EDITORIAL: A Friday Evening In MLM Radio La-La Land

EDITOR’S NOTE: Our theory about Zeek Rewards is that it’s a slow-motion, pyramid-style Ponzi scheme being driven by any number of clueless affiliates who do not understand they are being influenced by steroidal puppeteers and MLM’s Great Wing of Willfully Blind Hucksters, Religious Frauds and Disingenuous Opportunists, PR Amateurs, Government Agitators and Unindicted Felons and Misdemeanants. We had a similar theory about AdSurfDaily. Read this document (courtesy of the ASD Updates Blog) and see if you agree that Zeek affiliates need to be asking some very serious questions about their “program.”

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UPDATED 1:39 P.M. EDT (U.S.A.) If you expected to be less confused about Zeek Rewards after listening to Jim Gillhouse and Troy Dooly chat up Zeek COO Dawn Wright-Olivares Friday night on ACES Radio Live, you’re apt to have come away disappointed — or perhaps even more confused. (Link to recording at bottom of editorial.)

The 86-minute show began with something that resembled a hopeful note: Gillhouse implied he’d hold Zeek’s feet to the fire and play “bad cop” to Dooly’s “good cop” because of various controversies swirling around Zeek. Co-host Dooly, though, seemed to bristle at the “bad cop” remark.

“Well, it ought to be interesting because I’m learning that bad cops don’t usually have all the facts,” Dooly said.

With that remark, the radio program more or less devolved into a session in which Wright-Olivares was permitted to ramble . . . and ramble . . . and ramble. The questions Dooly put to a top MLM executive who represents a company that plants the seed it offers a return of more than 1 percent a day without being the Bernard L. Madoff Investment Securities LLC of multilevel marketing were asked with sugary and/or leading preambles — with Dooly effectively stifling the worthy aims of his co-host and coming off as Zeek’s PR flack and spin doctor.

When Zeek’s story is compared to the tale of Madoff’s relatively modest (compared to Zeek) but unusually consistent returns of around 10 percent a year, Zeek is outperforming the notorious Ponzi swindler by a factor on the order of 30 to one. Zeek, though, insists it is not offering an investment. It also preemptively denies it is a “pyramid scheme” and plants the seed it will terminate any affiliate who suggests Zeek is offering an investment program.

Gillhouse tried. He deserves credit for that.

After not liking how Gillhouse framed a question to Wright-Olivares in the context of Zeek’s purported revenue-sharing program and recruitment efforts and how it purportedly spits 50 percent of its revenue with affiliates, Dooly behaved as though the question were asked of him and not the Zeek executive.

The information was “proprietary,” Dooly insisted.

He then bizarrely planted the seed that the ACES Radio Live show could get in trouble with a “regulator” for asking such a question and that Zeek itself could get in trouble for even responding to such a question. Dooly also implied that someone with dubious motives had set up Gillhouse by supplying him with bogus questions to make Zeek look bad. Such questions were offensive to American Capitalism, Dooly implied.

At one point in the “interview,” Wright-Olivares planted the seed that jealous competitors were after Zeek — in addition to the fraudsters and hackers who were making Zeek look bad in the eyes of its financial vendors, including offshore payment processors.

And there also was accidental comedy: Dooly called Zeek’s legal and compliance team the “crackpot team” when he meant the “crack team.”

We think he meant that, at least.

Gillhouse tried to make the show something other than a Zeek commercial and even caused Wright-Olivares to get snarky in one of her responses, but his own co-host made sure the Zeek executive had a cocoon into which she could retreat with no meaningful follow-up questions asked to tie up any of the incongruities about Zeek.

Although Dooly ventured that Zeek was “the most complex thing I’ve ever seen,” he did precious little to strip away any of the layers of complexity to show Zeek in the plain light of day.

