Speaker 1: MLMs are economic cults, and people become almost fanatical about them,
Speaker 1: and the leaders of the MLM have extreme power over
Speaker 1: these people, hundreds of thousands, even millions of people, in
Speaker 1: the same way that some church leaders do. One thing
Speaker 1: Jane and I determined pretty quickly when we started working
Speaker 1: on this show was that we weren't going to find
Speaker 1: a lot of people coming forward saying they were experts
Speaker 1: on MLMs. We've talked about this before, but the industry
Speaker 1: is very litigious, very secretive, and that keeps a lot
Speaker 1: of people from wanting to weigh in. But that guy,
Speaker 1: Robert Fitzpatrick, who's been researching the MLM industry for thirty
Speaker 1: years since his own involvement in Impeermid scheme and has
Speaker 1: been expert witnessed in multiple class action lawsuits against MLMs
Speaker 1: around the country. He was never afraid to call himself
Speaker 1: an expert. In fact, he was never afraid to say anything.
Speaker 1: And one of the things he kept saying to me
Speaker 1: from the very first interview I did with them to
Speaker 1: the last is that in his estimation, MLMs are basically
Speaker 1: just cults. You couldn't have an economic cult because economics
Speaker 1: is numbers. Except now it's not because we've allowed the
Speaker 1: endless chain to be an economic principle. I've been involved
Speaker 1: with cases and families and so on where there were suicides, divorces,
Speaker 1: complete alienation from children and parents. It can become a
Speaker 1: true authoritarian cult. I was skeptical at first. I just
Speaker 1: met Robert, and it was early days in my research.
Speaker 1: I hadn't listened to the hours of tape of MLM
Speaker 1: owners speaking to their followers in the generally creepy way
Speaker 1: that most of them do. Once I had, I was
Speaker 1: able to hear what Robert was saying with a new perspective,
Speaker 1: because if MLMs aren't cults, they sure sound like them,
Speaker 1: so much so that it's almost impossible to tell MLM
Speaker 1: owners and cult leaders apart. Like, listen to these two
Speaker 1: clips I'm about to play you. One is the leader
Speaker 1: of the Institute in Basic Life Principles, a religious cult
Speaker 1: from outside of Chicago, and one is a high ranking
Speaker 1: member of amily. See if you can tell which one
Speaker 1: is which. Okay, here's the first one, Chapter two, verse ten.
Speaker 1: The Bible says, for we are His workmanship created in
Speaker 1: Christ Jesus into good works, which God hath before ordained
Speaker 1: that we should walk in them. That means the plans
Speaker 1: already made, you've just got them, figure it out and
Speaker 1: walk at it. And here's the second. One of the
Speaker 1: joys of being here this week is knowing, beyond a
Speaker 1: shed of a doubt that we have for every one
Speaker 1: of you. The answered can you tell the difference? Because
Speaker 1: I couldn't. If you're keeping score at home. That first
Speaker 1: clip was from a guy named David Severn, an executive
Speaker 1: seven diamond level AMWE distributor, which in AMWE parlance means
Speaker 1: he's a pretty big deal. The second piece of tape
Speaker 1: was Bill Gothard from the Institute in Basic Life Principles,
Speaker 1: who was sued in twenty sixteen by former members who
Speaker 1: accused Gothard of sexual assault and harassment. Like I said before,
Speaker 1: I didn't get either of those right. In fact, one
Speaker 1: of our producers, Lyra, gave me a quiz of about
Speaker 1: ten different pieces of tape from either cult leaders or
Speaker 1: MLM owners, and I think I only got two out
Speaker 1: of the ten right, and one. The piece of tape
Speaker 1: I'm about to play you was literally impossible to get wrong.
Speaker 1: If a person has access to more of themselves to
Speaker 1: bring to any behavior or any action. Their sculpting will
Speaker 1: be better, their acting will be better, participation in community
Speaker 1: events will be better, fuller, more authentic. You know, it's
Speaker 1: worse than a person that isn't authentic, a person that
Speaker 1: is authentically not whole. That's Keith Raneering, the founder of
Speaker 1: a self help program slash MLM slash cult called Nexium.
