Alert #216: 2/25/2013

Pyramid Scheme or Legitimate MLM
What’s The Difference?

Due to the recent well publicized attacks on Herbalife by short seller Bill Ackman (who has made hundreds of millions of dollars by getting their stock price to drop), as well as the FTC’s recent closure of Fortune Hi-Tech Marketing, there is an abundance of misinformation within the media regarding what the delineation is between a legitimate, legal network marketing program and an illegal pyramid scheme. The mainstream press, such as CNBC, CNN, Forbes, and the Wall Street Journal, all seem to be relaying on completely inaccurate and long debunked definitions typically presented by a very few, but very prolific anti-MLM critics.

For example, that the “70% Rule” requires that at least 70% of all multilevel marketed products be sold to retail customers, not purchased by distributors.

Or that sales to distributors are not legally commissionable at all.

Or that distributors making more money from their downline commissions than from their own retail sales is indicative of an illegal pyramid scheme.

Some ignorant industry critics have even suggested the FTC’s legal criteria for shutting down FHTM precisely applies to Herbalife, and practically all MLM operations, as well.

And, of course, they’re wrong.

There also appears to be a renewed confusion as to the distinctions between a pyramid scheme and a Ponzi scheme. They are fundamentally different.

There’s also been a lot of chatter about what defines an “illegal security” as it pertains to MLM programs, likely due to the recent SEC action against Zeek Rewards and the Montana Commissioner of Securities & Insurance’s fining of Funky Shark for selling founders positions.

Over the next several days I will be posting a series of video blog entries defining in clear, laymen’s terms what the current legal definitions are for each of these types of schemes: Pyramid, Ponzi and Security. The fourth installment will use Zeek Rewards as a case study. ZR is a perfect subject considering they hit the legal trifecta. They were declared a Pyramid Scheme, a Ponzi Scheme, and an illegal security (although I personally question the Ponzi accusation).

The first installment, “What’s a Pyramid Scheme?” can be viewed now at:

For those of you who have been following the Battle Royal between Ackman and Herbalife, and now Ackman and several other reasonable, well informed Wall Street gurus, my rebuttal/exposé of Ackman’s case against Herbalife is now posted in the Articles Library here:

Part two, “What’s a Ponzi Scheme” will be posted by the end of the week, so stay tuned.

Len Clements
MarketWave, Inc.


Alert #215: 1/11/2013

MarketWave is Back as


After four long months of Murphy never being so right, so many times, my website is finally back online. The site has been completely redesigned and retitled, and is now called “Inside Network Marketing“. Besides being much more descriptive of the site’s purpose, it also keeps things consistent considering this is also the title of my book, my podcast, and my new video blog (and was also the title of my fraud and scam exposing radio show on KSCO a few years back, before my spot was ironically given to a show hosted by a call in “psychic”).

The new website has been ready to launch for a few days, but it does still need to access some of the functions from the old site, so I was still in need of a reliable, competent, reliable, prompt, reliable SQL developer. But after inviting 13 such listers on eLance to assist me, and having all 13 ignore my offer to give them my money, and after hiring three others who failed to finish the job (two just disappeared) the trait I was most looking for was reliability. I then found a guy on eLance who completely resurrected my old site in less than 48 hours. His name was James Reimer (probably still is).

When I saw my MarketWave website come back to life, after seeing it lying there on life support for so many months, I actually teared up a little. That doesn’t happen often. When I used to give out nicknames to the kids on my politically incorrect “Midget League” baseball team they would always give me the same one – Spock. Seriously. I assumed it was due to my name being Leonard and, well, the eyebrows. But when a whole team of Little Leaguers, and two ex-wives, insist it’s because you’re overly-logical and emotionless, I’ve got to go with their version.

As you might imagine, a lot of topics have stacked up over the last four months that I really want to talk about. And now, besides hearing me talk about it in a long form podcast, which will be co-hosted by John Fogg, you can also watch me talk about it.

Since both M.L.M. IQ Tests (One and Two) have been revised and updated significantly, the “one time” limit has been rescinded for all those who have taken the quizzes previously. Also, the Favorite Company Vote poll is now reopened. The exclusive contact listings for several of the most popular companies have become available, so grab yours quick. Go to the Favorite Company Vote list and just click on your company’s name to see if its available. If you haven’t already done so, please complete the M.L.M. Survey. It’s an extensive survey which has been used to compile responses from over 7,700 participants. To keep the data fresh I reboot the survey every few years and we had left off with just over 400 responses. To see the results of the survey you need only to take the survey. There are some very surprising results so far. The Industry Trends data is now current as well.