“Proprietary” ain’t gonna cut it with Zeek — not with Zeek’s business model, not with criminals behind green curtains in the era of white-collar fraud relying on the word to coverup or sanitize massive fraud schemes, not after AdSurfDaily, not even if Zeek’s lawyers come on the show with the aim of turning on one of Dooly’s belt-high softball tosses in the middle of the plate and driving it into the upper deck of MLM La-La Land Stadium with the robotic Stepford fans rising to their feet in full Stepfordian awe. (Dooly’s suggestion that Gillhouse and/or the radio show itself could get in trouble for not being precise when asking questions is almost too strange to contemplate, so we are choosing not to contemplate it right now. Our plate is already filled with bizarre tales — JSS Tripler/JustBeenPaid, which has promoters in common with Zeek and  plants the seed it can outperform Madoff on the order of 50 to one, for instance.)

It’s this simple if you are a Zeek affiliate and have questions about the company: Assume that Dooly is trying to wear two hats (at least) and therefore is not an independent voice. He is making personal appearances at Zeek Red Carpet events, posing for the camera with Wright-Olivares and even permitting his image to be shown in what effectively is a commercial for Zeek. Then, he’s “interviewing” Wright-Olivares on the subject of Zeek.

What you are observing, unfortunately, is Troy Dooly and a Zeek executive in MLM Radio La-La Land, a cheerleader quizzing a woman who apparently is committed to her own bizarre talking points and even running interference for her. Paul Burks is the purported boss of North Carolina-based Rex Venture Group LLC, Zeek’s purported parent company. Burks and Wright-Olivares go way back, Wright-Olivares says.

At the heart of the Zeek flap are questions such as these:

  • Does Zeek’s penny-auction arm (Zeekler) constitute a gambling operation and therefore put the entire Zeek enterprise at risk?
  • Does Zeek’s MLM arm (Zeek Rewards) make the company vulnerable to charges that it is selling unregistered securities as investment contracts because of the seed Zeek plants that a return of between 1 percent a 2 percent a day is possible — thus putting the entire enterprise at risk?
  • Are Zeek’s purported tens of thousands of affiliates exposing themselves to charges they are helping Zeek sell unregistered securities?
  • Given Zeek’s business mix, what agency is its principal regulator?
  • Because any number of Zeek affiliates also are promoting highly dubious opportunities or obvious scams on well-known Ponzi scheme forums such as MoneyMakerGroup and TalkGold, is Zeek coming into possession of funds tainted by fraud and depositing those funds in its own bank and payment-processing accounts?
  • Why is Zeek, a U.S. company, auctioning sums of U.S. cash and telling successful bidders it will pay them via offshore payment processors linked to fraud scheme after fraud scheme promoted on the Ponzi boards?
  • Why has Zeek had problems with at least two U.S. banks? (And why is Wright-Olivares now suggesting that the banks and affiliates are to blame?)
  • Why are Zeek customers openly complaining on a Zeek support forum that they have not received their auction winnings for weeks or even months?
  • Why is Zeek apparently closing itself to would-be prospects in Montana?
  • How is Zeek paying employees? How many employees — as opposed to independent contractors — does it have?
  • Why were/are some of the “employees” Zeek lists on its website participants in cash-gifting schemes, matrix-cycler schemes and autosurf Ponzi schemes such as AdSurfDaily?
  • Is Zeek relying on volunteers to catch up on a considerable backlog of customer-service issues — and calling the volunteers “employees?” Why would Zeek permit either volunteers or employees associated with various forms of online fraud effectively become spokespeople for Zeek? (Note: AdSurfDaily also relied on “volunteers.”)
  • Was Paul Burks or any Zeek executive, employee or volunteer involved in AdSurfDaily in any capacity? Did any Zeek executive, employee or volunteer receive any compensation from the remissions pool established by the government in the ASD Ponzi case? Did Zeek, whose business model is similar to ASD, come into possession of any money that flowed from the ASD remissions pool?
  • Is there a chance that Zeek’s growth was fueled in part by money originally seized in the ASD case and returned to participants last fall in the form of remissions payments?
  • Why is purported MLM expert Keith Laggos, who ventured an opinion that ASD was not a Ponzi scheme, a consultant to Zeek?
  • MLM attorney Gerald Nehra, an expert witness for AdSurfDaily, ventured an opinion that ASD was not a Ponzi scheme. Why is Nehra’s law firm purportedly doing work for Zeek?

