A scheduling conference in the SEC’s Ponzi scheme case against DFRF Enterprises was held on the 29th of September.

At the hearing, the following tentative court dates were scheduled:

• Initial Disclosures 10/29/15
• Fact Discovery 5/31/16
• Expert Disclosure 6/30/16
• Defendants Expert Disclosures 9/30/16
• Motion for Summary Judgment due 10/30/16
• Opposition due 11/21/16

What we can learn from those dates is that the SEC seem pretty confident with their case. A summary judgement would see a Judge rule on the case without the need for a trial.

The initial disclosures to be filed by the 29th of this month would also provide some insight into Daniel Filho’s proposed defense.

Or at least it might have, had the DOJ not filed a Motion to Intervene on October 1st. [Continue reading…]

As part of the comparison between OneCoin and USFIA yesterday, I opined that, seven months in, OneCoin is probably at the stage where a Ponzi scheme “comes off the rails”.

Less than twenty-four hours after that article was published, we’ve now learnt that there are OneCoin affiliates who haven’t been paid for over a month. [Continue reading…]

One of the marketing tools affiliates in travel MLM niches often use is the travel itself.

Despite commissions typically having nothing to do with travel, recruitment is often marketed on the photos affiliates take on trips booked through third-party vendors.

And there’s nothing wrong with that.

But what happens when the third-party travel vendor goes rogue?

As affiliates in Pro Travel Plus recently found out, unfortunately it seems you’re just “shit out of luck”. [Continue reading…]

The recently filed responses by Vemma, BK Boreyko and Tom Alkazin to the FTC’s pyramid scheme case read pretty much like you’d expect:

Deny, deny, deny!

And that’s fair enough.

But there’s one peculiar assertion raised in their defenses that I don’t quite know what to make of… [Continue reading…]

If I was sure of anything MLM this year it was that by the end of the year, we’d see at least one MLM cryptocurrency offering busted by regulators.

That cryptocurrency was USFIA’s GemCoin, busted earlier this week by the SEC.

As with the MLM penny auction craze sparked by Zeek Rewards a year back, MLM cryptocurrencies are now popping up all over the place.

Not that that in and of itself is a problem, but to date I’ve yet to see one that isn’t just a rework of Zeek’s Ponzi points business model.

Of the current crop of MLM cryptocurrencies, by far the most visible is OneCoin.

What with USFIA’s GemCoin cryptocurrency revealed to be nothing more than a $32 million dollar Ponzi scheme, today I thought we’d take a look at the similarities between the two. [Continue reading…]

As we reported on a GemCoin party in Arcadia and Amber queen pageant in Singapore, the SEC was in the midst of halting USFIA’s business operations.

In a complaint filed under the seal on September 22nd, the SEC alleged USFIA is a $32 million dollar Ponzi scheme.. [Continue reading…]

Better late than never?

Following the SEC and having shut it down, the Business, California’s Department of Business Oversight has issued USFIA, Steve Chen, Leonard Stacy Johnson and Weiwen (Wayne) Zhao a cease and desist. [Continue reading…]

Ariix launched in mid 2011, are based out of the US state of Utah and operate in the health and wellness MLM niche.

Heading up the company are its seven founders: Fred Cooper (CEO), Mark Wilson (President), Jeff Yates (CFO), Riley Timmer (COO), Deanna Latson (Chief Product Officer), Wenhan Harry Zhang (CIO) and Ian Chandler (Vice-President of Business Development for Asia-Pacific).

With the exception of Latson, Ariix’s Founders all came from executive position with Usana.

Fred Cooper was Usana’s COO, Jeff Yates their CFO, Riley Timmer their Vice-President of Finance, Wenhan Harry Zhang their IT Director and Ian Chandler Usana’s Customer Relations Coordinator.

Evidently work on Ariix began while management still held their positions at Usana. The Ariix website domain was first registered on the 11th of January 2011, with Ariix’s Founders resigning from Usana four months later in May.

