By Len Clements © 2001
For those of you who are following the saga of Renaissance/The Tax People and have read my original expose’ (first published in November, 2000), you might also be aware of the alleged response by TTP CEO Michael Cooper. I say “alleged” because I do have doubts as to how much, if any, involvement Mr. Cooper actually had in constructing this response. Michael Cooper is a smart guy. These responses are not smart. I suspect they are actually the work of a TTP supporter who may have been working on behalf of Cooper. However, since Cooper has now had ample opportunity to disassociate himself from this response, I am going forward with this rebuttal assuming he at least has sanctioned it.
Let’s begin with the statement that introduces Cooper’s response: “CEO Mike Cooper’s point-by-point response of Len Clements widely read ‘case study’ of TheTaxPeople.net. Clements was apparently involved in several MLM organizations in the past with Mike.”
We’re off to a bad start. I was briefly involved as a distributor with a company operated by Cooper called Network Institute back in 1992. That’s it.
1984: Michael Cooper discovers network marketing. He has initial success as a distributor only to see the company fail. TRUE
1989: Cooper is the Executive VP and founder of National Energy Specialists Association (NESA). FALSE
ONLY PART-TRUE – NESA was incorporated as a not-for-profit trade association in 1984 with Mike Cooper as Executive Director, where he served until 1989. In 1989 and 1990, he was Executive Vice President of Eagle Shield, Inc., in Dallas — where he helped to build annual company sales to over $100 million a year.
REBUTTAL: Okay, he was the Executive “Director” of NEPA in 1989, not the Executive “VP.” Otherwise, the entire statement is not only TRUE, the response just confirmed it.
1991: Cooper is the National Director of Training for American Gold Eagle, a gold coin MLM, and one of the early pioneers of the binary compensation plan. AGE is eventually shut down for securities and pyramid violations (they claimed the Gold Eagle coins were a great “investment”). The pyramid label was due mainly to AGE reps buying product solely to acquire additional income positions in the compensation plan (the emphasis was on recruitment, not actual sales of the products — keep that in mind for later). [Comment: The founders of AGE, David and Martha Crowe, will go on to found Gold Unlimited (without Cooper), which will also be shut down with 11 criminal counts against David and 10 against Martha. The Crowe’s fled prosecution and were recently featured on the TV show “America’s Most Wanted”]. FALSE
ONLY PART-TRUE – Mike Cooper was only with them for only a few months, questioned their ethics and reported in writing irregularities of the business to the North Carolina Attorney General’s office — which lead to his being one of the “key” prosecution witnesses against the Crowe’s. When asked to testify against them, he paid his own airfare and hotel expenses to North Carolina — and refused reimbursement from the government.
REBUTTAL: Again, the response to the statement labeled as “FALSE” essentially confirms the statement. Note that all I said about Cooper was that he was the National Training Director for American Gold Eagle. I made no comment as to the duration of his tenure, his motivation for leaving, nor his post-participation actions. Every word of the events described concerning AGE are accurate (which Cooper does not deny). So, exactly what was “FALSE” in my original statement?
The point of this statement was not to question the ethics of Cooper, but to point out his close, first hand experience with what was deemed to be an illegal pyramid scheme. This experience should have made him acutely aware of what defines such a scheme. That being, the paying of commission on sales volume that is only produced by distributors (thus requiring recruitment to get paid). This experience should have made him acutely aware of the legal vulnerability of offering $1,200 “Founder’s Packs” and requiring $400 per month (for redundant monthly services) to qualify four business centers.
1992: Cooper is the founder and President of Network Institute, also a binary, which deals primarily with productivity tools. The main product is the Management Action Planner (called MAP), an elaborate, leather bound time management and productivity system. The MAP sells for $295. There is a monthly $30 charge that includes supplies for the MAP, access to a phone training system called “One Minute Manager” and a tax deduction tracking system called Tax Tracker. TRUE
1993: Cooper sells Network Institute to his partner and takes the position of Executive Vice President of a start up long distance reseller called TeleFriend (which used a unilevel comp plan). Soon after, Network Institute is merged into TeleFriend as a distributor support system. FALSE
ONLY PART-TRUE – Mike Cooper and John Meadows use the Institute training systems to build the largest and fastest growing downline in TeleFriend, which prompts the company to buy the company and move both of them to their home office in Tennessee, where Mike is made Executive Vice President.
REBUTTAL: So, everything I just said is TRUE, except that I claimed Cooper sold Network Institute to his partner before taking the corporate position with TeleFriend. Well, the only reason I made this claim is because that’s what Michael Cooper told me he did! I have a very clear memory of him saying to me, during a phone conversation, that he had sold the company to John Meadows.
1993: Later this same year Cooper leaves TeleFriend on unfriendly terms. 1994: Cooper assumes the position as President of a small network marketing company called Truly Special (TRI). TRI sold specialty foods manufactured by it’s parent company Briarwood Farms. FALSE
ONLY PART-TRUE – After a year long dispute with TeleFriend owners on behalf of his downline and all other distributors because the company is not providing the telephone service promised nor paying the distributors. The owners then share their plans to bankrupt TeleFriend and launch a new company to begin selling a $200 telephone debit card pyramid. Mike refused to participate, resigned, and took a computer consulting position with Truly Special in October, 1994. In December, he was named President of Truly Special just days before legal action is taken against the company for promoting the sale of their stock before Mike joined them. Mike never promoted the stock, and as the new President, immediately prohibited the promotion of the stock just days before legal action commenced. But as the new President, he was a company officer and was named in the action as well.
