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Currently in prelaunch till January 2014, a few weeks back I reviewed the Lucrazon Global MLM business opportunity.

In conducting my research into the company, I raised several concerns including a lack of information on Lucrazon Global’s credited CEO and Founder, Alex Pitt, and the company’s “revenue sharing” business model.

As is typical with MLM “revenue sharing” companies, I couldn’t see a product within the opportunity being sold to retail (non-affiliate) customers. This effectively meant that revenue going into the company was going to be primarily from Lucrazon’s affiliates, which it would then pay out to those who had already previously paid in.

Recruitment commissions by way of a referral payout on amounts deposited by newly recruited affiliates were also on offer, marking Lucrazon as using the now-familiar Ponzi/pyramid scheme hybrid model we saw pop up time and time again this past year.

Specific to Lucrazon, affiliates buy in at $1000 a position (capped at 15 positions or $15,000), which the company then pays out (sans referral commissions), via a daily “revenue share”.

Affiliates qualify for the revenue-share by sending in a random merchant’s contact details every 90 days, with new affiliate position money is used to pay out affiliates who have already bought positions.

Here’s how I summed it up in the BehindMLM Lucrazon review:

Whereas Zeek Reward’s front was a penny auction, Lucrazon try to pass of an e-commerce platform as the attached façade.

Let me be clear that I’m in no way questioning the legitimacy of Lucrazon’s e-commerce platform, replicated websites blahblahblah as a stand-alone services, as that’s entirely not the issue.

The issue with Lucrazon’s MLM business model is the basic mechanic of new affiliate money flowing in at $1000 a pop and being paid out to those who have already paid $1000 a pop for “positions”.

Dress it up any way you want, like every other MLM revenue-sharing opportunity out there this is still just the sale of unregistered securities.

The logic-fail kicks in when you consider the reason an affiliate would pay up to $15,000 to market merchant services and an e-commerce platform to legitimate merchants.

Lucrazon totally makes sense from a passive investor standpoint though. I pay my $1000 and you give me back >$1000.

And I’m not seeing the difference between a merchant signing up and buying a $1000 position or an affiliate doing it. Retail revenue would also appear to be a question mark in Lucrazon’s business model.

Seeking to address these concerns Alice Ly, who credits herself as Lucrazon Global’s “Social Media Manager”, left a comment on the review advising that Lucrazon had ‘answer(ed) your review points in addition to other questions‘.

Ly’s comment contained a link to a Lucrazon blog post titled “Alex Pitt and Lucrazon Global Facts“. Do Lucrazon quash Ponzi concerns about their revenue-sharing business model?

Let’s find out.

Lucrazon’s post opens with information on Founder and CEO Alex Pitt and some complaints over Pitt’s non-MLM past. I didn’t raise that as an issue in my review so I don’t see it as relevant.

What is relevant though is Lucrazon’s confirmation that Pitt ‘has no MLM history as he’s never been a MLM owner‘.

With that cleared up the only thing left for Lucrazon to address is whether their revenue-share is just paying existing affiliates with new affiliate money.

Before we get into the model itself, Lucrazon appear to suggest they don’t have a product:

Q8: Why doesn’t Lucrazon Global have products?

A: Lucrazon is the first fully-integrated ecommerce system with multiple patent-pending technologies containing a Website and Shopping Cart Builder, a proprietary Payment Gateway Integration, with automated Merchant Account approval process.

In addition, there are ecommerce stores with thousands of pre-populated products that are drop shipped by 3rd parties.

Brand Partners are Ecommerce business owners that provide Merchant Services, Websites and Shopping Carts, Ecommerce Stores with Inventory and SEO Marketing. These tools are specifically designed to build a business network as well as growing a Merchant Portfolio.

“Thousands of pre-populated products” from “3rd parties” still translates to Lucrazon themselves having “no products”. This is a red flag enough on its own in MLM – combined with a revenue-sharing business model though?