While Wright-Olivares was rambling Friday night, she did say two attention-getting things. One was delivered almost as a throw-away line; the other was a butchered attempt to spin a major negative into a positive.

First, the butchered spin attempt: After Zeek implied on its Blog on May 28 that it voluntarily was closing two U.S. bank accounts, Wright-Olivares suggested Friday night that the closings were less than voluntary.

One of the banks simply was too small to handle Zeek’s rapidly expanding business, a circumstance that left the bank president “devastated,” Wright-Olivares said. But at the same time she was saying that, she also was implying that the bank booted Zeek because of all the problems associated with doing business with the firm. (Emphasis added.)

“Well, our bank of 15 years came to us and said, ‘You’re just way too big. We can’t handle this.’ This is like the small bank in Lexington, North Carolina, and the president of the bank was devastated . . .” Wright-Olivares said.

She went on to explain that Zeek had opened an account at a second bank, apparently after the multimillion-dollar MLM firm had approached a branch office to open the account instead of consulting with the main office. Although Zeek told the branch office what business it was in and apparently managed to get an account started, the matter got kicked upstairs and Zeek ultimately got booted, Wright-Olivares implied.

“They didn’t do their due diligence” at the branch office, she curiously explained.

Now, the throw-away line:

After Gillhouse asked her if Zeek’s profit pool is a “50/50 split” between Zeek and participating affiliates, Wright-Olivares said, “Yeah, the Retail Points Pool — the revenue shares . . . actually, [Zeek President and CEO] Paul [Burks] — Paul manages all that.”

Wright-Olivares went on to explain that Burks gives “us” up to 50 percent of Zeek’s daily net, an answer that strongly implied that she was both a Zeek executive and an affiliate sharing in the profit pool. Neither Gillhouse nor Dooly asked whether Burks made the revenue-sharing calculations in the plain light of day with other executives observing the process, whether Wright-Olivares also drew an executive’s salary from Zeek, whether her COO title was simply an in-house designation and whether she essentially was just an affiliate with a fancy title and more responsibilities.

The answer to those questions could be important because Zeek’s business model strongly resembles that of Florida-based AdSurfDaily, which the U.S. Secret Service said in August 2008 — nearly four years ago — was operating a massive online Ponzi scheme. Like Zeek, ASD positioned itself as a revenue-sharing program that split 50 percent of its daily receipts with affiliates, awarding them an unusually consistent gain of about 1 percent a day.

And like Zeek, some ASD executives held fancy titles. In the end, however, the titles that ASD handed out appeared to be simple naming conventions designed to create the appearance of legitimacy. No evidence has emerged that any purported executive with the possible exception of ASD President Andy Bowdoin was anything other than an affiliate who held a fancy title in ASD’s MLM la-la land. Bowdoin effectively was alleged to be a glorified affiliate of his own company, with federal prosecutors saying that he’d placed an ad for a failed, dissolved business in his own “advertising” rotator to qualify for a payout from ASD’s revenue pool.

Moreover, the Secret Service alleged that, contrary to assertions by Bowdoin that ASD was paying out to affiliates 50 percent of the daily revenue it generated from sales,  ASD was not doing what it said it was doing.

“Rather, Bowdoin manufactured the revenue numbers to deceive members into believing that they could reasonably expect to receive an average daily return on their investment with ASD of at least 1%. This percentage in no way corresponded to the daily revenue that ASD was generating, but had been determined by ASD’s operators to be the amount needed to attract a steady stream of newcomers,” the Secret Service alleged in an affidavit originally filed under seal in February 2009, as the agency’s then-eight-month-old probe into ASD’s businesses practices continued.

In essence, the Secret Service alleged that Bowdoin was the man behind the colloquial green curtain and that he and unnamed others were fudging numbers and compartmentalizing information to keep the $110 million ASD scam afloat. Participants needed to hear a certain number or they weren’t apt to play, and Bowdoin and his coconspirators delivered that number — 1 percent a day — all while insisting ASD was not offering an investment product and giving themselves a further out by claiming revenue-sharing payouts were not guaranteed.