REBUTTAL: Here is perhaps the single most damning response. Either Michael Cooper is outright lying, or the author of this response is, in fact, NOT Michael Cooper (thus, the author who wrote this response is outright lying about the responses coming from Cooper).
First, note the three sentences in the original point. Once again, the response specifically confirms each sentence, word for word (yet, once again, the author labels the point as “FALSE”).
“In December, he was named President of Truly Special just days before legal action is taken against the company for promoting the sale of their stock before Mike joined them.” Now I get to say it… FALSE. I have in my possession a tape recording of two separate live presentations (one a conference call the other a meeting) given by Cooper in early November of 1994. Several times during the meeting he refers to “last Tuesday” as being “the very first day of the company.”
“Mike never promoted the stock, and as the new President, immediately prohibited the promotion of the stock just days before legal action commenced.” FALSE. During these recorded presentations he heavily promotes the stock sale. “We have a very simple monthly stock purchase plan. Any associate can participate if they wish, it’s $25.00 per month minimum.” He also states, “Most multilevel companies can’t even begin to be approved in all the regulatory manners that need to be to be on the stock market. Our company already is.” [Emphasis mine] Truly Special was not approved to be on the stock market, nor was it approved to sell stock.
November, 1994: Cooper and other senior personnel of TRI begin holding meetings where potential incomes of $100,000 are touted with an initial “investment” of $100. Also, shares of common stock in a company called Aunt Myra’s (AMI), a non-MLM marketer of ground beef seasoning, is offered for sale to participants in TRI. During this time Cooper also conducts live, national opportunity calls. [Comment: On one such call, which I was listening in on, Cooper questions the reasoning behind distributor requests for him to focus more on the value of the products. He responds, “If I told you you could make $10,000 a month selling horse manure, would you care what the product was?”] FALSE
ONLY PART-TRUE – Mike Cooper never promoted “investments” in any MLM. A gift box of gourmet foods, similar to a large basket from Hickory Farms was sold for $100. Mike Cooper NEVER used the “horse manure” example. He did use the “peanuts, popcorn, or pantyhose” example as a theoretical discussion of analyzing the profit potential of a business before starting one. Whether you like the idea of selling pantyhose, wouldn’t you like to have been the first to market “Peter Pan,” “Orville Reddenbacker,” or “Leggs” pantyhose? (whether you wear them or not)?
REBUTTAL: During these recorded presentations Cooper uses the terms “invest” and “investment” numerous times. At one point Cooper rhetorically asks the audience if they’d become involved if the “total business investment was $100 [to make] $100,000 per year?” And yes, he absolutely did use the “horse manure analogy (I was on the call and heard it with my own ears).
December, 1994: Truly Special, Cooper, and other senior management are hit with an “Emergency Cease and Desist” order by the Securities Division of the Kansas Attorney General’s office for selling unregistered securities without a license. Aunt Myra’s is not a public company and it’s stock cannot be legally sold. Furthermore, there are charges that TRI itself is an illegally sold security based on the $100 “investment,” and the heavy emphasis placed on recruiting others to invest, rather than product sales. The state’s charges also include various full-disclosure violations, such as; they failed to disclose to investors that in 1987 Aunt Myra’s was hit with a Cease & Desist order for having violated various provisions of the Kansas securities laws, and in 1989 AMI’s President and Chairman Gary Kershner was found guilty of two felony counts of selling unregistered securities. FALSE
ONLY PART-TRUE – Aunt Myra’s was, and to the best of our knowledge, is still a publicly traded company whose stock can be legally bought and sold (but not highly recommended at this time by anyone we know). It went from inactive at $0.02 to over $0.18 (900% increase in price) in less than 90 days with Mike Cooper as President, and back to inactive at about $0.02 or less in the months immediately following his resignation to start Renaissance.
REBUTTAL: I conducted several searches, including an EDGAR search at the SEC web site, and found no record of a public company called “Aunt Myra’s.” That doesn’t mean there wasn’t in 1994, so I’ll concede that is was a public company. But that has nothing to do with the point! (It’s a nice dodge, though). Whether it was public or not, neither Truly Special, nor their reps (or Cooper) were licensed to sell stock. That was the issue. Also, Cooper was not the president of Aunt Myra’s. Aunt Myra’s was the parent company of Briarwood Farms, and Truly Special was the marketing arm of Briarwood Farms.
Early 1995: TRI and Cooper are again under investigation by the KS AG’s office. This time the focus is on pyramid violations rather than securities violations. Once again, the catalyst to the investigation is the heavy emphasis on recruitment rather than product sales. Within weeks, Cooper closes down the company. FALSE
ONLY PART-TRUE – The securities action based on the stock option plan of the company, and the AG investigation of the MLM program were concurrent, and both resolved in short order with consent orders admitting none of the allegations, and no charges were pressed.
REBUTTAL: Reread the original statement declared “FALSE” and then try to find anything in the response that even begins to debunk the statement. So the two actions overlapped. So what? Where did I say they were not concurrent, and how does this disprove the statement? In fact, the consent order for the securities action was signed by Cooper in December of 1994 and the order regarding the pyramid action was signed in April of 1996. But why are we even wasting time on this one? It appears to be a desperate attempt to place “FALSE” after as many statements as possible.