After reluctantly forbidding any advertising on the MarketWave website for over 22 years, I am now accepting a limited number of banner ads – but only those promoting vendors and other industry service providers. No ads will be accepted for M.L.M. opportunities or products.

Please check out the new and improved “Inside Network Marketing” website at The original address still works as well.

Thanks for your patience and support during our absence.

Len Clements
MarketWave, Inc.


Alert #214: 12/31/2012

Herbalife Hit With Another Bogus Attack by Short Seller

Is Bill Ackman the Next Barry Minkow?

I‘ve been getting a lot of requests for commentary on the recent “short theses” presented by investment guru Bill Ackman regarding Herbalife. Although there are those within our industry who may see this as Herbalife’s problem, they would be both ignorant and naive. Industry critics are exploiting Ackman’s work in an attempt to attribute his case against Herbalife to all M.L.M. companies, and if he’s ultimately successful in destroying Herbalife (his stated desire is to instigate an FTC and/or SEC investigation of Herbalife, and his goal is to have their stock drop to “zero”) it is virtually assured this bash-n-cash model will be applied to all publicly traded M.L.M. companies with any significant market cap.

As you may recall, twice convicted stock fraud felon Barry Minkow employed this tactic back in 2007 and 2008 and made a bundle shorting, then trashing, USANA, Nu Skin, Medifast, and Herbalife (he also tried it with PrePaid Legal, now the privately held Legal Shield, but for some odd reason just couldn’t get their stock to go down). Minkow isn’t doing this anymore because you’re not allowed to invest in stocks while your in prison.

I was going to hold off on this rebuttal to Ackman’s short thesis until I got my new website launched, because it will include video commentary, but I decided I’d like to get it out during both mine and Bill Ackman’s lifetime. Yes, after three months, we’re still rebuilding the site, but it is getting close. And it’s going to be a huge improvement over the previous site. Someday. Soon.

BTW, for those of you who paid for the exclusive contact listing within the Favorite Company Vote, you will receive a free month for each month, or partial month, the site was offline. Thank’s for your patience.

So, as I explain in the rebuttal report, I don’t have time to research and write over 60 pages of rebuttal points, over several months, like I did when Minkow first attacked USANA, but this eleven page response should provide more than enough evidence as to what Ackman’s true agenda is here.

Also, even if you’re not involved in Herbalife, or any public M.L.M. company, or just not interested in this issue, I’d still recommend you read the response. It could provide some great material as far as addressing objections like “99% don’t make money” and M.L.M. companies are all doomed to inevitable “market saturation”.

You can find the rebuttal report here:

Please provide any feedback that you feel can improve this rebuttal, including misspellings and typos. I’ve only proofread it seven times, so there’s surely at least 20 or more still in there.

Direct Selling Edge Conference

I know it’s late notice, but if any of you are interested in starting and operate your own M.L.M. company, or would just like to be educated on what it takes to do so correctly, or just need a tax deductible excuse to visit Las Vegas, check out the Direct Selling Edge conference, sponsored by Sylvina Consulting, to be held on January 10th and 11th in Las Vegas.

I’ll be presenting there as well as attorney Kevin Thompson, author and consultant Daren Falter, premier start up consultant Jay Leisner, and at least half-a-dozen other industry experts.

For more information click on either of the above links, or call 503-244-8787.

On behalf of all of us here at MarketWave (yes, I actually have employees now!), we wish you and your loved ones a very safe, healthy and prosperous New Year.

Len, Carolyn, Dave and Russ.
MarketWave, Inc.

Alert #212: 10/31/2012

Frightening Times at MarketWave

Sometime during the middle of the night, about a month ago, someone – or something – mutilated my MarketWave website beyond recognition. They, or it, crudely amputated the site’s SQL database files, then cruelly left it in a zombie-like state both blind, and with no ability to communicate. It now waits, alive but in a semi-comatose state, for an SQL specialist to perform a transplant. And then, the plastic surgeons will… well, do the best they can do.

And was one of the lucky ones.

