BONUS 3: Dream Stealers

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mlms are you know economic cults and people become almost fanatical about them

And the leaders of the MLM have extreme power over these people, hundreds of thousands, thousands, even millions of people, in the same way that some church leaders do.

One thing Jane and I determined pretty quickly when we started working on this show was that we weren't going to find a lot of people coming forward saying they were experts on MLMs.

We've talked about this before, but the industry is very litigious, very secretive, and that keeps a lot of people from wanting to weigh in.

But that guy, Robert Fitzpatrick, who's been researching the MLM industry for 30 years since his own involvement in the pyramid scheme and has been an expert witness in multiple class action lawsuits against MLMs around the country, he was never afraid to call himself an expert.

In fact, he was never afraid to say anything.

And one of the things he kept saying to me from the very first interview I did with him to the last is that in his estimation, MLMs are basically just cults.

You couldn't have an economic cult because economics is numbers, except now it's not because we've allowed the endless chain to be an economic principle.

I've been involved with cases and families and so on where there were suicides, divorces, complete alienation from children and parents.

It can become a true authoritarian cult.

I was skeptical at first.

I just met Robert and it was early days in my research.

I hadn't listened to the hours of tape of MLM owners speaking to their followers in the generally creepy way that most of them do.

Once I had, I was able to hear what Robert was saying with a new perspective.

Because if MLMs aren't cults, they sure sound like them.

So much so that it's almost impossible to tell MLM owners and cult leaders apart.

Like, listen to these two clips I'm about to play you.

One is the leader of the Institute in Basic Life Principles, a religious cult from outside of Chicago, and one is a high-ranking member of Amway.

See if you can tell which one is which.

Okay, here's the first one.

Chapter 2, verse 10: The Bible says, For we are his workmanship, created in Christ Jesus unto good works, which God hath before ordained that we should walk in them.

That means the plans already made.

You've just got to figure it out and walk in it.

And here's the second:

one of the joys of being here this week is knowing

beyond a shadow of a doubt

that we have for every one of you the answer.

Can you tell the difference?

Because I couldn't.

If you're keeping score at home, that first clip was from a guy named David Severn, an executive seven diamond level Amway distributor, which in Amway parlance means he's a pretty big deal.

The second piece of tape was Bill Gothard from the Institute in Basic Life Principles, who was sued in 2016 by former members who accused Gothard of sexual assault and harassment.

Like I said before, I didn't get either of those right.

In fact, one of our producers, Lyra, gave me a quiz of about 10 different pieces of tape from either cult leaders or MLM owners.

And I think I only got two out of the 10 right.

And one, the piece of tape I'm about to play you, was literally impossible to get wrong.

If a person has access to more of themselves to bring to any behavior or any action, their sculpting will be better, their acting will be better,

their

participation in community events will be better, fuller, more authentic.

You know, it's worse than a person that isn't authentic,

a person that is authentically not whole.

That's Keith Ranieri, the founder of a self-help program/slash MLM/slash cult called Nexium.

The reason I couldn't get it wrong is because it was a trick question.

Both answers, cult leader and MLM owner, were correct.

He's both.

Minutes ago, a federal jury here returned verdicts convicting Keith Ranieri on all counts of racketeering, sex trafficking, and related crimes.

At the heart of Nexium training is something called intensives, running as long as 14 hours a day and up to 16 days.

He really fostered these secret relationships and called a lot of the women slaves.

And those women thought that they were simply there for self-help.

The group operated like a multi-level marketing scheme, pushing members to take more classes, some costing as much as $8,000.

And then as members took more classes, they could move up the ranks and recruit other members to bring in more revenue.

So obviously, Keith Ranieri's been in the news a lot lately, which is why this isn't going to be a profile of either him or Nexium.

But he is a useful backdrop for the conversation that I want to have.

Ranieri, more than just about anyone, sits at the crossroads between cult leader and MLM owner.

If you haven't heard it yet, go back and listen to episode four of the first season.

We go into detail about this guy.

The mind is like a fertile field.

Its size, the limits of your imagination.

It, like the field, will grow whatever you plant.

One seed planted and properly nourished with warmth and moisture will return thousands of such seeds.

His name was William Pinpatrick, and he had a similar executive success type program that he called Leadership Dynamics.

It was also similarly creepy.

He was sued by some of his former members and during his deposition he admitted to things like hanging people from a cross, forcing people into coffins and forcing them to stand naked in front of a group while being humiliated by instructors.

