The following is from Josh Anderson, a member of the Warrior Forum, regarding schemes and other programs you should be aware of.

I notice a lot of fairly new warriors posting questions about things like "randomizers," "investments," and other scams.

These "newbies" are looking at these programs and their offerings with serious interest and feeling the temptation that comes when promised easy money.

I am going to be straight forward and completely honest:

1. When you are getting started online it is hard to hear the legit opportunities because of the multitude of scams and ponzi schemes.

2. Opportunities that offer you fast money by making an "investment" into a "matrix" or "randomizer" or other such Ponzi scheme are almost all illegal.

3. There are so many illegal schemes online that it may seem like very few are exposed and prosecuted by the authorities but this does not make them any more legit.

4. In the US 70% of your revenues must come from the direct sale of goods or services and only 30% can come from the recruitment of other distributors in order for the opportunity to be legal.

This is known as the 70/30 rule and is used by the feds when taking on mlm and other opportunities.

Otherwise the companies are getting into "ponzi" and "chain" schemes which are federal offenses in the US.

5. "Referral sales" are illegal in all 50 states. A referral sale is where you offer a discount or other value in exchange for "leads" or the names of prospective purchasers (do a search for legal info regarding "referral sales" on Google and you will learn some very interesting facts).

Here is a link to a page with some basic legal definitions for ponzi or pyramid schemes and referral sales:

http://ag.ky.gov/cp/367_830.htm

6. A program does not have to pay out in the form of a "pyramid" to qualify as Ponzi.

7. Just because their is a product or service offered as a front does not mean that a program is not Ponzi. Here is a good example:

http://www.crimes-of-persuasion.com/Crimes/InPerson/MajorPerson/telecom2000.htm

8. There are many involved in ponzi who will claim that their program "works" and has passed the scrutiny of the FTC... most of them have no clue what they are talking about and are simply subconsciously excusing a lie that they have convinced themselves to ignore.

http://www.ftc.gov/bcp/conline/pubs/alerts/doznalrt.htm


9. Self deception is a destructive illness. I got on the internet for the first time in 2001 and began researching internet business. I was stuck by the amount of "investment" and "matrix" opportunities that were available. Many of them were "ground floor" startup opportunities that claimed they were going to sell a product or service once they got off the ground but that they needed a few "investors" to grab "top positions" before they "launched."

I found that almost all of them never actually offered a legit product or service and operated as an unabashed and obvious pyramid scheme. Most sites would disappear within a year and I would see the same founders starting different opportunities with varying "payout" plans all of them Ponzi.

I also saw that some of these Ponzi creators spent time posing as "consumer advocates" for those who had lost money in other schemes. These ponzi scammers would lure in victims of other failed ponzi schemes by publishing submitted complaints on their websites in behalf of the victims. They would act as if they were trying to assist the victims in recovering their lost "investments."

I would then see these very same "advocates," after building a list of victims sufficiently large enough who trusted them, launch their own ponzi schemes with claims like "everyone gets paid" and "guaranteed not to fail." They would tout themselves as saviors claiming that no one would get hurt and that they were out to help everyone who lost money when other companies failed.

10. A majority... let me say that again a MAJORITY of opportunities I see advertised in safelists are illegal investment schemes.

The reason for this is because most people who are attracted to these type of opportunities cannot build a mailing list to market to (the reason is because the mainstream business world immediately sees you as illegit) and they congregate in safe lists in hopes of spreading their opportunity virally.

Most members of safe list communities (the one's who spend every day reading and mailing safelists and investing in ponzi) are inexperienced deceived and looking for easy money.

*I know I will get heat for saying that but I also know it is true. There are legit ways to use safe lists but the majority of the opportunities advertised in them are complete garbage.*

11. Light attracts light. Darkness attracts darkness. Scammers attract easy money seekers who have deceived them selves into believing their lies.

12. There are many members of this and other marketing forums making money in illegal investment and ponzi schemes. There are many members of this and other marketing forums loosing money in illegal investment and ponzi schemes.

13. If you align your self with such opportunities (even if you make money) your business will be seen as illegit and your own reputation will be tarnished by those whom you associate with.

14. It is illegal to offer an investment opportunity, collect funds, and then spend the money on other projects:

Read the Matthew Bowin example on this page:

http://www.sec.gov/investor/pubs/cyberfraud.htm

Not to long ago dozens of warriors were lured into investing in a software development opportunity run by a well known marketer that was never fully delivered.

I settled out of court with that marketer to regain my own investment back after I threatened to bring in the FBI and SEC.

15. It pays to educate your self on the laws that govern your business. I have personally interviewed attorneys, legal experts, authors, and a federal expert witnesse on the subject of mlm, one up referral, and ponzi style compensation programs during my own investigation into the online "money for nothing" phenomenon.

http://www.firstgov.gov/Citizen/Topics/Internet_Fraud.shtml

16. You should also read what the SEC has to say about "internet investment" schemes.

It may shock you to know that:

"...the following companies must file reports with the SEC: All U.S. companies with more than 500 investors and $10 million in net assets;"

Companies that fail to do that are in violation of federal laws and many cases send the owners of such companies to prison.

The SEC governs most "investment" opportunities and when their hammer falls on a company it is not pretty.