This story begins the morning of October 4th. I awoke to find the aftermath of the slaughter graphically displayed on the screen of my Mac. Only the top sliver of the home page was visible. Then, when my site called out for it’s MySQL file, there was only silence. When I witnessed all the inky blackness below the mangled, deformed remains of my main menu I knew this was no mere, momentary glitch. With dreaded trepidation I slowly inched my sweaty mouse across its pad, and asked my site to try and tell me, if it could, what had happened. It responded, “Oh my God! My SQL files are gone! They’ve been ripped out! All my data… gone!” Well, actually it said “Specified SQL server not found”, which is kind of the same.

I immediately called the tech support version of 911 (my web host’s cell phone) only to hear an even more terrifying sound: “This number is no longer in service”. I emailed him, and what I got back was something so vile, so horrifying, I can barely type it’s description.

“Mail System Error 5.1.1 – The email account that you tried to reach does not exist.”

My web host, Nevada Racks, was a one man operation, and now that one man, Chris Lund, was missing. He had vanished, leaving no trace of his destination – or who had taken him. I was helpless to assist my suffering website. Then I remembered an email I received from Chris back in July informing me he was migrating all of his clients to another hosting company called RackSpace, and they could also offer me support. I even found an introduction email from a RackSpace “Account Manager” welcoming me to RackSpace, and offering their “full support”. There was still hope.

I called RackSpace and was subjected to yet another hideous sound: “You’re not our client. We can’t help you. Call Nevada Racks.”

I began frantically Googling, desperately trying to discover the whereabouts of Mr. Lund. Where did he go? Why did he flee? Who, or what, was he running from? And — did he make it?

It didn’t take long.

I discovered Chris had set up an allegedly fraudulent celebrity booking scheme and had made the dire mistake of accepting a $165,000 payment from a monstrously bad choice of victim – the co-founder of – as a 50% down payment towards the booking of Tom Petty and the Heartbreakers to perform at his wedding (seriously – I’m not making this up). Chris didn’t actually know Mr. Petty, nor was in any position to book him. He fled, but he didn’t make it far. Well, from Las Vegas to Illinois, so pretty far. But not far enough. The FBI arrested him on August 2nd. He now rests in a Washington state detention center awaiting his fate.

Here’s all the gory details:

After almost a month of investigation I’ve determined that some mysterious person, unknown to Mr. Lund or anyone else, logged into his Nevada Racks admin control and viciously murdered 19 of his 25 client’s websites, and badly injured one – mine. It’s unknown as to why the others were spared, or what might have been the motive. The killings were senseless in that those targeted were random, unassociated clients having no other connection to Mr. Lund, and the site that he used for his celebrity booking business was one of the survivors!

Alas, simply transporting my site to a safer home, such as GoDaddy (which I’ve done), does not heal the damage caused by an eviscerated SQL database. My site was born with a now rare form of database called MSSQL, and it needs to regenerate a MySQL database to survive. And even then, it will suffer from almost complete amnesia. It won’t remember any of my past customers, all the responses from the last 550 survey takers, the scores of the last 100 or so MLM-IQ test takers (about 98 of which won’t mind that at all), and worst of all, all the votes for the 2012 Favorite Company contest.

Those of you who have an exclusive contact listing within the Favorite Company Vote list will all receive a free listing for what ever amount of time the site was down (at least one month).

Back ups of all files were suppose to occur nightly. I’ve discovered the sickening truth that this has not been so. I did occasionally perform my own manual back up but, much to my torment, the last one was in November of 2011.

I can perform surgery on my own website to an extent, but when it comes to SQL databases I’m way over my head. I’ve gotten the assurance from two web developers that they will help resurrect MarketWave, and then both also disappeared. I went to eLance and invited 13 (no kidding) different local freelance web developers who have SQL experience to accept the on-the-clock, cash paying job of bringing my site back to life, and all 13 have utterly ignored the invitation. Why did they even list themselves!?

So now I’m reaching out to you. Although I do appreciate this may be an ominous request, since everyone associated with my site’s recurrence seem to disappear.

I’ve actually decided to go with a whole new WordPress website, which will focus much more on video and audio blogging related to industry events and commentary, with a discussion forum. However, even this site accesses several pages from the site. So if anyone knows anything about MySQL, or knows anyone who does, I’m in desperate need of rescue. It can be on-the-clock, or in trade for a premium placed banner ad (vendors only, no M.L.M. companies), or you can assist pro bono (which I think is Latin for schmuck).

So there you have it. I’m reaching my ectoplasm drenched hand from beyond the grave, asking for someone to pull me back from the other side. Email me at if you can help.

