Way back in 1999, and that seems a century ago, I was a newbie to network marketing when I learned of a great new company called PRSI. I hadn't a clue what a resource system is, and still don't but PRSI's wonderful attributes were being blasted all over the Internet.
For a rather hefty $295 we thought we were buying a (Small Office Home Office) which would be our own internet store connecting to both PCs and TVs. All of the SOHOs would be strung together rather like beads in a Virtual Private Network (VPN).
We would sell whatever we wanted from our store, and the whole universe would see our goodies and buy, and we would be on our way to millionaire status.
The architecture of our was described in voluptuous detail and we knocked ourselves out to sell more SOHOs while itching to get started. We had visions of glory.
There was a major flaw in the grandiose scheme. We didn't realize it, but we were buying a membership, not a product. We were recruiting other people to buy memberships. We didn't know the SOHOs were a pie in the sky.
Just where were the SOHOs? Where were the plans, the dimensions? We each had a temporary website called a shingle, which, like a shingle, didn't do anything but sit there. Still, 60,000 loyal PRSI members around the world couldn't be wrong, we thought. We sold phantom SOHOs and we waited.
Enter the CEO of PRSI, one Bill Caudell. I had heard from some members how nice was Bill, how generous, how caring. Didn't he promise substantial funds from the PRSI cache would go to under-privileged Native American children? Over and over our kids were mentioned in nice little fireside chats that Bill put on, so that all PRSI members would feel good about being so generous and help the little tykes get afloat.
People really got fired up about both Bill and the kids. One guy told me he had quit a $100,000 job because he was going to make a lot more with PRSI. And wasn't Bill Caudell an inspiration? Wasn't it marvelous to be helping the children? Yeah, yeah, sure, I thought. But 100 grand? Gasp.
In the meantime, I and the other members sweated to sell memberships at $295 a pop. It was tough. We had no idea we were selling illegal memberships and an empty dream- no tangible SOHOs had yet appeared. We still didn't know what they looked like or how we could get a shopping cart, take credit cards, learn the ropes of online selling. We waited. Bill said they were coming, so they were! Just be patient.
I am not sure exactly when the shit hit the fan.
One Richard Snell, who had acted as legal advisor to PRSI, and who possibly had no law degree, handled corporate monies and helped himself liberally from the till, paying his family members in Texas "salaries" even though they did not work for PRSI.
Snell knew the law authorities had become very interested in his activities and he tried to plea bargain with prosecutors by squealing on PRSI for conducting an illegal pyramid scheme. He went to jail for a year, anyway, and a large squadron of armed police officials raided PRSI headquarters in
Following the raid, in which everything in the PRSI offices was confiscated, Bob Butterfield, the Florida Attorney General, shut down the company and froze its assets. PRSI was conducting an illegal pyramid scheme, selling memberships and SOHOs that did not exist, fuelled by the 18 million dollars the members , who, by the sweat of their brow, had funneled into PRSI. Furthermore, Inspirational Bill had siphoned off hefty amounts of dough for a $650,000 seaside house, two Jaguars, one for himself, one for his brother-in-law and payments for child support.
The little Native American kids had vanished like the morning dew.
A leopard doesn't change his spots, does he? CEO Caudell had been convicted of securities fraud in 1993, among other shall we say, irregularities. A Joseph Rotunno, who had used seven different aliases in the past and had been convicted for "loan sharking, fraud and embezzlement, among other things" was also involved in PRSI.
Caudell, Rotunno and all the PRSI defendants took the Fifth at their deposition. Eventually, however, William Caudell got 14 years. That sentence was reduced to 11 years when Caudell put the finger on the Mafia, who had their fingers in the PRSI till, too.
Does this story remind you of Bernard Madoff's Ponzi scheme? It should . Ponzi schemes and Pyramid schemes are related. Madoff provided no product, ie stock investment -but funneled money from new investors into the accounts of old ones, to look like investments in securities. Caudell grabbed money from membership sales that was supposed to be used for building each member a SOHO.He hadn't the slightest intention ever of delivering on the SOHOs any more than Madoff had any intention of investing his clients' money in stocks. Both men liberally lined their own pockets with their scams.
Why doth the way of the wicked prosper? I don't know, but greed is alive and well.
They all get caught in the end. Reminds me of the Elvis Presley song: "You can run on for a long time, but one day God Almighty's going to cut you down."
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