June, 1995: Cooper launches Renaissance Designer Gallery, a marketer of high ticket goods such as jewelry, art, collectibles, and gourmet food. He is the majority shareholder, owning 64.04% of it’s common stock. FALSE
ONLY PART-TRUE – Renaissance was originally a marketer of some of the most highly DISCOUNTED priced goods in the jewelry, art and collectible fields. Renaissance expanded into additional product lines from Wrangler blue jeans to gourmet foods as we grew. Mike Cooper was the majority shareholder, owning 90% of the stock, the other 10% “gifted” to the two other principles in gratitude for their steadfast loyalty and hard work over several years they had worked with him through their painful experiences in TeleFriend, Network Institute, and Truly Special.
REBUTTAL: So, the only thing “FALSE” about the entire statement is the 64.04% figure (the response, once again, confirms the accuracy of the rest of the statement). Actually, it is true that he didn’t own 64.04% of the stock in June of 1995. He owned 64.04% of the common stock in September of 1998 when he was again accused of securities violations (we’ll get to that in a moment).
April, 1996: Cooper signs a posthumous Consent Judgment pursuant to the KS AG’s investigation of Truly Special. He agrees to be “permanently enjoined from engaging in those acts and practices alleged to be deceptive or unconscionable… (and) agree that engaging in such acts or similar acts, after the date of this Consent Judgment, shall constitute a violation of this order.” [Comment: Cooper also agrees, and is now legally obligated, to disclose the existent and provisions of the Judgment to all of his (not Truly Special’s) future employees, agents and representatives for the next two years. Allegedly, he has not done so.] FALSE
ONLY PART-TRUE – The consent order only required the company Truly Special and Mike Cooper to disclose to Truly Special employees, agents and representatives those provisions. As Mike Cooper was no longer affiliated with Truly Special, he had no control over what that company disclosed or not.
REBUTTAL: I’ve got a copy of the Consent Order. It clearly states that Cooper must disclose the Judgment to all of “his” future business associates. Furthermore, his failure to disclose this Judgment was cited in the 1998 securities action against Renaissance.
November, 1997: Advantage International Marketing (AIM) is formed as a division of Renaissance to market tax related products and services. By the end of 1997 AIM has 489 distributors. AIM would eventually be known as The Tax People. March, 1998: Renaissance purportedly has 20,933 distributors. AIM now has 1,648. May, 1998: During a special interactive teleconference call several hundred AIM reps are introduced to “Commitment 2000.” Cooper himself describes how all AIM reps who will commit, in writing, to simply remaining active in the company until January, 2000 will receive 1,000 shares of stock in the company “regardless of whether they ever make a sale.” He further explains that an additional 1,000 shares of stock will be issued for every sale (of the $300 Tax Advantage System) that is made. In addition, he claims 1,000 shares of this stock is “worth today over $40,000.” He concludes by cautioning against promoting or advertising the deal by means other than private invitations. He refers to the information related on the call as “double secret stuff” and further comments “There are no misdemeanors in securities violations.” FALSE
ONLY PART-TRUE – Based on what was believed to be competent legal advice, the C2000 stock was promised to IMAs at that time as a GIFT for believing and sticking with the company through the year 2000. It was “secret” only to the extent that they were warned not to make the stock part of the sales process as it was only for IMAs in the company prior to the upcoming annual convention, and no others. This call, which was recorded, specifically attached no value to the stock, but contemplates that it may or may not be valuable in the future, just as Prepaid stock went from 50¢ to as high as $40 per share.
REBUTTAL: I got my information from the Notice of Intent to Invoke Administrative Sanctions (Docket No. 99E027). If you were to obtain this document (which you can – it’s in the public domain) you can see for yourself. For example, Part 16, Section (e) quotes Cooper as saying the stock of Renaissance is “worth today $40 a share.” However, there appears there may have been some confusion on the part of the state’s investigator as to what Cooper was referring to when he mentions the value of “prepaid” stock. It looks like Cooper was using Prepaid Legal’s stock as an example, and the investigator may have thought he was referring to Renaissance stock. I’ll give them the benefit of the doubt on this one, so let’s strike the line “In addition, he claims 1,000 shares of this stock is worth today over $40,000.” Otherwise, every other word of this section is verifiably factual.
June, 1998: Cooper files form SB-2 with the SEC in preparation to register common stock in Renaissance for the purpose of sale and distribution to distributors per the “Commitment 2000” announcement made in May. FALSE
ONLY PART-TRUE – The SEC filing was made in a proper and orderly fashion to effect a normal initial public offering for the company stock, and had nothing to do with C2000.
REBUTTAL: Really? So, three years after Renaissance opens for business Cooper announces the stock promotion, then one month later files with the SEC to offer stock, and that’s just a coincidence?
August, 1998: Cooper applies to the SEC for withdrawal of their Registration Statement citing their inability to secure a broker/dealer required for registration purposes in several states. FALSE
ONLY PART-TRUE – Based upon the Kansas Securities office advising us that they had a problem with the C2000 stock “gift,” the IPO registration was voluntarily withdrawn until this issue was resolved. The company did have multiple broker-dealers and market makers ready to handle the IPO and sales of company stock in a totally proper and legal manner.
