January 27, 2005
Amway knew it was in trouble when the internet arrived and the details about the company’s pyramid schemes began appearing online.
A memo dated December 19, 1997, that surfaced in a lawsuit, contains the details of a voice message sent out to the Amway leadership, by then Vice President, Ken MacDonald, that reveals just how desperately Amway tried to control the flow of information on the internet.
MacDonald said ... "This message is on the internet ... we’ve hired consultants and been working very diligently on all of the secret computer language that helps the search engines pick a site and because of that we’ve moved the positive Amway sites quite a bit up in the web search engines, and some of the negative sites down. And lastly, that we are working to provide very soon, for all those who qualified Emeralds and above ... their own personal homepage so we will have tons of positive Amway information on the web," he said.
There is one particular document that the company has gone to great lengths to stop people from reading on the internet. In fact, on June 12, 1998, Amway went to court and got a Protective Order in attempt to keep this specific report hidden from public view.
Professor G Robert Blakey was retained as an expert witness for the plaintiffs in the 1998 Procter & Gamble v Amway lawsuit to render an opinion on Amway's business practices. He is one of the nation's foremost authorities on organized crime. Blakey was directly involved in drafting and implementing RICO-type legislation in 22 of the more than 30 states that enacted racketeering laws.
After studying Amway’s business structure and functions, Blakey, wrote a damning report that stated: "It is my opinion that the Amway business is run in a manner that is parallel to that of major organized crime groups, in particular the Mafia. The structure and function of major organized crime groups, generally consisting of associated enterprises engaging in patterns of legal and illegal activity, was the prototype forming the basis for federal and state racketeering legislation that I have been involved in drafting. The same structure and function, with associated enterprises engaging in patterns of legal and illegal activity, is found in the Amway business."
For those not familiar with the RICO Act, it "was passed by ... Congress to enable persons financially injured by a pattern of criminal activity to seek redress through the state or federal courts," according to the Act's website.
Amway has been sued hundreds of time under the RICO Act.
Blakey Report Outed
In the early spring of 2004, Amway became extremely upset when the full Blakey Report began appearing on the world wide web. The company’s attorneys flew into action trying to suppress it.
Initially, they successfully used the protective order to force websites to remove the report. For example, on March 11, 2004, the MLM Survivor website reported that the Quixtar Blog had removed the Blakey Report from its servers and said "... according to the site owner, Amway's lawyers are frantically trying to find out who leaked. They assert the report is confidential, and covered by a protective order."
However, Amway was not as successful with getting it removed from other sites. MLM Survivor reported that company attorneys also contacted MLM, to demand that they remove the report from its website because it was sealed under a protective order.
Survivor’s response to Amway was, "We can't remove what we don't have. MLM Survivor does not now, nor has it ever, had a copy of the report on its website. Link, yes. Copy, no," the website said.
This must be like deja vu to MLM. The website had already been hit with one SLAPPer lawsuit by Amway. SLAPP is the abbreviation for Strategic Lawsuits Against Public Participation.
According to the First Amendment Center, "SLAPPers do not sue to achieve a litigation outcome; rather, they file to silence their opposition. Generally, the mere filing of the suit — or just the threat of suit — accomplishes that purpose;" www.firstamendmentcenter.org
However, it looks like the SLAPPer failed to obtain its objective with Survivor because the site is still alive and well on the internet. In fact, Survivor had this to say about the lawsuit. "I have to admit that I've been waiting for about six years (as long as this site has been in existence) for Amway/Quixtar/Alticor to slap me with a lawsuit for one trumped-up thing or another. I never expected my first-ever lawsuit to be such a farce," it said.
In another futile attempt to have the report removed from a site, on March 2, 2004, Amway Attorney, Griffin, sent a letter with a copy of the court order to a research professor by the name of David Touretzky. On March 21, 2004, he wrote back to Griffin and stated: My reading of this order leads to the following observations:
Paragraph 16 says that the terms of the order shall remain in force "to the extent that the information in such material is not or does not become known to the public..." Since I obtained my copy of the Blakey Report from a publicly accessible web page, the information clearly has become known to the public. The order therefore no longer applies to this document.
Paragraph 16 also says that the protective order is "binding upon all persons to whom confidential information is disclosed hereunder." The information was not disclosed to me under the terms of this order. I was never a party to this litigation, nor do I have any relationship of any kind with Amway, or Proctor & Gamble, or their respective attorneys, agents, or consultants. The protective order was never intended to apply to totally unrelated parties like me, or the news media, and it is not binding upon me now.
Touretzky’s reasoning would apply to the copy of the report that I obtained as well. When I discovered my copy a while back, it was already published on a number sites. It is currently posted on just about every Amway website out there.
The entire report can be read on the www.merchantsofdeception.com website of Eric Scheileber, a former Amway Distributor, who wrote the book, Merchants of Deception, that prompted the current FBI investigation of Amway, and an expose by NBC’s Dateline. (The book discloses Amway’s close ties to the Republican party and both Bush administrations and can be downloaded free, for a limited time, on the website)
Why Was Amway So Worried?
Why was Amway so worried about people reading the report? Probably because it very specifically explains how the Amway Corporation’s family-business structure is just like the mafia. According to Blakey, Amway has a family structure nearly identical to those found in organized crime.
The company has remained a privately held company since it was founded by Jay Van Andel and Rich DeVos in 1959, Blakey notes. But control of the corporation has now shifted to the sons of the founders, Richard DeVos, Jr and Steve Van Andel, he says.
