Amway: The Untold Story

Hayden Lawsuit

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

GERALD HAYDEN; EDDA HAYDEN

V.

DEXTER YAGER; YAGER ENTERPRISES;         : Case #3:97CV1509JCH
CONTINUING DISTRIBUTOR EDUCATION;        :
INTERNET SERVICES CORPORATION            :
NETWORK; DISTRIBUTION MARKETING          :
TECHNOLOGIES; DOWNEAST NETWORKING        :
SERVICES, INC; NETWORK OF BUSINESS       :
OPPORTUNITY ENTREPRENEURS; NATIONAL      :
BUSINESS OPPORTUNITY ENTREPRENEURS;      :
DON WILSON; NANCY WILSON;                :
COLOMBO DISALVATORE; KAREN               :
DISALVATORE; DISALVATORE                 :
NETWORK MARKETING; AMWAY CORP.;          :
AMWAY DISTRIBUTOR                        :
ASSOCIATION; EDWARD POSTMA;              :
DAVID KRUER                              :

July 24, 1997

COMPLAINT

PARTIES

1. Plaintiffs Gerald and Edda Hayden ("the Haydens") are currently and have been residents of the township of South Windsor, State of Connecticut at all times relevant herein. The Haydens invested and lost money in Defendants' network marketing schemes.

2. Defendant Amway Corporation ("Amway") is a Michigan corporation, which is engaged in the manufacture, distribution and sale of consumer goods, and the promotion of Amway distributorship throughout the United States, including the State of Connecticut.

3. Defendant Edward Postma ("Postma") is employed by Amway in the capacity of "Business Conduct" administrator and has acted as the employee and agent of Amway at all times relevant herein.

4. Defendant David Kruer ("Kruer") is employed by Amway in the capacity of "Senior Administrator of Business Conduct" and has acted as the employee and agent of Amway at all times relevant herein.

5. Defendant Amway Distributor Association ("ADA") is charged with development of Amway Rules of Conduct and enforcement of those rules. The ADA is comprised, in part, by individuals elected by other Amway distributors and, in part, by individuals selected by Amway.

6. Defendant Dexter Yager ("Yager") is an executive member of the ADA.

7. Yager also promotes Amway distributorships and distributes Amway products through a network of thousands of individuals who are within Yager's line of distributorship within Amway.

8. Yager operates his distributor network as defendant Yager Enterprises.

9. Defendants Don and Nancy Wilson ("the Wilsons") are currently and have been residents of the township of the State of Utah at all times relevant herein. Defendants were recruited by individuals within Yager's distribution network and acted as distributors of distributorships and products produced and marketed by both Amway and Yager Enterprises.

10. Defendants Karen and Colombo DiSalvatore ("the DiSalvatores") are currently and have been residents of the township of South Windsor, State of Connecticut at all times relevant herein. Defendants were recruited by the Wilsons to act as, and did act as, distributors of distributorships and products produced and marketed by Amway, Yager Enterprises and the Wilsons.

11. The defendants identified in paragraphs two through ten above are herein collectively referred to as "the Amway defendants."

12. Defendant Yager d/b/a Continuing Distributor Education; Internet Services Corporation; Network; Distribution Marketing Technologies; DownEast Networking Services, Inc.; Network of Business Opportunity Entrepreneurs; and National Business Opportunity Entrepreneurs (hereinafter collectively referred to as "Yager Tools") also produces, distributes and sells audio tapes, video tapes, and written materials ("tools"); organizes and participates in rallies purportedly to train the distributors within his network as to the secret of building a successful Amway distributorship; and markets and sells tools and rally distributorships. Yager sells these tools, rallies, and distributorships solely to, and through, his downline distributors.

13. The defendant Wilsons d/b/a Wilson International Networking participated in the creation of materials for sale by Yager Tools; organized and participated in rallies promoted by Yager Tools; and advertised, marketed and distributed tools and rallies produced by Yager Tools.

14. The defendant DiSalvatores d/b/a Distributed Network Marketing ("DNM") and Distributed Marketing Technologies ("DMT") advertised, marketed and distributed tools produced by Yager and Yager Tools; advertised, and marketed rallies organized and produced by Yager, Yager Tools, the Wilsons and Wilson International Networking; and advertised, marketed, and organize rallies produced by the DiSalvatores.

15. The DiSalvatores and Wilsons also participated in rallies organized or authorized by Yager, Yager Tools, Wilsons, and Wilson International Networking and sold interests in Yager, Yager Tools, and Wilson International Networking.

16. The defendants identified in paragraphs twelve through fifteen above are herein collectively referred to as "the Tools Defendants."

17. Yager acted individually and as the agent of Amway, Yager Enterprises and Yager Tools at all times relevant herein.

18. The Wilsons acted individually and as the agent of Amway, Yager Enterprises, Yager Tools, and Wilson International Networking at all times relevant herein.

19. The DiSalvatores acted individually and as the agent of Amway, Yager, Yager Enterprises, Yager Tools, Wilsons, Wilson International Marketing, DNM and DMT at all times relevant herein.

JURISDICTION AND VENUE

20. This court has jurisdiction of counts one through twelve under 28 U.S.C. § 1331 (federal question) and 28 U.S.C. 1337 (regulation of commerce).

21. This court has jurisdiction of counts one through four for violation of section 12(l) and 12(2) of the Securities Act of 1933 as amended under 15 U.S.C. § 77v.

22. This court has jurisdiction of counts five and six for violation of section 10(b) and Rule lOb-5 thereunder of the Securities Exchange Act of 1934 as amended under 15 U.S.C. 78aa.

23. This court has jurisdiction of the counts seven through nine for violations of 18 U.S.C. § 1962(c) and (d) under 18 U.S.C. § 1964(c).

24. This court has jurisdiction of the counts ten through twelve for violations of 15 U.S.C. §§ 1, 2 under 15 U.S.C. § 15.

25. This court has pendant jurisdiction of counts thirteen through twenty-two under 28 U.S.C. § 1367.

26. The plaintiff Haydens reside within the District of Connecticut. In addition, the Hayden's investments were solicited within the District of Connecticut, and the Tools defendants and the Amway defendants Yager conduct business within Connecticut on a regular basis.

27. Thus, venue in this district is proper under 28 U.S.C. §§ 1391(b) and (c) because the events giving rise to the plaintiffs, claims occurred, and continue to occur, in Hartford County.

FACTUAL ALLEGATIONS

GENERAL FACTUAL ALLEGATIONS RECRUITMENT - ALLEGATIONS AS TO THE AMWAY DEFENDANTS

28. At various times between 1987 and 1992 the DiSalvatore attempted to induce the plaintiffs to invest time, money and effort in the "Amway system."

29. In order to induce plaintiffs to invest in the "Amway system," the DiSalvatores represented that they earn a six figure per year return from their investment in Amway which allows them to live a lavish lifestyle including the ability to purchase a mansion, new Mercedes, yacht, diamonds, furs and early retirement.

30. The DiSalvatores corroborated their claim by showing the Hayden's their new car, diamonds, furs and yacht.

31. The DiSalvatores further represented that the Wilsons and Yager, as well as numerous other individuals, had achieved similar and greater returns from their investment in Amway.

32. The DiSalvatores represented that the return from the Hayden's investment in Amway, characterized as "residual income" would allow the Haydens to retire and receive a six figure income per year in return on their investment within two years.

33. The DiSalvatores further represented to the Haydens that, through the assistance of the DiSalvatores, the Haydens would be able to retire and receive the "residual income" or profit from their investment in Amway, within a matter of 2 years.

34. The DiSalvatores also provided the Haydens with literature produced by Amway in order to induce the Haydens to invest in Amway.

35. The literature produced by Amway and provided by the DiSalvatores represented that:

A. the "Amway system" is one in which individuals earn income by distributing consumer goods produced or marketed by Amway and recruiting others to distribute these goods;
B. an individual need only pay Amway approximately $132.00 in order to earn the right to distribute Amway products and recruit others to distribute Amway products;
C. an Amway distributor who recruits another individual to distribute Amway products is designated an "upline distributor" of the person whom he has recruited. The recruit is designated as both the "downline distributor" and the "personal sponsor" of the "upline distributor";
D. every individual whom the "personal sponsor" recruits to become an Amway distributor is within the "downline network" of the "upline distributor";
E. every "upline distributor" has the potential to earn a profit from the sale of Amway products to all the individuals in his "downline network." Thus, an investor earns residual income by recruiting other individuals who purchase Amway products and who recruit other individuals who purchase Amway products;
F. Amway pays distributors an increasingly larger percentage of profit, designated as a "performance bonus" as they recruit greater numbers of individuals who purchase an increasing volume of Amway products;
G. an "upline distributor" earns the status of "Direct Distributor" within the Amway system by recruiting individuals and having the group collectively purchase approximately $15,000 worth of Amway products per month for six months within a fiscal year (which is from September to August).
H. in addition to a performance bonus, Amway pays Direct Distributors a "profit sharing bonus" based upon Amway's profitability during the year. This bonus is discretionary;
I. the Direct Distributor is the only person authorized within his "downline network" who may order products directly from Amway and who receives a performance bonus. Thus, the Direct Distributor controls the purchases and controls distribution of all the products and performance bonuses to his "downline network"; and
J. a distributor may only cite "lifestyle examples" where such benefits were actually accrued as the result of building a successful Amway business.