Speaker 1: The reason I couldn't get it wrong is because it
Speaker 1: was a trick question. Both answers cult leader and MLM
Speaker 1: owner were correct. He's both minutes ago. Federal jury here
Speaker 1: returned verdicts convicting Keith Raneery on all counts racketeering, sex trafficking,
Speaker 1: and related crimes. At the heart of Nexium training is
Speaker 1: something called intensives, running as long as fourteen hours a
Speaker 1: day and up to sixteen days. He really fostered these
Speaker 1: secret relationships and called a lot of the women slaves,
Speaker 1: and those women thought that they were simply there for
Speaker 1: self help. The group operated like a multi level marketing scheme,
Speaker 1: pushing members to take more classes, some costing as much
Speaker 1: as eight thousand dollars, and then as members took more classes,
Speaker 1: they could move up the ranks and recruit other members
Speaker 1: to bring in more revenue. So obviously, Keith Ranieri has
Speaker 1: been in the news a lot lately, which is why
Speaker 1: this isn't going to be a profile of either him
Speaker 1: or Nexium, but he is a useful backdrop for the
Speaker 1: conversation that I want to have. Ranieri, more than just
Speaker 1: about anyone, sits at the crossroads between cult leader and mlmowner.
Speaker 1: If you haven't heard it yet, go back and listen
Speaker 1: to episode four of the first season. We go into
Speaker 1: detail about this guy. The mind is like a fertile
Speaker 1: feel its size, the limits of your imagination. It like
Speaker 1: the field will grow whatever you plant. One seed planted
Speaker 1: and properly nourish with warmth and moisture will return thousands
Speaker 1: of such seat. His name was William Pinpatrick, and he
Speaker 1: had a similar executive success type program that he called
Speaker 1: Leadership Dynamics. It was also similarly creepy. He was sued
Speaker 1: by some of his former members, and during his deposition
Speaker 1: he admitted to things like hanging people from across, forcing
Speaker 1: people into conference, and forcing them to stand naked in
Speaker 1: front of a group while being humiliated by instructors. I
Speaker 1: wasn't even sure if I wanted to talk about Nexium
Speaker 1: because of all the news coverage. But while I was
Speaker 1: interviewing Robert Fitzpatrick about something totally different, he mentioned another
Speaker 1: friend of the podcast, Doug Brooks, had worked on a
Speaker 1: few cases related to Ranieri and Nexium, which again is
Speaker 1: a cult that's profiting by using the same type of
Speaker 1: compensation plan as an MLM. I've been a practicing attorney
Speaker 1: since nineteen eighty two. In recent years, I have focused
Speaker 1: my practice on representing victims of multi level and other
Speaker 1: types of business opportunity scams, including the type of pyramid
Speaker 1: schemes that you guys were talking about in the dream.
Speaker 1: Around two thousand and one or two thousand and two
Speaker 1: when I got contacted by an anti cult activist named
Speaker 1: Rick ross Different. Rick Ross Rick has spoken out against
Speaker 1: cults for many years, and he occasionally was hired by
Speaker 1: families of who were concerned that their loved one was
Speaker 1: involved in a cult. And he had been hired by
Speaker 1: a family whose son and their daughter had both gotten
Speaker 1: involved in a group called Executive Success Programs later known
Speaker 1: as Nexium an x IVM, which supposedly was a group
Speaker 1: that held courses in which you could improve yourself and
Speaker 1: improve your executive abilities, and it became something more than that,
Speaker 1: it became as the Nexium. People would describe it a
Speaker 1: basically a way to save the world. You're not just
Speaker 1: improving yourself. You were going to help everyone on the
Speaker 1: planet live better and improve the whole world. And one
Speaker 1: of the ways you do that is by controlling the
Speaker 1: assets of as much assets as you could possibly control.
Speaker 1: And it turns out that Nexium and a number of
Speaker 1: similar groups use a multi level model of compensation. You
Speaker 1: get paid for people that you bring into the organization
Speaker 1: and take courses, and you get paid some more if
Speaker 1: they bring in more people. You know, you first you
Speaker 1: go to maybe an evening course for a couple hundred dollars,
Speaker 1: and the main message there is, well you really should
Speaker 1: come to the weekend course, which is say a couple
Speaker 1: of thousand dollars. And then the weekend of course, you say, well,
Speaker 1: you really should. If you're serious about this and you
Speaker 1: really want to improve yourself, you should take the week
Speaker 1: long intensive program for you know, five or ten thousand
Speaker 1: dollars or whatever it is. And so it escalates. They
Speaker 1: were being cut off from their family, they were spending
Speaker 1: all their time and a lot of money on courses,
Speaker 1: and essentially that it was consuming all of their attention,
Speaker 1: and you know that they would try to recruit their family,
Speaker 1: but if the family was negative, they were being taught
Speaker 1: to basically cut them out of their lives. And unfortunately
Speaker 1: that is a pattern with cults. It certainly occurs with
Speaker 1: multi level marketing as well. In MLM, you're taught to
Speaker 1: avoid the dream stealers. Have you ever approached a prospect
Speaker 1: to ask them if they joined the business? But all
Speaker 1: you heard from him or her is what network market
Speaker 1: Are you serious? No, it is a scam. I won't
Speaker 1: join network marketing. You should quit too. Does this sound familiar?
