URGENT >> BULLETIN >> MOVING: (2nd update 3:21 p.m.) Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina has issued an order authorizing the court-appointed receiver to file lawsuits against alleged Zeek insiders and winners.
Receiver Kenneth D. Bell asked for the order last week. He is expected to file the complaints soon.
Mullen has scheduled an initial conference for the parties Jan. 27 at 2 p.m. in Courtroom 3 of the Charles R. Jonas Federal Building in Charlotte. He further ordered parties to preserve evidence, including “documents, data and tangible things.”
From the Scott Miller puff piece in Home Business Advertiser.
UPDATED 11:23 A.M. ET (U.S.A.) The November/December issue of Home Business Advertiser carries a puff piece on TelexFree promoter Scott Miller. The one-page article, described by the publication as a “totally wild cover story,” does not reference TelexFree by name. Nor does the piece mention that TelexFree is the subject of a pyramid-scheme probe in Brazil and that a judge and prosecutor reportedly have been threatened with death.
Rather, the piece provides a link to a page featuring a YouTube promo for TelexFree that, like the puff piece, doesn’t mention the Brazil probe and police investigations into the death threats. The 8:47 video solicits viewers to send TelexFree sums of up to $15,125 and claims prospects can earn money without selling anything.
“We’re paid to advertise our company and products and build a team if you choose to sponsor. [Sponsoring] is not necessary,” according to the video.
Like the puff piece, the video solicitation does not reference TelexFree by name.
Lower sums such as $289 and $1,375 also are solicited in the video. Viewers are told that $15,125 will return at least $1,100 a week for a year. Meanwhile, according to the video, $289 will fetch at least $20 a week for a year, and $1,375 will bring in “never less than 100 bucks a week for a year.”
From the Home Business Advertiser puff piece (italics added):
After a couple years of looking, Scott finally found an opportunity that allowed people to achieve success without having to sell anything or sponsor people. In fact, he now has over 14,472 positions in his group and 100% of those are now earning money every week! He even has one team member who is on track to make $200,000/year and hasn’t sponsored a single person . . . If you are interested in running a successful home business, but do not want to have to sell anything or sponsor any people . . . then this could be the perfect home business for you.
A photo of the cover of Home Business Advertiser featuring Miller now appears on a Facebook pitch site for TelexFree styled “TelexFreeInUSA.” Info on the Facebook site suggests that Miller has gone from the 14,472 positions reported in the puff piece to “OVER 25,400 Positions Under Me! 100% Of Them Being Paid Weekly!”
The puff piece on Miller appears on Page 30 and includes a link to a domain styled ThePaidWeeklyRevolution.com upon which the YouTube solicitation appears. Page 31 appears to consist of a companion ad from Miller that in part claims, “AS OF OCT. 10, 2013 14,472 HAVE JOINED ME 100% OF THEM ARE . . . BEING PAID EVERY WEEK!”
Page 69 of Home Business Advertiser appears also to consist of an ad from Miller. This one appears to slam an unidentified MLM company:
“100% COMMISSIONS?” it questions. “LMAO! ONLY 1% EVER MAKE A SALE! (READ THEIR INCOME DISCLOSURE) FORGET 100% COMMISSIONS.”
The ad does not explain precisely why Miller apparently believes it imprudent it to join the unidentified “100% COMMISSIONS” program while he apparently believes it prudent to join TelexFree, an “opportunity” under investigation in Brazil and accused in Peru of gathering money unlawfully.
News of the Miller puff piece in Home Business Advertiser was received late yesterday.
Two days ago, the court-appointed receiver in the Zeek Rewards Ponzi scheme case auctioned off two plaques showcasing a Zeek puff piece that appeared in Network Marketing Business Journal in 2011. About a year after the NMBJ piece appeared, the SEC described Zeek as a $600 million Ponzi and pyramid scheme that had duped recruits into believing the money they’d been receiving came from an underlying, highly profitable business.
Zeek constituted a “classic” Ponzi scheme in which cash from investors was simply “going to the earlier investor,” the SEC charged.
TelexFree, which has a Zeek-like advertising component, may be operating in similar fashion. Whether the “program” is under investigation in the United States is unknown. Zeek had been under investigation in the United States for at least four months before the probe that led to its collapse was revealed in August 2012.
Some Zeek members might have been confused by puff pieces that appeared in NMBJ in the summer of 2011 and the spring of 2012.
The 2011 puff piece and accompanying plaques were auctioned Tuesday in Zeek’s home base of Lexington, N.C., as part of a bid to raise money for defrauded Zeek investors.
On its website, Home Business Advertiser informs readers that it also can arrange advertising in NMBJ and other publications.