Explaining his departure from Usana on a September 2011 Ariix affiliate call, Fred Cooper equates his time there to “killing himself”:

When I started Ariix, I never actually thought we would be doing our own network marketing company.

I had what many people would have said was the most cushy job on the planet. It was a job which everyone tries to aspire to.

I worked hard, I got my good education, I did everything that I could… worked day and night, worked all the time, worked hours.

There were weeks where I’d work a hundred and twenty hours. A hundred and twenty.

In one year I missed forty-seven weekends out of fifty-two, at the cost of my family, my social life, my friends.

And all the things that I love to do, I didn’t have the time to do because I was killing myself to rise up into this company and kind of live the good life.

I finally did it, three years ago approximately I finally made it to the President of the organization.

I didn’t have much chance of going any higher, because the owner’s son took the top spot. But I was perfectly content in the second spot.

Then one day it became apparent to me, as much as I think this is my company too, because I had thireen years or so in that company, I had worked my guts out for thirteen (years), side by side with the owner, side by side next to the owner’s son, this was mine too – I had a vested emotional interest in that company.

And it became obvious that I was just an employee. That in the end, my decisions, my choices did not have to be adhered to or listened to.

That my ability to control my company was also limited. My ability to control my compensation was controlled by a board of directors and the owners.

And, more importantly, I saw first-hand that an associate colleague of mine, that I had worked with for thirteen years, was going to lose his job at the opinion of an owner.

The one place that I thought I was safe and secure, turned out to be not any safer or more secure than any other employee.

So when I saw the treatment of those other executives and what was going to happen to them, that was the day I realized, “Y’know what? My turn is coming.”

It’s not “if”, it’s “when” – and I had better do something to change my own financial situation.

That “something” was Ariix, which Cooper departed with a host of his fellow Usana executives.

We walked away from seven-figure incomes, to do a business that we’ve taken to become better.

With key Usana executives ditching the company so too came the inevitable affiliate jumpships, with Usana terminating a number of affiliates following Ariix’s launch.

One such affiliate was Lynn Allen-Johnson, a former 5 Star Diamond Director with Usana and member of their Millionaire Club.

Allen-Johnson was terminated by Usana in July 2011. Reflecting on her termination at the time, Allen-Johnson wrote (source withheld due to affiliate marketing links):

I am writing with much sadness to announce that I am no longer with USANA.

I have been terminated based on the fact that I was looking at the Ariix opportunity joined by my family on a private call to gain clarity on the compensation plan.

After 15 years of building my business for what I thought was a “life long” residual income and my legacy to my Grandchildren, I have once again discovered how naive I am.

USANA has blessed my life so much and given me so much but I also believe that I have given USANA much.

I have loved and shared the vision of Dr. Wentz with my whole heart and the fact that I chose to look at Ariix had nothing to do with USANA.

It had to do with the fact that Fred and Mark are my dear friends and I respect and admire them greatly. They have always been there for me with encouragement and love and I wouldn’t have accomplished what I did without them.

Although Ariix hasn’t opened yet, I was looking at it and weighing my options and deciding what path I wanted to follow for my future.

USANA compliance department has made that decision for me with a termination letter and it is with great sadness that I share this….

Responding to an enquiry about Allen-Johnson’s termination, Usana’s compliance asserted it was due to cross-promoting:

Thank you for your question about the recent cancellation of Lynn Allen Johnson’s associate agreement.

It was with a very heavy heart that USANA took the action to cancel her distributorship. Lynn violated her agreement when she invited a select group of USANA distributors, including leaders from her team, her family and non-family members, to an opportunity call where the CEO of another network marketing company presented the benefits of joining that company, including their perception of improvement over USANA.

On the call Lynn also promoted the benefits of joining that company to the USANA associates who were listening.

Because of the public way in which this was done, Lynn’s promotion of a competitor immediately caused damage in the USANA field.