REBUTTAL: Again, strong evidence that Michael Cooper had nothing to do with this response. Surely he would know that anyone can go to the SEC web site (www.sec.gov) and simply look at this withdrawal application, which states “The Registrant has been unable to secure a broker/dealer required for Registration purposes.” Also, he would have nailed me for getting the date wrong. This withdrawal application was actually filed on February, 2000.
September, 1998: Cooper is again sanctioned by the Securities Division of the Kansas AG’s office. Again it’s for offering unregistered securities (stock in his company, which was not yet registered) and for “omissions and misrepresentations” concerning the offer. For example, disclosure documents filed by the company revealed that the tangible book value of the stock was less than 0.005 cents per share — not $40 per share as was announced on the “Commitment 2000” call. The proposed offer price was 10 cents per share. Plus, distributors were never told during the call that not only was the stock not registered, there had not yet even been any action taken to register it. Cooper is forced to rescind the “Challenge 2000” offer to the 1,196 who signed up for it. [Comment: It should be noted here that based on the definition of a security (SEC vs. W. J. Howey Co., 1946) the “investment” made in exchange for stock need only be “consideration.” That being; money, gold dust, chickens, labor — anything of value. Indeed, the SEC has even defined a “promise” as being “consideration.”] FALSE
ONLY PART-TRUE – The consent order in this matter was based simply on the conflict of semantics and legal interpretation. We were told that we could give away our stock for FREE if we wished. The state decided to view this as an “offer to sell” for ZERO cost. An “offer to sell” must be made by a broker dealer of a registered security. Only by this definition or interpretation could any “sanction” be levied, which was a $10,000 fine in this case. All promised stock has since been delivered to over 1,100 IMA/stockholders, as ONLY FOUR people out of almost 1,200 took the refund which was offered as part of this settlement.
REBUTTAL: Yet again, the response confirms the original “false” statement. Cooper was sanctioned for selling unregistered securities. What, exactly, was “false” about my statement?
October, 1998: The Kansas Attorney General’s office appoints a Special Agent to begin a formal investigation into the business practices of TTP.
TRUE/FALSE? Who knows? Investigators are assigned to investigate companies as a daily practice in an investigative agency.
REBUTTAL: I know. Because I asked an investigator in this case when the Special Agent was first assigned.
May, 1999: Dan Gleason, President of My Tax Man, resigns from the Board of Directors of AIM/TTP citing a difference in product philosophy. My Tax Man is the company hired to fulfill the monthly tax services supplied by AIM/TTP, such as audit protection, 1040 preparation and review, telephone consultation, etc. FALSE
ONLY PART-TRUE – Gleason tenders, then withdraws his resignation in an attempt to triple his fees while not providing the contracted services. This was the only “difference in product philosophy” discussed. After carefully explaining the several terms of Gleason’s contract that were not being fulfilled by Gleason, Gleason then agrees to continue with the company, and is issued a five-figure check for providing June services to our customers, then not only does he fail to deliver the contracted services, but is actively on national conference calls for a new competitive tax service making negative comments about TheTaxPeople.net.
REBUTTAL: Dan Gleason tells a very different story (to me, and to the court, under oath). All I said was that he resigned in May of 1999. He did.
June, 1999: My Tax Man sends a “Termination of Service” to Cooper announcing they will no longer be providing the ongoing monthly services. [Comments: This may well be one of those “you can’t quit ’cause you’re fired” deals. Gleason claims there was a falling out between him and Cooper resulting in a demise of contract negotiations, so he terminated the agreement. Cooper claims he terminated the services of My Tax Man which may explain why no further contract negotiations were offered by TTP. We’ll likely never know who really terminated who first. However, Gleason did initiate his company’s separation from TTP.] FALSE
ONLY PART-TRUE – Gleason does send a termination of service letter to TTP, but only after the phone call where he was called to answer for his unethical conduct, and Gleason’s contract was terminated on that call by the company — and both parties confirmed that termination via mail.
REBUTTAL: Again, there is no need to rebut anything since the response confirms the original statement.
July, 1999: TTP comes under investigation by the Securities Enforcement Division of the Attorney General’s office of Hawaii for possible pyramid and securities violations. TRUE/FALSE?
ONLY PART-TRUE – Yes, Hawaii regulators did their job, investigated TTP and no action was taken against the company. Many other states have inquired for information from TTP over the years, and some could call these “investigations” if they wished. However, we view it as regulators simply doing their jobs, and upon review of our materials and company, no state but Kansas has taken any action against TTP.
REBUTTAL: First of all, this was not an “inquiry.” I spoke directly to a representative of the SED who said the “investigation” was concerning the “possible” operation of an illegal pyramid. Also, when a home state AG issues a Temporary Restraining Order and is seeking an Injunction against a company, it is non uncommon for other state and/or federal investigations to lay back and await the outcome. Obviously, it makes no sense for Hawaii, or any other state, to continue to use up resources investigating a company that may be put out of business soon by another agency.
Summer, 1999: The Missouri AG’s office begins an investigation of TTP. FALSE
ONLY PART-TRUE – See above.
REBUTTAL: The statement is verifiably true and the response essentially confirms it. This is one of many cases where the respondent, whomever it is, just likes to put “False” after everything.