I wasn't even sure if I wanted to talk about Nexium because of all the news coverage, but while I was interviewing Robert Fitzpatrick about something totally different, he mentioned another friend of the podcast, Doug Brooks, had worked on a few cases related to Ranieri and Nexion, which again is a cult that's profiting by using the same type of compensation plan as an MLM.

I've been a practicing attorney since 1982.

In recent years, I have focused my practice on representing victims of multi-level and other types of business opportunity scams.

including the type of pyramid schemes that you guys were talking about in the dream.

Around 2001 or 2002, when I got contacted by an anti-cult activist named Rick Ross.

Different Rick Ross.

Rick has spoken out against cults for many years, and he occasionally was hired by families

who were concerned that their loved one was involved in a cult.

And he had been hired by a family whose son and their daughter had both gotten involved in a group called Executive Success Programs, later known as Nexium, NXIVM,

which supposedly was a group that held courses in which you could improve yourself and improve your executive abilities.

And it became something more than that.

It became,

as the Nexium people would describe it, basically a way to save the world.

You're not just improving yourself, you are going to help everyone on the planet live better and improve the whole world.

And one of the ways you do that is by controlling the assets of as much assets as you could possibly control.

And it turns out that Nexium and a number of similar groups use a multi-level model of compensation.

You get paid for people that you bring into the organization and take courses and you get paid some more if they bring in more people.

You know, you first you go to maybe an evening course for a couple hundred dollars and the main message there is, well, you really should come to the weekend course, which is say a couple thousand dollars.

And then the weekend course, you say, well, you really should, if you're serious about this and you really want to improve yourself, you should take the week-long intensive program for, you know, five or ten thousand dollars, whatever it is.

And so it escalates.

They were being cut off from their family.

They were spending all their time and a lot of money on courses.

And essentially, it was consuming all of their attention.

And they would try to recruit their family.

But if the family was negative, they were being taught to

basically cut them out of their lives.

And unfortunately, that is a pattern with cults.

It certainly occurs with multi-level marketing as well.

In MLM, you're taught to avoid the dream stealers.

Have you ever approached a prospect to ask them if they joined the business, but all you heard from him or her is, what?

Network marketing?

Are you serious?

No, it is a scam.

I won't join network marketing.

You should quit too.

Does this sound familiar?

This is something a dream stealer would usually say to you.

Dream stealers are the people who try and bring you down and destroy your dreams.

They make you believe that you'll never reach your dreams.

There are two types of dream stealers.

People who are concerned about you.

Unfortunately, some of the people who are closest to you are dream stealers.

They love you so much and don't want you to fail.

And the second type, dream stealers who are jealous.

They don't want you to win.

What can you do?

These techniques.

I think what we're seeing is a lot of the same techniques that were used.

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With cults like the Moonies and Jonestown, some of those same techniques are being used with multi-level marketing to keep the recruiting pipeline running.

It's the same pitch.

It's the exact same pitch.

It's been honed a bit, and every time there's a new media that's developed, the MLMers absorb it and they take advantage of it.

But the basic elements of the recruitment pitch are the same.

One of the emphasis of the MLM recruitment process is to get the person to make that first dollar investment.

There's a real push and you never are supposed to tell your recruit the name of your company or even that this is MLM or that it involves selling.

You create this sense of mystery that basically you found the answer to all of your problems.

You get the person to think about their dreams and their hopes and their fears and

how this thing

that you're being pitched on will solve all of that.

And the key thing is, is to buy that starter pack, buy that introductory package, buy that first set of inventory.

And once you've done that, the sunk cost fallacy starts operating and you want to protect that investment.

And the way to protect that investment is to invest more.

And the MLM people are masters at that kind of manipulation.

Everything is focused on getting people in and then getting them to stay in month after month.

The earnings claims,

the people who get up on the stage and talk, you hear the same stuff over and over again.

It really, Amway

started it back in the 50s and they developed it.

And in essence, every MLM that I've ever looked at over 25 years plus has really followed the same pattern.

It turns out that Ranieri, the founder of Nexium, had a pretty good idea of how to run an MLM.

Nexium was the third one he'd founded in less than a decade.

The first was a company he started in the early 90s called Consumers Buyline.

According to a 2003 Forbes article, quote, Consumers Byline, a multi-level marketing program near Albany, promised lucrative commissions to old customers for recruiting new ones.

Ranieri barnstormed the nation promoting discounts on groceries, dishwashers, and even hotel stays, stoking crowds of a thousand pumped-up and profit-hungry people.

It's incredible that from five friends at a meeting, we went to 20, then to 100, then, well, now sometimes thousands of us get together.

