Directly Speaking Postma Memo Challenge of the '80's Memo Blakey Report Rebuttals AmQuix.Info
Interviews Dateline Didn’t Do
Read about people Dateline didn't talk to.

Amway is ordered to cease and desist from making income claims, and from price fixing. Amway escaped prosecution as an illegal pyramid scheme due to supposed enforcement of the rules requiring retail sales. The 70% rule was to ensure that a majority of the product was retailed to customers.

FTC vs. Amway 1979

"Because of the extensive and extremely adverse publicity associated with Glenn Turner's "Dare to be Great" operation -- an operation based primarily on the sale of motivational tapes -- it must be recognized that any multi-level sales plan which unduly emphasizes sales of motivational literature or tapes is likely to attract the attention of enforcement authorities!!!"

Hogan and Hartson
Amway's outside counsel
in a 28 page opinion about the tools business

"The motivation business could not exist without the Amway business, yet in all seriousness, these Diamonds feel that their Amway business is impossible without the motivational business. It has been clearly stated to me by more than one Diamond in this group that if anything is done that negatively affects the tools business, they would leave the business".....

"Although the Amway business is legal (no question), the tool business is not (my conclusion)"

Ed Postma, Amway Business Conduct Manager

"Subsequent legal evaluations disclosed that the disproportionate (to Amway) sales, intensity and solicitation of these "tools/systems" are illegal, per se, under several U.S. federal and state laws."

"Challenge of the '80's"
Memo To Senior Amway Management

"The structure and function of major organized crime groups, generally consisting of associated enterprises engaging in patterns of legal and illegal activity, was the prototype forming the basis for federal and state racketeering legislation that I have been involved in drafting. The same structure and function, with associated enterprises engaging in patterns of legal and illegal activity, is found in the Amway business."

Professor Robert Blakey
RICO Law Expert

Quixtar has been a member of the Direct Selling Association since 1999. The Direct Selling Association is working to change the pyramiding laws with HR1220 so that Quixtar's business practices will be completely legalized. Under the new bill product based pyramid schemes would be legalized.

"Anti-Pyramid Scheme Act"

Quixtar IBO and Republican Representative, Sue Myrick, from North Carolina is a co-sponsor of HR1220, yet denies knowing the bill would legalize product based pyramid schemes.

Charlotte, NC TV station WCNC New 6 contacted Myrick.

“I had heard nothing about it until your phone call frankly so this is news to me,” Myrick said. “I can just tell you nobody has contacted me about it. Nobody encouraged me to sign the bill.”......

“Any type of a pyramid promotion is not something that should happen and people should not take advantage of other people in doing that it's not something anyone approves of,” she said.

North Carolina Representative, Sue Myrick

The Wisconsin Attorney General charged numerous Wisconsin Amway distributors with unrealistic and exaggerated income claims as well as failure to disclose the identity of Amway and the nature of the opportunity being offered. An analysis of Wisconsin State direct distributors revealed that they had an average net loss of $918/year.

The State of Wisconsin vs. Amway

Amway pleaded guilty in Canada to criminal fraud for tax evasion in 1983. Amway had been evading duties and taxes by using false invoices to misrepresent the value of its products being shipped across the border.

The Government of Canada vs. Amway

Amway pays $100,000 fine for violating 1979 order about making income claims. A 1979 Commission decision resolved FTC charges that Amway's claims about the amount of money distributors are likely to earn had the capacity to deceive potential distributors. The order accompanying that decision prohibits Amway from misrepresenting the amount of profit, earnings or sales its distributors are likely to achieve. The order also requires that whenever Amway makes above-average earnings or sales claims, it must also dis close clearly and conspicuously either the average earnings of all distributors or the percent of distributors who actually earn the amount claimed.

The Corporation now discloses that the average renewing, active IBO earns just $115 /month.

The FTC vs. Amway 1986

Top IBOs file lawsuit
"The tool and function business generates enormous profits. Simply put, the money is not in the Amway business; it is in the hype of the Amway business."

Crown - Kenny Stewart
Double Diamond - Brig Hart
Lawsuit against Quixtar's Additions to Dateline NBC

Chris Hanson's Photo
Chris Hanson: Reporter, Dateline NBC
Audio fileVideo Part 1 Part 2
Complete Audio and Video from the May 7, 2004 Dateline Show.

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".

Rich DeVos's Photo

Rich DeVos: Co-Founder, Amway Corporation
The rest of the story....
Audio file

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.

Rich DeVos's Photo
Rich DeVos: Co-Founder, Amway Corporation
The "Directly Speaking Tape II"
Audio file

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:

Q. What happened in the area of the tools abuses, the private tools abuses addressed at that meeting?
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

Audio Recordings

Rich DeVos's Photo
Rich DeVos: Co-Founder, Amway Corporation
Wholesaling only is an illegal business
Audio file
Rich DeVos's Photo
Rich DeVos: Co-Founder, Amway Corporation
Abuse in the Tools Business
Audio file
Ken McDonald's Photo
Ken McDonald: Managing Director, Quixtar
Quixtar and the king pins are joined at the hip
Audio file
Rich DeVos's Photo
Rich DeVos: Co-Founder, Amway Corporation
Some Amway board members run pretty big tools systems
Audio file
Dexter Yager's Photo
Dexter Yager : Crown Ambassador IBO
You are not moving half the tools you could be
Audio file
Rich DeVos's Photo
Rich DeVos: Co-Founder, Amway Corporation
Tools business is more important than Amway business
Audio file
Ron Puryear's Photo
Ron Puryear: Crown IBO, World Wide Dream Builders
If you are short of money give tapes and function tickets as anniversary presents
Audio file
Rich DeVos's Photo
Rich DeVos: Co-Founder, Amway Corporation
Want to make some more money? Retail some products!
Audio file
Rich DeVos's Photo
Rich DeVos: Co-Founder, Amway Corporation
The tools business can be illegal
Audio file
Andy Andrew's Photo
Andy Andews: Quixtar Diamond, Team In Focus, Terminated by Quixtar
Quixtar said 98% of the IBOs should not know about the tools income
Audio file
Rich DeVos's Photo
Rich DeVos:Co-Founder, Amway Corporation
Amway's achievement numbers have not improved with the "systems"
Audio file
Rich DeVos's Photo
Rich DeVos: Co-Founder, Amway Corporation
We have gross indications of dishonesty
Audio file
Doug Wead's photo
Doug Wead: Diamond IBO, and spiritual adivsor to presidents' Bush
Cracking down on tools takes income away from me
Audio file
Rich DeVos's photo
Rich DeVos: Co-Founder, Amway Corporation
If we don't clean up our abuses .... we won't be around to worry about it
Audio file
Bill Abraham's photo
Bill Abraham : Attorney for Yager Diamonds
You can't give up your tools income because that means bankruptcy for you
Audio file
unknown speaker
Unknown Emerald : From a Yager Emerald reunion tape
Invest in tools; borrow shoes from your upline for your kids
Audio file
Bill Childers' photo
Bill Childers : Executive Diamond
I'd like to shoot Kennedy with a new 7 mm
Audio file