Evelyn Pringle December 8, 2004
This article is the first in an investigative series covering the Amway Scandal.
Former Amway insider, Eric Scheibeler, has written a must read new book called "Merchants Of Deception." This one time member of the Amway motivational cult has turned whistleblower and FBI witness and boy does he have some tales to tell.
In the book, Scheibeler exposes an Enron sized fraud with Amway raking In billions of dollars annually, and the billionaire founding families Being the largest soft money contributors to the GOP, with funds that have Been generated from what may turn out to be one of the largest consumer fraud scandals in history, perpetrated by the world's largest multi-level marketing company (MLM).
The former Federal Auditor has also has a website, www.merchantsofdeception.com, that reveals the close ties between Amway and Republicans.
As a life long conservative, Scheibeler was discouraged to both discover and document that "the GOP seems to have been hijacked by political payoffs from an industry that is rife with consumer deception, and bogus 'business opportunity' selling."
He goes on to say that it's "time this secret influence peddling and the harm it causes consumers and our democracy are revealed. I was on the inside for nine years. I saw it with my own eyes. I also have the internal documents, financials, and the audio and video tapes to prove it."
Merchants of Deception exposes the company's deceptive marketing of phony business opportunities and other secret scams by Amway's top promoters to sell so-called success tools to unsuspecting recruits all over the world. It also contains first hand accounts of the Kingpin's fraudulent recruitment practices that have led to an endless stream of lawsuits.
Scheibeler and Dateline Team Up In Sting Operation
In addition to writing a book and setting up a web site, Scheibeler provided key documentation for the May 7, 2004, NBC Dateline program that televised an expose of the secretive and illegal pyramid business run by Amway & Quixtar kingpins.
During its investigation, Dateline smuggled hidden cameras into recruitment meetings in order to document the company's deceptive claims and promises, and to expose its multi-million dollar 'secret' business. The expose verified the common allegation made in numerous consumer lawsuits, that the company is merely a front for a hidden pyramid business based on selling books, tapes, and registrations to seminars and rallies to new recruits, with nearly all participants losing money.
According to Dateline, the FBI and the IRS are conducting investigations into the scheme.
Republicans Will Do Anything For A Buck
Amway's billionaire founders, Rich DeVos and Jay VanAndel, have been the largest soft money contributors to the GOP on and off for the past 20 years. Together, DeVos and VanAndel gave $4,000,000 to a 527, just 45 days prior to the last election. And you can bet that they demand (and get) a bang for every red cent.
Scheibeler's book reveals how GOP donations and corporate promotion have resulted in a trade off for political protection and tax reduction benefits for the MLM. His web site provides a goldmine of documentation to back up his claims, including audiotapes.
By going to the site, you can hear Newt Gingrich promoting Amway at a large event, or you can listen to audio clips of then Texas Governor George W Bush. There is even a clip sent by high-level kingpin distributors from a private meeting within the White House.
Scheibeler tells how some members of the GOP have been paid as much as $100,000 for a single promotional appearance at an Amway seminar. The list of high-paid Republican speakers who have appeared at rallies over the years, reads like a list of who's who in the GOP. It includes former Presidents George Bush, Ronald Reagan, Gerald Ford and former Vice Presidents Bob Dole and Dan Quayle, along with other GOP heavyweights like Gingrich, Oliver North, Senator Rick Santorum and even the latest SE Regional Chairman for the Bush-Cheney '04 campaign, Ralph Reed.
Scheibeler reveals just how much Republican law makers have given back to Amway in return for the large speaking fees and contributions, which includes tax breaks and a blanket of immunity from investigations into the company's illegal business practices. In hindsight, it is more than evident that the money bought a whole lot of regulatory protection for Amway.
Merchant's of Deception provides a good example of how the racket works in the case of Newt Gingrich. His speaking fees are reported to be in the $50,000 range. The books explains how, after accepting speaking fees, Gingrich arranged a reported last-minute modification in a comprehensive tax bill that allegedly provided a $283 million tax break to just one company -- Amway.
One report called the tax break a $283 million payoff. "The payoff for Amway was not in the original House or Senate version of the tax bill. House Speaker Newt Gingrich intervened at the last minute to help get the special tax break inserted in the bill." (San Antonio Express-News Aug 12,1997).
Who Else Is Involved In The Amway Scandal?
Back in 1997, syndicated columnist Molly Ivins described Amway's Lobbying power in Congress. "Amway has its own caucus in Congress. Yes, the Amway caucus. Five Republican House members are also Amway distributors: Reps. Sue Myrick of North Carolina, Jon Christensen of Nebraska, Dick Chrysler of Michigan, Richard Rombo of California and John Ensign of Nevada. Their informal caucus meets several times a year with Amway bigwigs to discuss policy matters affecting the company, including China's trade status," she said.
Ivins also noted that, "House Majority Whip Tom DeLay, a onetime Amway salesman, also remains close to the company."
