WMI in Norway: The long road to regulatory oblivion?
Earlier this year, Wealth Masters International opened up it’s first satellite office in Oslo Norway.
With an estimated 1000+ strong local member base, things seemed to be going quite well for WMI in Norway.
As 2010 progressed however things started to take a bit of a downturn and from about April the Norwegian regulators began to get involved.
Recently, BehindMLM reader ‘M_Norway’ provided some very interesting information regarding Wealth Masters International’s Norwegian activities.
They detail a company in boom in early 2010 and subsequently document a gradual decline into regulatory oblivion.
Unfortunately the information provided is universally in Norwegian and from my own poking around, there seems to be very little information in English regarding WMI’s Norwegian dramas.
Today I present to you the story so far in English.
In February 2010 Wealth Masters International kicked off a world tour starting in Oslo Norway. 360+ people rocked up with approximately 150 of those new prospects to the business.
Following this WMI went on to tour Australia and then Canada.
Around March 2010 WMI opened it’s first satellite office, again in Oslo Norway. This was to service a ‘growing Scandinavian Member base‘ and was to be ‘staffed and managed by WMI Consultants and recognized financial experts throughout Norway‘.
From a business perspective, things were going well. Really well.
By April however things began to turn sour and the Norwegian Consumer Ombudsman announced that the legality of WMI’s products were under doubt.
An Ombudsman spokesperson warned that
people must be very skeptical of such concepts and do not believe all the promises of riches. It has proven itself time and time again that it has not been the case.
Following this announcement from the Ombudsman, the Norwegian Gaming Board began an investigation into WMI.
They released a preliminary statement in May claiming that
Among other things, lots of members’ income is derived from the sale of membership and starter kits, combined with what appears to be partially over-priced goods.
The overall impression Gaming Board is left with is that these companies (WMI and Carbon Copy Pro) operate in a gray area of the pyramid scheme definition, as defined by the provision in the Lottery Act, Section 16.
At this point in time the Gaming Board stressed however that they had not finished their analysis of WMI and that the investigation was ongoing.
While the Gaming Board’s investigation continued nothing much happened until October.
In early October the Gaming Board sent WMI a list of nine enquiries it wanted WMI to provide the answers to;
1. What were the registration costs for members?
2. Details about the bonus and commission systems
3. A copy of WMI’s accounting records for sales of goods and services
4. An valuation of the products WMI offer
5. WMI’s terms and conditions for participation
6. A copy of the products sold where possible
7. Details about the Ownership / structures of WMI
8. Documentation proving that the turnover of the company is due to sale of products and not recruitment of new members
9. General information about WMI
WMI were given a three week deadline to provide the Gaming Board with the information requested.
The same week the Gaming Board sent its enquiries off to WMI, WMI had another ‘world tour’ event in Oslo aimed at recruiting new members.
At the WMI event, local Norwegian newspaper ‘E24’ got to briefly interview WMI co-founder and CEO Kip Herriage.
Specifically, E24 queried Herriage about the Gaming Board classifying WMI as being in a ‘gray area’ when classifying pyramid schemes according to the Norwegian Lottery Act.
Herriage: Yes, we are in the gray area, but can you say about all companies in our (the MLM) industry.
E24: Does that not mean that there is something wrong with the whole industry ?
Herriage: No, I think not. We are a legitimate company, not a pyramid scheme.
Herriage seemed to believe that, in regards to WMI being classified as a pyramid scheme, that if it was indeed one, it was the Lottery Act and the Gaming Board that were the problem – rather then WMI itself.
Naturally all of this negative media coverage in Norway wasn’t doing much for WMI’s reputation and in an attempt to silence critics, WMI set its lawyers loose on the blogosphere.
Law firm Helleroy and Co., acting on behalf of WMI went after the author of the now defunct ‘ccpsvindel’ blogspot blog.
Helleroy stated that their clients objected to the use of the terms “fraud”, “illegal” and “pyramid schemes” to describe WMI.
Helleroy went on to claim that although the use of the terms might be ‘objectively correct’, nonetheless their use to describe WMI could be illegal.
If found to be illegal and Helleroy were able to show how the blog had caused economic loss for WMI, Helleroy threatened that a lawsuit would be filed seeking compensation.
Helleroy even claimed that writing negative things about WMI might constitute a ‘criminal offense’.
In response to Helleroy’s demands, the owner of ccpsvindel pulled the blog only to continue it elsewhere under the title Pharaoh’s Tomb.
As far as I can tell Helleroy’s legal threats against the owner(s) of ccpsvindel and Pharaoh’s Tomb have thus far been ignored.
Meanwhile the three week deadline imposed on WMI by the Gaming Board arrived and not surprisingly, WMI failed to deliver any answers.
In a letter sent to the Gaming Board, WMI asked for an extension to the October 27th deadline. Graciously the Gaming Board complied and a new deadline was set for the 5th of November.
Today it’s November the 11th and as far as I can tell, no details have yet emerged as to whether WMI indeed actually met this second deadline.
If they did, I imagine it won’t be too long now before the Gaming Board processed the information provided and releases a final verdict into its investigation.
