lost over $75,000 as a result of the lies and deceptions of this company. I could tell so many stories of people going broke and the reality of the cult like brainwashing.”

“When we started this business we were only $7,000 in debt, now we are $32,000 in debt, due to this crap. Since the day we left the organization, we have been working nonstop to pay off credit card bills, and loans totaling $25,000.00. We fell for their lies, deception and faulty ad and practices. I hope the Feds make them feel, pay and suffer like we now are.”

What can be done?

It seems that federal regulations regarding the MLM industry are needed to protect people. Essentially, there is no such effective regulation now.

Anyone considering participation within an MLM should do his or her homework and research in-depth before becoming involved or paying a penny.

Sadly, most participants don’t do this and instead are taken in by the pitch. However, today through the Internet investigating such companies is actually becoming an increasingly easy process.

A multi level marketing scheme called “Pre Paid Legal” suffered a setback. Its stock crashed Monday losing 23% of its value, reports The Street.com.

One short-seller said, “It’s only a matter of time before a pyramid based on misleading people begins to collapse.”

Pre Paid Legal reportedly used an “Amway strategy” of multi level marketing to fuel its growth.

However, according to the Detroit Free Press “Multilevel marketing — practiced by such well-established companies as Alticor’s Amway unit — is a legitimate form of business.”

In Michigan Amway is a major employer and perhaps the Detroit Free Press is reluctant to discuss Amway’s own troubled history within a recent article about “get-rich-quick” schemes.

Multi level marketing (MLM) companies such as Amway and Pre Paid Legal seem to frequently focus more on the pitch than their products. That is, slick sales hype and high-pressure meetings where potential distributors or sellers are persuaded to become involved.

Many former MLM distributors have likened such high-pressure approaches to coercive persuasion. And the mindset produced by some MLM companies has been called “cult-like.”

This MLM mindset is often evident by the participant’s willingness to accept whatever the company and/or his “upline” says, rather than objectively examine such claims through an independent and careful process of critical analysis and/or due diligence.

A kind of false euphoria, or “dream” of success often replaces the common sense of many MLM distributors. And anyone who offers criticism of the MLM plan, is apt to be labeled as a “dream killer.”

What is the MLM industry based upon? Is it about offering viable and competitive products, or selling dreams, which are unlikely to be fulfilled? Is the profit for MLM founders through primarily achieved by product sales, or feeding off layers of distributors, who have become “true believers.”

Pre Paid Legal’s current problems seem to indicate the inherent fragility of many MLMs.

Historically, the collapse of Equinox, a recent court ordered shut down of Trek Alliance and a pending class action lawsuit against “New Way to Wealth” seem to indicate the more sinister side of some MLMs.

Many people are losing money in MLMs and they remain essentially an unregulated industry.

A multi level marketing (MLM) scheme called “Trek Alliance,” the brainchild of Kale Flagg and Rich Von, has been shut down by order of the United States Federal Trade Commission.

On December 6, 2002 the United States Federal Trade Commission filed a lawsuit alleging deceptive marketing practices against Trek, subsequently a federal judge issued a Temporary Restraining Order and appointed a receiver to control the company’s frozen assets.

But the first action actually taken against Trek was last December, when the State of Wisconsin filed a complaint alleging “misrepresentations and other unlawful practices.”

Flagg and Von were formerly associated with Equinox, another MLM founded by their mentor Bill Gouldd. Equinox was closed and later liquidated through federal action.

Now any visitors to the Trek website will see an announcement posted by Robb Evans, its Temporary Receiver. Evans was the receiver who liquidated Gouldd’s Equinox.

Many complaints were generated by Trek and some were posted at my website as either personal stories or visitor comments within a designated archive.

Trek typically preyed upon young urban professionals or recent college graduates looking for work.

Trek often cold called people who posted their resumes on Internet websites such as HotJobs.com, Monster.com. and/or FlipDog.com. The company also placed misleading ads for job opportunities in local newspapers.

Their usual pitch was that job interviews were taking place and appointments were available. People who came in would then be subjected to an elaborate recruitment effort to pull them into the MLM. And instead of being offered a salary, they would be asked to buy “starter kits.”

Trek gained an increasingly bad reputation, so they used an array of different names such as “Majestic Enterprise” in Minnesota, “Bay State Marketing Group” in Massachusetts, “Liberty Alliance” in Pennsylvania, “Bay Street Marketing” in Florida, “Chesapeake Group” in Maryland, “Carolina Marketing” in North Carolina, “Midwest Alliance” in Indiana, “Dynamics International” in Illinois, “Pacific Alliance” in California and “Mountain Edge Alliance” in Arizona.

Largely due to the effectiveness of the Internet through websites like MLM Survivor, the Rip Off Report and my own Rick Ross.com, potential victims of Trek were able to access information quickly before becoming involved. This helped many people avoid being taken in and exploited by the MLM.

Some former Trek associates were virtually wiped out financially. It was not uncommon for the MLM’s victims to run up their credit cards and seek loans to fund their participation in Trek, putting them deeply in debt.

Trek, like many other MLM schemes popular in the United States and around the world, seems to sell “dreams.” Specifically, “get rich quick” dreams. And within the group environment Trek created some felt that dream was promoted through a kind of “cult like” “brainwashing,” which apparently was Trek’s real business.

MLMs represent an unregulated industry with a troubled history and anyone considering involvement should understand that. Trek and Equinox are cautionary examples.

MLMs may provide money for those at the top, but it seems that too often little if any meaningful income flows to the distributors below and/or near the bottom.

Before becoming involved in any MLM, due diligence is important. And that process of examination should include an understanding of “What’s Wrong With MLMs.”

As always, “Let the buyer beware.”