Happy Halloween. Be safe.

Len Clements
Founder & CEO
MarketWave, Inc.

Alert #211: 9/17/2012

Zeek Rewards: Aftermath

Zeek Rewards Podcast Now Posted      

Those of you following the Zeek Rewards debacle have probably heard about the two alleged class action lawsuits that are supposedly in the works. One is on behalf of Zeek victims against Zeek Rewards, and depending on what happens with the receiver, and how much money is eventually returned, this one may actually happen. But then there’s the one where funds are being raised to sue the SEC in an effort to get Zeek back in business. That one will never happen. In fact, in my opinion, it’s a scam designed to extract money out of victims of a scam.

The SEC claims ZR hit the trifecta of illegal schemes: they were a pyramid scheme, a Ponzi scheme, and an unregistered security. The lawsuit against the SEC has not yet been filed, probably never will be, and even if it is will likely be thrown out. But assuming it actually does get filed, and survives a demand for summary judgement against it, there is virtually no chance of it ever succeeding. All the SEC has to do it prove one of it’s three charges against ZR, and although I still believe (although not quite as strongly as when I wrote my ZR report) that they were not a Ponzi scheme, they very likely were an unregistered security, and they absolutely were a pyramid scheme.

If you’re rather hear me explain why rather than read my 35 page exposé, here’s the latest edition of my Inside Network Marketing podcast:

Also, it has been alleged by a certain industry watchdog that the lead attorney in one of the class action lawsuits against Zeek Rewards, J. Calvin Cunningham, has been reprimanded by the North Carolina state bar for “cheating his clients”, and affiliates participating in the suit my be “jumping out of the frying pan into the fire”. Within this commentary a link is provided leading to an article asserting Mr. Cunningham “rips offs” his “clients” (plural).

J. Calvin Cunningham Jr. did, in fact, receive a reprimand from the state bar for overcharging one of his clients. About 36 years earlier he had a son, which he named James Calvin Cunningham. His son went on to also become and attorney – and file a class action lawsuit against Zeek Rewards!

J. Calvin Cunningham III has not only never been reprimanded by the state bar, he has had a rather exemplary career.

Survey Question

Who do you think deserves to be “exposed” next?

Len Clements
Founder & CEO
MarketWave, Inc.

Alert #164: 11/19/2010

The Ultimate “MLM Summit”? You Decide!
Also, Industry Trends Update Now Posted

One of my dream projects has always been to hold an “MLM Summit” where not only do many of the best leaders and trainers come together, but all of the most powerful, influential people in our industry. The attorneys, consultants, publishers, authors, watchdogs, vendors, and the executive leadership from our various trade associations and companies, all in one place, for one united purpose – to improve the public image and acceptance of the multilevel marketing profession. 

This would first involve doing something that so many of our industry’s most influential power brokers (mostly from the corporate, training and publishing segments) have so far been loath to do – admit there’s a serious problem. Nothing is ever going to get fixed until we, as a profession, confess to what’s broke.

While the MLM business model itself is just fine, and indeed offers tremendous advantages to any would-be entrepreneur, it is so often dismissed or outright rejected due to mass ignorance of its true nature. This ignorance is perpetuated by the mainstream media, and by a small but prolific clique of anti-MLM zealots. If you want to find them, just Google “MLM”, like many of your prospects are doing. At least five of their sites are usually within the top 25 search results, and typically three or four of the top ten. What has been most frustrating, at least for me, is that their anti-MLM propaganda can be so easily refuted, if not completely debunked, yet so few even make the attempt. The reasoning has always been, “Acknowledging them just draws more attention to them”. That may have made sense, maybe, before about 1996 when that thing called the internet became so popular. Today if we defend ourselves against these anti-MLM ignoramuses perhaps 98% of our prospects are exposed to them instead of 96%. At least, 98% of them that are taking their business serious enough to have done any investigation of it before joining, and have made any attempt to learn more about it once they’ve joined.

Those that would have the world believe that we’re all just scammers promoting “product based” pyramid schemes are kind of like cavemen with clubs and spears – and we’re the U.S. Marines. But instead of defending ourselves against their onslaught of rocks and pointy sticks with .45 caliber facts and 20 megaton truth bombs, we stand there with our hands clasped behind our backs, with our eyes closed and our chins jutting forward, inviting them to freely batter away.