August, 1999: My Tax Man is issued a subpoena by the KS Attorney General’s office demanding the TTP member database. That same month Dan Gleason is deposed by the KS AG’s investigating attorney. An agent from the Criminal Division of the IRS is present for the deposition. FALSE
ONLY PART-TRUE – We have reason to believe Gleason / “My Tax Man” instigated this subpoena through proactive campaign to smear TTP’s name and reputation. The very same tax strategies and marketing he endorsed as a paid contractor for TTP are now marketed by “My Tax Man” as the “Tax Toolbox,” yet he keeps a straight face while he says we are “bad,” but his copycat program is “good.” TTP filed suit against Gleason, which is ultimately “settled to the satisfaction of all parties.”
REBUTTAL: You are probably seeing a pattern here. Regardless of the alleged impetus for the AG subpoena of the TTP database or the deposition of Gleason, these events absolutely did occur during the date specified. Not one word of the response in any way disproves one word of my statement which was labeled “false.”
August, 1999: Sandy Botkin, founder of the Tax Reduction Institute and author of TTP’s “Tax Relief System” officially parts ways with TTP, demanding that TTP discontinue use of his products, name and likeness. [Comment: Botkin claims he verbally requested that TTP stop using his name and material as early as May. The Tax Relief System was the up front $300 product purchased by new TTP reps which activated their position in the compensation plan.] FALSE
ONLY PART-TRUE – Botkin was hired in early 1997 to be the voice on the “Ex-IRS Agents Don’t Lie” audio tape scripted, produced and owned by TTP. The Tax Advantage System (TAS) sold at that time was written and printed well before TTP even knew Botkin existed. He was never listed as an author and was never paid anything for or on the sales of the TAS, of which he had no interest.
REBUTTAL: In an interview with Botkin he stated that it was his material. But then, so did Michael Cooper on the a fore mentioned audio tape! Botkin refers to “the program we put together” and “my system” right on the tape, and Cooper, who is interviewing Botkin, refers to the TAS as “your course” and twice as “your program.” But again, debating this issue appears to be an attempt to deflect attention from the real concern: that being, Botkin no longer wished to be associated with TTP and did demand to have his name and material disassociated with it – and TTP continued to use this tape long after Botkin was gone.
January, 2000: Sandy Botkin sues TTP for continuing to use his name, and for using promotional material that suggested they were still using his tax education package as their Tax Relief System. [Comment: Several months after I had first heard that Botkin had completely disassociated himself with TTP I received in the mail, unsolicited, an audio tape featuring an interview between Michael Cooper and Sandy Botkin praising the benefits of Botkin’s “Tax Relief System.” I discovered that, in fact, the tape was still a TTP supplied sales aid even though the product being sold by TTP was no longer Botkin’s.] FALSE
ONLY PART-TRUE – TTP sues Botkin in September, 1998, in order to terminate his contract. The lawsuit is ultimately “settled to the satisfaction of all parties.” Botkin never sued TTP. The “Ex-IRS Agents Don’t Lie” audio tapes were always owned by TTP, not Botkin, and many independent reps used their inventory as they wished even after TTP stopped promoting Botkin in any way. The tape was one of many successes for TTP.
REBUTTAL: Botkin’s version of events is practically the exact opposite.
April, 2000: Cooper and TTP are the subject of a moderately negative article in The Kansas City Star newspaper [Comments: Within the article Cooper responds to questions concerning his involvement with Truly Special by saying he took the president position weeks before the legal complaint was filed and was unaware of the company’s legal problems. However, within that complaint it is stated, “Defendant Cooper is an individual who was President of Truly Special, Inc. during the time the acts alleged in paragraph eight occurred.” It further states, in paragraph eight, that “…the following acts and practices by Defendants Cooper and (co-defendant) were deceptive and/or unconscionable and violate the Kansas Consumer Protection Act….” Cooper’s signature appears at the end of the Judgment.] FALSE
ONLY PART-TRUE – Allegations are just that, and are often more misleading than any actions of the defendants. This is why it also states in that document that the defendants specifically DENY ALL ALLEGATIONS made herein, and that NO ADMISSIONS are made as part of agreeing to such an order.
REBUTTAL: Another attempt to deflect attention from the point, which has to do with the timing, not the validity of the accusations. Revisit the Rebuttal to the 1993/1994 Response above. Based on this evidence and the above assertions in the legal complaint, Cooper’s claim of ignorance and innocence regarding the 1994 action seems dubious – and curiously ignored in the response.
April, 2000: The Criminal Division of the IRS demands the latest TTP member database from My Tax Man, which they supply. FALSE
ONLY PART-TRUE – Again, we have reason to believe that a vindictive Gleason / “My Tax Man” instigated contact with the IRS with the intent to disrupt our business. As TTP was plaintiff in a suit against Gleason, he may have asked for these demands to be made of him so that he would not violate or compound the litigation. So, this may or may not have happened, but as Gleason had no access to TTP databases for almost two years, it is largely irrelevant.
REBUTTAL: I wonder if having your records sent, by demand, to the IRS is “largely irrelevant” to the 20,933 distributors they allegedly had two years earlier. Also, note the response essentially says this statement is “false” because it “may or may not have happened.” I hope who ever wrote this for Cooper is not a defense attorney.