There have been no allegations of wrongdoing against Burks or Wright-Olivares or Zeek, but the remarks by Wright-Olivares are troubling.

“Paul manages all that?”

In closing, we present to you Paragraph 16 of a U.S. Secret Service affidavit filed on Feb. 26, 2009. This document was part of a seizure action that targeted the bank accounts of certain ASD members. We urge readers who may be members of Zeek not to listen to anyone who argues the document has no relevance in the context of the Zeek “program.” Indeed, you are about to read something that speaks compellingly about criminality — and steroidal puppeteers and Stepfordians — within the MLM universe:

16. Bowdoin and his [silent partner and 12DailyPro] sponsor knew that it was illegal to sell investment opportunities to thousands of individuals; thus, they were careful not to call participants “investors” but rather referred to them as “members.” Moreover, there were careful not to call payments to “members” “return on investments”; rather, they referred to the income program as a “rebate” program (A review of the ASD account database actually revealed ASD used the term “ROI” as a payment category for members). Although they were careful not to explicitly state that any income from ASD was guaranteed, both ASD founders intended that prospective members understood that they would receive better than market returns. Bowdoin and his sponsor were paying the stated 150% return and knew that ASD members expected that return. Bowdoin and the sponsor had discussed the need to pay at least one percent a day to members for members to promote the program to others.

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27 Responses to “EDITORIAL: A Friday Evening In MLM Radio La-La Land”

  1. Both Dawn Wright-Olivares and Daryl Douglas are affiliates with very large downlines. From reports of those attending Zeek red carpet events, these two are amongst the top 12 affiliates that made over $1M in May.

    Todd and Bruce Disner (of ASD fame) are also in the top 12 AFAIK. Todd was showing off his backoffice of over 1 million VIP points to his downline. Too bad Zeek compliance is not serious about enforcing the rules against the top affiliates.

    On the 5/31 call, Daryl Douglas said he is not aware of any situation EVER where Zeekler did not deliver auction winnings and implied that he has a “hotline” (his cell phone) should that ever occur. Apparently, Daryl Douglas doesn’t read the problems posted by hundreds of people on forums and Zeek’s own support forum about winnings having gone unpaid for months. It is strange that Zeek is not paying the auction winnings because they are such a small fraction of the daily profit share and weekly withdrawals. But it does allow critics to now point to months of no payment and show how Zeekler can’t be a serious auction.

    I want the truth,
    JC

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  2. Excellent article Patrick, but that’s no surprise coming for you. I had some doubts before listening to that show but it is undeniable that Troy Dooly is acting in an advocacy capacity for Zeek Rewards. The gentleman has been an advocate for many years but it used to be for the reps in the field and the industry in general. Now he’s just being PR flack for an exceedingly questionable program.

    One issue that perked my ear a bit was when Jim Gillhouse asked Troy if he was being compensated by ZR in any way and Troy immediately reframed the question to assure us that neither he nor any member of his family is a ZR “rep” (affiliate). That wasn’t the question Troy.

    To me it almost doesn’t matter if Troy is being paid anything other than the travel expenses for his appearances at the Red Carpet events. He is using his professional reputation to assure skeptical people that Zeek Rewards is a safe and legitimate program with a surrealistically high return on investment, er,.. revenue opportunity(?). Just a friendly word of warning to Troy, when you find yourself on the same side of an argument with the Ken Russo’s of the world, it’s time to reevaluate your position.

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  3. Dawn is an affiliate in addition to her official company role, so she’s raking it in both ends.

    I am troubled by Troy Dooly’s attitude in the whole interview. Good Cop / Bad Cop routine just didn’t work at all.

    The host “tried” bad cop, and good cop is supposed to say “I’m willing to help, give me something”, not jump in a make the defense for Dawn.

    Troy Dooly is acting more like an attorney deciding what could be and could not be said… and more. He’s speaking like a stakeholder, even though he vehemently denied it in prior occasions.