And we could end this tomorrow.

Well, maybe not that fast. It might take a couple of months, actually. I know because that’s how much full time work it would take to completely the development of I’ve already produced all of the responses, now I just need to find a web developer with some free time who is as passionate as I am about fighting back, and defending this profession. I’m going to co-brand this site with somebody, and somebody is going to get a ton of exposure. If that might be you, please email me.

But, the first thing we need to do is stop giving the anti-MLM Neanderthals a target. There is way too much “junk MLM” out there with gimmicky pay plans and products based on hype, exaggeration, and in some cases outright fraud. Even when the content of our gift has great, legitimate value, way too often the packaging is crap.

An MLM Summit?

An event production company called CAPA Productions, founded by ANMP and DSRA board member Bret Matheny, is attempting to produce an event that may very well accomplish many of these goals. This ambition venture will definitely be more than just a few MLM gurus giving lectures (not that that’s a bad thing). I’d give you more details about exactly what it will be, except much of that is being left up to you!

Please participate in this survey:

Anyone who takes the survey gets a chance to win an 8 Gig Nano iPod ($150 value).

Industry Trends Data

Also, the MLM Industry Trends data has been updated HERE. An index of the ten largest public MLM companies is still outperforming the S&P 500 over the past year (20.02% to 11.5%) and past three months (9.88% to 8.71%), and the ratio of pro/con MLM search term results increased 1.8% to 2.09 (the third increase in the past four months, although the overall trend for the year is slightly down).

In closing, look for an increase in the number of Alerts and “Inside Network Marketing” podcasts in the weeks ahead. I’ve had some major projects that have kept me busy the last few months, but it’s time to get back in the game. Thanks for hanging in with me during my absence.

Len Clements
Founder & CEO
MarketWave, Inc.

Alert #206: 4/3/2012

Industry Trends Update 

At the beginning of every month the Industry Trends page at is updated HERE. As most of you already know due to previous commentary, I’m not a big fan of using a specific company’s web traffic as an indicator of a growth or decline in popularity. However, the number of people searching for information about a company, or any aspect of network marketing in general, is a good indicator of rising or falling interest in the business model, and public opinion of it.

For example…


Searches for the synonymous “MLM” or “Multilevel Marketing” are also gradually trending down. However, this does not necessarily indicate lessening public interest in specifically networking marketing. Check this out…


It would appear that there is a gradual, and strange, lessening of interest in home business ventures entirely. What’s most bewildering is that the sharpest decline in Google searched for the term “home business” began during the sharpest decline in the economy. Did you notice the other interesting trend in the above graph? Searches for “home business” was always at its annual lowest during December, and always spiked in January.

Paradoxically, the number of unique visitors to the Wikipedia entry for “Multilevel Marketing” over the last 4-plus years, presumably as part of one’s consideration of the industry, looks like this…


The bad news is that back around late 2008 the Wikipedia page devoted to Multilevel Marketing ceased to be neutral. It is now controlled by a clique of Wiki editors who are demonstrably anti-MLM.

So how about some good news! There are several thousand trend analysts, better known as stock traders, or residents of “Wall Street”, who seem to be very optimistic about the future growth potential of our industry. I’ve been tracking an index of the dozen largest publicly traded network marketing companies, which I call the “MLM 12”. When comparing the growth of this index to the S&P 500 (an index of 500 of the largest, mostly U.S. based, public companies) here’s what we find…


The MLM12 has outperformed the overall market in six of the last eight months (and 22 of the last 36). In March the S&P grew by 12.0%. The MLM12 grew by 19.8%. Over the past 12 months the S&P has risen 5.7%. The MLM12 has grown 23.6%. domain name for sale. 

I have received an inquiry regarding the purchase of this domain name, which was originally used for my ill-fated attempt to launch my own network marketing company back in 2005 (yes, I’m 0-for-2 in my corporate ventures, but hey, I’m 2-and-0 in court against my ex-partners!). Before selling this domain I thought I’d give my subscribers a shot at it first. This will also help me appraise its value. The average provided by five different free appraisal services peg the value at $3,621.50, however the range is from $17,002.50 down to only $170.00. That doesn’t give me a lot of confidence in free appraisal services. I paid GoDaddy to perform a formal, detailed appraisal and they came up with $623.00. However, within GoDaddy’s domain name auction site bidding for is up to $70,000 and is going for $50,000. Wouldn’t – with fewer characters, no plural, and .com instead of the much less valuable .net – be worth more than that? Surely it’s worth more than the hyphenated, which has a high bid of $10,000! If and are both going for $1,000, has got to be worth several times that amount – right?