Anyone interested in online business opportunities should read this page about "internet investment fraud:"

http://www.sec.gov/investor/pubs/cyberfraud.htm

Also it may surprise you how many internet businesses violate these areas of the law:

Franchising - http://www.ftc.gov/bcp/franchise/netrule.htm

Endorsements - http://www.ftc.gov/bcp/guides/endorse.htm

Earnings Claims -

http://www.ftc.gov/opa/2003/11/dojsweep.htm

http://www.ftc.gov/opa/2005/11/wealthsys.htm

http://www.lawpublish.com/mlm.html

http://www.ftc.gov/opa/1998/05/greenhorse.htm

17. Robert Fitzpatrick is one of the foremost experts and has served as an expert witness in many federal cases, been published on the subject of ponzi, and has been featured on nationally syndicated television shows speaking on the subject.

His website is one of the greatest resources for educating you self against ponzi and other related illegal scams:

http://www.pyramidschemealert.org/PSAMain/home.html

Mr. Fitzpatrick's site is not another anti scam site where people post their grievances it is one of the most educational sites on the subject of ponzi and mlm legal battles on both side lines that you can read.

I don't care if there are any detractors to this post. I am not going to debate what I have written.

I have written it for the benefit of those who are truly interested in educating themselves on the subject and making educated decisions based on the laws that govern the businesses they are getting involved in.

There are many on the internet and in this forum who will seek to excuse their illegal activities and continue to live in self deception.

That is fine. Everyone is entitled to their own decisions and opinions.

This post is to provide a powerful education to the multitudes who desperately need it including the newbies who keep posting questions about whether such scams "work" in various marketing forums around the internet.

 As I mentioned previously I had interviewed some of the top legal experts on this topic in my research...

Even they all agreed that many programs that lay in a "grey area" must be tested in court before judgement is passed.

However, that is in reference to mlm opportunities and "one up" compensation plans and not your avarage "investment" "randomizer" or "pyramid scheme"

Let all of us remember that Frank Kern and his master resale rights product "Instant Internet Empires" was prosecuted under some of the doctrines I mentioned above. His site was shut down and he was ordered to pay restitution.

Yes many, many, many of the programs that warriors are members of could be targeted by the ftc and could be found in violation of laws.

The courts decide though and I believe the judgement on whether or not a company or an opportunity is legit is best made by you after doing your"due dilligence."

Instead of walking on the edge and risking my reputation and business over associating my self with ponzi schemes I choose to speak out against them.

The post above has enough information from the US government and other resources on the issue to be clear in every essense what should be avoided and how to evaluate whether a program is appropriate.

The Direct Selling Association has lobbied for years in behalf of the network marketing industry and product based ponzi schemes... Amway has been targeted many times by the federal government for allegedly operating as an illgal ponzi scheme.

Most large companies like Amway negotiate with the government and settle out of court so that they do not have to admit guilt.

I know of very few companies that actually follow the 70/30 rule. Most network marketing companies focus solely on creating the idea in the heads of consumers that they can recruit others distributors and get rich off others work while sitting in bed and being brain dead.

This is what makes Ponzi attractive to the newbie... so many are struggling to make money online, they are overloaded with information and do not know where to start, then along comes some "garanteed sign up" company that offers an investment in a "position" promising a high return on investment.

Consider these questions:

1. Is the opportunity you are considering offering the ability to sell a product or service?

2. Can you make money selling the product or service directly without recruiting others?

3. Is the focus of the company selling their product or recruiting other distributors or investors?

4. Is 70% of the revenu generated by the company from the sale of products and not from just the purchase of "distributorships" "positions" or "investments?"

If the answer to those questions is no then you can be confident that you are involved in a ponzi scheme.

A company that offers a "position" and high yield payout in exchange for an "investment" and which uses the money you invested to pay out other "investors" or "positions" is Ponzi.

You may run accross a company that offers a "position" or multiple "positions" promising a high yield on your "membership payment" and then says that their product is a "download area" full of digital products.

If that company redistributes your "membership payment" to earlier members who purchased "positions" you can be confident that opportunity is ponzi.

Here is another page packed with resources that will help you readily identify questionable and illegal business opportunities:

http://www.pyramidschemealert.org/PSAMain/resources/resources.html

Here is another useful article to help you evaluate opportunities:

http://www.pyramidschemealert.org/PSAMain/resources/ppsabstract.html

Any company that has more than 500 investors and 10 million in revenues that does not file with the SEC is illegal.

This problem is rampant. I see posts asking questions and advertising illegal ponzi shemes in this forum and another popular marketing forum that I moderate at every day.

Anyone who spends any amount of time on the internet will come in contact with illegal opportunities on a daily basis via spam email, links in forums, and advertisements on websites.

Most of us have been invited by an under educated friend, subscriber, or list owner to join a ponzi scheme... many of which may not be immediately identifiable as such but after thorough investigation fail the test.

Be wise. Don't kill your own credibility. Stay away from the "grey area" and don't spend all your time in business sitting on the edge of a cliff.

If you want to build a legitimate business online, something that can be passed on to your children, or even sold to a company that wishes to buy you out for millions of dollars...

Build it on a safe ponzi free foundation.

I am not against network marketing but finding legitimate companies that operate within the law takes due dilligence.

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Josh Anderson is president and CEO of Internet Business Ideas Inc. He is also the developer of Website Jukebox(tm) and the internet's most powerful website audio and visual presentation creation solution at www.TotalWebAudio.com.
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