Speaker 1: This is something a dream stealer would usually say to you.
Speaker 1: Dream Stealers are the people who try and bring you
Speaker 1: down and destroy your dreams. They make you believe that
Speaker 1: you'll never reach your dreams. There are two types of
Speaker 1: dream stealers. People who are concerned about you. Unfortunately, some
Speaker 1: of the people who are closest to you are dream stealers.
Speaker 1: They love you so much and don't want you to fail.
Speaker 1: And the second type dream stealers, who are jealous. They
Speaker 1: don't want you to win. What can you do best?
Speaker 1: I think what we're seeing is a lot of the
Speaker 1: same techniques that were used with cults like the Moonies
Speaker 1: and Jonestown. Some of those same techniques are being used
Speaker 1: with multi level marketing to keep the recruiting pipeline running.
Speaker 1: It's the same pitch, it's the exact same pitch. It's
Speaker 1: been honed a bit, and every time there's a new
Speaker 1: media that's developed, the mlmer's absorb it and they take
Speaker 1: advantage of it. But the basic elements of the recruitment
Speaker 1: pitch are the same. One of the emphasis of the
Speaker 1: MLM recruitment process is to get the person to make
Speaker 1: that first dollar investment. There's a real push, and you
Speaker 1: never are supposed to tell your recruit the name of
Speaker 1: your company or even that this is MLM or that
Speaker 1: it involves selling. You create the sense of mystery that
Speaker 1: basically you've found the answer to all of your problems.
Speaker 1: You've You get the person to think about their dreams
Speaker 1: and their hopes and their fears and how this thing
Speaker 1: that you're being pitched on will solve all of that.
Speaker 1: And the key thing is is to buy that starter pack,
Speaker 1: buy that introductory package by that first set of inventory,
Speaker 1: and once you've done that, the sunk cost fallacy starts. Operating,
Speaker 1: and you want to protect that investment, and the way
Speaker 1: to protect that investment is to invest more. And the
Speaker 1: MLM people are masters at that kind of manipulation. Everything
Speaker 1: is focused on getting people in and then getting them
Speaker 1: to stay in month after month. The earnings claims that
Speaker 1: you know the people who get up on the stage
Speaker 1: and talk, you hear the same stuff over and over
Speaker 1: over again. It really Amway started it back in the
Speaker 1: fifties and they developed it, and in essence, every MLM
Speaker 1: that I've ever looked at over twenty five years plus
Speaker 1: has really followed the same pattern. It turns out that Rhineering,
Speaker 1: the founder of Nexium, had a pretty good idea of
Speaker 1: how to run an MLM. NEXTIM was the third one
Speaker 1: he'd founded in less than a decade. The first was
Speaker 1: a company he started in the early nineties called Consumer's Byline.
Speaker 1: According to a two thousand and three Forbes article quote,
Speaker 1: Consumer's Byline, a multi level marketing program near Albany, promised
Speaker 1: lucrative commissions to old customers for recruiting new ones. Rhaneeri
Speaker 1: barnstorm the nation, promoting discounts on groceries, dishwashers, and even hotels,
Speaker 1: days stoking crowds of a thousand pumped up and profit
Speaker 1: hungry people. It's incredible that from five friends at a meeting,
Speaker 1: we went to twenty, then to one hundred. Then well
Speaker 1: now sometimes thousands of us get together. What we were
Speaker 1: trying to do and our doing is keep this business
Speaker 1: just amongst our friends. That's how you heard of us
Speaker 1: through a friend. And to this day, although we have
Speaker 1: over two hundred thousand members, it's grown by one friend
Speaker 1: telling another, without hyper fluff. It's almost as if we're
Speaker 1: a family. And it was a class action suit on
Speaker 1: behalf of Consumers Byline distributors who lost thousands after joining
Speaker 1: the company. That was actually Doug's first case and encounter
Speaker 1: with Raneer. Doug Brooks wasn't the only one gunning for
Speaker 1: Ranei at that time. The Attorney General of New York
Speaker 1: had filed a civil suit against Consumer's Byline, claiming the
Speaker 1: company was a pyramid scheme. They won the case, which
Speaker 1: meant that Raneer got fined about forty thousand dollars and
Speaker 1: was banned for life from promoting anything that even looked
Speaker 1: like a pyramid scheme, which begs the question is anyone
Speaker 1: not banned from promoting pyramid schemes. Predictably, Ranieri paid very
Speaker 1: little attention to either the fine, which he paid about
Speaker 1: nine thousand dollars of or the pyramid scheme ban. He
Speaker 1: started another MLM a few years later, called the National
Speaker 1: Health Network, and then a few years after that he
Speaker 1: founded Nexium. Doug's attempt to squeeze any money out of Ranier.