Please tell me what you think. If you would like to purchase this domain name, make an offer. Either way, what do you think it’s worth? Thanks for your help.

Len Clements
Founder & CEO
MarketWave, Inc.

Alert #199: 11/4/2011

Industry Trends Update

This month’s industry trends update is a mixed bag of good news and bad news.

First, the good news…

As has usually been the case for most of the last decade, our M.L.M. stock index (comprised of the 12 largest public companies by market cap) has out performed the overall market by 3.36% over the past three months, and 11.02% over the past year. The biggest gainers over the past 90 days are USANA (24.95%), Nu Skin (24.86%), and Mannatech (9.72%).

Although the overall amount of internet chatter regarding M.L.M. decreased significantly, and for only the third time in the last 15 months (by 10.4%), the ratio of positive comments to negative ones increased from 1.94 to an all time record of 2.53! To put this in perspective, over the 40 months I’ve been tracking this ratio it has exceed 2.33 only twice, with the next highest being 2.395 back on September 3rd of last year. The lowest it’s ever been was 1.60 on July 1st of 2009.

What’s just as promising is that the number of Google search hits for the combined terms “MLM” and “Scam” has dropped for the third consecutive month to (albeit a still too high) 10,900,000. This is down from an all time high of 14,800,000 back on June 3rd, and hopefully signifies the beginning of the end of this contemptible, foolish, foot shooting practice of promoting our opportunities by rhetorically asking if they are a scam (i.e. “Is ABC Network a Scam?”).

I’ve also been following what I think is another good metric for tracking interest in our industry – the number of unique visitors to the “Multilevel Marketing” page on Wikipedia. Here’s what it looks like for the last 46 months:

What’s interesting here is that about this time last year a small but diligent anti-MLM contingent of Wiki editors assumed control of the Wiki page. They skewed its depiction of your industry so far towards the negative that I began counting it as an anti-MLM site in these monthly trend stats. Note the downtrend in unique visitors beginning right about the same time.

The only other negatives to report would be the drop in pro-MLM sites among the top 20 Google search hits for the term “MLM”, from 14 to 13, and among the top 100 from 86 to 84. The number of anti-MLM sites increased from 4 to 5 and 10 to 11 respectively. Certainly nothing to cause anyone to believe the M.L.M. sky is falling.

Although, it does beg the question… There are only about 6 or 7 anti-MLM critics who’ve developed full fledged anti-MLM exposé websites, and there are over 10 million of us. Why are almost all of their sites among the top 20 when someone Goggles “MLM”?

Actually, I know just enough about SEO to, well, know that Search Engine Optimization is referred to as SEO. But amongst my limited knowledge on the subject I do know that how many other sites link to yours is a major factor in determining search result rankings – and the anti-MLM crowd tends to concentrate all their linking on these very few sites. When we have several hundred generic, pro-MLM sites to link to the focus gets spread much thinner. So, here’s what you all can do to bump these ignorant MLM smear sites out of the top 20. Get as many others as you can to add links to these generic, educational or advocate websites, which are currently outside the top 20 (some just barely):

And last, but certainly not least,

There are several others within the top 100 that you might find link-worthy as well. If even 1% of us referenced these sites on our own site, I’m betting these one million new links might have a positive effect.

In fact, I just thought of another good one. This is Michael Clouse’s training and information site, where he is currently conducting his annual “Favorite Trainer” poll. If you feel like voting for that guy who did that amazing seven part training series last month, please, feel free 🙂

Thanks for your support.

Len Clements
Founder & CEO
MarketWave, Inc.

P.S. If you plan on doing any Christmas shopping via this season, please use THIS link, or the one at the bottom of the home page. You’ll have the exact same shopping experience (same screens, same prices, etc.) but MarketWave (okay, me) will earn a small affiliate commission for each purchase. However, 100% of this affiliate income will go straight to the Salvation Army’s Angel Giving Tree program. Check it out.