May, 2000: W. Bradford Murray sues TTP in Federal court for copyright infringement claiming much of the tax advise in the new Tax Relief System was taken verbatim from his work. The company claims it acquired the rights legally through an intermediary. FALSE
ONLY PART-TRUE – TTP has never seen any work published by Bradford, and would not even know who he is, other than being told by Botkin that he and his former partner, Bradford have an ongoing conflict as to who really authored or owns Botkin’s workbook titled “Tax Advantages in the 1990s.” Bradford’s suit against TTP has been dismissed.
REBUTTAL: This one’s strange. My statement is only two sentences. The first one describes the negative event, the second one offers TTP a defense. The response confirms the negative event (Murray did sue TTP), and denies the defense. The Murray suit would have been dismissed after my article was written.
May, 2000: The KS AG’s office reports 27 formal complaints have been filed against Renaissance, AIM and TTP dating back to 1995. Fourteen are still open (unresolved). FALSE
ONLY PART-TRUE – These “formal complaints” consist of “letters” asking for unreasonable refunds, generally following many months (or years) of tax services provided, and often following earning thousands in commissions and bonuses. Several were prompted by Gleason/Botkin fans who quit TTP to work with Gleason/Botkin in new competitive ventures. With over 80,000 customers in three years, over 5,000 reasonable requests for refunds were met with immediate refunds by TTP over this same period, and only 27 complaints. That is less than .0003 (3/10,000ths) of sales!
REBUTTAL: Most of the 27 complaints I am aware of would have taken place before Gleason or Botkin left. There were “several” others after they left (over 100 actually), which would be in addition to the 27. What’s more, TTP’s VP of Operations confirmed in court that they only had about 30,000 customers/IMAs in June of 2000. So 5,000 refund requests would be 16.7% of total sales. How ever you cut it, five thousand refund requests over four years is not good. The main point here is actually magnified by the response – if you are going to gladly pay refunds to 5,000 people, why not 5,027 and save an Attorney General investigation?
[Comments: The TTP spin from the field was that this was par for the MLM course. Not true. This is, relatively speaking, a substantially high number of complaints for a five year old company.] FALSE
ONLY PART-TRUE – Clements is totally wrong on this one. We have one of the lowest complaint/customer ratios in the history of sales. As a comparison, we have been told that the local Walmart store in Topeka currently has over 100 complaints from just the one local store. Nationwide, all companies have a small percentage of people (3/10,000ths) that nothing seems to satisfy, no matter how hard you try.
REBUTTAL: You’ve got to be kidding. In the history of sales? All sales? Hyperbole aside, comparing the complaints at a local Walmart to an MLM company isn’t exactly apples to apples. A WalMart in any major city likely has more customers in one month than TTP has in a typical year. A better comparison would be to other MLM companies, and 27 is a very high number, relatively speaking.
June, 2000: In an internal IRS newsletter within an article titled “Tax Alchemy” they warn, “In a multilevel marketing scheme, unsuspecting investors may be told they can convert their personal expenses into home business deductions by selling the tax shelter program to their friends.” This is the first public hint that there is an IRS investigation of TTP. FALSE
ONLY PART-TRUE – That internal newsletter does not refer to TTP, and the IRS may well be investigating dozens of investment/tax schemes at any time. TTP is not a marketing scheme and we do not have investors in our MLM marketing efforts. We do have customers and IMAs that benefit from our services and programs.
REBUTTAL: Who ever produced these responses obviously didn’t read carefully enough. I clearly said that the IRS document referred to a “multilevel” marketing scheme which sold tax shelter programs. I am aware of only one such company in June of 2000 – The Tax People. It should also be obvious that the IRS document was using the term “investors” as a general term for those investing in their business, not a security.
July, 2000: TTP now claims to have over 50,000 representatives. FALSE
ONLY PART-TRUE – We had over 50,000 customers (now over 80,000), some of which are also IMAs.
REBUTTAL: It’s almost funny (almost) to hear how reps bragged about the 50,000 IMA’s they had amassed, but when they need to show in court a high customer-to-IMA ratio (thus demonstrating that IMAs weren’t the only one’s buying the product) suddenly only 5,000 we IMA’s and the rest were retail customers. If they did have 50,000 people paying for the monthly service (what ever you want to call them) in July of 2000, then my statement was TRUE (as the response just confirms). And if they had 30,000 in June of 2000, it now looks like my figure may have been much higher than the actual figure (there’s no way they brought in 20,000 new people in the month of July alone). The TRO and federal raids occurred in October, so are they suggesting 50,000 new members came in from July 1st (when they now claim there were 30,000) through September (80,000)?
August, 2000: The North Carolina Attorney General advises Cooper that TTP is an illegal pyramid and they should stop soliciting NC residents. FALSE
ONLY PART-TRUE – An employee of the North Carolina AG office sent us a letter concerning a “fax blast” made by an IMA that went to a state facility, which is unlawful in NC. They advised us in that letter to C&D all fax blasts. We notified the entire field to C&D any fax or e-mail blast, and received written conformation from the NC AG office that the issue was resolved and no further investigation was planned.