One of the ads in the November/December issue of Home Business Advertiser is for something called “TooDamnEasy,” an apparent-cash gifting “program” in which a video pitchman tells viewers that they are looking at a stack of $100 bills totaling $60,000.
The ad in Home Business Advertiser crows, “I don’t care what anybody says — when you can have a $60,000 yearly salary, delivered in cash, to your front door, in one day, by overnight courier … THAT’S SOME POWER THAT WILL BLOW YOUR MIND AND WILL TAKE THE AVERAGE PERSON SOME TIME TO GET USED TO!”
As part of the pitch, the narrator inserts stacks of $100 bills in a Semacon cash-counting machine. He goes on to explain that he sometimes purchases cars for cash. The deck on the TooDamnEasy page reads, “Yearly Salaries Delivered Daily. In Cash. By Overnight Courier. 6 Days A Week.”
“What I’m selling you is freedom,” the narrator intones.
Two Connecticut women were sentenced to federal prison earlier this year for their roles in promoting a cash-gifting pyramid scheme and tax fraud.
A LinkedIn profile for a user known as TooDAMNEASY.com reads in part, “To be ‘economically sovereign’ means that you’re a self-governing individual, who is financially self-sufficient and not indebted or controlled in any way, by an outside source such as credit cards, loans, interest, etc. This means that you exist as an individual who owns and controls his or her labor and income.”
A column in Home Business Advertiser that appears to be unrelated to TelexFree and TooDamnEasy positions Jesus Christ as the person who inspired modern network marketers through his recruitment of 12 disciples.
Images of Jesus Christ have appeared in promos for TelexFree and WCM777, an “opportunity” that became the subject of a securities investigation in Massachusetts and appears to have high-tailed it out of the United States. The state said the WCM “program” was targeted at the Brazilian community.
Images of Jesus Christ also appeared in promos for Profitable Sunrise, which may have gathered tens of millions of dollars and funneled the cash offshore, according to an SEC fraud complaint filed in April 2013.
This Semacon cash-counting machine appears as a stage prop in a cash-gifting video advertised in Home Business Advertiser.
EDITOR’S NOTE: The case described below is apt to be followed closely by First Amendment advocates and companies trying to avoid PR calamities.
Public Citizen has gone to federal court in Utah, alleging that Michigan-based KlearGear.com effectively fined a Utah couple $3,500 after the wife posted a negative review of KlearGear at RipoffReport.com after her husband never received a desk toy and a keychain he’d ordered as Christmas gifts in 2008.
The items were valued at less than $20, including shipping, and never arrived from KlearGear, according to the complaint.
KlearGear also is accused in the lawsuit of causing a debt collector to go after the couple and of lying to credit-reporting agencies when asserting the debt was valid.
Named defendants were KlearGear of Grandville, Mich., and Fidelity Information Corp. of Los Angeles. The plaintiffs are John Palmer and Jennifer Kulas of Layton, Utah.
“A company may not retaliate against a customer for a critical review by demanding money under a penalty clause in contractual fine print or by wrecking the customer’s credit,” said Scott Michelman, a Public Citizen attorney.
In December 2008, John attempted to make a purchase on the KlearGear.com site, but the order was never delivered. His wife Jennifer then wrote a critical review on RipoffReport.com. In 2012, the company contacted John and demanded $3,500 pursuant to a non-disparagement clause contained in the website’s terms of use, which purported to prohibit “any action that negatively impacts KlearGear.com [or] its reputation.”
However, the non-disparagement clause did not appear in the terms of sale when John did business with the company; it was added more than three years later. And even if it had been present at the time of John’s transaction, the clause would be unenforceable under basic principles of contract law and the First Amendment, Public Citizen explains in the suit.
Among the issues in the case is whether a retailer such as KlearGear can enforce so-called “non-disparagement clauses” though contract language that asserts its customers owe it money if they complain online. Public Citizen has taken the view that KlearGear’s alleged behavior chills the First Amendment and is “unconscionable” and unenforceable as a matter of law.
Whether other direct-sales companies such as the collapsed FastProfitsDaily scheme would monitor the KlearGear case is unclear. FastProfitsDaily once threatened recruits with a $500 fine if they filed a chargeback. Other MLM-like “programs” also have threatened recruits with fines for trying to leave the “programs.”
Look for this phrase online: “ALL Purchases are FINAL and NO REFUNDS or CHARGEBACKS are allowed. Any attempts to acquire a refund or chargeback constitute theft and fraud, and are grounds for legal prosecution.”
Some of the sites on which this phrase appears threaten $500 chargeback fines. Others threaten $100,000 fines for linking to content or portions thereof.
URGENT >> BULLETIN >> MOVING: (2nd update 3:21 p.m.) Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina has issued an order authorizing the court-appointed receiver to file lawsuits against alleged Zeek insiders and winners.