36. The literature produced by Amway and which the DiSalvatores gave the Haydens also represented that:

A. Amway provides individuals with a legitimate business opportunity which Amway supports and assists through numerous methods such as group insurance rates, advertising, public relations releases and other means of legitimizing Amway in the public eye as well as by providing extensive Rules of Conduct which Amway would enforce to protect distributors from coercive or illegal behavior by other Amway distributors;
B. Amway provides individuals with a unique business opportunity because the "system" is one in which the "upline" is required to support and assist the "downline" because the "upline's" income is dependent upon the success of his "downline";
C. Per Amway Rules and Regulations, Amway ensures that distributors and their recruits are trained because it requires Direct Distributors to conduct "at least weekly" "training" and "inspirational" meetings of their recruits or "downlines"; and
D. distributors should emulate their sponsor and "stay involved with your upline network and all its various activities . . . Take advantage of the experience and successful track record found in your Line of Sponsorship . . . there are leaders in your Line of Sponsorship who can show you a proven path to building a successful Amway business."

37. The Amway Rules of Conduct, created by Amway and distributed by the DiSalvatores to the Haydens represented, in relevant part, that:

A. an Amway distributor may not sell any non-Amway product to another Amway distributor whom he has not personally recruited;
B. an Amway distributor may not take advantage of his knowledge or association with other Amway distributors to promote or expand his non-Amway business;
C. an Amway distributor may not require his downline distributors to purchase either Amway or non-Amway products or attend rallies as a condition of receiving assistance in building an Amway business;
D. an Amway distributor may not represent that there are exclusive franchises or territories available under the Amway system;
E. an Amway distributor may not engage in unfair or deceptive trade practices;
F. an Amway distributor may not engage in unlawful business enterprises or activities;
G. an Amway distributor may not engage in high pressure selling tactics;
H. Direct Distributors must ensure that every distributor within their "downline network" sells Amway products to a minimum of 10 retail customers per month (the 1110 customer rule"). Amway rules prohibited the Direct Distributor from paying a performance bonus to any individual within his network in the absence of proof of such retail sales each month;
I. Direct Distributors must ensure that every distributor within his "downline network" sells, or personally uses, at least 70% of the Amway products he purchases each month (the "70% rule"). The Direct Distributor may not pay a performance bonus to any individual within his network in the absence of proof of such sales each month;
J. Distributors must enforce the rules of conduct; and
K. the Amway Rules of conduct would be enforced by the ADA.

38. In reliance upon the representations of the DiSalvatores and Amway, in April 1993, the Haydens began to invest time, money and effort in Amway by purchasing Amway products, selling Amway products, and recruiting other individuals to purchase and sell Amway products.
 

THE SECRET TOOLS BUSINESS - ALLEGATION AS TO THE TOOLS DEFENDANTS IN THEIR CAPACITY WITHIN THE TOOLS BUSINESS AND THE AMWAY BUSINESS

39. During the Spring and Summer of 1993, and continuing through March, 1996, the defendants purported to advise the Haydens as to the proper method to invest their time, money and effort in order to maximize their return from Amway.

40. The DiSalvatores consistently and continually represented that the advice they gave to the Haydens was approved by, and came directly from, Yager and Wilson.

41. Between 1993 and 1996, all of the defendants, through oral and written materials, counseled the Haydens not to expend effort to build a retail customer base.

42. Rather, the defendants explained that, in order to earn "residual" income from Amway, the Haydens should purchase Amway products for personal consumption, and recruit other individuals to purchase Amway products for personal consumption. They reasoned that no one in Amway since Amway co-founders Rich DeVos and Jay Van Andel "has run the roads or built the business" and 3/4 of the Amway Rules and Regulations should be ignored or are not applicable to building a successful Amway business.

43. The DiSalvatores often encouraged, and promoted through others, their recruits to purchase Amway products in excess of their personal consumption needs in order to achieve new pin levels and deceive new and potential recruits into believing that the distributors had sold large volumes of Amway products and were being successful.

44. The DiSalvatores explained that retails sales "never stay done," meaning that if a distributor focused on retail sales, he would never be able to receive "residual income" but would be required to continually service and sell to his retail accounts.

45. The defendants thereafter counseled the Haydens that the Haydens could only ensure the receipt of "residual income," or continuing profit from their investments in Amway, by continually recruiting new Amway distributors and inducing those individuals to (a) purchase Amway products for personal consumption and (b) recruit others who would do the same.

46. The defendants claimed that the Haydens would only be successful in recruiting other distributors who would recruit other distributors to purchase Amway products by attending defendants, rallies, purchasing defendants' tools, and inducing their downline recruits and prospects to attend defendants' rallies and purchase defendants, tools.

47. The defendants represented that the rallies and products were essential to the Haydens' success because "the key to this business is the power of duplication." The defendants claimed that duplication could only be achieved if all of the individuals within the Yager organization received the same tools and attended all of the rallies, in short, 'you must follow the system", as they define it.

48. The Tools,defendants represented that they were affiliated with the Amway defendants in that:

A. the DiSalvatores represented that the advice they gave to the Haydens was approved by, and came directly from, representations made by Yager and Yager Enterprises and Wilson;
B. defendant DMT distributed to the Amway distributors within the DiSalvatore network literature that simultaneously promoted the purchase of tools, attendance at rallies, and the purchase of Amway products;
C. defendant DMT conducted promotions whereby Amway distributors could earn free tickets to rallies in return for purchasing Amway products and recruiting Amway distributors;
D. defendant DMT conducted a promotion whereby distributors could earn skybox tickets to a basketball game if they purchased Amway products. DMT represented that Amway made this opportunity possible;
E. defendant International Network Marketing Systems circulated literature which claimed that the tools "system" and Amway were integrated;
F. defendant Internet Services Corp. circulated a catalog of "tools" to Amway distributors which purported to sell material as to "how to go Diamond in two years." This material purports to provide direction specific to the Amway system;
G. all of the defendants, between 1993 and 1997, represented, both orally and through written materials, that purchase of "tools" and attendance and promotion of rallies organized by Yager, the Wilsons, and the DiSalvatores was "vital" to plaintiffs, success as Amway distributors or would "insure" plaintiffs' success as Amway distributors; and
H. Yager, by and through the Wilsons, DiSalvatores and other Amway distributors, strictly controlled the content, distribution and price of tools within the Yager Amway network.

49. The defendants represented that they were competent to advise the Haydens as to the most effective method to invest in Amway because they had achieved lavish lifestyles and annual six figure "residual incomes" solely by participating in the Amway system.

50. The defendants represented that they were advising the Haydens solely because the defendants, incomes were dependent upon the Hayden's success within the Amway system and because the defendants "loved" and "cared about" the plaintiffs.

51. The defendants made the aforesaid representations and omissions to induce plaintiffs to continue to invest in defendants' Amway distributorship and recruit others to invest in defendants, Amway distributorship and to induce plaintiffs to continue to purchase defendants' tools and rallies and to recruit others to do the same.

52. In reliance upon the defendants, representations, between 1993 and 1996, the Haydens attended defendants' rallies, purchased defendants' products, and recruited other individuals whom they induced to attend defendants' rallies and purchasedefendants, products.

53. The Haydens' reliance upon defendants' representations was justified in that the Haydens, did not know, nor did they have any reasonable means to discover, that:

A. defendants were not affiliated with Amway;
B. at least fifty percent (50%) of the defendants' income and represented lifestyles, etc. was derived from the sale of tools and rallies to the Haydens and other individuals, including the Haydens' recruits;
C. consequently, the defendants counseled the Haydens to purchase defendants' products and attend defendants, rallies and recruit other individuals to purchase tools and rallies in order to obtain profit from such sale;
D. defendants counseled the Haydens to focus on recruitment rather than retail customer sales for the purpose of ensuring an ever increasing market for defendants, tools and rallies without regard to the long term effects of such conduct upon plaintiffs' interest in Amway.

54. The Haydens had no reasonable means of knowing that defendants, conduct was in violation of the Amway Rules of Conduct as set forth herein in that the Haydens did not know that defendants were promoting non-Amway products and businesses and defendants concealed this fact from plaintiffs.

55. The Haydens had no reasonable means of knowing that defendants' conduct was in violation of the Amway Rules of Conduct as set forth herein in that defendants DiSalvatores represented that enforcement of the "10 customer rule" and "70% rule" was within the discretion of the upline distributor, that the DiSalvatores, did not enforce this rule, and that Amway did not require the DiSalvatores' to enforce this rule, citing they were the Diamonds and "they could do whatever they want".

56. The Haydens' reliance upon defendants' representations was further justified because the defendants' representations that their interests coincided with the Haydens in that the defendants' income was dependent upon the Haydens' income from Amway would have been true in the absence of the fact, unknown to the Haydens, and concealed by the defendants, that the defendants earned substantial income from the sale of non-Amway products and rallies to the Haydens and the Haydens' recruits.
 

CONCEALMENT OF THE TOOLS PROFITS - ALLEGATION AS TO THE TOOLS DEFENDANTS

57. In addition to representing that they were affiliated with Amway, between April 1993 and September 1994, the defendants conspired with each other and with other organizations within Amway who produce non-Amway products and rallies to intentionally conceal the existence and scope of the profit earned by defendants from the sale of non-Amway products and rallies.

58. The defendants further conspired with each other and with other organizations within Amway to maintain a monopoly and price control over defendants' products and rallies.

59. As evidence of, and in furtherance of this conspiracy, between April 1993 and the present, the DiSalvatores represented to the Haydens that:

A. Yager prohibited distributors within the DiSalvatores' network from purchasing motivational products from any other person or entity not affiliated with the Yager network;
B. Yager prohibited distributors within his Amway network from selling motivational products to any person or entity not affiliated with the Yager network;
C. Yager prohibited Amway distributors within his network from producing and/or selling and/or distributing any motivational products similar to defendants, products to any other person or entity within Amway, including the Yager organization, citing that "we were not allowed to compete with Dexter";
D. Yager prohibited Amway distributors within his Amway network from purchasing motivational products from any individual or entity at any price other than the price established by Yager;
E. Yager prohibited Amway distributors within his network from re-selling tools to any individual or entity at any price other than the price established by Yager, Wilson or DiSalvatore; and
F. Yager prohibited Amway distributors within his network from discussing his products or rallies with any other individual within Amway who was not within the Yager network. They also represented that it was against Amway Rules;

60. Between April 1994 and September 1994, the DiSalvatores represented that these prohibitions applied to the Haydens because they had not achieved the status of "Amway Direct Distributor" and that the Amway Rules of Conduct delegate sole responsibility and authority to Direct Distributors to train their downline network. They further enforced this by saying it was within Amway's Rules & Regulations.