If WMI missed the deadline again, well I can only imagine that getting on the bad side of Norway’s regulators is a one way street that ends in WMI being declared illegal in Norway.
Hopefully, details on whatever happened on November the 5th make their way out into the public domain soon.
Stay tuned.
WMI have probably sent the requested information within the deadline. It may take more than 6 weeks before anything will happen. They have the right to appeal a decision if they don’t agree with it.
The number of members in Norway is far below the number they claim. They also include members who have quit. These are registered as “inactive” rather than being deleted as members, and they still count as members. I assume this also applies to the member number in the world – that they also count members who have actually quit.
Most of the growth in Norway has come from mPower, which can be called “a 30-day trial”. Many of these participants leave without buying any of the other products. This means that the claimed number of members is much higher than the real number of members. It also means that the profit on each new member is lower than earlier, when the cheapest product was M1.
I think that the number of ACTIVE members in Norway are less than 100, if we define “active” to “have at least 3 sales in 3 months”. The figure is probably much lower if we define “active” to that they must at least have a “normal income” from this – 3 months in a row.
WMI and CarbonCopyPro has always been marketed as a “business opportunity” in Norway. You have VERY low incomes if you only manage to sell 3 mPower within 3 months.
Hi! It is excellent to see that my blog is causing attention in USA. It makes me consider translating it into English.
Actually, there has not only been threats about lawsuits. Per Gunnar Hoem (member of WMI Executive Committee) called me (with hidden number) a late sunday night in August. He said he represented Wealth Masters International, but did not want to tell his name. He claimed that I broke the law by calling CCP/WMI a pyramid scheme, and therefore he had the same right to break the law to stop me.
He told me he knew people that could “take me out”, leaving no doubt that this was about violence, and that I also would be sued from his lawyers. Of course this was immediately reported to Norwegian police, and he has later admitted that the anonymous phone call was from him.
In Norway all citizens’ income and tax is public information. Could the record of Per Gunnar Hoem reveal that he is lying about his income (180.000 in his 4th month) or lying to Norwegian Tax Authorities?
http://skattelister.no/skatt/profil/per-gunnar-hoem-32234099/
(inntekt=income, formue=wealth, skatt=tax)
Another WMI top, Magnus Weierud Haga, is even more accurate about his income in 2009:
“The last three months I have made an amazing $164.384!!”
(from http://www.aweber.com/archive/magnus_engccp/1mogf/h/Start_the_new_year_to_your.htm)
Too bad this is not reflected at all in the public lists:
http://skattelister.no/skatt/profil/magnus-weierud-haga-30336448/
Since the Game Board escalated the investigation of WMI, I have not heard anything from Hellerøy & Co. It looks like they have realized that the threats against me and others were a big mistake, as they now are ridiculed in Norwegian press. According to another Norwegian lawyer their license is in danger.
Any documentation of the claims that Kip Herriage was busted for tax evation is highly desired, as this probably will make big headlines in Norway when forwarded to the journalists.
@B.F.
Wow, nice insight into the people at the top of the ladder. Threats like that are very ‘protect the business at all costs’ which kind of opens your eyes a bit.
Good luck with WMI in Norway, quite frankly it sounds like quite the mess over there.
Kip Herriage was a part of Global Prosperity…..in fact, Wealth Master International’s programs mirror Global Prosperity’s programs.
Global Prosperity had the G1, G2, and G3 products. WMI has the M1, M2 and M3 products.
Let me repeat that:
Global Prosperity had the G1, G2 and G3 products.
WMI has the M1, M2 and M3 products.
Global Prosperity targeted disenfranchised Americans who didn’t trust the government, and provided a cockamamie scheme to avoid paying taxes.
WMI targets angry disenfranchised people (Conspiracy Against Your Money, anyone?) and provides “tax strategies.”
Here’s the thing: many many Global Prosperity members went to prison for tax fraud, and some committed suicide. Not just employees or founders, mind you; people who were selling the “opportunity” and believed the “gurus” at the top.
Stay away from this “opportunity.” I advise you to stay away from any MLM or Network Marketing “opportunity.” The economy’s bad, but your personal economy will get much worse if you get involved in this garbage.
Oh, you should read some of the messages TVI Express supporters left for me on comment board of India newspaper “Voice of Sikkim”. I believe one of them wishes to play tabala “in” my arse. (Tabala is an Indian percussion instrument)
http://kschang.blogspot.com/2010/04/tvi-express-shills-threaten-to-visit-me.html
Mind you, this is AFTER TVI Express decided to refund 6000 participants in Sikkim
If Kip Herriage was part of GPG and it can be proved that he was, this will be the next headline in Norwegian newspapers. Not only because of WMI, but also for Herriage’s close relation to Wayne Allyn Root, the vice-president nominee for Libertarian Party in 2008:
LNCC Announces Addition of Economist and CEO Kip Herriage to the Board (http://www.kipherriage.com/home/2010/9/14/libertarian-national-congressional-committee-announces-addit.html)
Please provide sources that links Herriage to Global Prosperity Group.
The next question is: Why did Herriage’s career at Wall Street suddenly end when he still was very young?
