Three Famous MLM Scams: PRSI, NFL, and PAI-
that left 500,000 members beached around the world
PRSI (Professional Systems Resources International)
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 were buying a SOHO (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 each of your goodies and buy, and we would be on our way to millionaire status.
The architecture of our SOHO 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.
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 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 SOHOs at $295 a pop. It was tough. We had no idea we were selling illegal memberships and an empty dream- no 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 a pyramid scheme. He went to jail for a year, anyway, and a large squadron of armed police officials raided PRSI headquarters in Florida.
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 , 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 paid his 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."
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.
NFL (Nutrition for Life)
Nutrition for Life had been around for 16 years when I joined this MLM company. I figured, this one is safe, solid as a rock. I decided to go "Executive" to get ahead faster, and that meant buying a $200 distributor box as well as promising to buy $100 worth of NFL products every month.
There were some 300 products to choose from, including special nail polish, skin creams , very pricey all-natural cleaning compounds, a whole line of vitamins and herbs, shark cartilage, diet plans, the works. All the stuff cost an arm and a leg.
In the distributor box were diet cookies that cost $2.50 a piece, and tasted like hay, some kids' chewy vitamin treats that stuck in my bridge work (but presumably kids wouldn't have that problem) a skin moisturizer, and a spray bottle of some sort of snore-eliminating compound. You were to spray it on the back of your throat to keep your glottis or epiglottis from doing something. I passed on that one.
The box also contained a large loose leaf notebook with colored pictures in plastic sleeves, called The Plan. We were supposed to show The Plan to prospective members, turning the pages slowly so everything would sink in.
The Plan was engineered to grab you by the throat and get you running to be an NFL distributor before you reached 65. After all, said The Plan, by age 65 3% of the population was financially independent, everybody else was mooching off children or welfare, or were dead.
I threw The Plan in the closet. I could not rise to the occasion of presenting it. I can't handle rejection, I go all squishy least face-to-face. It's not so bad when you are hiding in cyber space.
In the box were several motivational tapes. I used to walk around the block several times with the tapes blaring into my headset, listening to NFL CEO David Bertrand pontificate about the joys of being an NFL distributor.
Included on the tape were various testimonials, one from a nutritionist, another from a former down-and outer who had been $250,000 in debt until he discovered NFL (like discovering Jesus) and became a millionaire.
I tried. I really did. I persuaded two friends to join NFL at executive status. Both of them looked in the distributor box, turned up their noses, and sent the box back to NFL.
So much for my recruiting powers.
I spoke with a couple of distributors who were pleased with NFL, but a far more common reaction was from a young woman who said "We found that our upline would pay attention to us only if we were making money. If we weren't. sponsoring anybody, they just ignored us. When we told them we were resigning, they called us dream stealers".
Enter Kevin Trudeau, con man extraordinaire
At the time I was in NFL, I did not know about the company's top distributor and that his meteoric rise in the company would spell the end of NFL but not Mr. Trudeau.
Trudeau probably started out as a scheming, manipulative baby, and reached a new plateau of deceit each year as he grew up. By his early twenties he was a full-blown con artist.
In 1990 and 1991. Trudeau was indicted for fraud and larceny, having deposited $80,000 of worthless checks while posing as a doctor to bank officials and misappropriating credit card numbers from a memory improvement course he was offering.
Trudeau spent two years in prison for his crimes and was ripe for a new caper. He found it in NFL "the perfect marriage for his selling powers and NFL's products" as he coyly put it.
David Bertrand of NFL was not worried about Kevin's criminal past, a mind-boggling case of naivete. Trudeau, meanwhile, established the Kevin Trudeau Marketing Group and in 10 months of infomercials on TV, sold $15,000 NFL memberships at $1,000 each, with a commitment from each person to buy $100 worth of NFL products each month.
Success on this scale is a huge deodorant and NFL was understandably euphoric over its star performer, offering him stock options that put $11 million in his pocket.
However, the authorities smelled a rat and they soon determined that Kevin and NFL were conducting an illegal pyramid scheme with the $1,000 membership fees.