Alert #210: 8/20/2012

Inside Zeek Rewards
What Went Wrong, When, and Why

Zeek Rewards Expose’ – Better Late Than Never     
This extensive review (35 pages, 100 footnotes) is now offered more as an explanation rather than a warning. Hopefully it will also serve as an educational tool to help prevent this kind of emotional and financial damage from happening again.
My greatest regret is that I didn’t get this done sooner. As I explained in the review, my policy is to never make a public comment regarding concerns I have with any person, product or company, until I’ve gotten their side of the story. I have made exceptions, but only when their was a smoking gun, and the evidence was irrefutable. In ZR’s case, virtually all of the myriad concerns I had still left open at least the possibility of a valid explanation, or that I had simply got it wrong. Also, ZR was a work-in-progress. It didn’t make a lot of sense to write up a novella about what ZR is at that moment when it would have been made obsolete several times over before the review was completed. As I state in the review…
“The first challenge in reviewing ZeekRewards is that it has been in a constant state of metamorphosis… About the time all the online chatter began about what ZeekRewards was and was not, legally, structurally, and economically, was about the time it started to turn into something different. My argument for not joining the debate during this time was that it was tantamount to arguing whether this newly found species was going to be a beautiful, rainbow colored butterfly, a fuzzy gray moth, or a malaria riddled mosquito, while it was still inside the cocoon. Unlike so many other Zeek critics, I chose to wait to see what emerged rather than judge what it was, or was in the process of changing from.”
I also was led to believe by ZR management that an “exclusive” interview with founder and CEO Paul Burks, along with attorney Kevin Grimes, was imminent. This was to be recorded for broadcast on my “Inside Network Marketing” podcast, and it was fully understood that no questions were off the table. After waiting a month, and three postponements, I started work on writing this review based on what I had.
My biggest concern when I do this is, what if I’m wrong? What if I don’t have my facts straight? What if I’m about to bash them on something that they are about to change or eliminate? In this case, my concerns were confirmed, but by the SEC rather than a member of ZR corporate management.
Still, I feel somewhat like how I feel when I hear about a life saving medication passing FDA mandated, years long, double blinded clinical trials. We eventually find that the drug works when those who got the real drug get better. But in the mean time thousands of people who got a placebo died unnecessarily. I’m not debating this specific practice (at least not here, and now), I’m just lamenting how my own self-vetting process very likely caused at least one person to dump thousands of dollars into ZR that otherwise wouldn’t have. And even one was too many.
Or, it might have made no difference. I warned at least a dozen friends and associates about Zeek. Every one of them joined anyway.
Either way, I should have gotten this done sooner, and I am sorry I didn’t.
This review is a monster. It involves a lot of legal theory and delves deeply into the minutia of what was ZeekRewards. But if you can bear through it I assure you, you will be armed with all the ammunition you need to be sure that you, your family, and your friends will never be a victim of an illegal pyramid, Ponzi, or investment scheme again.
You’ll also completely understand why the closure of ZeekRewards was inevitable, and why (in spite of rumors to the contrary), it is not coming back. 
Here’s the SEC’s press release, which includes a link to the legal Complaint:
Forbes, Reuters, Fox News, MarketWatch, CNN, The Wall Street Journal, and many local news outlets have all reported on the “SEC Closure” of ZR. Just Google “Zeek Rewards” and “News” and you’ll find them.
And, finally, here’s the ZeekRewards review:
I’m also going to be doing an INM podcast on this issue in the next few days, because there’s a lot of stuff I want to say about the aftermath of this fiasco, and I talk a lot faster than I type. Also, I’ll be a guest on Tony Canulli’s “The Slight Edge” show on the “Home Business Radio Network”, where we will be discussing nothing but Zeek.
I know there’s a lot of you who have a lot of questions. For those who don’t get them answered within this review, or during my podcast, or on Tony’s show, I’ll be conducting a live Q&A call devoted entirely to ZeekRewards within the next few days as well. Stay tuned for details.
ZeekRewards was an M.L.M. experiment gone awry. It was an out-of-the-box concept that hit it out of the park but, I strongly believe, had no intention of being out of compliance. And while the idiom “Intent is 9/10th of the law” is completely false, it may very well have played a roll here. In spite of the SEC’s declaration that ZeekRewards was a “$600 Million Online Pyramid and Ponzi Scheme”, no criminal charges have been filed against Mr. Burks (or any other member of Zeek’s senior management) and he was allowed to settle without even admitting any guilt.
One final thought for those of you who were involved in ZeekRewards: As much as the anti-MLM critics are going to exploit this, and the media is going to sensationalize it as another bad “multilevel marketing scheme”, ZeekRewards was an aberration. They are not representative of the multilevel marketing profession, or indicative of how the business model operates. Please don’t give up on the profession itself.
This education was probably a costly one. Don’t waste it.
Len Clements
Founder & CEO
MarketWave, Inc.