Looks like Wayne Allyn Root has “learned” a lot from Kip Herriage: http://www.lvrj.com/opinion/why-every-bank-in-america-is-bankrupt-105622033.html?viewAllComments=y&c=y
Funny to read one of the comments:
“Unfortunately, each and every one of these programs is a pyramid scheme based on the utopian concept that there would be a never-ending base of tax paying citizenry to pay the freight.”
Ah, Las Vegas, which, along with Reno, would be one of the WORST place to buy real estate right now, no wonder they are upset.
Yet nobody spoke up when the real estate market is booming, plenty of people paying taxes and fees and whatnot. NOW things are bad, everybody talks about how bad things are, the good old days back then, and how lack of foresight ruined everything.
If you expect the government to save you, then there shouldn’t be any complaining about the taxes and whatnot. If you don’t, then you can always go somewhere else.
Wayne Allyn Root can be an interesting candidate for president in 2012. He is a “modern Robin Hood” – “take from the poor and give to the rich.” He gives active support to the Wealth Masters International, and receives active support in return.
If you want a president that can easily be “bought” he seems to be a good choice.
http://wmitoday.com/news/wayne-allyn-root-for-libertarian-national-chairman/
http://wmitoday.com/articles/wayne-allyn-root-business-new/
http://wmitoday.com/articles/wayne-allyn-root-on-wealth-masters-international/
http://wmitoday.com/articles/wealth-masters-root/
I suppose he knows WHAT he recommends – that he is not only PAID to write something nice about the company.
At least 80 percent of the consultants are guaranteed to lose in this. In practice, perhaps 2-3 percent earn well at this, while 95 percent should rather have focused on something else.
Well, the best result Libertarian Party has ever achieved in a presidential elections is 1,1 % of the votes. Then Wayne Allyn Root might think 2-3 % is a very good result.
Update from Norway:
“Have opened a case” is a step up from “have the company under review.” It probably means that they have made a decision, but that decision may be appealed to the Gaming Appeals within 6 weeks. Some of the nuances of the language is lost in the auto-translation, but the case has certainly evolved.
Source (in Norwegian):
http://www.abcnyheter.no/abc-penger/okonomi/101214/ny-pyramidebolge
Wealth Masters International is now officially declared to be a pyramid in Norway. Norway follows the EU’s “UCP Directive” in this area, which means that the same laws apply in most of Europe.
Source (in Norvegian):
http://e24.no/naeringsliv/article3959112.ece
http://www.lottstift.no/dav/f64473c402.pdf
Letter from “Lotteritilsynet” – too large to translate.
Source (Google autotranslate):
http://translate.google.com/translate?js=n&prev=_t&hl=no&ie=UTF-8&layout=2&eotf=1&sl=no&tl=en&u=http%3A%2F%2Fe24.no%2Fnaeringsliv%2Farticle3959112.ece
Sorry for some bad translation.
Correction:
Letter from the Gaming Board is only a notification of a decision, not the actual decision. Administration Act requires that a party is notified of a decision before it is made.
WMI has been given a warning that the Gaming Board will make a decision that they’re illegal. It’s set a deadline of 3 weeks to send a confirmation that the business has ceased. If they do not receive such confirmation, they will make a decision.
So there is still 3 weeks to a decision – “if any is made”. I do not think they will make a decision if the business is confirmed ceased within the time limit.
A decision can be accepted, or appealed to a neutral appeals board within a time limit (6 weeks?)
Carl Harald Krystad in WMI Skandinavia has already proclaimed that WMI will not accept the decision:
http://www.tv2underholdning.no/hjelperdeg/wmi-nekter-for-pyramidevirksomhet-3372702.html
http://translate.google.com/translate?hl=no&sl=no&tl=en&u=http%3A%2F%2Fwww.tv2underholdning.no%2Fhjelperdeg%2Fwmi-nekter-for-pyramidevirksomhet-3372702.html
(in the translation 15.000 NOK has been 15.000 dollar)
Wow thanks for the heads up guys.
I’m currently working on getting a translation of the official letter so I’ll have a look at that shortly. I’ve been working on researching Pyxism this past week and a bit but this is pretty important news.
Looks like it’s going to be a long night.
Hmm, having trouble translating the lottery letter. Seems the entire letter has been saved as an image within the PDF file so text extraction and translation is proving difficult.
It’s been scanned in from a hardcopy I believe.
Can someone tell me where I can find the proof of this? I have searched Google etc and cannot find any mention of this.
I have some good friends that are looking at Wealth Masters and I really want to warn them if this is true, but I know they won’t believe me just on hearsay.
@CS
I had a quick hunt around and couldn’t find anything concrete either. Probably why nobody claims Herriage was a part of GPG with any certainty.
If it is a deal breaker for your friends in joining Wealth Masters, why not get them to ask Herriage (assuming they have access to him) or request that their upline present the question to him.
If they get a concrete answer you might be able to share it with us and clarify the issue once and for all.
Interesting readings! What about Hellerøy? Do You have any info on him?
regards
Zoran
Helleroy and Co. is/was a law firm. BehindMLM had no interested in the firm outside of WMI.