61. The DiSalvatores threatened the Haydens that, if they refused to comply with Yager's alleged prohibitions, the Yager network would withdraw all support from the Haydens' Amway organization and destroy the Haydens, credibility with their recruits, citing "if it comes to a dispute between a Diamond and a Direct, the people will believe the Diamond".

62. Plaintiffs thereafter contacted other Amway distributors who were not affiliated with the Yager network who confirmed the representations of the DiSalvatores by refusing to sell motivational products to the Haydens because they were members of the Yager network and not working directly with "our Diamond Direct".
 

INVESTMENT IN THE TOOLS BUSINESS - ALLEGATION AS TO THE TOOLS DEFENDANTS

63. In June 1994, the DiSalvatores sought to induce the Haydens to purchase thousands of dollars worth of Amway products although the Haydens did not have retail sales orders for those products. The purchase of those products would qualify the Haydens as Amway Direct Distributors. In addition, unbeknownst to the Haydens, the purchase of the those products by the Haydens was necessary for the DiSalvatores to re-qualify as Amway Diamond Distributors and gain a significant monetary "Diamond Bonus".

64. An Amway Diamond Distributor earns a greater percentage profit from his investment in Amway.

65. In addition, Yager and Yager Tools permit Diamond Distributors to speak at Yager rallies for which they earn substantial profit. They are allowed to control their rallies and their prices.

66. In order to induce the Haydens to purchase the large volumes of Amway products, the DiSalvatores Represented to the Haydens that their purchase constituted an investment in the "tools business."

67. The DiSalvatores represented that, upon earning the status of Amway Direct Distributor, Yager would grant the Haydens an irrevocable interest in the "tools business."

68. The DiSalvatores explained that Yager pays each Direct Distributor within his Amway network a profit share of every tool sold to the Direct Distributor's downline network.

69. Thus, the DiSalvatores represented that investment in the "tools business" was an additional method to ensure "residual income" which would compensate the Haydens for the money with which they purchased Amway products.

70. In justifiable reliance upon the DiSalvatores' representations, between June 1994 and August 1994, the Haydens personally purchased thousands of dollars of Amway products.
 

EFFORTS TO PROMULGATE THE SECRET TOOLS BUSINESS AND PROFITS - ALLEGATIONS AS TO THE TOOLS DEFENDANTS

71. In September, 1994, following the Haydens' promotion to the status of Amway Direct Distributor, the DiSalvatores provide the Haydens with a chart indicating that the percentage return Yager paid to each Direct Distributor for the sale of motivational products and rallies varied each month in relation to the volume of Amway products the Direct Distributor purchased from Amway. Between January, 1994 and September, 1994 they purposely withheld requested information on profits in the tool business.

72. Thereafter, the Haydens began to realize that the income earned from investment in the tools business constituted a substantial portion of their upline's income.

73. Between September.1994 and August 1995, the Haydens sought to negotiate with the DiSalvatores to disclose to their downlines the scope of the profit earned from the tools business and to reduce the cost of the tools and rallies to their downlines.

74. However, during this time, the DiSalvatores represented that Yager prohibited Direct Distributors within his network from re-selling tools to any individual or entity at any price other than the price established by Yager, Wilson and DiSalvatore.

75. Moreover, the DiSalvatores represented that Yager prohibited Direct Distributors within his network from purchasing tools from any individual within Amway who was not affiliated with the Yager network. The DiSalvatores represented that the other Amway distributors had agreed with Yager to not sell motivational products to distributors within Yager's network and citing "that no one would sell us tools".

76. The DiSalvatores threatened to withdraw the support of Yager's Amway organization to plaintiffs; refuse to supply plaintiffs with tools or rallies; prevent plaintiffs from obtaining tools from any other individual or entity with the Amway organization;,and to otherwise injure plaintiffs' Amway distributorship if plaintiffs attempted to re-sell defendants' products at any price other than that established by Yager or disclosed the profits to anyone.

77. Thereafter, as of September 1995, the DiSalvatores refused to continue to pay the Haydens any profit from the sale of defendants, products and rally tickets to the Haydens' downlines.

78. Between 1994 and 1997, the Tools defendants sold tools and rally tickets directly to plaintiffs, downline distributors during rallies and failed to pay plaintiffs any profit from such sales.

79. On September 17, 1996, the DiSalvatores admitted that they had withheld the Haydens, profits from the sale of defendants, products and rallies in order to induce the Haydens to comply with Yager's prohibitions.
 

AMWAY KNOWLEDGE, RESPONSE AND PARTICIPATION - ALLEGATIONS AS TO AMWAY CORP., ADA, KRUER, AND POSTMA

80. Between 1993 and 1997 Amway represented that it would protect plaintiffs from coercive conduct such as alleged herein by enforcing its rules against every distributor.

81. At various times between September 1994 and December 1995, the Haydens attempted to contact Amway to discuss the DiSalvatores' and Yager network's violation of Amway Rules of Conduct. Amway refused to respond to the Haydens' requests and informed the Haydens that Amway would not participate in any conflict involving the sale of tools or rallies.

82. However, after the Haydens informed defendant Kruer that they intended to increase the price at which they re-sold Amway products to their downline recruits, Kruer agreed to conduct a meeting between the Haydens and the DiSalvatores to resolve their dispute.

83. Kruer also contacted the DiSalvatores and informed them of the Haydens intent to increase the price at which they re-sold Amway products to their downline recruits.

84. In March, 1996, Kruer and Postma, on behalf of Amway, met with the DiSalvatores and the Haydens.

85. The Haydens disclosed to Kruer and Postma the practices of the "Tools Defendants" as set forth in herein, and also indicated the fraud in Portugal and 70/30 violations throughout the network.

86. At the meeting, the Haydens only request was that they be permitted to reduce the price at which they resold tools to their downline distributors and disclose the price and profit earned by the Tools Defendants without being subject to retaliation. However, the DiSalvatores refused to agree to the Haydens I request stating "I am the Diamond and I can do what I want".

87. Thereafter, Postma suggested that the Haydens and DiSalvatores divide the Haydens, recruits into two groups, which Amway termed Plan "B". One group would continue to purchase motivational products and rallies from the DiSalvatores. The second group would continue to rely upon the Haydens as the source of motivational products and rallies.

88. The Haydens explained to Postma that Yager, through the DiSalvatores, was their only source of motivational products and rallies because no other Amway distributor would agree to sell motivational products to the Haydens.

89. In order to induce the Haydens to agree to the group split, Postma represented that he would later provide the Haydens with the name of ten other "Diamonds" within Amway who were not members of the Yager network who would be willing to supply the Haydens with motivational products which the Haydens could resell at any price they deemed appropriate. The Haydens were also told who not to buy them from.

90. Postma rejected the Haydens' suggestion that the parties disclose the source of the dispute between them and permit the Haydens' Amway recruits to choose whether to continue to purchase tools and rallies from the DiSalvatores or the Haydens.

91. Rather, Postma insisted that the facts underlying the dispute remain secret and that the Haydens and DiSalvatores jointly divide the Haydens recruits.

92. In order to further induce the Haydens to agree to the group split, Postma promised the Haydens that all aspects of the Haydens, distributorship with respect to Amway would remain unchanged. Postma represented that the Haydens would continue to receive all paperwork regarding the Amway activity of their recruits and would continue as the upline sponsor of all individuals whom they had recruited, and that the Amway part of the business would be unchanged.

93. Based upon Postma's representations, the Haydens agreed to the group split. However, the parties agreed that the split would not occur until Postma had provided the Haydens with an alternative source for motivational materials and rallies.

94. During all times relevant herein, Amway knew that the lifestyles presented to plaintiffs by both Amway and Amway distributors reflected income earned primarily or solely through the recruitment of individuals to act as Amway distributors, purchase Amway products for personal consumption and recruit other distributors to do the same as well as the investment in, creation and development of a distributorship of tools and rallies. Amway omitted to inform plaintiffs of this fact.

95. During all time relevant herein, Amway was aware that defendant Yager and other similar Amway distributors' integrity had been compromised by their motivation to sell non-amway products to distributors within the Amway system and to utilize their position and knowledge of the Amway system to promote and expand their non-Amway businesses and that Amway had taken no action to enforce its rules of conduct against Yager and Yager Enterprises.

96. During all times relevant herein, Amway knew that, in practice, retail sales represented a minimal portion of Amway sales and that, instead, the "Amway opportunity" was represented and practiced as an illegal pyramid scheme in which distributors were trained and induced to personally purchase large volumes of Amway products and to recruit others to personally purchase large volumes of Amway products in order to purchase status levels within the Amway system and earn profit in the Yager Tools scheme.

97. Amway further knew that defendants Yager and Yager Tools as well as other distributors within the Yager distributorship would act to prevent, injure and otherwise harm plaintiffs, Amway distributorship in the event that plaintiffs, failed or refused to participate in the Yager "system" which included coercing plaintiffs and plaintiffs' recruits to purchase large volumes of Amway products for personal consumption.

98. Nevertheless, on March 18, 1996, Postma wrote a letter to the Haydens in which he stated that "Amway finds no rules violations documented for Amway's review or decision." 99. As of May, 1996, the DiSalvatores refused to provide tools to the Haydens, or any of the Haydens, recruits who were not on the DiSalvatores, list in the group split.