Trudeau was fined $1 million dollars, and NFL had to pay $185,000 to be divided among 8 states where the illegal transactions occurred.
NFL had to let Trudeau go, who maintained that the "changing dynamics" of the company made it impossible for him to work effectively as a distributor.
NFL hung on for another four years, but whether it had lost momentum after losing its superstar, or perhaps was simply ill-managed, I haven't been able to find out.
In April 2003 NFL was liquidated in bankruptcy court , but one of its
Marketing arms in Korea was sold to a company called 4Life.
Kevin Trudeau went on to creating one scam to another. Nobody seems to be able to shut him up. He is undeterred by big fines, he just re-groups and launches another scam. He has several highly suspect books selling briskly in Amazon right now.
Why doth the way of the wicked prosper? I don't know, but wickedness is alive and well.
PAI: (Pacific Achievements International)
400,000 trusting souls around the Globe, including me, were suckered into this complicated scam. People said to me afterwards, "How could you be so dumb?"
It's easy. Money talks so loudly that like a herd of lemmings racing blindly over a cliff to their deaths in the sea, we embrace a scheme as ludicrous as PAI with open arms and hearts and pocketbooks because we think we are going to hit the jackpot.
Money talks.
Two enterprising guys, Scott Guenther and Frank Hendricks, hatched a scheme. Using as a front their company PAI, which was incorporated in the State of Nevada and which would be supposedly selling business related products and expertise from its website, the two men bilked 1,600 investors to cough up the odd sum of $5859 each in return for profits of $2,000 up to 1 million a month.
The men's bank account in Corvallis went from a deposit of $50.00 to over 6 million in a matter of three months. The FBI started sniffing around. Guenther and Hendricks returned $2.2 million to their investors, who thought they were being paid dividends. They also withdrew large amounts for themselves , including two luxury houses, and bought gold.
In the meantime, with the speed of light, word went around that a benefactor program had been established by PAI and that every person who signed up would receive a free matrix of 39 people and $2,350 a month for life. They could also fill matrixes on their own and would be paid $2350 for each one.
400,000 people signed up on the PAI website.
Why would anyone pay an enormous number of people a healthy income for doing absolutely nothing? We asked ourselves this, but Frank Hendricks was just too convincing. In an update call each week he would tell us in a cultured voice to be patient, the money was coming. You'd practically trust this guy with your life.
In the meantime we should buy an expensive Mazumah debit card obtained at the PAI website, so that the company would have a convenient place to dump our money. Thousands of people must have bought the card, although I am sure Mazumah had no idea of the nature of the PAI enterprise.
The debit card was a very clever front, because we were now firmly convinced that the manna would start falling soon. And besides, a lot of business people and organizations backed PAI. We were a -titter with excitement. One group sent around an email saying "Take out your dancing shoes" as PAI was about to pay up.
400,000 hearts were pounding with expectation.
Of course the FBI pulled the plug and the matrixes were dissolved, which meant no free dough. Since with the exception of the debit card, PAI members had not been asked to fork out a cent, few people suffered monetarily although their pride took a beating.
However, one gal I know who had filled up three matrixes on her own, and who expected to be receiving some $8,000 a month, sold her Las Vegas house for a huge loss, and already in debt for some $80,000, she packed up her two kids, her ex husband and the cat and barreled out to Washington State, where they would rent a house and happily wait for the windfall. The windfall went west, too
That family is now on welfare.
The most revolting thing about con men is that they prey on peoples' trust.
Caudell, Trudeau and Guenther and Hendricks were all past masters in deceit. Is easy to be gullible when an expert snake oil salesman grabs you but we should harden our hearts and realize the old adage that if something sounds too good to be true it usually is. And never, never to be a lemming and rush madly into disaster without using your brain first.
I was an MLM junkie, but not any more.
So what am I doing? I am writing ebooks. My ship is coming in, I can see the sails on the horizon! Everything comes to him who waits, they say. And I've been waiting a long time.