    I don’t know what’s going on over there, but this smells.

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  4. Dooly is a proven fraud and fool after getting caught shilling for his friend who started the buzzirk scam. He has to be getting compensated handsomely to pull off this charade. Anyone who believes this asshole’s bullshit is doomed to lose money. FACT. Why anyone is in awe of this jerkoff is baffling to me. He’s another clements without the IQ bragging.

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  5. The part about the bank can be interpreted several ways.

    The most likely explanation is the bank(s) told Zeek to close up, we don’t want to deal with you any more (reasons unknown), and if you’ll just go quietly we won’t make a big deal out of it.

    It makes far more sense than Zeek’s story: those two banks can’t handle us, and we’re going out of state to find one, not to mention a credit card processor out of the country. And we’re not telling you who they are.

    Neither banks are small, and merchant banking can be easily expedited through a LOT of different ways, including direct check scanners at customer site, scan deposit (scan both sides of check and submit that as deposit).

    Add to the part were Dawn admits to some sort of hoops to jump through (flaming?) in North Carolina and Montana, and it’s FAR MORE LIKELY that the banks kicked Zeek out due to some sort of potential legal issues. Smoking gun? Better than the cover story from Zeek? Definitely.

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  6. Hallo Patrick,

    please excuse my bad english, but it’s not my native speak.

    I don’t know if you’ve heard about WoT – there was a discussion with Zeekler fans:
    http://www.mywot.com/en/forum/15524-zeekler-com?page=1

    The man behind Zeekler seems to be Nicholas Boccio, there’s a “warning-site” on facebook:

    http://www.facebook.com/notes/list-of-markerplace-scammers/nicholas-boccio/166913783324504

    Thanks for the very good job you do every day

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  7. I may be mis-remembering, but do not the Federal Trade Commission changes of late 2009 render failure to disclose compensation from the advertised business an illegal act of marketing?

    Let me check… ah yes, “The revised Guides also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media.”
    http://www.ftc.gov/opa/2009/10/endortest.shtm

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  8. K. Chang: The most likely explanation is the bank(s) told Zeek to close up, we don’t want to deal with you any more (reasons unknown), and if you’ll just go quietly we won’t make a big deal out of it.

    The Zeeklers had better hope the reason isn’t “we don’t want to deal with you any more”

    If it is, indeed, the reason, automatically triggered Suspicious Activity Reports have already been filed and Zeek is definitely no longer “under the radar”

    Which is not a situation in which any US based HYIP ponzi would wish to find itself.

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  9. @Christine:

    Paul Burks is the official owner and he replied multiple times in MyWOT. Boccio is out to defend any and all penny auction sites as he apparently gets commission from referring people to the various sites he lists on his website.

    @ProfHenryHiggins

    You know they’ll argue that Troy Dooly’s statement doesn’t quite rise to the level of “endorsement”. :D Though Zeekheads certainly think they are. In that case, who’s at fault? Zeekheads? ZeekRewards for not reining them in? Troy Dooly for making semi-endorsements?

    @LittleRoundMan

    I honest can’t think of an innocent explanation that’s as simple as “Banks kicked them out”. Their story was also “shifting” albeit pretty subtle shift. First they said they are shifting banks, then their banks can’t handle them. Then it became “the bank came to us, told us they can’t handle us any more”. It sounds like PR spin from the start.

    I hope Patrick can get some answers from Montana.

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  10. Interesting additional info: Zeek’s “red carpet” events are now up to $1000 dollars, when their website only says $25?

    What did ASD’s “rallies” cost? If anything?

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  11. On the banking issue, recall that Zeek Rewards required all checks to be deposited within a few days of mailing and could not leave funds in the account to cover outstanding checks. Them they had the strange “clawback” process. So whatever explanation given by Zeek has to be juxtaposed against the likely scenario that the bank initiated account closure. If it was a simple move to a bigger bank, the transition would had been seamless and not sudden and haphazard.

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  12. Why don’t you guys get thr facts! Nothing better to do with your time except bash companies?
    Get the facts…then get a life.
    Most people who bash….are broke.
    These guys arr for real and have the utmost integrity.