Might as well just march into your local SEC office and get it over with now…

Moving onto Lucrazon’s revenue-share model itself. The company states that it

doesn’t have a dollar amount assigned to the daily payout because we reserve 10% of the daily revenue. The 10% is then shared with qualified Brand Partners so that amount could be a few cents or it could be hundreds of dollars.

It never exceeds the 10% of revenue earned by the company on any given day.

Got it. My question – Is that “daily revenue” primarily newly invested affiliate money (“positions”) or does it come from elsewhere?

I maintain that it makes no sense to have affiliates dump up to $15,000 into the scheme that’s suppose to market e-commerce services to merchants – unless you’re planning to use that money to pay out existing affiliates.

Lucrazon attempt to address this concern… but not really:

Q3: Is Lucrazon Global a MLM, investment company, ponzi or similar?

A: Lucrazon Global neither a MLM, an investment, a Ponzi scheme, or similar. It does not recruit or assign people to certain positions that are controlled by “corporate.”

Lucrazon Global doesn’t restrict people from participating in other businesses and encourages individuals to promote their own business built on Lucrazon Technology.

Lucrazon, Inc. is a registered Visa and MasterCard MSP (Merchant Service Provider) and ISO (Independent Sales Organization) of Merrick Bank, South Jordan, UT, and Member of FDIC.

Lucrazon Inc. owns several patent-pending Lucrazon Technology and is part of a highly regulated industry, paying out up to 75% revenues (not 100% or more) which is the standard payout for the Merchant Service industry.

Lucrazon Global is operating on Lucrazon Technology and is held to these same standards. MLMs or related “ventures” are not regulated in this way.

Where to begin?

First of all Lucrazon is very much an MLM business opportunity. In addition to paying out referral commission on new position investment by affiliates, you’re also using a binary compensation structure.

Cmon guys, cut the crap.

As for being a Ponzi scheme, what on Earth does “It does not recruit or assign people to certain positions that are controlled by “corporate”” have to do with affiliates investing in “positions” and earning a daily ROI on them?

I think your definition of a Ponzi scheme might be broken Alice.

The core question that determines whether or not Lucrazon is a Ponzi scheme is are you paying out new affiliate position money to existing affiliates (who have already invested in positions)?

If so, you’re running a Ponzi scheme, with affiliates buying positions (unregistered securities) on the promise of an eventual >100% ROI on each position.

The rest of Lucrazon’s post addresses things that are neither here nor there – “lead” commissions, the “Brand Partner Process”, claims of Lucrazon affiliates “falsifying info” etc.

I did think this one last point was somewhat revealing though:

Q10: I heard that Brand Partners “don’t need to do anything.” Is this true?

A: No, this is not true. A Brand Partner Business is a real business. People who manage their Brand Partner business like any other business will typically have much greater success than those who put forth little to no effort.

Is it just me or did Lucrazon just confirm it’s entirely possible to invest in positions, do nothing and make money?

Sure, it’s typical that if an affiliate “manages their business” they’ll have greater success – but for those who are happy with the revenue-share ROI, “no effort” will surely suffice.

…if you can call handing in random merchant details every 90 days “effort”.

Is Lucrazon nothing more than yet another affiliate-funded MLM revenue-sharing Ponzi scheme?

I’m still not convinced.

Oh and while we’re discussing “other questions”, can you clarify BehindMLM reader ISO’s allegation that Lucrazon is actually being run by an ex Zeek Rewards and Better Living Global Ponzi player?

By the way…this Asian man who created Lucrazon Global was in Zeek, jumped into Better Living and now Lucrazon GLOBAL. He is a nice man when you talk to him. Always smiling….AT THE EXPENSE OF OTHER.

I wonder how much money Alex Pit will get from him? This guy is an MLM recruiter. You can take ALL of Lucrazon’s earning from it’s merchant service side and would not be able to sustain ONE MONTH of payment that LG has to payout.

Does Lucrazon Global have Chinese backer(s) who were involved in Zeek Rewards, Better Living Global and Juding USA? Wouldn’t be the first time a legit-looking frontman had been made the public face of a revenue-sharing opportunity.

Over to you Alice.