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Industry Professionalism

How To Handle Pyramiding and Proselytizing in the Direct Selling Industry

(Speech delivered by Josiah Go during the 1st Direct Selling Management Conference held August 9-10, 2001 at the AIM Acceed Center, Philippines)
Ladies and gentlemen, good morning.

I shall divide my presentation into 2 parts: The first part deals with pyramiding, while the second one with proselytizing (or more popularly known as piracy of distributors).

I. Introduction

In 1995, a Texas-based company called AuQuest International started offering gold coins, among other products. The company used the binary compensation plan allowing individuals to buy up to seven business centers with US$200 personal business volume qualification for each of these center.

In May, 1996, AuQuest was sued by the state of California and the Monterey County District Attorney's office. It was charged, among others, with conducting a pyramid or endless chain scheme. The state brought three lawsuits, including criminal felony charges against the owners, an injunction lawsuit against the company, as well as a separate lawsuit seeking to confiscate US$328,000 seized in Houston bank accounts. The company countered with its own lawsuit against the government officials for violation of their civil rights. The Monterey County Superior Court issued a temporary restraining order and a preliminary injunction.

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