Amquix.info's Additions to Dateline NBC
Since Dateline had so much information and so little time they had to leave some information out of the show. Dateline really did not highlight Amway/Quixtar's 20+ year knowledge of the abuses in the Business Support Materials (tools) business and the illegal business model of "buying for yourself".
The rest of the story....
The show did not use any of Rich DeVos's sound bytes from his famous "Directly Speaking Tapes", which are highlighted at the bottom of this page.
The "Directly Speaking Tape II"
The following is a brief history of the tools scam and Amway/Quixtar's long time knowledge of its illegality, which Dateline did not mention on the show.
The History of the Tools Scam
Before the Yager/Britt tools systems emerged in Amway, the corporation was already sponsoring seminars and functions. Motivational books had already found their place early in the business. In the late 1970's when the low cost and reliable compact cassette tape format replaced the 8-track format, the final and most profitable element of BSM's triad was put into place. The king-pin distributors took over providing motivational seminars and functions from the corporation..
The compact cassette tape format became so popular that the heads of the two largest systems, Dexter Yager, and Bill Britt each started companies devoted to reproducing and packaging pre-recoreded cassette tapes for their growing Amway downlines. Dexter Yager runs I.C.C.A, and Bill Britt runs American Media International (AMI).
Rich DeVos takes a stand against the "systems"
Glen Turner's "Dare to be great" scheme focusing totally on the sale of motivational supplies, caught the eye of state and federal regulators. At this time the FTC had also refined the definition of illegal pyramid schemes to include plans, which had little or no sales to normal retail customers. Such plans are called "product based pyramids". These legal developments as well as distributors' complaints about abuses within the systems caught Amway's attention. Numerous internal memos were written concerning the illegality of the tools systems.
On January 19th, 1983 Ed Postma wrote an analysis of how the "systems" worked. It details how the "system" is used to isolate distributors and to create a dependencey on the system. It highlights that the profitability from these systems was far greater than the profitability from the Amway products business. In the same month Amway C-founder, Rich DeVos, produced the first of two "directly speaking tapes" sent only to direct distributors and above. This website is still searching for a copy of Directly speaking I. If you have one please write me.
Early in 1983 the company added BV on the corporation produced tapes, allowing all distributors to participate in income from tape sales. The uproar from this action prompted Rich DeVos to record another tape in March of 1983 called Directly speaking II.
On April 5, 1983 Amway attorneys met with Yager diamonds and emeralds at the annual Yager Emerald Club in Miami, Florida. Many Yager Diamonds expressed their concern that the company was trying to move-in and steal their lucrative tape business.
The Corporation must live with the "systems"
The publicity from a CBS 60 Minutes expose and the fallout from Rich DeVos's "Directly Speaking Tapes" contributed to a 25% tumble in Amway sales in 1983. Amway was faced with its own demise if it continued to take a stand against the powerful distributor networks. Fortunately for the tools king-pins, the Corporation gave in and accepted the systems as a necessary evil to Amway's own survival.
In April of 1988, Rich DeVos was questioned and cross-examined on the witness stand as part of the Setzer vs. Amway suit. The part of DeVos's testimony is largely a recounting of Amway Corp.'s realization of the problems posed by the tools business, and its attempts to deal with those problems. DeVos stated under oath that:
DeVos. Well, those abuses continued to this day, There are a variety of people who complain to me continually about some of those abuses, so that's an ongoing challenge that the organization faces.
Q. And let me ask you this, in your tape there you said that you would expect
that the position that the company is taking, expressed in these various speeches, including the one we
just heard, would be costly to the company; what did you mean by that?
DeVos. Well, I said to some of our staff there that I thought that it would cost us a few hundred million dollars in volume—I think I said $300 million—as we went through a correction phase.
Q. And did it cost $300 million in volume?
DeVos. I think we lost upward of $300 million in volume as we tried to go through this adjustment period.
Q. It is a position that you took in the early part of 1983. Have you
deviated from that position in the Amway Corporation since then, with respect to your Ten Points
and the subject matter contained therein?
DeVos. Well, let's just say that we dealt with it the way we did. We did put some people under notice that they were doing things wrong. We pursued of course re-education but we never pursued it to its ultimate goal of really nailing anything down. In the meantime, the volume came down and we started to work at trying to hold the business together but the problem persisted in any case.
The Corporation's complicity with the systems
Dateline mentioned the suit against the Corporation by Crown IBO Kenny Stewart, Double Diamond Brig Hart, and Diamond Charlie Schmitz. The suit filed in Missouri alleges the corporation conspired with and helped certain king pin distributors take over BSM profits from the plaintiffs. The suit focuses on anti-trust violations between the corporation and the various kingpin distributors within the tools business.
Additionally, Dateline NBC never did mention the Blakey report. Professor Robert Blakey was instrumental in the drafting of racketeering legislation.
"It is my opinion that the Amway business is run in a manner that is
parallel to that of major organized crime groups, in particular the Mafia."
Professor Robert Blakey
Wholesaling only is an illegal business
Abuse in the Tools Business
Quixtar and the king pins are joined at the hip