Executive Diamond Starts
Own Tool System - LTD.

I'm sure there are also financial reasons to start your own system, if you can make it fly.  I'm not sure how the Britt diamonds were paid for their tape and seminar sales.   Some systems give their people discounted prices , or "tools break",  on their tools based upon volume, and other tools systems pay the calculated sales commissions to the distributor in the form of a check from the upline support system.   People getting commission checks will get a 1099 from their upline.  Those working on "tools break" must calculate their own profit and loss. 

From numbers I have seen over the years on tools commissions, the commission paid to downline amount to $3-$4 per tape or CD.  Since the tape or CD sells for $6-$7, and duplication costs are $0.25 $0.65 per copy the guy selling the system has still around a $3 markup per tape/CD to pocket.  The guy who owns the system can make almost as much money per tape as he pays out in commissions to move them downline.

The second benefit of owning the system is being able to better control the revenue side of the whole business.  That can help a Diamond with that nagging problem of taxes.   A diamond in a commission paid system is at the mercy of all the 1099's he receives from Amway/Quixtar and his upline.  A diamond making good money on tapes and motivational tickets sold in his downline, can only control his tax bill by manipulating expenses.   The revenue side of his income is fixed by the 1099's he receives.   His upline will try to push anything he can into a 1099 since it is a deductible expense for the system seller's business. 

In Larry's case, the IRS slapped him with $2.1 million in tax liens in May 2005 and about $1 million a year earlier for Federal Income taxes going all the way back to 1997. I've heard over the years that the IRS is especially successful in disallowing deductions taken by large Amway/Quixtar pins.   I can only speculate that it is easier for the IRS to find bogus deductions than it is to find unreported sources of income.   If the money never shows up in a bank account or in things purchased, they will never be able to track the money.

Owning the system means that you now have better control of the income side of the business so you can control your tax problem.  I spoke a long time ago with Ruth Carter, who worked for diamond for a few years, and she told me how it works.     One big factor in any business is cash transactions.     If there is not a check or a credit card receipt the cash is going to disappear.   Ruth told me of diamonds who had old refrigerators and freezer chests filled with cash taken from tools tables and functions.  The people running the show are in a position to run the cash off to the side and make sure it never shows up as revenue to the business.  The business would surely show a high "shrinkage", (an inventory term used for missing stock) since the theoretical sales does not match with reported sales.  Functions are loaded with cash and I've been told there are duffel bags of cash containing hundreds of thousands of dollars.   In the course of a weekend function it is all moved out the back doors of the arenas into waiting vans, to be whisked off.... to some place other than the bank!   No doubt a group of organized thieves could have a grand old time robbing a line of sponsorship major function as the cash in the duffel bags is being loaded into the waiting van.   It would be kind of like stealing money from the Mafia.    How will they explain to the police and the IRS that they got ripped off for several hundred thousand dollars in cash that was never going to be reported in the first place.  

It is my opinion and experience any business that requires a "cash" payment or prefers a cash payment is probably siphoning off the cash so that it never gets reported on the revenue side of the business.   If you want to help make sure your upline is paying his far share in taxes, insist on paying with something traceable like a check or a credit card! 

Certainly there are risks to starting your own support system.  You need to be able to get tapes and CD made as soon as possible and you need a ready supply of speakers for your motivational functions.  There are several large lines of affiliation and then a group of several smaller lines that work together to provide the necessary variety of diamonds to speak at the functions.    The competition amongst lines of affiliation in Quixtar is fierce  The BSM business is very profitable and competitive and you will not see diamonds form the Yager group speaking for WWG, WWDB, or N21.

However the financial benefits to having your own system can be very compelling.  There can be lots of cash, which has its tax benefits and you can also have better control of the dowline since you now control the payments.  I have never seen an line of affiliation "contract", and will probably never see one.   As long as there is no contract for tools commissions the upline can exercise a lot of control on his downline, who are probably dependent upon the tools system income to stay "retired".

Larry has numerous downline diamonds so he might be able to make it fly but he will probably have to tap into another source of diamond speakers.   It would not surprise me if he did eventually not tap into the group formed by the old Yager groups.