A few days ago the Norwegian Gaming Board publicly announced that they’d completed a review of Wealth Masters International and had concluded that the company was a pyramid scheme.

The Gaming Board’s report at the time of release was only available in Norwegian and was uploaded as an image in PDF format. I requested an English copy from the Gaming Board directly but as of publication of this article have yet to hear anything back from them.

Thankfully a BehindMLM reader was kind enough to translate the entire 18 page report into English and send me a copy.

I thought the summaries of the report that I was able to read on the news articles were bad… the translated report however takes critical assessment of Wealth Masters International to a whole new level.

It’s quite possibly the most indepth government review of any MLM company I’ve ever seen.

The report revolves around the four criteria set out by the Gaming Board to establish whether or not Wealth Masters International is a pyramid scheme.

1. Revenues in WMI primarily come from the recruitment of members, not the sale of products.

2. One must give consideration to achieve revenues in the WMI.

3. The cost to be a member of WMI and to purchase WMI’s products are clearly overpriced.

4. WMI has a pyramid-like trading system.

The report opens with a brief summary of the story so far between Wealth Masters and Norwegian authorities. It then continues with an overview of the company itself, its product line and WMI’s commission payout structure.

Finally we then get into the nitty gritty of the report. The bulk of which seeks to address in detail the four criteria the Gaming Board sought to assess WMI by and how they came to their conclusion.

In their assessment of WMI, the Gaming Board set out to answer four simple queries.

1. If WMI is a business model similar to a pyramid scheme

2. If a payment is required to participate in WMI

3. If a payment is required to obtain the possibility to earn money in WMI

4. and if the income in general is based on enrolling instead of retail sale of wares or services, hereby if more than 50 % of the income is related to enrolling. This applies both to the company and to each single member.

The answers to these queries are then to be used to answer the four main criteria the Gaming Board are assessing Wealth Masters’ validity as a business by.

Query one was addressed quite simply with the Gaming board concluding that

A business model similar to a pyramid scheme is arranged in several levels.

WMI is arranged in a way that makes consultants earn their income up to five levels deep – according to consultant level – by enrolling new members/selling the products.

Lotteritilsynet concludes that WMI has a multi-level structure where a participant can benefit by sale/enrolling on a lower level.

This finding addresses criteria point one quite clearly, that ‘WMI has a pyramid like trading system‘.

Query two seeks to establish whether or not payment is required to participate in WMI. This is done by an analysis of the WMI product line in an attempt to establish whether or not the products represent their sale value.

The M1 Program

In the marketing of M1 it is highlighted that by buying the products you will get access to information and knowledge that only the ultra rich people have access to, the single percentage that are super wealthy.

A new finance crisis is predicted, as well as an enormous transfer of wealth, only if the participant has the same knowledge as the ultra rich people.

It is claimed that WMI has collected global experts that will provide you this knowledge. It is presented as if the participant will get wealthy and rich by participating in WMI

Some of the examples cited by the Gaming Board that apparently only the global experts and ‘ultra rich people‘ have access to are

  • drink a glass of water each morning and evening
  • eat breakfast every day
  • make a list of what you spend your money on and get an overview of your expenses
  • your mindset is created by your parents and you need to be able to change your mindset to change yourself.

As you can see, it’s Wealth Master’s M1 is choc full of ground breaking stuff. Therefore it’s no surprise that the Gaming Board concluded that

the information and advice given are very general and have little professional substance as an educational concept.

If the content of the M1 product should have any value for the participant, he or she must have a lot of debt, pay a lot of interest on this debt and have no overview of his or her private finances.

In addition the person must live an unhealthy life, be in bad shape and eat unhealthy food. For these people M1 could have a value. However, the marketing of WMI is directed against anyone, and for normal people the exercises presented for Lotteritilsynet will have a very low value.

The Gaming Board also found that there was a strong underlying encouragement of recruitment to be found in M1;

It is highlighted in M1 that the way to get rich is to help others.

Lotteritilsynet consider the indirect consequence of this is that the participant must spread the message of WMI to more people by selling the products to them.

You should not work for the money, but let the money work for you. This is mentioned together with the advice to not to be careful, but invest a lot immediately, to gain success quick. If you are careful and patient you will fail.

This information is formulated in a vague way, but Lotteritilsynet finds it clear that it over and over again is referred to the business opportunity presented by selling WMI products and the big commission given for each sale.

By investing a lot immediately the bonus plan received from WMI reveals that this will make bigger commission. The concept of letting the money work for you instead of you working for the money is considered by Lotteritilsynet to be enrolling a lot of people who again enroll a lot of people, which makes automatic earnings possible without any personal effort.