100. Although the Haydens continued to request the names of individuals within Amway from whom they could obtain motivational materials, Postma failed to provide the Haydens with the name of any Diamond from whom they could obtain motivational materials.

101. The Haydens contacted other Amway distributors who were not members of the DiSalvatore network, all of whom refused to supply the Haydens with motivational products, because they were under the Yager network.

102. Thereafter, the DiSalvatores contacted individuals who were on the Haydens' list in the group split and solicited them to continue to purchase tools and rallies from the DiSalvatores.

103. On June 13, 1996 Kruer submitted a proposal for the Haydens to sign in which the Haydens agreed to split their Amway group into two halves, one of which would continue to purchase motivational products from the DiSalvatores. Amway sought to require the Haydens, within the proposal, to sign a general release of liability as to Amway and the DiSalvatores.

104. Kruer represented that, if the Haydens signed the Agreement, Amway would permit the Haydens to continue to receive Amway "group activity reports upon request" and that Amway would give the Haydens a list of Diamond Distributors from whom the Haydens could obtain motivational materials, and in fact, promised that Amway would participate in the negotiations.

105. The Haydens refused to sign the release of liability and, despite Postma's acts, recommendations and representations at the March meeting, and Kruer's written proposal and representations of June, 1996, Kruer thereafter claimed that Amway would not participate in any dispute regarding motivational products, including assisting the Haydens to find a new source of motivational products, claiming that the Haydens "must sign the contract first".
 

COOPERATION BETWEEN THE AMWAY DEFENDANTS AND THE TOOLS DEFENDANTS

106. On August 20, 1996, Kruer requested that the Haydens provide written evidence of Amway Rule violations if the Haydens continued to protest the conduct of the DiSalvatores.

107. On August 23, 1996, and August 27, 1996, the Haydens requested that Kruer provide them with clarification regarding the "70% rule" and the "10 customer rule." The Haydens informed Kruer that the DiSalvatores had expressly stated that Amway distributors need not comply with the "10 customer rule."

108. The Haydens requested that their distributors provide them with evidence of compliance with the "70% rule" and the "10 customer rule."

109. However, the DiSalvatores contacted the Haydens' Amway downlines and instructed them not to have any communications with the Haydens and not to provide the Haydens with any "group activity reports."

110. Despite the representation at the March 1996 meeting that the group split would have no effect upon the Haydens, Amway distributorship, the DiSalvatores, with Amway's knowledge, claimed that the Agreement prohibited the Haydens from contacting their Amway distributors in any way, even though no Agreement existed.

111. On August 30, 1996, Kruer claimed that the "10 customer rule" was not required by law and that Amway would not enforce this rule but delegated sole discretion for its enforcement to Direct Distributors.

112. Thereafter, both Amway and the DiSalvatores refused to provide the Haydens with group activity reports through which the Haydens could confirm that their recruits were in compliance with the "10 customer rule" and "70% rule."

113. On October 11, 1996, Kruer claimed that the DiSalvatores had "provided documentation to support their claim that promotion of retail sales is an important part of their business activities. The documentation includes a list of product promotion activities and copies of literature used to support these activities. Amway is satisfied that the DiSalvatores understand the importance of retail sales in building a successful Amway business and promote them accordingly."

114. Although Amway has specific documentation to verify whether the DiSalvatores in fact comply with the 10 customer and 70% rules, Amway did not rely upon, or allege the existence of, such documentation.

115. Amway also refused to provide the Haydens with "group activity reports" from which the Haydens could verify that the DiSalvatores complied with the 10 customer and 70% rules.

116. Amway continued to support the DiSalvatores refusal to provide information to either the Haydens or individuals within the Haydens' Amway organization regarding compliance with the 10 customer rule and the 70% rule.

117. In November 1996, Amway amended its rule that prohibits the sale of non-Amway products to Amway distributors to permit the Tools Defendants to freely market their products within Amway.

118. The DiSalvatores have contacted numerous distributors of plaintiffs, and induced them to cease all business relations with the Haydens, to remove the Haydens, name from their line of sponsorship, and to induce their recruits to do the same, including encouraging others to falsify documents in violation of SFC.
 

COUNT ONE [Section 12(l) of the Securities Act of 1933 as to all defendants with respect to the Amway System]

119. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 118, and further allege as follows against all defendants:

120. Investments in the Amway marketing scheme, as described in the Factual Allegations, constitute investment contract securities (hereinafter "Amway Securities") as described in Section 2 of the Securities Act of 1933, 15 U.S.C. § 77b, and for the purpose of the registration and anti-fraud provisions of the Act, in that, as a matter of economic reality, the different income positions in the Amway network marketing plan are investments in a common enterprise, with profits to be derived from the essential managerial efforts of the Amway defendants, and others in the pyramid and in that defendants represented that plaintiffs, financial success was dependent upon: A. defendant Amway's reputation and integrity communicated to the public and potential recruits through Amway's tradename, public relations, advertising, promotional literature, superior products, Rules of Conduct, and enforcement mechanisms; and B. defendant Yager, Yager Enterprises', Yager Tools, Wilsons', DiSalvatores', DNM and DMT training, products, assistance, and promotions;

121. Defendants represented that their aforesaid efforts made Amway a superior investment opportunity and that plaintiffs, businesses would not obtain profits in the absence of the aforesaid efforts by defendants.

122. Defendants, severally and in concert, directly and indirectly, have participated in a continuous course of conduct at all relevant times herein, by the use of mails, wires and other means and instruments of communication, transportation, and interstate commerce, and offered for sale, sold and were the proximate cause or substantial and necessary factors in the sale of the subject securities in violation of Section 5 of the Securities Act, 15 U.S.C. § 77(e), in that no registration statement was in effect or had been filed with respect to such securities, and the offer for sale and sale of such securities by defendants was not exempt from the registration requirements of Section 5 by Section 3 or 4 of the Securities Act, 15 U.S.C. 77(c) and 77(d).

123. Between 1994 and 1997, plaintiffs were and are being induced to pay thousands of dollars to purchase the subject Amway securities, as a direct and proximate result of defendants' violations of Section 5, and plaintiffs accordingly seek to recover the full amount of consideration paid for said securities, with interest thereon, upon tender of such securities, which tender is hereby made, or, in the alternative, seek damages sustained as a result of the sale of such securities pursuant to Section 12(l) of the Securities Act, 15 U.S.C. 771(l).

124. This claim under Section 12(l) is asserted with respect to damages sustained as a result of plaintiffs' purchase of Amway securities within one (1) year of filing this action.
 

COUNT TWO [Section 12(l) of the Securities Act of 1933 as to all defendants with respect to the Tools System]

125. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 124, and further allege as follows against all defendants:

126. Investments in the Tools marketing scheme, as described in the Factual Allegations, constitute investment contract securities (hereinafter "Tools Securities") as described in Section 2 of the Securities Act of 1933, 15 U.S.C. § 77b, and for the purpose of the registration and anti-fraud provisions of the Act, in that, as a matter of economic reality, the different income positions in the Tools network marketing plan are investments in a common enterprise, with profits to be derived from the essential managerial efforts of the Tools defendants, and others in the pyramid and in that defendants represented that plaintiffs, financial success was dependent upon: A. defendant Amway's reputation and integrity communicated to the public and potential recruits through Amway's tradename, public relations, advertising, promotional literature, superior products, Rules of Conduct, and enforcement mechanisms; and B. defendant Yager, Yager Enterprises', Yager Tools, Wilsons', DiSalvatores', DNM and DMT training, products, assistance, and promotions.

127. Defendants represented that their aforesaid efforts made both the Tools and Amway a superior investment opportunity and that plaintiffs, businesses would not obtain profits in the absence of the aforesaid efforts by defendants.

128. Defendants, severally and in concert, directly and indirectly, have participated in a continuous course of conduct at all relevant times herein, by the use of mails, wires and other means and instruments of communication, transportation, and interstate commerce, and offered for sale, sold and were the proximate cause or substantial and necessary factors in the sale of the subject securities in violation of Section 5 of the Securities Act, 15 U.S.C. § 77(e), in that no registration statement was in effect or had been filed with respect to such securities, and the offer for sale and sale of such securities by defendants was not exempt from the registration requirements of Section 5 by Section 3 or 4 of the Securities Act, 15 U.S.C. 77(c) and 77(d).

129. Between June 1994 and June 1996, plaintiffs were induced to pay thousands of dollars to purchase the subject Tools securities, as a direct and proximate result of defendants' violations of Section 5, and plaintiffs accordingly seek to recover the full amount of consideration paid for said securities, with interest thereon, upon tender of such securities, which tender is hereby made, or, in the alternative, seek damages sustained as a result of the sale of such securities pursuant to Section 12(l) of the Securities Act, 15 U.S.C. 771(l).

130. This claim under Section 12(l) is asserted with respect to damages sustained as a result of plaintiffs, purchase of Amway securities within one (1) year of filing this action.
 

COUNT THREE [Section 12(2) of the Securities Act of 1933 as to all defendants with respect to Amway Securities]

131. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 130, and further allege as follows against all defendants:

132. Defendants severally and in concert, directly and indirectly, participated in a continuous course of conduct, throughout all times relevant herein, by use of the mails, wires, and other means and instruments of communication and transportation and interstate commerce, and offered for sale, sold, and were the proximate cause and substantial and necessary factors in the sale of the subject Amway securities to plaintiffs by means of written promotional materials, oral communications, and violations of Section 12(2) of the Securities Act, 15 U.S.C. § 77(l)(2).

133. In the course of their offer for sale and sale of said securities to plaintiffs, defendants have made untrue statements of material fact and omitted to state material facts necessary in order to make the statements, in light of the circumstances under which they were made, not misleading, at the time they offered for sale and sold said securities to plaintiffs.