Speaker 1: He didn't fare much better than the State of New York's.
Speaker 1: It looks like they got away with very little punishment
Speaker 1: of forty thousand dollars fine, which they didn't even pay
Speaker 1: until many years later. I mean, it's I think they
Speaker 1: got off lightly. They managed to convince us and the
Speaker 1: New York ah at the time that they had no
Speaker 1: money to pay any restitution. So you know, they had
Speaker 1: about two hundred thousand members at one point, and I
Speaker 1: think most of them lost money and never saw a
Speaker 1: pennyback of it. The judge did dismiss our allegations under
Speaker 1: the Rico Statute, but he upheld our claims under the
Speaker 1: New York Pyramid scheme and consumer protection statutes, so we
Speaker 1: counted it as a victory. But basically we had to
Speaker 1: move on and we were not able to recover anything
Speaker 1: for the class in that case. So after working on
Speaker 1: both these cases, I wanted to know what was Doug's
Speaker 1: impression of Rahaneeri like as a person and cult leader
Speaker 1: at that I have to say, at that time, it
Speaker 1: would be the farthest thing from my mind that he
Speaker 1: would turn out to be this charismatic cult guru. He
Speaker 1: seemed to be a very nondescript, unassuming, ordinary person. He
Speaker 1: didn't strike me as having a great force of personality
Speaker 1: or anything remarkable about him. Some of the consumer violins
Speaker 1: marketing material did refer to what a genius he was.
Speaker 1: That's very common in MLM's there's always sort of a
Speaker 1: mystical aspect to it. You know, you're not just getting
Speaker 1: a product, You're getting a whole lifestyle and a whole
Speaker 1: way of transforming the world. I mean that's part of
Speaker 1: the pitch. Okay, So after all of that, Doug decides
Speaker 1: to drop this on me. The thing about this case,
Speaker 1: it just kept on getting weirder. I mean, it started
Speaker 1: off odd, and it just everything had happened, it just
Speaker 1: kept on getting weirder. During the course of the case,
Speaker 1: Nexium had hired a private investigator to lure Rick onto
Speaker 1: a cruise ship for ostensibly to do an intervention on
Speaker 1: someone who was involved in Nexium. Okay, so this is
Speaker 1: Nexium hiring a private investigator to lure Rick Ross, the
Speaker 1: cult programmer that Doug represented, onto a cruise ship, with
Speaker 1: the idea that Rick was going to help get this
Speaker 1: person's family member out of Nexium. But this was all untrue.
Speaker 1: You know, we never found out what they really intended
Speaker 1: to do. Once they got them on the cruise ship.
Speaker 1: It turned out the person that they had put up
Speaker 1: to sort of pretend to be a sort of victim
Speaker 1: of Nexium was actually one of the upper echelon people
Speaker 1: at the time. What as our conversation was wrapping up,
Speaker 1: I asked Doug what his options were legally speaking to
Speaker 1: go after someone like Rhineeri or Colts in general, or
Speaker 1: MLM's for that matter. I initially thought, well, the answer
Speaker 1: is disclosure. You know, if everybody knew the actual percentages
Speaker 1: of people who succeeded and failed, then no person in
Speaker 1: the right mind would join. But there has been a tendency,
Speaker 1: at least among some of the more sophisticated MLM companies
Speaker 1: to provide some disclosures even though they're inadequate. And yet
Speaker 1: people continue. It's not like there's some sharp dividing line
Speaker 1: between something that's benign and something that's harmful. And as
Speaker 1: I said, there's no law that says cults are illegal
Speaker 1: or provides really any insight into this. I'm thinking that
Speaker 1: really we need people like Steve to explain to us
Speaker 1: how it could be that someone just sort of suspends
Speaker 1: their critical thinking and despite all the information that they
Speaker 1: have in front of them about their own experience and
Speaker 1: about the experience of other people, why would they continue
Speaker 1: to stay in it? Hold on, who's Steve coming up?
Speaker 1: On the next bonus episode of The Dream, we'll meet Steve.
Speaker 1: It starts with a deception. Destructive groups will either omit
Speaker 1: critical data, distort information, or outright lie. And MLM's due
Speaker 1: all three and we'll dig deeper into the question our
Speaker 1: MLM's colts. The Dream is a production of Little Everywhere
Speaker 1: and Stitcher, written and reported by Me, Jane Marie, and
Speaker 1: Dan Galucci, with help from Lyra Smith. We're edited by
Speaker 1: Peter Clowney. Our executive producers are Chris Biannon, Dan Galucci,
Speaker 1: and me. We have a brand new season coming out
Speaker 1: in a few months, so don't forget to subscribe, and
Speaker 1: we also appreciate you rating and reviewing the podcast anywhere
Speaker 1: you listen