Which figures, because everybody knows that if there's a buck to be made from a scam, DeLay is sure to be lurking around in the shadows somewhere nearby.
And the fund-raising power of this pyramid company is not limited to the company's top dogs. The downline distributors are often pressured to produce large sums of money by soliciting small contributions from a great number of people. And that money can add up fast, considering that in 2000, Amway reportedly had over 700,000 distributors.
In 1997, a request from Congresswoman Sue Myrick to Amway Kingpin, Dexter Yager, for help in her fund raising events, increased her campaign war chest by more than $20,000 with small contributions from distributors. The next year, another fundraiser aimed at distributors brought in over $35,000.
W and Amway Are Tight
When it comes to W and Amway, it's a give and take situation. They mutually provide "quid pro quo" favors to each other. For instance, during the 2000 campaign, W used the company's voicemail network to reach thousands of Kingpin Dexter Yager's distributors with a personalized message from none other than Bush himself.
Then last summer, when Amway co-founder Rich DeVos attended a dinner party at the home of a friend in Grand Rapids, MI, he got seated right across the dinner table from W, according to the Orlando Sentinel.
DeVos isn't shy about discussing his contributions to Bush. "People ask Me sometimes why I support Bush, "DeVos said, "I just tell them, 'Because When I walk into the room, he says, "Hi, Rich." 'I've been a friend to the family for a long time.'"
"I give the max," DeVos said proudly.
"People talk about buying access, But all I can tell you is that politicians know the people who support them," he told the Sentinel.
And DeVos ain't lying, he has been very generous to W over the years. The $2,000 campaign Limit that he gives directly to Bush, is but a fraction of what he actually contributes. His wife, kids, and their spouses, also make large donations to W and other members of the GOP.
During the 2000 election cycle, DeVos, his wife, and son contributed a combined sum of $760,000 to Republican candidates and causes, and according to FEC records, Amway itself contributed a whopping $1.3 million, with every dime going to Republicans.
Favored politicians are also aware that the Amway perks don't necessarily end once they leave office. For example, DeVos has remained such great friends with President Ford over the years, that when Ford travels, it's often on DeVos' private jet.
How Much Does W Protect Amway - Let Me Count The Ways
Scheibeler's reporting provides a well documented expose of the Bush administration's direct involvement in the regulatory protection of Amway, and verifies that DeVos does get a lot of bang for every buck.
As we all know, there are rampant cases of improper influence in the Bush White House. Right off the top my head, energy and drug companies come to mind.
But Amway is different; its primary goal is not merely to rip off tax payers. It's to literally protect its very existence. The MLM completely relies on political protection to prevent it from being shut down by regulators and law enforcement.
And Bush has demonstrated that he was more than willing to engage in the protection racket.
On his web site, Scheibeler is highly critical of the FTC, and its current chairman, Bush appointee, Timothy Muris, mainly because of the agency's utter refusal to properly investigate and/or prosecute pyramid schemes, despite the overwhelming number of well documented complaints that have been filed with the agency.
Without a doubt, Amway's business practices are flagrant violations of FTC rules. Three separate federal court rulings have defined these types of pyramid sales as illegal schemes, and there are any number of websites on the internet that document the financial harm caused to millions of people by Amway's deceptive recruitment schemes. Yet, the Bush administration has consistently ignored the company's violations.
Scheibeler's web site attracts testimonials from Amway victims all over the world. Complaints have come in from Australia, New Zealand, UK, Germany, France, Canada, and Slovakia. And the whole world watches as the FTC turns a blind eye to the blatant exportation of this "American" fraud.
In fact, it could be said that Bush has aided and abetted Amway's criminal behavior. To begin with, appointing Tim Muris to head the FTC was the equivalent of setting a fox loose in the chicken coup. Before his appointment, Muris was as an attorney with the antitrust division of the law firm Howrey, Simon, Arnold and White, LLP. And guess who the firm's antitrust division counts as one of its largest clients? Amway.
So here we have it, while Muris was at Howrey, and while he was in charge of the FTC, his former law partners were representing Amway in a class action lawsuit initiated by a former Amway distributor that alleged that the MLM's recruitment program was an illegal pyramid scheme.
And there's more. The MLM's influence with the FTC doesn't end with Muris, it extends beyond him. During the Clinton administration, a company named Equinox (an Amway clone), was prosecuted for violating the pyramid scheme fraud statutes. One of Equinox's expert witnesses was David Scheffman, and he testified against the FTC and defended the scheme.
Scheffman claimed that the company's business model was legitimate and not a pyramid scheme, based on the assertion that company operated just like Amway. In the end, Equinox lost the court battle and was shut down, but guess where Scheffman ended up? Muris made him the Chief Economist at the FTC.
Does the information above indicate any conflict of interest violations within the Bush administration? Probably not, since the term conflict of interest was obviously deleted from the White House vocabulary when Bush moved in.