They even had a go at WMI’s Wealth Accelerator program;

Lotteritilsynet has without problems found free software on the internet where people can fill in relevant information and get an overview of their private finances.

One example of such a free product is www.mindyourmoney.no which is provided by a Norwegian bank. Lotteritilsynet consider this free product to be a lot better than wealth accelerator.

The final verdict on M1?

The total understanding Lotteritilsynet is left with is that M1 mainly consists of general knowledge and advices which everyone can access for free.

The only value of the advices/content in the product might be that they are collected, and the customers don’t need to collect them from several sources. M1 is mainly considered as an education to sell WMI products.

Lotteritilsynet conclude according to the above review that the real value of the M1 product is a lot lower than the actual price.

The M2 Educational Conference

Although acknowledging difficulty in reviewing the M2 product (presumably because they were unable to attend one), the Gaming Board still concluded that

M2 is overpriced. We especially base this conclusion on what is mentioned in the marketing of M2 compared to the information we have about M2 and WMI in general.

The M3 Educational Conference

In analysing the M3 conference, the Gaming Board noted there appeared to be some discrepancies about the actual primary purpose of the conference itself.

M3 is a conference of the same model as M2. In the M3 conference the focus is on wisdom.

We were informed in the meeting December 10th that the buyers of M3 also get access to the VRA letter. This is a kind of newsletter which gives tips/advices about which shares/companies the participants should invest in.

It was also in the meeting highlighted that no financial advice was given regarding investment, but at the same time it was said that the investors buying M3 can save a lot of money that in other cases would have gone to the dealer.

Lotteritilsynet finds these facts to be in conflict with each other.

Apparently there was even less information to be found on M3 than there was on M2 and in concluding their thoughts on M3 the Gaming Board acknowledged that it is

hard to review M3 based on the limitation of information we have about this product, but we also consider that M3 will not fulfill what WMI promises of professional quality.

So that’s three for three in the failure to deliver on promises and professional quality, which obviously undermines any attempt to justify the retail cost of the WMI product line.

Based on the above analysis, the Gaming Board thus concluded that

the products mostly contain general knowledge and advice, plus information made for the American market. The products have little value for Norwegians.

Lotteritilsynet does not decide the real value of the products, but consider it to be obvious that the products relatively have a lot lower value compared to the price, and that product sale basically is there to generate a cash flow upwards in the system.

A yearly fee is required to be WMI consultant. In addition, Lotteritilsynet is in no doubt that the products are overpriced, and sales of the products is an indirect payment for membership.

Lotteritilsynet concludes that a payment is required to be member of WMI.

Concluding that WMI’s products are overpriced and this artificial inflation serves as an ‘indirect payment for membership‘ specifically addresses criteria point three, that ‘the cost to be a member of WMI and to purchase WMI’s products are clearly overpriced‘.

Query three sought to establish whether or not ‘a payment is required to get the possibility to earn money in WMI‘. In establishing this, the Gaming Board quite clearly set out their definition of a pyramid scheme’s membership payment structure;

If a payment is required for participating in a pyramid scheme or a similar system, it is with intention and hope to get economical benefit in the next step.

The systems often offer big and unrealistic incomes. It is mostly this possibility that is the motivation for the participants, and the payment is also motivated by this.

To create the pyramid effect new participants must continuously enroll new participants in lower levels. This creates the pyramid structure.

When the income in the system derives from these participants payment for membership, this is the foundation for the pyramid effect.

In applying this to WMI, the Gaming Board found that

From the online marketing and information presented in live meetings that Lotteritilsynet has had access to, we are left with the understanding that the main focus is on the business opportunity and how much each single consultant receives in commission and bonus by the different sales.

The main focus in back office is also on the business opportunity, even if the back office shall be a function both for the education and the business opportunity.

In the internal WMI web pages there are standard letters for communication with potential buyers. Here it is referred all the time to the possibility for the participant to earn “six or seven digits income” and “$2000 – $10000 a week”, and “I only want to work with people who want to earn a 100K income in the next 6-12 months”.

In the standard letters as mentioned it is also expected that the consultant will claim that the referring mentor could leave his or her job within 90 days after starting with WMI.

Definitely sounds like some ‘big and unrealistic‘ incomes are being represented there by WMI itself.

To answer the question on whether or not payment is required to earn any money with WMI however, the Gaming Board noted that the direct purchase of the WMI product line by a new WMI member was clearly unavoidable.

It is in theory possible to sell the products without buying it. This is done by paying the annual fee of $99 to be consultant, as well as the monthly fee for back office.