REBUTTAL: According to court documents, on August 31st, 2000 Michael F. Easley of the Consumer Protection Section of the North Carolina Attorney General’s office wrote to Michael Cooper and advised him that “we have received information concerning The Tax People.net. Based on verbal descriptions [emphasis mine] and written material, we have made a determination that TTP is an illegal pyramid scheme… You are to immediately cease soliciting North Carolina residents for The Tax People.net…” A subsequent letter from the NC AG’s office specifically states that no further investigation is underway as it is their policy to not pursue a company under federal investigation until those proceedings have been concluded. The letter further stated that NC’s inaction does not mean they believe TTP is in compliance with NC law.
September, 2000: Cooper and TTP are the subject of a harsher, although not entirely negative article in the New York Times. The article is primarily critical of the tax strategies taught by TTP. FALSE
ONLY PART-TRUE – The reporter in this instance told several of us he thought “TTP is a brilliant method of mass merchandising tax planning and services to the public.” He made many positive comments that were not in his biased article.
REBUTTAL: Fine. But my statement was about the article, which the response, once again, validates.
September, 2000: TTP is the subject of discussion during a segment of The O’Reilly Factor, a Fox News television program. An ex-IRS commissioner is also part of the on-air discussion. The lone TTP representative (not Cooper) spends most of the ten minute segment deflecting accusations of pyramiding and defending their tax strategies. [Comment: The segment ended on it’s only positive note with the host suggesting TTP’s $40 per month fee for audit protection “sounds like a good deal.” However, Mr. O’Reilly apparently didn’t have a calculator handy. More on this in the final commentary.] FALSE
ONLY PART-TRUE – TTP was the subject of TWO national news broadcasts on FOX. In the first, the commentator tried to set up a confrontation between Steve Kassel and a former IRS commissioner. He not only failed to create the confrontation, but the commissioner did end up saying it sounded like a good deal. In the follow up broadcast a few days later, Mike Cooper was simply asked to explain the benefits of TTP, which he did in a positive manner.
REBUTTAL: I’m confused as to why the person writing these responses continuously writes “FALSE” after my statements then provides a response that confirms the statement. Yes, there was a Fox News program, and the host was confrontational. However, the former IRS commissioner did not say TTP sounded like a good deal, he was specifically referring only to the too brief description he was given regarding the $40 per month audit protection service.
October, 2000: The North Dakota securities commissioner issues a cease and desist order to halt “recent” offers of stock in Renaissance/TTP to at least one NC resident as an incentive to keep them participating. [Comment: Unbelievable.] FALSE
ONLY PART-TRUE – The has never been any stock offers in TTP other than C2000 described earlier. No stock has been ”recently” offered in North Dakota or anywhere else for any reason. This unfounded action by North Dakota is under investigation and resolution at this time.
REBUTTAL: Denying the allegation does not make my statement “FALSE.” In fact, yes, once again the response confirms the statement. While TTP may eventually be vindicated, that doesn’t change the fact that North Dakota took the action.
October, 2000: The TTP home office is raided by the Criminal Division of the IRS as well as the US Postal Inspection Service. TRUE
ONLY PART-TRUE – The offices were raided as part of an ongoing investigation. No charges have been filed, and we expect to be fully vindicated at the completion of the investigation.
REBUTTAL: It’s very likely that no charges have been filed because the feds are waiting to see what happens with the state action. You can’t close down a company that’s closed down. Doesn’t that make sense?
October, 2000: The Kansas AG’s office receives inquiries about it’s investigation of TTP by 8 other states, including California and Florida, as well as from the SEC and FTC. TRUE/FALSE?
ONLY PART-TRUE – We understand the AGs have weekly conference calls to share information, just as we do. With all the growth and recent headlines we have generated, we would be surprised if only eight other states requested information.
REBUTTAL: This information came directly from the AG’s office. And yes, I’m surprised it’s only eight as well.
October, 2000: TTP agrees to a Temporary Restraining Order (TRO) requiring them to shut down their web site, halt all new sales and enrollment of new reps, and discontinue the paying of commissions and bonuses. The company’s assets are frozen, although the order does allow for the ongoing fulfillment of various services, such as audit protection and tax advice, and the payment of basic operating expenses. [Comment: This is a state action and it separate from the federal investigations.] TRUE
ONLY PART-TRUE – The only option was to agree, or to stop ALL tax services, audit intervention, etc. We currently provide all tax services, advice, and audit intervention as normal to all customers pending the resumption of new sales activities in the near future.
December 11th, 2000: A hearing will take place to decide the resolution to the TRO. Either it will be lifted, modified, or the company will be permanently enjoined from doing further business. FALSE
ONLY PART-TRUE – The hearing is scheduled for Feb 12th, at which time we expect the facts, rather than opinions and allegations to speak for themselves, and we hope to be fully vindicated at that time with the voluntary Temporary Restraining Order being lifted so we can resume business as usual.
REBUTTAL: Of course, this article was written previous to the original hearing date of December 12th. The hearing was postponed to February 12th, and the ruling is now scheduled for sometime after March 16th.
In the KS AG’s Petition to the court (to be decided upon December 11th), there are several key statements. A listing and analysis of each follows: FALSE
ONLY PART-TRUE – The petition contains opinions and allegations of a handful of people. Their statements of opinion are just that, and our expert opinions will dramatically differ from theirs. The additional text of this message consisted of Clements’ biased opinions of allegations pending in this legal action, and cannot be commented upon. However, as he only saw fit to share partial truths, lies, and distortions earlier, you judge the value of his slanted, one-sided conclusions.
