News from Pyramid Scheme Alert.org

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How thin is the line between MLM and illegality? How close are some MLM leaders to doing jail time?

One prominent MLM leader - who had been heralded by thousands of followers as a financial savior - is now doing serious jail time for claims and practices that are not uncommon throughout the MLM industry.

Another famous MLM leader took money from thousands of consumers in a classic 1-2-4-8 pyramid scheme that was shut down in England as a fraud. He ran the same scheme, with a new name, which was debunked and exposed as a fraud on national television in Canada where he closed it down leaving all participants with losses. He was never prosecuted in Canada. Yet, now he too is now doing jail time, not for the fraud, but for reckless driving that a judge considered criminal.

The Canadian Broadcasting Corporation news reported that Alan Kippax, who was the founder of the MLM scheme, Business in Motion and also ran the scam, Treasure Traders, was sentenced to three-years in prison for reckless driving that "contributed to the death of his cousin." The crash also left a couple with severe injuries.
Kippax was apparently racing his cousin, Peter, who had operated his MLM scheme in England, which authorities shut down in that country. The cousin's car slammed head-on into a car carrying Mark and Alison Radman. Peter Kippax died in the crash and the Radmans were left to recover from severe injuries, the effects of which linger to this day, CBC news reported.

In handing down the sentence , the judge said Kippax had shown little regret or remorse for the damage caused by his dangerous driving.

There was no regret for his MLM scheme either. The Business in Motion scheme was the focus of a Canadian documentary news show as a national fraud. Kippax subsequently closed the scheme down, wiping out all consumer investors. Yet, Kippax' lawyers depicted him as a solid citizen running a legitimate business. Though the scheme was not a part of the reckless driving case, the judge did take note that Kippax had unsuccessfully sued Canadian whistle-blower, Dave Thornton of Crime Busters Now. Thornton won in court when he demonstrated to a federal judge that the Kippax MLM was, "prima facie" an endless chain, that is, a fraud, and he was within his rights to publicize that fact.

Note: Robert FitzPatrick, Pres. of Pyramid Scheme Alert, served as the main consultant and was interviewed on air by the producers of the Canadian news show, Marketplace, which exposed the scheme's deception and fraudulent operation.

In the United States, the Associated Press recently reported that "Michael C. Cooper, 55, was convicted following a 2008 trial on 73 counts including fraud, conspiracy and money laundering." Prosecutors said his multi-level marketing company - Renaissance, The Tax People (RTTP) - defrauded customers and the Internal Revenue Service out of millions of dollars before it was shut down in 2002.

Note: Robert FitzPatrick, Pres. of Pyramid Scheme Alert, testified as an expert witness against Cooper and Renaissance the Tax People (RTTP) in 2002, stating that RTTP was a pyramid scheme. The scheme was subsequently shut down following the prosecution by the state of Kansas.

The AP reported that Cooper was sentenced to 20 years in federal prison by a U.S. District Judge who also ordered him to pay $10 million to the IRS and to forfeit $75 million.

Now, here is something for veteran MLMers and all other consumers to ponder. The AP story reported that "federal prosecutors said Cooper and his company falsely told clients they could reduce their income taxes by deducting such expenses as vacations and children's allowances."

This very same claim is regularly made to millions of consumers in MLM rallies around the country. MLM has led millions of people to join after being told that MLM provides a unique and far-reaching tax deduction in which virtually everything is deductible because the MLM sales person is always recruiting and marketing. The MLM person's entire home becomes an "office," they are told, making the children potential sub-contractors for mowing the lawn and dusting the furniture. They are told that even going on family vacations can be a form of "prospecting" and therefore "deductible." Many are told that their net losses in MLMs are actually good because they further reduce taxes, turning the loss into a gain.