What we were trying to do and are doing is keep this business just amongst our friends.

That's how you heard of us, through a friend.

And to this day, although we have over 200,000 members, It's grown by one friend telling another, without hype or fluff.

It's almost as if we're a family.

And it was a class action suit on behalf of Consumers Byline distributors who lost thousands after joining the company that was actually Doug's first case and encounter with Ranieri.

Doug Brooks wasn't the only one gunning for Ranieri at that time.

The Attorney General of New York had filed a civil suit against Consumers Byline, claiming the company was a pyramid scheme.

They won the case, which meant that Ranieri got fined about $40,000 and was banned for life from promoting anything that even looked like a pyramid scheme.

Which begs the question, is anyone not banned from promoting pyramid schemes?

Predictably, Ranieri paid very little attention to either the fine, which he paid about $9,000 of, or the pyramid scheme ban.

He started another MLM a few years later called the National Health Network, and then a few years after that, he founded Nexium.

Doug's attempt to squeeze any money out of Ranieri didn't fare much better than the state of New York's.

It looks like they got away with very little punishment, a $40,000 fine.

Which they didn't even pay until many years later.

I mean, I think they got off lightly.

They managed to convince us and the New York AG at the time that they had no money to pay any restitution.

So, you know, they had about 200,000 members at one point, and I think most of them lost money and never saw a penny back of it.

The judge did dismiss our allegations under the RICO statute, but he upheld our claims under the New York Pyramid Scheme and Consumer Protection Statutes.

So we counted it as a victory, but basically we had to move on and we were not able to recover anything for the class in that case.

So, after working on both these cases, I wanted to know what was Doug's impression of Ranieri, like as a person and cult leader?

I have to say, at that time, it would be the farthest thing from my mind that he would turn out to be this charismatic cult guru.

He seemed to be a very nondescript, unassuming, ordinary person.

He didn't strike me as having a great force of personality or anything remarkable about him.

Some of the Consumer Bylines marketing material did refer to what a genius he was.

That's very common.

In MLMs, there's always sort of a mystical aspect to it.

You know, you're not just getting a product, you're getting a whole lifestyle and a whole way of transforming the world.

I mean, that's part of the pitch.

Okay, so after all of that, Doug decides to drop this on me.

The thing about this case, it just kept on getting weirder.

I mean, it started off odd, and it just every everything that happened, it just kept on getting weirder.

During the course of the case, Nexium had hired a private investigator to lure Rick

onto a...

cruise ship for ostensibly to do an intervention on someone who was was involved in Nexium.

Okay, so this is Nexium hiring a private investigator to lure Rick Ross, the culta programmer that Doug represented, onto a cruise ship with the idea that Rick was going to help get this person's family member out of Nexium.

But this was all untrue.

You know,

we never found out what they really intended to do once they got him on the cruise ship.

It turned out the person that they had put up to sort of pretend to be a,

you know, sort of a victim of Nexium was

actually one of the upper echelon people at the time.

What?

Oh, watch your step.

Wow, your attic is so dark.

Dark.

I know, right?

It's the perfect place to stream horror movies.

What movie is that?

I haven't pressed play yet.

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As our conversation was wrapping up, I asked Doug what his options were, legally speaking, to go after someone like Ranieri.

or Colts in general, or MLMs for that matter.

I initially thought, well, the answer is disclosure.

You know, if everybody knew the actual percentages of people who succeeded and failed, then no person in their right mind would join.

But there has been a tendency, at least among some of the more sophisticated MLM companies, to provide some disclosures, even though they're inadequate.

And yet people continue.

It's not like there's some sharp dividing line between something that's benign and something that's harmful.

And as I said, there's no law that says cults are illegal or provides really any insight into this.

I'm thinking that really we need people like Steve to explain to us how it could be that someone just sort of suspends their critical thinking.

And despite all the information that they have in front of them,

about their own experience and about the experience of other people, why would they continue to stay in it?

Hold on.

on.

Who's Steve?

Coming up on the next bonus episode of The Dream, we'll meet Steve.

It starts with a deception.

Destructive groups will either omit critical data, distort information, or outright lie.

And MLMs do all three.

And we'll dig deeper into the question: are MLMs cults?

The Dream is a production of Little Everywhere and Stitcher, written and reported by me, Jane Marie, and Dan Gallucci, with help from Lyra Smith.

We're edited by Peter Clowney.

Our executive producers are Chris Bannon, Dan Gallucci, and me.

We have a brand new season coming out in a few months, so don't forget to subscribe, and we also appreciate you rating and reviewing the podcast anywhere you listen.

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