134. Each of the defendants at various times have made or assisted the other defendants in making the untrue statements and omissions of material fact enumerated above in connection with the offer and sale of securities to plaintiff. As a result of the material false representations and omissions of said defendants, plaintiffs have been induced to purchase the subject securities.

135. Plaintiffs have relied on the untrue statements of material fact above, made by defendants in connection with the offer and sale of said securities to plaintiffs.

136. By virtue of the defendants' actions, the plaintiffs have suffered loses, costs and damages including but not limited to their investment in Amway products, their investment in motivational products and rallies, severe emotional trauma, and injury to their reputations.

137. Pursuant to 15 U.S.C. § 771 and 770, plaintiffs are entitled to recover the consideration paid to defendants with interest.

138. Plaintiffs claims are within the applicable statute of limitations as set forth in 15 U.S.C. § 77m in that this action is brought within one year of plaintiffs, discovery of the defendants, misrepresentations and omissions and defendants, prevented plaintiffs' earlier discovery by the use of fraud.

139. Plaintiffs claims are further within the applicable statute of limitations as set forth in 15 U.S.C. § 77m in that the investment contracts alleged herein were ongoing and were entered into within three years of this action, between 1994 and 1997.
 

COUNT FOUR [Section 12(2) of the Securities Act of 1933 as to all defendants with respect to Tools Securities]

140. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 139, and further allege as follows against all defendants:

141. Defendants severally and in concert, directly and indirectly, participated in a continuous course of conduct, throughout all times relevant herein, by use of the mails, wires, and other means and instruments of communication and transportation and interstate commerce, and offered for sale, sold, and were the proximate cause and substantial and necessary factors in the sale of the subject Tools securities to plaintiffs by means of written promotional materials, oral communications, and violations of Section 12(2) of the Securities Act, 15 U.S.C. 77(l)(2).

142. In the course of their offer for sale and sale of said securities to plaintiffs, defendants have made untrue statements of material fact and omitted to state material facts necessary in order to make the statements, in light of the circumstances under which they were made, not misleading, at the time they offered for sale and sold said securities to plaintiffs.

143. Each of the defendants at various times have made or assisted the other defendants in making the untrue statements and omissions of material fact enumerated above in connection with the offer and sale of securities to plaintiff. As a result of the material false representations and omissions of said defendants, plaintiffs have been induced to purchase the subject securities.

144. Plaintiffs have relied on the untrue statements of material fact above made by defendants in connection with the offer and sale of said securities to plaintiffs.

145. By virtue of the defendants, actions, the plaintiffs have suffered loses, costs and damages including but not limited to their investment in Amway products, their investment in motivational products and rallies, severe emotional trauma, and injury to their reputations.

146. Pursuant to 15 U.S.C. §§ 771 and 77o, plaintiffs are entitled to recover the consideration paid to defendants with interest.

147. Plaintiffs claims are within the applicable statute of limitations as set forth in 15 U.S.C. S 77m in that this action is brought within one year of plaintiffs, discovery of the defendants, misrepresentations and omissions and defendants' prevented plaintiffs' earlier discovery by the use of fraud.

148. Plaintiffs claims are further within the applicable statute of limitations as set forth in 15 U.S.C. § 77m in that the investment contracts alleged herein were ongoing and were entered into within three years of this action, between 1994 and 1997.
 

COUNT FIVE [Section 10(b) of the Securities Exchange Act of 1934, and Rule lOb-5 Thereunder as to all defendants with respect to Amway Securities]

149. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 148, and further allege as follows against all defendants:

150. The Amway Securities, as described in the Factual Allegations section of this Complaint, are investment contract securities within the meaning of, and regulated by, the Securities Exchange Act of 1934, 15 U.S.C. § 78(c).

151. Defendants, severally and in concert, directly and indirectly, participated, aided and abetted one another, and conspired with one another to participate and to aid and abet one another in a continuous course of conduct in connection with the purchase and sale of unregistered securities, in violation of Section 10(b) of the Exchange Act, 15 U.S.C. § 78(j), and in contravention of Rule l0b-5 promulgated thereunder, 17 C.F.R. 240.10b-5, at all relevant times herein, and, by use of the mails and other means and instruments of transportation and interstate commerce: a. employed manipulative and deceptive devices, contrivances, schemes and artifices to defraud plaintiffs; b. made untrue statements of material fact and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made not misleading; and C. employed acts, practices, and a course of business which operated or would operate as a fraud or deceit upon the plaintiffs.

152. The purchases of such securities by plaintiffs has been made in reliance upon the manipulative and deceptive devices, contrivances, schemes and artifices employed by defendants, and in reliance upon the untrue statements and omissions of material facts made by defendants in connection with the offer and sale of said securities to plaintiffs.

153. Defendants knew and know that the devices, contrivances, schemes and artifices were fraudulent at the time they employed them, or employed them in reckless disregard thereof, and employed them for the purpose and with the intent to deceive and defraud and oppress plaintiffs in reckless disregard of plaintiffs, interests and the truth.

154. Defendants also knew and know that the untrue statements and omissions of material fact that they made were false and misleading at the time they were made, or were made with reckless disregard thereof, and made them for the purpose of, and with the intent to, deceive, defraud and oppress plaintiffs or in reckless disregard for plaintiffs' interests and the truth.

155. Defendants have conspired with each other to market securities which were essentially worthless, and fraudulently promoted as legitimate, sham investments which were not entitled to be placed on the market.

156. By virtue of the defendants' actions, the plaintiffs have suffered loses, costs and damages including but not limited to their investment in Amway products, their investment in motivational products and rallies, severe emotional trauma, and injury to their reputations.

157. Pursuant to 15 U.S.C. § 78j(b), plaintiffs are entitled to recover actual and consequential damages in addition to disgorgement of defendants' profits earned as a result of defrauding plaintiffs.
 

COUNT SIX [Section 10(b) of the Securities Exchange Act of 1934, and Rule lOb-5 Thereunder as to all defendants with respect to Tools Securities]

158. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 157, and further allege as follows against all defendants:

159. The Tools Securities, as described in the Factual Allegations section.-of this Complaint, are investment contract securities within the meaning of, and regulated by, the Securities Exchange Act of 1934, 15 U.S.C. S 78(c).

160. Defendants, severally and in concert, directly and indirectly, participated, aided and abetted one another, and conspired with one another to participate and to aid and abet one another in a continuous course of conduct in connection with the purchase and sale of unregistered securities, in violation of Section 10(b) of the Exchange Act, 15 U.S.C. § 78(j), and in contravention of Rule lOb-5 promulgated thereunder, 17 C.F.R. 240.10b-5, at all relevant times herein, and, by use of the mails and other means and instruments of transportation and interstate commerce: a. employed manipulative and deceptive devices, contrivances, schemes and artifices to defraud plaintiffs; b. made untrue statements of material fact and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made not misleading; and c. employed acts, practices, and a course of business which operated or would operate as a fraud or deceit upon the plaintiffs.

161. The purchases of such securities by plaintiffs has been made in reliance upon the manipulative and deceptive devices, contrivances, schemes and artifices employed by defendants, and in reliance upon the untrue statements and omissions of material facts made by defendants in connection with the offer and sale of said securities to plaintiffs.

162. Defendants knew and know that the devices, contrivances, schemes and artifices were fraudulent at the time they employed them, or employed them in reckless disregard thereof, and employed them for the purpose and with the intent to deceive and defraud and oppress plaintiffs in reckless disregard of plaintiffs, interests and the truth.

163. Defendants also knew and know that the untrue statements and omissions of material fact that they made were false and misleading at the time they were made, or were made with reckless disregard thereof, and made them for the purpose of, and with the intent to, deceive, defraud and oppress plaintiffs or in reckless disregard for plaintiffs, interests and the truth.

164. Defendants have conspired with each other to market securities which were essentially worthless, and fraudulently promoted as legitimate, sham investments which were not entitled to be placed on the market.

165. By virtue of the defendants, actions, the plaintiffs have suffered loses, costs and damages including but not limited to their investment in Amway products, their investment in motivational products and rallies, severe emotional trauma, and injury to their reputations.

166. Pursuant to 15 U.S.C. § 78j(b), plaintiffs are entitled to recover actual and consequential damages in addition to disgorgement of defendants, profits earned as a result of defrauding plaintiffs.
 

COUNT SEVEN [Civil RICO, 18 U.S.C. S 1962(c) as to the Amway defendants with respect to the Amway System]

167. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 166, and further allege as follows against the Amway defendants:

168. At all material times, defendants were associated with an enterprise engaged in, and whose activities affected, interstate commerce.

169. Defendants have conducted, and participate directly and indirectly in the conduct of and the affairs of Amway through a pattern of racketeering activity, in violation of 18 U.S.C. §§ 1962(c) and (d). This pattern of racketeering activity consisted of repeated acts of mail fraud, violations of 18 U.S.C. § 1341, repeated acts of wire fraud, violations of 18 U.S.C. § 1343, and repeated acts of fraud in connection with the purchase and sale of the subject securities. The mailings included but were not limited to, the mailings of letters, materials, brochures, and checks to plaintiffs and other Amway distributors, and to the other defendants. The use of the wires included, but was not limited to, the use of Amway AMVOX messaging system to promote and carry out the Amway scheme.

170. Defendants have participated in the conduct of the Amway System and conspired with each other by, among other things, offering the investments to the public without registration or qualification, making misrepresentations and omissions of material fact through standardized promotional materials and scripted sales presentations, concealing the fact that Amway's profits are derived from the recruitment of new members rather than through retail sales, concealing the fact that Amway distributors, profits are derived from the recruitment of new members to purchase tools and rallies, and further promoting the sale of Amway Securities through the techniques described herein.