Lotteritilsynet consider it to be unrealistic to sell a product without any chance to know what it contains before it is bought. In reality it is recommended that the participant will buy M1, but minimum MPower, before starting selling the products.

Further, the possibility of commission and bonuses increase if the participant also buys M2 and M3.

Our opinion is backed up by the claims from the meeting December 10th that the consultant had to know the product before they were able to sell it, in addition to the fact that 3 sales are needed to receive full commission payout if the product is not bought by the consultant.

Lotteritilsynet has already concluded that the products are overpriced, and in this way a payment for membership exists. In reality it is hard to sell the products and then achive an income without buying the products.

Further, the participant must  – as mentioned above – normally buy M1, M2 and M3 to get commission from sales of these products.

If the consultant has not bought these products, he will need to sell several products before receiving commission from these sales.

The opinion of Lotteritilsynet is that the system stimulates the consultants to buy all products to achieve maximum income. This will create a cash flow upwards in the company, and in this way create a pyramid effect.

Lotteritilsynet concludes that a payment is required to get the possibility to earn money in WMI.

This finding addresses criteria two, that ‘one must give consideration (payment) to achieve revenues in WMI’ and query two, that ‘payment is required to obtain the possibility to earn money in WMI‘.

The final criteria and query left to address is whether or not ‘revenues in WMI primarily come from the recruitment of members, not the sale of products‘, and ‘if the income in general is based on enrolling instead of retail sale of wares or services‘.

To assess the criteria and query, the Gaming Board set a 50% threshold for recruitment based income. Any more than this and WMI was clearly primarily relying on recruitment to generate revenues.

The first point of argument here made by the Gaming Board is that WMI’s products have no resale value. The Gaming Board claim that they

doubt that any existing member will buy the products several times, even if it is possible to attend several conferences’.

This, together with the marketing of WMI, which mainly focuses on the business opportunity, makes Lotteritilsynet consider that the purpose of participating in WMI is to enroll new members.

Lotteritilsynet has concluded that the products are overpriced. In addition between 59 and 71 % of the payment for the products will end up as commission or in the bonus pool when sold by an Elite Consultant.

From the combination of products with a one-time value when bought, and considering these products to be the most popular (especially MPower and M1), it is obvious that the income derives from enrollment and not from sale of products and services.

The system also works in a way that a minimum monthly sale is required to maintain the status as Master Consultant. This also applies to Senior Consultant and Elite Consultant.

Lotteritilsynet consider this to depend on a given number of new members enrolled each month which generates income upwards in the system.

This is a partial illustration that the main purpose with WMI is not education, but product sale to move money upwards in the pyramid structure.

Lotteritilsynet concludes based on the above that the income in WMI mainly derives from enrollment and not retail sale of wares or services.

More than 50% of the income is derived from enrollment.

With more than 50% of WMI member’s income being derived from enrollment, it follows then that the same is true of the company – seeing as both are paid from the same source; the recruitment of others.

Taking into consideration the fact that, after investigation and thorough analysis, all four criteria were met, the Gaming Board had no choice but to issue a formal statement declaring Wealth Masters International to be a pyramid scheme in Norway;

Lotteritilsynet has considered the concept according to the pyramid regulations in the gaming law § 16.

Our conclusion is that WMI is a business model similar to a pyramid scheme where a payment is required to achieve income mainly deriving from enrolling new members, and not from retail sale of wares or services, according to second part of § 16.

The report was issued on the 21st December 2010 and as it stands now WMI has three weeks to decide what they are going to do. The Gaming Board has requested that ‘all sales of the products of Wealth Masters International in Norway must immediately stop‘, however it looks like WMI intend to fight the decision.

In an email to Norwegian website E24, WMI’s lawyers Hellerøy & Co wrote;

WMI believes the proposal for decision is not legitimate since it is based on wrong facts and incorrect application of the law.

Nothing is finally settled – there is now a response period of 3 weeks which WMI will necessarily take advantage of.

With seemingly such a solid analysis conducted and put together in the Gaming Board’s report on WMI, it’s a mystery to me how WMI will fight the claims made by the regulatory body.

In any case, three weeks from the 21st of December, 2010 gives WMI a Tuesday January the 12th, 2011 deadline to come up with an official response.

Has time run out for Wealth Masters International in Norway or are we going to see the Gaming Board reverse its decision…?

Let’s see what happens.


Note: I have the complete Gaming Board’s report translated from Norwegian to English but I have yet to spell and grammar check the entire 18 page document.

I intend to do this sometime over the next 48 hours at which point I’ll make the entire Gaming Board’s report available for download. I’ll update this article when I’ve proofread the entire report.