Bill Berkowitz: Amway - 'Masters of deception'
Amway: 'Masters of deception'
Multi-billion dollar corporation recruits ordinary folks into the 'system,' uses politicians and pastors to build its empire
By Bill Berkowitz
Like many others, Eric Scheibeler and his wife, Patty, were recruited to the Amway Corporation by close friends. Along the "guaranteed" road to success they met powerful politicians, dined with multi-millionaires and spoke to thousands of Amway members at gatherings throughout the world. Then, without warning, their house of cards collapsed:
Eric Scheibeler discovered that the operation was committing massive fraud. When he took documentation to Amway Senior Management, they shut off his income and told him not to have contact with distributors he was revealing the fraud to. Scheibeler, a former federal auditor for the US Department of Energy, refused. He and his wife were threatened, ostracized, and lost all they had built over a decade.
Eric Scheibeler's book, "Merchants of Deception: An Insider's Look at the Worldwide, Systematic, Conspiracy of Lies That is Amway/Quixtar and their Motivational Organization," available free at merchantsofdeception.com, is more than a story about one family's rise and decline under the Amway/Quixtar umbrella. It also exposes the corruption enveloping one of the US's most politically well-connected companies.
Before signing on with Amway, the Scheibelers were skeptical about the rags to riches stories they were told. "One of the most significant factors that drew us to this 'business,'" Eric Scheibeler told me during a series of e-mail interviews, "was that you only succeeded by helping others succeed (those you recruited). This win/win philosophy was very appealing to us and literally millions of others."
Through time, energy, and money they built a global Amway distributorship: "We met many of the Amway millionaires ourselves and saw their palatial homes, exotic cars and personal jets." (Amway is part of the Alticor family of companies, which generated worldwide retail sales of $6.2 billion in 2004.)
"Each of the mega-wealthy leaders credited Amway and the 'system' for their success." New recruits get acquainted with the "system" -- books, tapes, videos, CD's and seminars -- the method through which "wealthy people teach others how to follow their path to success." Scheibeler pointed out that "the system" was described "as having a 100% success rate."
Distributors are told that in order to create wealth, similar to the millionaires they were rubbing elbows with, "they needed to buy 100% of their own products from 'their own' business and become completely immersed in the 'system' of success," Scheibeler said. After spending thousands of dollars a year, distributors would "recruit others and teach them to follow the same rules and eventually their businesses would contain enough consumer products that they could generate very large incomes."
For nearly a decade, the Scheibelers' prospered: Their business "extended from North America to Europe, South America, and the Philippines." They met House Speaker Newt Gingrich, former Iran/Contra figure, Oliver North, Wendy's owner, Dave Thomas, TV Pastor Robert Schuller, Senator Rick Santorum (R-PA) and many others. Religious leaders like Charles Stanley (a former distributor), Dr. Schuller and Dr. D James Kennedy of Florida's Coral Ridge Ministries, a multi-media multi-million dollar ministry, gave the company and its founder a credibility that seemed to be beyond reproach. Former US Presidents Ronald Reagan, Gerald Ford, George H.W. Bush also spoke to Amway distributors.
Amway's Road to Power is Paved with Political Patronage
Headquartered in Ada, Michigan, Amway was founded in 1959 by two high school buddies from Grand Rapids, Rich DeVos and the late Jay Van Andel. DeVos and Van Andel came up with the Amway idea -- described by Mother Jones' Zina Klapper in a 1981 article as a "door-to-door dime store of everything from car cleaners to cosmetics" -- after "engage[ing] in a series of business ventures together, including an unsuccessful attempt to market bomb shelters."
Molly Ivins wrote in a 1997 that Amway had "its own caucus in Congress... .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."
Some Republicans received as much as $100,000 for appearing at an Amway event. "After accepting speaking fees, then-House Speaker 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," investigative reporter Evelyn J. Pringle pointed out in a piece on Amway.
According to the San Antonio Express-News, "The payoff for Amway was not in the original House or Senate version of the tax bill. ... Gingrich intervened at the last minute to help get the special tax break inserted in the bill."
Billionaire Rich DeVos, a regular on the Forbes magazine list of richest Americans and the owner of the National Basketball Association's Orlando Magic, has been a member of the highly secretive Council for National Policy. He once served as the finance chairman of the Republican National Committee. He also created a conservative philanthropy for he and his wife called the Richard and Helen DeVoss Foundation.
For more than thirty-five years, the DeVos family has been a benefactor of both the religious right and the Republican Party. In the final weeks before the 1994 election, the Amway Corp. gave the GOP $2.5 million -- at the time "the largest political donation in recent American history," the Washington Post reported. And in 1996, the company donated $1.3 million to the San Diego Convention and Visitor's Bureau "to help fund a Republican cable TV show to be aired during the party's national convention," the Associated Press reported. The program featured ""rising GOP stars as 'reporters,'" and aired on the Family Channel, which was owned by Pat Robertson.
According to Media Transparency, a Web site tracking "the money behind the media," grant-making by The Richard and Helen DeVos Foundation, which was founded in 1970, grew from $4 million in 1990 to more than $25 million in 2001. "The family provides major funding to Concerned Women for America, Free Congress Foundation, Michigan Right to Life, Focus on the Family, Family Research Council and a number of other groups," according to a People For the American Way report. In addition, foundations with the DeVos family name attached to them branched out to include the Dick and Betsy DeVos Foundation (1990), the Daniel and Pamela DeVos Foundation (1992), and the Douglas and Maria DeVos Foundation (1992).