171. These acts all occurred after the enactment of RICO, and within ten years of one another.

172. Each of these acts had similar purposes, involved the same or similarly-situated participants and methods of commission, and had similar results impacting similar victims. These acts thus constituted a pattern of racketeering activity within the meaning of RICO.

173. Through said pattern of racketeering activity, defendants, and each of them, conducted or participated, directly or indirectly, in the conduct of the Amway enterprises affairs.

174. The Amway defendants participated in the operation of the Amway enterprise. The individual defendants, through their positions with Amway and as high ranking participants in the marketing pyramid, exercised direction and control over the affairs of the enterprise. Kruer and Postma also directly participated in the operation of Amway Corporation. Defendants Yager and Wilson also served as a member of the ADA. In that capacity, he attended board meetings and was involved in decisions regarding Amway's business operations and management. Defendant ADA is involved in decisions regarding Amway's business operations and management. The individual defendants further participated in the conduct of the affairs of Amway System through active participation and influence over decisions made by the Amway defendants concerning the conduct and operation of the Amway Enterprise.

175. As a direct and proximate result of defendants' RICO- violative activities, plaintiffs have suffered substantial loss and damage to their business and property. This loss entitles them to recover treble damages,s against defendants, and their costs of suit, including reasonable attorneys' fees pursuant to 18 U.S.C. § 1964(c).
 

COUNT EIGHT [Civil RICO, 18 U.S.C. 5 1962(c) as to the Tools Defendants with respect to the Tools System]

176. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 175, and further allege as follows against the Tools defendants:

177. At all material times, defendants were associated with an enterprise engaged in, and whose activities affected interstate commerce.

178. Defendants have conducted, and participate directly and indirectly in the conduct of and the affairs of the Tools marketing scheme through a pattern of racketeering activity, in violation of 18 U.S.C. §§ 1962(c) and (d). This pattern of racketeering activity consisted of repeated acts of mail fraud, violative of 18 U.S.C. § 1341, repeated acts of wire fraud, violative of 18 U.S.C. § 1343, and repeated acts of fraud in connection with the purchase and sale of the subject securities. The mailings included but were not limited to, the mailings of letters, materials, brochures, and checks to plaintiffs and other Amway distributors, and to the other defendants. The use of the wires included, but was not limited to, the use of Amway AMVOX massaging system to promote and carry out the tools scheme.

179. Defendants have participated in the conduct of the Tools System and conspired with each other by, among other things, offering the investments to the public without registration or qualification, making misrepresentations and omissions of material fact through standardized promotional materials and scripted sales presentations, concealing the fact that the individual defendants, profits are derived from the recruitment of new members rather than through retail sales of Amway products, concealing the fact that the individual defendants, profits are derived from the recruitment of new members to purchase tools and rallies, and further promoting the sale of Tools Securities through the techniques described herein.

180. These acts all occurred after the enactment of RICO, and within ten years of one another.

181. Each of these acts had similar purposes, involved the same or similarly situated participants and methods of commission, and had similar results impacting similar victims. These acts thus constituted a pattern of racketeering activity within the meaning of RICO.

182. Through said pattern of racketeering activity, defendants, and each of them, conducted or participated, directly or indirectly, in the conduct of the Tools enterprises affairs.

183. The Tools defendants participated in the operation of the Tools enterprise. The individual defendants, through their positions with the Tools Enterprise and as high ranking participants in the marketing pyramid, exercised direction and control over the affairs of the enterprise. Yager, Wilsons and DiSalvatores also directly participated in the operation of the Tools enterprise and were involved in decisions regarding Tools business operations and management. The individual defendants further participated in the conduct of the affairs of Tools System through active participation and influence over decisions made by the Tools defendants concerning the conduct and operation of the Tools Enterprise.

184. As a direct and proximate result of defendants' RICO- violative activities, plaintiffs have suffered substantial loss and damage to their business and property. This loss entitles them to recover treble damages against defendants, and their costs of suit, including reasonable attorneys' fees pursuant to 18 U.S.C. § 1964 (c).
 

COUNT NINE [Civil RICO, 18 U.S.C. S 1962(d) as to all individual defendants]

185. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 184, and further allege as follows against the individual defendants:

186. In violation of 18 U.S.C. § 1962(d), the individual Amway defendants, and the individual Tools defendants, and each of them, conspired to conduct, and to participate in the conduct of, and the affairs of each of their aforesaid enterprises and conducted and participated directly and indirectly, in the conduct of the affairs of these enterprises through a pattern of racketeering activity specifically defined as constituting repeated acts of mail fraud, violative of 18 U.S.C. § 1341, repeated acts of wire fraud, violative of 18 U.S.C. § 1343, and repeated acts of fraud in connection with violations of the federal securities laws, which breaches also constitute mail and wire fraud, violative of 18 U.S.C. §§ 1341 and 1343.

187. At all relevant times, the Tools defendants and the Amway defendants knowingly agreed and conspired with each other to conduct or participate in the conduct of the affairs of their own enterprises and each others, enterprises and to commit the predicate acts set forth herein with knowledge that such acts were in furtherance of the violative conduct of each enterprise, and the scheme to engage in unlawful securities transactions.

188. The defendants agreement to participate in a conspiracy to violate 18 U.S.C. § 1962(c) may be ascertained by reference to their conduct as set forth herein including but not limited to the fact that:

a. the Tools Defendants, who are not affiliated with Amway as distributors or in any other capacity promote Amway products within their literature as set forth more fully in paragraph 58(A) through (H) above;
b. Amway, in turn, failed and refused to enforce its Rules of Conduct against these Tools Defendants, by and through Yager, Wilsons, and DiSalvatores, and violated its own rules in order to facilitate the conduct of the Tools Defendants as set forth in paragraphs 91 through 126 above. Amway expressly refused to enforce its rules pertaining to any non-Amway products.
c. defendants' conspiracy is further evidenced by Amway's refusal to assist the plaintiffs to obtain group activity reports to substantiate their allegations that the DiSalvatores, Wilsons, and Yager violated the 10 customer and 70% rule.
d. defendants, conspiracy is further evidenced by Amway's refusal to provide plaintiffs with the names of other Amway Diamond Distributors from whom plaintiffs could purchase alternative motivational materials;
e. Amway further facilitates the conduct of the Tools Defendants by delegating authority to enforce the Rules of Conduct with regard to non-Amway products to the ADA. Amway is aware that the members of the ADA are those with primary interest in tools enterprises.
f. defendants, conspiracy is further evidenced by Amway's and the ADA's representation that plaintiffs should rely on defendant uplines to guide them in developing their Amway business and that plaintiffs' uplines would act in plaintiffs' best interest although Amway and the ADA were aware that plaintiffs, uplines were making the misrepresentations alleged in herein to plaintiffs, detriment.

189. Defendants' conspiracy is further evidenced by the mutual benefit obtained by defendants from the tools business within the Amway system including but not limited to: a. utilizing the income earned from the tools business to deceive prospective distributors of Amway products into believing that said income was earned from a legitimate Amway distributorship and thereby inducing potential Amway distributors, including plaintiffs, to invest in the Amway system; b. utilizing the potential income earned from the tools business to induce Amway distributors to purchase large volumes of Amway products in order to gain an interest in the tools business and to increase their profit percentage within the tools business. c. in addition, the defendants agreed to act in concert for their mutual benefit in that the financial success and credibility of the Yager motivational business is dependent upon its position within the Amway hierarchy.

190. Plaintiffs have been injured in their business or property by reason of the conspiracy to violate 18 U.S.C. § 1964(c), in that plaintiffs have lost their investments and incurred additional business related losses.

191. Pursuant to 18 U.S.C. § 1964(c), plaintiffs are entitled to recover treble damage from defendants, their cost of suit, and reasonable attorney fees.
 

COUNT TEN [Conspiracy In Restraint of Trade, 15 U.S.C. § 11, as to the all defendants with regard to the Amway Products]

192. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 191, and further allege as follows against the defendants:

193. The Amway defendants are manufacturers and distributors of Amway products and market the products in interstate commerce. Plaintiffs have sold Amway products to individual distributors in the state of Connecticut.

194. The Tools defendants are manufacturers and distributors of motivational products and market the products in interstate commerce.

195. Plaintiffs and other distributors, similarly situated have a common interest in maintaining a free and unhampered market for the purchase of Amway products from distributors and the conduct of the trade and business of plaintiff and other distributors in Amway products wholly depends on their ability to purchase Amway products for resale at a fair market price.

196. Plaintiffs and other distributors, similarly situated have,a common interest in maintaining a free and unhampered market for the purchase of Amway products from distributors and the conduct of the trade and business of plaintiff and other distributors in Amway products depends on the support and assistance of their upline Amway distributors.

197. Plaintiffs and other distributors, similarly situated have a common interest in maintaining a free and unhampered market for the purchase of Amway products from distributors and the conduct of the trade and business of plaintiff and other distributors in Amway products depends on their ability to obtain group activity reports from Amway.

198. Plaintiffs and other distributors, similarly situated have a common interest in maintaining a free and unhampered market for the purchase of motivational products from distributors and the conduct of the trade and business of plaintiff and other distributors in Amway products depends on their ability to purchase motivational products for resale at a fair market price.

199. On or about February 1996, agents of Amway contacted the DiSalvatores and informed them that the plaintiffs intended to increase the price at which they re-sold Amway products within their distribution chain.

200. On or about March 1996, the defendants Kruer and Postma, as agents of Amway, met with the plaintiffs and agreed to continue to provide plaintiffs with group activity reports and to provide plaintiffs with name of Amway Diamond distributors from whom they could obtain motivational materials in order to induce plaintiffs to continue to re-sell Amway products at Amway's suggested distributor price.