REBUTTAL: I blew it on two dates, one corporate title, and I’m giving them the benefit of the doubt on the status of Aunt Myra’s in 1994 and the “prepaid” example of stock value. Other than that, not only does every word of my “Case Study” stand up to scrutiny, the respondent essentially confirmed 16 out of 30 allegedly “false” statements!
What is most curious is that this chronology section of the Case Study was not the meat of the article. The second half dealt with the specifics of the allegations and why those allegations exist. My commentary was not based on just opinion, but decades of legal precedent and personal experience. I think the analysis stands on it’s own merits. The entire article, including the half that was avoided in this response, can be viewed at www.marketwaveinc.com.
What I am most critical of, more than anything, is the “partial truths and distortions” (which I’m so ironically accused of) that I feel Michael Cooper and others in a leadership role have been perpetrating on TTP loyalist who are patiently awaiting the outcome of the TRO hearing (and probably getting pretty tired of hearing “it’s almost over.”) What they are not being made fully aware of is that:
1. The hearing regarding the TRO is only the first step in the state’s action. If the TRO is lifted the state then has the ability to, and very likely will, take their case to a jury trail. This is the same right Cooper has should he not prevail in the TRO hearing. In other words, all the hoopla over “vindication” and “getting back to business” after the judges decision is sadly misguided. The state action alone could take months, or even years, to finally resolve.
2. There is still two federal investigations to contend with. Even if the TRO is lifted (a possibility) and the state declines to pursue the action further (highly unlikely), there is still a pyramid investigation by the US Postal Inspector’s office (they were part of the October raid), and a criminal investigation by the IRS.
3. It was extremely unlikely that the judge’s decision regarding the TRO would take place immediately following the conclusion of the hearing, as Cooper and others assured followers was the case. This is not The People’s Court where the judge comes back after a commercial break and makes a ruling. It is routine for there to be several days, if not weeks, before a final decision is made in hearings such as this. Why did Cooper, for weeks previous to the hearing, continually imply to his followers that the conclusion of the hearing would be the conclusion of the TRO? Not only did he suggest this, he has even stated publicly that they felt the state’s case was so poor they could have asked for a judgment without even posting a defense. However, defense attorney’s routinely request a “motion to dismiss” after the conclusion of the prosecution’s case – just as they did in this case! And the motion was denied! Wasn’t Cooper notified of this?
4. The previous action by the KS AG against Cooper when he was the President of Truly Special was due to his actions. He was not an innocent bystander.
Here are some excerpts from the two recorded presentations made by Cooper. These first ones are from the live conference call.
“You approach somebody about this business – very simple proposition to ask them one question: ‘Would you invest $100 in your business that has the potential of making you $500 a day, over $100,000 per year?’ The typical response is, Well, what is it? And my response has been, regardless of what it is, if there is a viable, legitimate, honorable business that cost $100 to invest in that could make you $100,000 per year, would you put your $100 up? The next thing I ask is, ‘Could you find two people that would do the same? Could you find two people who’d invest $100 in their financial future, no other requirements, monthly requirements, none of that garbage – put in $100, find two people to do the same thing.”
Note the common usage of the term “invest” and the complete void of any reference to a product. In fact, he asks if you would pay $100 for something to make $100,000 “regardless of what it is.” Sounds a lot like the “horse manure” claim, doesn’t it? And yes, he was knocking those companies that have monthly volume requirements, like TTP. He went on to say that Truly Special had:
“No ongoing monthly production requirements, no check qualification requirements, all the things people dislike about a program.”
Next, he acknowledges, in a positive manner, a “top” distributor who has “multiple business centers.” He states, “There is the opportunity to qualify multiple business centers and a lot of people are doing that… a lot of people start with 3 or 7 business centers.” Cooper then introduces “Eric” who claims to have “come in with” seven business centers (making a $100 product purchase for each).
If there’s any doubt left, here’s a quote from the recording of the live meeting:
“I’d venture to say if I was willing to pay you 500 bucks to get me two apps tonight – find me two people that would be willing to put $100 into a business to make $500 a day and you could make your first 500 just that quick – would I get two apps tonight? For 500 bucks wouldn’t you find two of your friends that want to make some money?… Next month your two find two people (who find two, and so on)… as 64 turns into 128, you’ll get about three payouts that month.”
He then describes a $100 autoship system that only deducts $100 (for product) from the distributor’s next check when needed to qualify for another “pay cycle” (as opposed to buying them because they actually want the product). He goes on to state that reps use this system so as to “never miss a pay check.”
And remember, this is all coming from a man who turned state’s evidence against the owners of American Gold Eagle which was declared an illegal pyramid for essentially emphasizing the sale of business centers rather than product. Again, not that Cooper was responsible for that then, but certainly he should have known not to do it with Truly Special. And after two such experiences, why would he allow the promotion of Founder’s Packs to facilitate acquiring more business centers?
Was Michael Cooper really unaware of the legal vulnerability of American Gold Eagle when he first joined it? Was he really unaware of the legal vulnerability of Truly Special when he first took over? Was he really unaware of the legal vulnerability of Renaissance/The Tax People the first four-plus years he was in control of it?
You be the judge.