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  13. Their employees are really drinking the Koolaid… They are now claiming that asking what bank Zeek uses would put the company in danger!

    [quote]
    Brett Gurney (Official Rep) 5 hours ago
    this is a huge problem with zeek and it literally puts the company in danger…too many affilaites running around calling the banks and lawyers to find out this and that…in my opinion…this needs to stop and if it doesn’t those people who have to know this information maybe should just not be in zeek
    [/quote]

    http://zeeksupport.zeekrewards.com/zeeksupport/topics/who_is_zeek_banking_with_now#reply_9140607

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  14. Chris: Most people who bash….are broke.

    REALLY ??

    And, just how many of “most people” have you met and asked about their financial situation ?

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  15. Chris: Why don’t you guys get thr facts! Nothing better to do with your time except bash companies?
    Get the facts…then get a life.
    Most people who bash….are broke.
    These guys arr for real and have the utmost integrity.

    Which facts are you referring to that you ALLEGED we didn’t “get”?

    Who are “these guys” you were referring to?

    Or can you only make nebulous generic references that points at nothing in particular?

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  16. Patrick…Zeek Rewards is helping people pay there bills with a very legitimate online auction.Are you helping people pay there bills in this extremely difficult economy? If you are… I would love to hear how.

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  17. Eric: Patrick…Zeek Rewards is helping people pay there bills with a very legitimate online auction.Are you helping people pay there bills in this extremely difficult economy? If you are… I would love to hear how.

    Eric,

    Have anything to say about the editorial above that raises serious concerns about Zeek — or would you prefer to overlook all of it and come off like a Zeek Stepfordian?

    Patrick

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  18. Yeah…the end is definitely near when the scammers need to come out in droves to distact fro the real issues.

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  19. Eric: Patrick…Zeek Rewards is helping people pay there bills with a very legitimate online auction.Are you helping people pay there bills in this extremely difficult economy? If you are… I would love to hear how.

    Ah, the “it paid me” argument. Are you saying that because it pays it is legitimate? or because it pays, whether it’s legitimate or not is irrelevant?

    It almost sounds like you meant the latter, but I’d love to hear your interpretation.

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  20. just fuck off you shower of hateful bastards and leave zeek alone

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  21. Is that fear and doubt speaking? Are you Bart Simpson with a lampshade over his head banging on it with his slipper so he can’t hear Marge’s lecture?

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  22. When I first started telling people that the “latest, greatest get rich” scheme they are involved in may be illegal and could cause a lot of people to lose a lot of money, I thought (naively) that they would be pleased that someone cared enough to take time out to warn them.

    What I found was the typical responses from those who did not totally ignore me were pretty much the same as the defensive and offensive postings seen here, many of them similar to this…

    archie mcgregor: just fuck off you shower of hateful bastards and leave zeek alone

    I have had ONE person respond thanking me for warning them.

    That ONE makes it worthwhile :)

    Thom

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  23. Eric: Patrick…Zeek Rewards is helping people pay there bills with a very legitimate online auction.Are you helping people pay there bills in this extremely difficult economy? If you are… I would love to hear how.

    Here’s my method:
    “If you’re putting money into this scheme, your money will be used to pay other investors. In return you will get worthless VIP points that will generate daily reward points each day for 90 days. The reward points can be reinvested each day, making your VIP point balance grow. After a few months, you can withdraw money if other investors keeps joining and are willing to support your bills. You’ll need money from other investors to get paid, or else you will only have worthless VIP points.”

    And then I tell them the odds are heavily stacked against them, because of all the investors who have joined before them, who have already drained most of the money out of the system.

    And then I tell them about some tax issues that can cause problems.

    So all in all, people will be better equipped to take care of their own bills if they stop supporting schemes. We will eventually see which one of us who have used the best method when it comes to helping other people pay their bills.

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  24. @Thom, you’ve got a good heart man. You’d fit in around here.

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  25. @M_Norway,

    It is nice to see you here. Thanks for joining the discussion.

    Patrick

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