201. Thereafter, the DiSalvatores refused to provide the plaintiffs with motivational products; Amway refused to provide the plaintiffs with the names of Diamond Distributors from whom they could purchase motivational products; the DiSalvatores withdrew their support from plaintiffs and encouraged and induced plaintiffs, distributors to cease all business with the plaintiffs; Amway failed and refused to protect the plaintiffs

202. The conduct of defendants Postma, Kruer and Amway as alleged above was undertaken by defendants as part of a conspiracy to fix, control, raise and stabilize arbitrarily, unlawfully, unreasonably and knowingly the price of Amway products in interstate commerce, to restrain trade in interstate commerce for Amway products, and to preclude plaintiffs and other dealers marketing and distributing Amway products from dealing in interstate commerce except on terms controlled by defendants in violation of 15 U.S.C. § 1.

203. From and after March, 1996, defendants, in pursuance of their conspiracy as alleged above, coerced plaintiffs to re-sell defendants, products at a fixed price by withholding from plaintiffs the names of other Diamond Distributors from whom plaintiffs could obtain motivational materials; withholding group activity reports; threatening to withdraw, and withdrawing, the from said action and take action against the DiSalvatores for violating the Amway Rules of Conduct; and Amway failed and refused to provide plaintiffs with evidence necessary to establish violations of Amway Rules of Conduct by the DiSalvatores.

202. The conduct of defendants Postma, Kruer and Amway as alleged above was undertaken by defendants as part of a conspiracy to fix, control, raise and stabilize arbitrarily, unlawfully, unreasonably and knowingly the price of Amway products in interstate commerce, to restrain trade in interstate commerce for Amway products, and to preclude plaintiffs and other dealers marketing and distributing Amway products from dealing in interstate commerce except on terms controlled by defendants in violation of 15 U.S.C. § 1.

203. From and after March, 1996, defendants, in pursuance of their conspiracy as alleged above, coerced plaintiffs to re-sell defendants, products at a fixed price by withholding from plaintiffs the names of other Diamond Distributors from whom plaintiffs could obtain motivational materials; withholding group activity reports; threatening to withdraw, and withdrawing, the support of plaintiffs, upline distributors; and otherwise acting to decrease or eliminate plaintiffs' distributorship.

204. As a result of defendants, acts as alleged above, plaintiffs sustained injury to their business and are entitled under 15 U.S.C. § 15 to treble damages from defendants.
 

COUNT ELEVEN [15 U.S.C. § 1, as to all defendants with regard to tools].

205. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 204, and further allege as follows against the defendants:

206. The Amway defendants are manufacturers and distributors of Amway products and market the products in interstate commerce. Plaintiffs have sold Amway products to individual distributors in the state of Connecticut.

207. The Tools defendants are manufacturers and distributors of motivational products and market the products in interstate commerce.

208. Plaintiffs and other distributors, similarly situated have a common interest in maintaining a free and unhampered market for the purchase of tools and the conduct of the trade an business of plaintiff and other distributors in Amway depends on their ability to purchase tools for resale at a fair market price.

209. Plaintiffs and other distributors, similarly situated have a common interest in maintaining a free and unhampered market for the purchase of tools and the conduct of the trade and business of plaintiff and other distributors in Amway products depends on the support and assistance of their upline Amway distributors.

210. Plaintiffs and other distributors, similarly situated have a common interest in maintaining a free and unhampered market for the purchase of tools and the conduct of the trade and business of plaintiff and other distributors in Amway products depends on their ability to obtain group activity reports.

211. Plaintiffs and other distributors, similarly situated have a common interest in maintaining a free and unhampered market for the purchase of motivational products from distributors and the conduct of the trade and business of plaintiff and other distributors in motivational products depends on their ability to purchase motivational products for resale at a fair market price.

212. The Tools defendants, in agreement with other distributors of motivational products within the Amway system agreed and conspired to prohibit the sale of their respective motivational products to distributors who were not within their Amway downline network.

213. Thereafter, the Tools defendants refused to provide the plaintiffs with motivational products; Amway refused to provide the plaintiffs with the names of Diamond Distributors from whom they could purchase motivational products; the DiSalvatores withdrew their support from plaintiffs and encouraged and induced plaintiffs' distributors to cease all business with the plaintiffs; Amway failed and refused to protect the plaintiffs from said action and take action against the DiSalvatores for violating the Amway Rules of Conduct; and Amway failed and refused to provide plaintiffs with evidence necessary to establish violations of Amway Rules of Conduct by the DiSalvatores.

214. The conduct of the Tools defendants as alleged above was undertaken by defendants as part of a conspiracy to fix, control, raise and stabilize arbitrarily, unlawfully, unreasonably and knowingly the price of motivational products in interstate commerce to restrain trade in interstate commerce for motivational products, and to preclude plaintiffs and other dealers marketing and distributing motivational products from dealing in interstate commerce except on terms controlled by defendants in violation of 15 U.S.C. § 1.

215. The conduct of the Amway defendants as alleged above was undertaken by defendants as part of a conspiracy to fix, control, raise and stabilize arbitrarily, unlawfully, unreasonably and knowingly the price of motivational products in interstate commerce, to restrain trade in interstate commerce for motivational products, and to preclude plaintiffs and other dealers marketing and distributing motivational products from dealing in interstate commerce except on terms controlled by the Tools defendants in violation of 15 U.S.C. § 1.

216. At all relevant times herein, defendants, in pursuance of their conspiracy as alleged above, coerced plaintiffs to purchase and re-sell defendants, products at a fixed price by, among other things, withholding from plaintiffs the names of other Diamond Distributors from whom plaintiffs could obtain motivational materials; withholding group activity reports; threatening to withdraw, and withdrawing, the support of plaintiffs, upline distributors; and otherwise acting to decrease or eliminate plaintiffs, distributorship.

217. As a result of defendants' acts as alleged above, plaintiffs sustained injury to their business and are entitled under 15 U.S.C. § 15 to treble damages from defendants.
 

COUNT TWELVE [15 U.S.C. § 2, as to all defendants]

218. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 217, and further allege as follows against all defendants:

219. The defendants conditioned the sale and rebate price of motivational products to plaintiffs upon the plaintiffs, purchase of Amway products from defendants as set forth herein.

220. The defendants conditioned the sale and rebate price of motivational products to plaintiffs upon plaintiffs, purchase of motivational products solely from the Tools defendants as set forth herein.

221. The Amway defendants conditioned their support of plaintiffs, Amway distributorship upon plaintiffs, purchase of motivational products solely from the Tools defendants and plaintiffs, resale of motivational products and Amway products at the prices established by defendants as set forth herein.

222. The conduct of the defendants as alleged above was undertaken by defendants to tie, fix, control, raise and stabilize arbitrarily, unlawfully, unreasonably and knowingly the price of Amway and motivational products in interstate commerce, to restrain trade in interstate commerce for Amway and motivational products, and to preclude plaintiffs and other dealers marketing and distributing Amway and motivational products from dealing in interstate commerce except on terms controlled by the defendants in violation of 15 U.S.C. § 14.

223. The actions of the defendants had and have the effect of substantially lessening competition and creating a monopoly in that Amway and Tools distributors, including plaintiffs were and are unable to conduct business except on the arbitrary, unlawful, and unreasonable terms dictated by defendants.

224. As a result of defendants, monopoly or attempted monopoly or conspiracy to monopolize the market for Amway distributorship, Tools distributorship and motivational products, plaintiffs were injured in their businesses and are entitled pursuant to Title 15 United States Code § 15 to treble damages from defendants.
 

COUNT THIRTEEN [Violation Connecticut Business Opportunity Investment Act as to all defendants with respect to Amway System]

225. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 224, and further allege as follows against all defendants:

226. The actions of Defendants alleged above are in violation C.G.S. 36b-60 et seq. in that Defendants sold plaintiffs business opportunities in Amway for value.

227. Defendants represented that plaintiffs would earn income from these businesses and that defendants would provide a sales program or marketing program for plaintiffs.

228. Defendants have failed to provide plaintiffs with the information required pursuant to C.G.S. § 36b-63 and have failed to register pursuant to C.G.S. 5 36b-62.

229. By virtue of the defendants' actions, the plaintiffs have suffered loses, costs and damages including but not limited to their investment in Amway products, their investment in motivational products and rallies, and severe emotional trauma.

230. Pursuant to C.G.S. § 36b-29(a)(1),(2), (b)(1), and (c), plaintiffs are entitled to recover the consideration paid to defendants, together with interest, costs and reasonable attorney's fees.

231. Plaintiffs claims are within the applicable statute of limitations as set forth in C.G.S. § 36b-29(f) in that this action is brought within one year of plaintiffs, discovery of the defendants, misrepresentations and omissions and defendants' prevented plaintiffs, earlier discovery by the use of fraud..

232. Plaintiffs claims are further within the applicable statute of limitations as set forth in C.G.S. § 36b-29(f) in that the investment contracts alleged herein were ongoing and were entered into within three years of this action, between 1994 and 1997.
 

COUNT FOURTEEN [Violation Connecticut Business Opportunity Investment Act]

233. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 232, and further allege as follows against all defendants:

234. The actions of Defendants alleged above are in violation C.G.S. S 36b-60 et seq. in that Defendants sold plaintiffs business opportunities in Yager, Yager Tools, Wilsons and DiSalvatores for value.

235. Defendants represented the plaintiffs would earn income from these businesses and that defendants would provide a sales program or marketing program for plaintiffs.

236. Defendants have failed to provide plaintiffs with the information required pursuant to C.G.S. § 36b-63 and have failed to register pursuant to C.G.S. § 36b-62.

237. By virtue of the Defendants actions, the plaintiffs have suffered loses, costs and damages including but not limited to their investment in Amway products, their investment in motivational products and rallies, and severe emotional trauma.