Reporter Evelyn Pringle pointed out that "DeVos and 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."
The DeVos family has made Michigan their personal political stomping grounds: Richard DeVos Jr., the son of Amway founder Rich, served as president of Alitcor and presided over "Restoring the American Dream," an organization described by Mother Jones magazine as "a political action committee that supports candidates opposed to the 'fundamental coarsening of our culture' and the 'erosion of civility and basic decency.'"
Shortly before addressing the Class of 2002 at the Christian-oriented Grove City College in Pennsylvania, President John H. Moore's office described Dick DeVos as "a nationally prominent Christian layman who led the fight in Michigan for [a] school vouchers," by co-chairing the Michigan Kids First! Yes! Campaign. DeVos' group, a network of right wing religious, civic and business leaders organized and supported the school vouchers ballot measure which ultimately "lost due to readily understood political factors," said President Moore's office.
"He is a truly fine evangelical Christian business leader, one who puts his faith in practice in his business. We've had religious and political leaders as commencement speakers -- we thought it was time to have a Christian businessman," Moore's office pointed out.
In early March of this year, DeVos took the first step toward turning the state of Michigan into his personal political laboratory by setting up an exploratory committee to test the waters for of a run for the governor's mansion.
The Scheibelers bought into the Amway program and became rising stars: "We rose through the ranks and reached the founder's Emerald level -- a level that less than 1/25th of 1% of Amway participants are abler to achieve. We were featured in Amway's national magazine, and succeeded in recruiting physicians, attorneys, teachers, laborers and many others all eager to work towards financial freedom. These people became our closest friends; they virtually became our family."
The Scheibelers spent quality time with the company's billionaire founder Rich DeVos.
They were making money -- "a small fraction" of what they were led to believe they would earn -- but their debts were mounting. Through the Internet they discovered a number of "unhappy members that had filed lawsuits against the company." These suits revealed that massive profits were being made from the sale of books, tapes and seminars, which totally contradicted what the Scheibelers had been told during their recruitment.
"We were told that these 'tools' were sold at or near break even and that some seminars were run at a loss," Eric Scheibeler said. "The lawsuits revealed that almost all of some of the Kingpin Distributors income came not from Amway but from the secretive secondary business of 'the system' of books, tapes and seminars." According to Scheibeler, those sales account for as much as 90-98% of the Kingpin Distributors gross income. "Without this secret income, even the most successful distributors in the country could lose money on their Amway business. This was a bait and switch consumer fraud of global proportions," Scheibeler maintains.
Scheibeler's findings, as laid out in "Masters of Deception," was the product of thousands of hours researching and culling documentation from global sources, getting hold of over 1,000 hours of legally recorded tapes and videos as well as internal Amway documents.
As a lifelong conservative Republican, Scheibeler was "disheartened" at what he discovered and documented: He found "rampant, systematic, global fraud" within the operation, and had "documentation" that "appears to reveal... two decades of systematic, global fraud [that ran]... into sums far in excess of twenty billion dollars."
At first he thought that "it only involved Kingpin level distributors in the field" so, accompanied by copious documentation, he reported his findings "to Amway senior management." After all, he had uncovered documents that showed that founder Rich DeVos had "been aware" of the company's "illegal activities" for well over twenty years. "My book was written as a road map for regulators and prosecutors worldwide." According to Scheibeler's documentation, 99 percent of those recruited into Amway Quixtar motivational organizations lose money.
On hearing from Scheibeler, Amway officials stonewalled. They "created pressure intended to silence me," he said. After talking with some of the other distributors, the Scheibeler's "sole income" was shut off as the company tried to "starve" him "into silence." They lost their health insurance, "were forced into bankruptcy" and lost their family home.
Superiors encouraged him to get out -- sell his business, accept a settlement and "sign a legal agreement to never speak publicly of our experience."
The Scheibelers refused.
In May 2004, with Eric Scheibeler's assistance, NBC's Dateline ran an expose of the secretive and illegal pyramid business run by Amway/Quixtar operatives. According to Evelyn Pringle, "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."
Dateline reported that the FBI and the IRS are conducting investigations into the scheme.
Ultimately, Eric Scheibeler's expose of the Amway Corporation goes beyond the trials and travails experienced by his family and the families of thousands of others that have been taken in by the company's promises. It goes beyond the suicides of failed member/owners, and the countless bankruptcies, foreclosures and broken marriages. Since releasing "Merchants of Deception," over 100,000 copies have been downloaded to date. Scheibeler said that he was "inundated with near identical stories from Amway victims from around the world."
Richard DeVoss and Jay Van Andel's Amway Corporation has its tentacles firmly planted in late-twentieth and early twenty-first century Republican Party politics. Masquerading as a Christian-oriented family enterprise, Amway leaders have made billions selling a phony version the American Dream while bilking thousands of ordinary American dreamers out of their hard-earned life savings. The wealth of the founders has supported the nearly 30-year conservative makeover of American society through millions of dollars in donations to the creation and development of right wing institutions and causes.
For more please see the Bill Berkowitz archive.
Bill Berkowitz is a longtime observer of the conservative movement. His WorkingForChange column Conservative Watch documents the strategies, players, institutions, victories and defeats of the American Right.