USANA asked Lynn to help combat the damage caused by publicly committing her 100% efforts to USANA but she declined leaving no choice but to cancel the associate agreement.

Compliance with the associate agreement is essential to the security of USANA’s business and the independent businesses of thousands of USANA distributors.

While we are saddened by Ms. Johnson’s choice, we wish her well in her new company.

Calling out Ariix’s integrity and that of their affiliates, Usana went on to frame the termination as a potential regulatory issue:

State and federal regulators carefully scrutinize the network marketing industry to ensure that companies enforce polices to protect distributors and consumers alike from the unethical or illegal conduct of unscrupulous business promoters and rogue associates.

To that end, USANA vigorously enforces its polices so that associates and shareholders alike can rely on USANA as a long-term responsible business.

USANA regrets that it must take action to cancel any distributorship, and as such, it is a rare occurrence among the tens of thousands of hard working and deserving USANA associates.

However, when the actions of rogue associates directly affect the livelihood of other associates USANA has no choice. USANA will always choose to protect its associates.

USANA will gladly suffer the short-term effect of losing a distributor leader rather than sacrifice the integrity on which USANA is built and the livelihood if its associates and families.

On her LinkedIn profile, Allen-Johnson credits herself as a member of the “Ariix Founders Club”:

The ARIIX Founders Club is the most prestigious and high-level ranking that a Representative can achieve in the entire sector of network marketing.

The invitation to join the ARIIX Founders Club is the pinnacle of what can be achieved in the direct selling industry—the perfect balance of being a Representative with the privileges of a founder.

Other than the inevitable fallout of gutting one MLM company to start another, it appears to have been smooth sailing for Ariix since.

Read on for a full review of the Ariix MLM business opportunity. [Continue reading…]

There is no information on the 3×9 Millionaire Machine website indicating who owns or runs the business.

The 3×9 Millionaire Machine website domain (“3x9millionairemachine.com”) was registered on the 7th of September with Sherm Mason listed as the owner. An address in the US state of Arkansas is also provided.

Sherm Mason (right) first popped up on BehindMLM’s radar as the admin of Magnetic Builder in 2012.

Magnetic Builder saw affiliates pay $29.95 and get paid to recruit others who do the same.

Following Magnetic Builder Mason went quiet, until earlier this year when he launched Paradise Payments in February.

Paradise Payments saw affiliates gift $2 to $1000 to eachother, with the scheme collapsing shortly after launch.

Since February Mason has gone on to launch to other schemes (in addition to 3×9 Millionaire Machine), Magnetic Gratitude in April and Summer Fun Matrix in July.

Magnetic Gratitude was a $580 a pop Ponzi scheme and Summer Fun Matrix a $22 three-tier Ponzi cycler.

Alexa statistics suggest both schemes have since collapsed.

Now comes 3×9 Millionaire Maker, Mason’s fourth launch of 2015.

Read on for a full review of the 3×9 Millionaire Machine MLM business opportunity. [Continue reading…]

There is no information on the ProfitShare 63 website indicating who owns or runs the business.

The ProfitShare 63 website domain (“profitshare63.net”) was registered on the 20th of September 2015, with a “Paolo Longo” listed as the owner. An incomplete address at the French tourist attraction Puy de Dome is also provided.

ProfitShare 63 is obviously not being run out of a dormant volcano, and so I was ready to dismiss Paolo Longo as a made up name too.

Turns out there’s a “Longo Paolo” (right) posting on Facebook in relation to ProfitShare 63, with the account appearing to be legitimate.

Going by Paolo’s Facebook posts, Profits 63 was first launched on two separate French domains in late May.

By August Paypal shut down their payment processor account for violating their Terms or Service.

That was the end of the French iteration of ProfitShare 63, with Paolo restarting the scheme with a new domain a few days ago.

Read on for a full review of the ProfitShare63 MLM business opportunity. [Continue reading…]