238. Pursuant to C.G.S. § 36b-29(a)(1),(2), (b)(1), and (c), plaintiffs are entitled to recover the consideration paid to defendants, together with interest, costs and reasonable attorney's fees.

239. Plaintiffs claims are within the applicable statute of limitations as set forth in C.G.S. § 36b-29(f) in that this action is brought within one year of plaintiffs, discovery of the defendants, misrepresentations and omissions and defendants' prevented plaintiffs, earlier discovery by the use of fraud.

240. Plaintiffs claims are further within the applicable statute of limitations as set forth in C.G.S. § 36b-29(f) in that the investment contracts alleged herein were ongoing and were entered into within three years of this action, between 1994 and 1997.
 

COUNT FIFTEEN [Common Law Fraud and Misrepresentation as to all defendants]

241. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 240, and further allege as follows against all defendants:

242. The Amway defendants made intentional misrepresentations and omissions as set forth herein.

243. The Tools defendants made intentional misrepresentations and omissions as set forth herein.

244. All of the defendants made the foregoing misrepresentations and omissions for the purpose of inducing plaintiffs to invest money, time and effort and recruit other individuals who would invest money, time and effort into defendants, respective enterprises.

245. In reliance upon these misrepresentations and omissions plaintiffs invested money, time and effort and recruited other individuals who would invest money, time and effort into defendants, respective enterprises as set forth herein.

246. Plaintiffs reliance upon defendants representations wa justified as set forth herein.

247. By virtue of the defendants actions, the plaintiffs have suffered loses, costs and damages including but not limited to their investment in Amway products, their investment in motivational products and rallies, and severe emotional trauma.
 

COUNT SIXTEEN [Breach of Contract - as to Amway, Kruer, Postma, ADA]

248. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 247, and further allege as follows against the defendants:

249. Plaintiffs entered a distributorship contract with Amway the terms of which included a commitment by Amway and the ADA to enforce its own rules.

250. Amway and the ADA breached this contract by failing and refusing to enforce the Rules of Conduct as set forth herein.

251. Although plaintiffs performed all of their obligations pursuant to their contract with Amway, Amway failed to perform its obligation by refusing to enforce the above mentioned rules although it had notice of their violation.

252. By virtue of the Defendants actions, the plaintiffs have suffered loses, costs and damages including but not limited to their investment in Amway products, their investment in motivational products and rallies, and severe emotional trauma.
 

COUNT SEVENTEEN [Breach of Contract - Third Party Beneficiary - as to Yager, Yager Enterprises, Wilsons, DiSalvatores]

253. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 252, and further allege as follows against defendants:

254. Defendants entered distributorship contracts the terms of which were governed by the Amway Rules of Conduct and in which they promised to abide by those rules.

255. Plaintiffs were the express third party beneficiary of Rules of Conduct set forth herein.

256. Plaintiffs' third party beneficiary status of these terms of defendants' contract is expressly stated by Amway within the contract.

257. Defendants breached the terms of the contract as set forth herein.

258. By virtue of the Defendants actions, the plaintiffs have suffered loses, costs and damages including but not limited to their investment in Amway products, their investment in motivational products and rallies, lost income and severe emotional trauma.
 

COUNT EIGHTEEN [Breach of Contract - Yager, Yager Tools, Wilsons, DiSalvatores]

259. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 258, and further allege as follows against defendants:

260. Defendants entered into an oral contract with plaintiffs whereby, in consideration to plaintiffs' purchase and sale of Amway products, and Yager motivational materials and rallies, and plaintiffs' recruitment of other individuals to purchase Amway products and Yager tools and rallies, defendants would continue to supply plaintiffs with motivational products and plaintiffs would earn a profit from the sale of said products.

261. Although plaintiffs performed pursuant to the terms of said agreement, defendants thereafter failed and refused to either pay plaintiffs a profit from the sale of Yager motivational products or to supply plaintiffs with Yager motivational products.

262. By virtue of the defendants breach of contract, the plaintiffs have suffered loses, costs and damages including but not limited to their investment in Amway products, their investment in motivational products and rallies, lost income and severe emotional trauma.
 

COUNT NINETEEN [Tortious Interference With Contractual Relations as to the DiSalvatores]

263. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 262, and further allege as follows against defendants:

264. Plaintiffs had an existing contractual relationship with the individuals whom they had recruited to become Amway distributors by virtue of both oral agreements and the Amway distributorship agreement.

265. Defendants were aware of the contractual relationship between plaintiffs and plaintiffs, downlines and were bound by the Amway distributorship agreement, Amway Rules of Conduct and the agreement between plaintiffs and defendants, to uphold that relationship.

266. With intent to interfere with plaintiffs, contractual relationships with their downlines, defendants solicited plaintiffs' downlines to cease all contact with plaintiffs; induced certain of plaintiffs, downlines to cease all contact with plaintiffs; and induced certain of plaintiffs, downlines to remove plaintiffs names from their line of distributorship on recruitment forms; and induced certain of plaintiffs, downlines to cease the purchase of motivational products from plaintiffs; ceased providing plaintiffs with motivational products to supply to plaintiffs' downlines.

267. Defendants' conduct was tortious in that it was in violation of the Amway distributorship agreement, Amway Rules of Conduct and the agreement between plaintiffs and defendants.

268. Defendants' conduct was also tortious in that it was undertaken by the use of misrepresentations and omissions of material fact made to plaintiffs, downlines including but not limited to statements that the dispute between defendants and plaintiffs arose because plaintiffs demanded a greater profit from the sale of tools.

269. Defendants' conduct was also tortious in that it was undertaken in furtherance of defendants, violation of the antitrust and securities regulations as set forth herein.

270. As a direct consequence of defendants' tortious interference with plaintiffs, contractual relations, plaintiffs have been damaged and continue to be damaged in their business and reputations.
 

COUNT TWENTY [Tortious Interference with Business Relations As to Amway, Kruer, Postma, and DiSalvatores]

271. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 270, and further allege as follows against defendants:

272. Plaintiffs had an existing contractual relationship and business interest in their business relationship with their downlines by virtue of both oral agreements and the Amway distributorship agreement.

273. Defendants were aware of the contractual relationship between plaintiffs and plaintiffs' downlines and were bound by the Amway distributorship agreement, Amway Rules of Conduct and the agreement between plaintiffs and defendants, to uphold that relationship.

274. Plaintiffs had an existing business interest in the sale of motivational products to their downlines by virtue of an oral agreement between plaintiffs and the DiSalvatores and the Tools defendants.

275. Defendants were aware of the plaintiffs' existing business interest.

276. With intent to interfere with both plaintiffs' contractual relationships and business interests, defendants induced plaintiffs to agree to permit the DiSalvatores to sell motivational products directly to certain of plaintiffs, downlines; prevented plaintiffs from obtaining documentation necessary to establish the Tools Defendants, violation of the Amway Rules of Conduct; refused to enforce the Amway Rules of Conduct against the Tools defendants; and refused to provide the plaintiffs with the names of individuals from whom they could obtain motivational products for re-sale to their downlines.

277. Defendants' interference was tortious in that it was in violation of the agreement between the parties; the Amway Rules of Conduct; was accomplished by the use of misrepresentations an fraud; and was undertaken in furtherance of defendants' violation of the antitrust and securities laws as alleged herein.

278. As a direct consequence of defendants' tortious interference with plaintiffs, contractual and business relations, plaintiffs have been damaged and continue to be damaged in their business and reputations.
 

COUNT TWENTY-ONE [Intentional Infliction of Emotional Distress as to all defendants]

279. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 278, and further allege as follows against defendants:

280. Defendants intentionally and in reckless disregard for plaintiffs' physical and emotional well being undertook the actions alleged herein and also subjected plaintiffs to psychological manipulation and abuse.

281. Defendants knew or should have known that their conduct as alleged herein would subject plaintiffs to severe emotional and physical distress.

282. Defendants conduct was extreme and outrageous in that defendants acted solely for their own economic gain to plaintiffs, detriment.

283. As a direct and proximate result of defendants conduct, plaintiffs suffered and continue to suffer severe emotional distress and physical manifestations thereof.
 

COUNT TWENTY-TWO [Violation CUTPA as to All Defendants]

284. Plaintiffs reallege as if more fully set forth each and every allegation contained in paragraphs 1 through 283, and further allege as follows against all defendants:

285. The actions of Defendants alleged above are in violation C.G.S. SS 42-110b et seq. and the plaintiffs have suffered loses, costs and damages.

286. The actions of defendants alleged above are in violation of C.G.S. § 42-145 and are thus a per se violation of C.G.S. §§ 42-110b et seq.

287. By virtue of C.G.S. § 42-110g, plaintiffs are entitled to such actual damages and also may, and should, be awarded punitive damages, costs, and reasonable attorney's fees.

WHEREFORE, plaintiffs pray for

1. Compensatory damages for their lost principal investments, together with interest thereon at the contract or legal rate, plus additional general and incidental damages, according to proof;

2. Exemplary and punitive damages for defendants, fraud, in an amount commensurate with each defendants, ability to pay, which will be shown at trial;

3. For treble damages pursuant to 18 U.S.C. § 1964(c) for defendants RICO violations;

4. For disgorgement by defendants, and restitution to plaintiffs, of all earnings, profits, compensation and benefits obtained by defendants as a result of their false advertising and unfair business practices;

5. For costs incurred herein, including attorney's fees to the extent allowable by law; and

6. For such other and further legal and equitable relief as this Court may deem proper.

PLAINTIFFS DEMAND TRIAL BY JURY PLAINTIFFS

By Eliot B. Gersten Fed Bar No.: ctO5213
GERSTEN & CLIFFORD
214 Main Street Hartford, CT 061-6-1892
Tel. (860) 527-7044
Their Attorney