The report also describes the Amway pyramid schemes. "The Amway Corporation primarily provides the various products and services that serve as a backdrop for the pyramid-type recruitment and motivational schemes undertaken in the Amway business."
As evidence of the mafia-like family structure, the report points out that Amway's Policy Board consists of family members Richard DeVos, Sr, Steve Van Andel, Richard DeVos, Jr, Jay Van Andel, Cheri DeVos Vander Weide, Dave Van Andel, Doug DeVos, Nan Van Andel, Dan DeVos and Barb Van Andel Gaby.
On June 7, 2002, the shift of control in authority that Blakey mentioned in 1998, was further confirmed by a press release that announced that Doug DeVos would become president of Amway’s parent company, Alticor,* after the retirement of Rich DeVos.
Upon taking office, Doug DeVos, in true mafia lingo, was quoted as saying: "It’s humbling to be asked to step into a job that has been done so well for the past 43 years, first by my dad and then by my brother."
Further confirmation of the control being passed down, was the fact that Doug DeVos joined Chairman Steve Van Andel (Van Andel’s son) in the Office of the Chief Executive, extending the dual leadership structure first established by company co-founders Rich DeVos and Jay Van Andel, according to the press release.
Blakey explains that family members are drawn in to the business as a matter of right, with family members being given responsibilities that outweigh their capability. The basis for this assertion is with Amway itself. As an example, Blakey refers to the deposition testimony of Jay Van Andel's 2 children, David and Nan Van Andel, in the P&G lawsuit.
When deposed, they both held high positions with the company. Yet Blakey says, their testimony reflected a complete lack of knowledge and business experience. It was obvious that neither obtained their position on merit, nor would they have been permitted to continue in their position in an regular company.
"Placing unqualified family members in high positions is also common in the Mafia," Blakey reports.
What About Other Amway Families?
Amway stresses that once you are involved, you are a member of the Amway family, and your upline and downline are part of your family. "Amway becomes a way of life for its participants, much like those involved with the Mafia," Blakey notes.
He describes how, "You are to "edify" or honor your upline, and "counsel" with them regularly."
"The "upline" assume virtual "parental" control, and distributors are urged to "counsel" on all aspects of their life, including topics such as which car to buy or how to handle marital problems," Blakey wrote.
According to the report, distributors are even told how to dress. For example, "Wilson women" (those in the Don Wilson family) at functions do not show ankles, thighs or cleavage, he notes.
The absolute control is also evidenced by the Amway Distributors Association Board. At the time of Blakey’s report, the Board consisted of 30 distributors who were elected.
However, 15 were chosen off a list of nominees compiled by Amway. The Board is led by the Executive Committee which also includes family leaders, which all but guarantees that the family leaders, or their designees, will get elected and retain control of Amway.
Although the DeVos and Van Andel families control the corporation, Blakey says a 1996 Amway Corporate Culture Document shows there are at least 8 other lines of family sponsorship that control the distributors groups. Every participant is considered to be a member of a family, with one individual positioned at the top of a chain of command.
In 1998, the Dexter Yager family had the largest organization in North America, and the Bill Britt family was enormously comprised of over 149,000 distributorships.
However, it should be noted that Bill Britt has since been booted out of Amway and is under investigation for a host of scams. According to an August 12, 2004, letter from Robert FitzPatrick, President of Pyramid Scheme Alert, to North Carolina's Attorney General, requesting an investigation of the Bill Britt organization, "Last year, it was reported that Bill Britt was involved in what authorities consider perhaps the largest single financial fraud case in North Carolina history in terms of the amount of dollars that disappeared," the letter stated.
The August 8, 2003 edition of The Triangle Business Journal reported that in spring, 2001 Bill Britt invested $5 million in a fraudulent investment scheme perpetrated by Cornerstone Management, a company under investigation and prosecution by the SEC since 1999, according to the letter.
At the time of the Blakey report, other "Amway families" included: the Childers (team of six Diamonds); the Stewarts; the Gooch family; the Bryans (Down East); the Wilsons (WOW); the Puryears (World Wide Dreambuilders); the Hays (International Connection); the Matz family ( International Diamond Association); the Dornans (Network 21); the Strehlis (Creative Life Styles); and the INA (International Networking Association), run by a group of seven families.
According to the report, each family is involved in the Amway business, in terms of using the Amway Sales and Marketing Plan, and is also involved in Business Support Materials (BSM), or "tools," which include books, tapes, and rallies, Blakey determined.
However, each family kingpin rules his own Amway distributor pyramid and his own tool pyramid. But even though these pyramids are all separate corporate entities, they all work together to promote the Sales and Marketing Plan and the tools business, the report found.
What Else Is Amway Hiding?
What else is Amway hiding? Most likely Blakey’s assertion that "The Mafia uses "omerta" and violence for control," and "Amway has other methods, with similar effect."
Blakey claims, "Distributors must always honor their upline. No negative talk or action is permissible. A distributor who steps out of line is punished. ... serious offenders may be dealt with by having portions of their business taken away - e.g. they can no longer appear at rallies, or downline distributors are "re-routed."
There are also reports of violence against those who attempt to take action against Amway, the report maintains.
(Part 2 of this article will discuss specific incidents of this "omerta" and violence and other information contained in the report that Amway fought so hard to keep hidden.)
* Alticor was announced in October 2000 as the parent company for Amway (direct selling), Quixtar (e-commerce); www.alticor.com.