Alert #208: 6/27/2012

Rebuttal to Barrage of Binary Battery

Let’s get this out of the way right up front.

I don’t like binary plans.

Fortunately, binary plans are almost non-existent today. The binary/unilevel hybrid plan, however, has become one of the most popular compensation plan models of the last two decades.

The unilevel aspect is usually the matching bonus. Some call this plan the “binary match”. The matching bonus was first adapted to a binary plan in September of 1995 and has since become the most copied comp plan feature in history (although at the current rate the “break even bonus” may someday overtake it). The binary/match was invented by Jim Song who was the founder of Longevity Network (where I was a top earner from 1995 through 2003, and am no longer associated with). In fact, next time you’re in Vegas I can take you to a business park at the end of Sunset Blvd. and we can peer through the window of one of the ground floor offices and see the exact spot where the binary/match was invented (then flee from the building’s security). It should be an M.L.M. historical landmark.

What’s unfortunate is that a number of industry leaders, both field and corporate, have recently felt compelled to bash the binary based on bogus b… binformation (look it up). I have no problem with anyone making a pragmatic, historically, logically, mathematically, fact based argument against a specific style of plan. I did it several years ago when I made a case for why the Compressed Unilevel was not as good as was being declared. I even made a case for why the Aussie 2-Up should be avoided unconditionally. I did that because, I felt, and still feel, there was no redeeming aspect to it and it’s flaws, unlike the straight binary, were inherent and irreparable. Trying to fix the Aussie 2-Up would be tantamount to teaching Jeffrey Dahmer better table manners. But to denounce an entire category of plan, one where there are myriad variations, most of which have, in fact, resolved most of the flaws in the original concept (circa 1989), is just silly on it’s face. Saying the Binary plan is “bad for network marketing” (actual quote), is like saying, “Fords are bad for automobiles”.

But, alas, they have done just that. In this case, “they” being John Godzich, Jeff Olson, Blake Mallen, and to a lessor extend, Lou Abbott and John Councel.

You can find my probably too long rebuttal to each of their specific anti-binary points here:
And for the record, this is not meant to defend or promote any particular company (there are hundreds of binary programs out there), and I am by no means discrediting the unilevel plans used by anyone listed above. I like unilevel plans, and the plans they promote are just fine. My only issue with them is the statements they have made against binary plans.
Zeek Rewards
Over the last several months I have received more requests for commentary on Zeek Rewards than probably every other M.L.M. opportunity combined. Because I haven’t commented publicly, at all, I’m now starting to get emails accusing me of accepting “hush money” to keep silent. No, that’s not the case. I will never comment publicly on any person, company or product until I have exhausted all efforts to get my facts straight, which includes having the subject respond to my questions and/or concerns. Usually this isn’t a challenge. Unfortunately, how this sometimes goes is that the company chooses to not participate in my inquiry, even after I practically beg them to respond to my concerns. Sometimes they say I’m just not “relevant” enough, or words to that effect, but usually they just ignore me. I then go with what I have and make negative comments about them, and then suddenly I become relevant enough to have their attorney write me a nasty letter telling me to “get your facts straight”, and demanding a retraction. The letter never includes any specific points I got wrong, so I then write back asking for such clarification, and never hear from them again. (this is, by the way, exactly what happened with my PrePaid Legal exposé in 2002 – which, for the record, is no longer relevant). In the case of Zeek Rewards, I’ve been informed that late July is the earliest anyone from corporate can speak with me. I know they are in a state of overwhelm right now, which is why I’ve been patient for weeks. But, over those same weeks they seem to have no problem finding time to be interviewed by other bloggers and broadcasters. I guess I’m not as relevant. At least until my next show, when I go with what I’ve got.

I’m not really sure why ZR can’t find time to be interviewed by me, but I’ve got some insiders lobbying on my behalf, and ZR management has never shied away from public inquiry before, so I’m still hopeful the next INM show you hear will be a live interview. Only this time the interviewer won’t be lobbing underhanded softballs and blowing love kisses.

Maybe I just answered my own question.

Len Clements 
Founder & CEO 
MarketWave, Inc.