THE QUIXTAR KINGPINS' TALE OF WOE

If you want a better idea of what the infighting between the head honchos at Amway and their top Quixtar distributors is all about, this complaint filed by kingpin Orrin Woodward and some of his cohorts in a California federal court will give you an idea.

The kingpins complain that Amway/Quixtar is an illegal pyramid scheme, because the owners of Amway of have deliberately priced the products to be distributed through the Quixtar distribution chain so high that they cannot be realistically sold to a genuine retail market -- i.e., to consumers outside of the Quixtar network.  So while the high prices profit Amway, they don't profit Quixtar distributors except by recruiting sub-distributors to buy from them kits of Amway products on the con that they can sell the overpriced stuff to a non-existent retail market.

Therefore, the multi-level marketing structure of Quixtar does not serve to expand the retail customer base for Amway products.  Rather it serves to profit those at the top of the distribution chain (Amway and the kingpins) solely at the expense of those at the bottom of the chain (the suckers who buy an inventory of unsellable Amway products).  For that reason, it would appear Amway/Quixtar crossed the Federal Trade Commission's line between legitimate MLM to illegal pyramid scheme.

The kingpins' complaint is persuasive.  In fact, what they say is no surprise to anyone who hasn't drunk the Amway Kool-Aid.  Amway is no Avon.  Of course, their complaint, being what it is, doesn't tell the full story.  That full story needs to include how the kingpins were willing partners in this racket.  They needed Amway to provide the sales kit for them to use as the gimmick to recruit sub-distributors into their organizations.  In addition to profiting from the sale of Amway products to their "downline" distributors, the kingpins made even more money selling motivational seminars, tapes, books, and other nonsense to those same distributors as "tools" that would allegedly help them sell to a retail market the overpriced Amway junk they were saddled with.

So the Quixtar kingpins have hands as dirty as the owners of Amway.  As I said before, it takes a lot of chutzpah for these bandits to claim they are victims.  Let us not forget that the kingpins only complained about the cruelties of Amway, when DeVos and Van Andel juniors cut off their "tools" trade this summer.  Amway ended the Mexican stand-off between it and the kingpins that had kept them working together since the '80s.  Now out come the guns a-blazing.  My bet is that the last man standing won't be the kingpins, but then Amway won't come out unbloodied either.

Comments

[Chris]

I recently stumbled across a link to your site, and I want to start by saying that I am very impressed, overall, with the information you present.

I also would like to say that I believe that you are misrepresenting Orrin Woodward and the others in the current/newest Amway debacle. While I realize that there are many more important things to report about in the Grand Rapids area, you seem to have spent considerable time and energy letting folks know your opinions about the DeVoss and VanAndel families and Amway/Quixtar/Alticor. After reading some of your articles on those subjects I can honestly understand why you would hold a severe prejudice against any of the higher ranking Quixtar distributors. But, I would think in all interest of fairness, you would want to do a bit of investigating before you begin tarring this particular case with the same tired old brush. Just to give you a hint about me, I am currently active in the TEAM organization (recently resigned from Quixtar), and I was also a distributor in Amway in the late 1990's through another organization below Yeagar during the transition period from Amway to Quixtar. I have experienced both the way the TEAM does things and how other organizations do things. They are night and day different.

First, I don't believe I'd personally classify Orrin as a "Kingpin". He is relatively new the the upper levels of Quixtar, when compared to others that you have rightfully given that name. He did not even reach diamond status with the corporation until after 2001, and it was some time after that before he begand his own tool system. You are not talking about an individual who has been knowingly taking advantage of others for decades.

While he has earned a very high level with the Quixtar corporation and quite a bit of money from the Tools/Functions aspect of the business, he has also always been very forthright and transparent about the tool/function income. He and Chris Brady co-authored a book several years ago entitled "Leading a Consumer Rebelliion" that was intended to be given to people when they initially saw the Quixtar business plan. In that book they outlined in basic terms how the tool/function money is earned and divided. When the first edition of the book was published they began distributing it to their organization. Some people over at Quixtar had a problem with the transparency about the tool/function income, and made them revise the book to comply with Quixtar's need for secrecy.

TEAM had a profit sharing program of the Tool/function money that applied the same formula for Orrin Woodward as it did for the newest members. The requirements to qualify were minimal compared to the other tool organizations. The tools themselves were actually quite different than the ones distributed by Yaeger's group, INternet Services (knowing this from personal experience). They focused more on developing yourself as a person with good character traits and leadership principles, rather than on selling techniques.

Orrin Woodward was nominated in October of 2005 to the IBOAI Board. From that point forward he tried to work from the inside to get the company to lower product prices so that the business would be easier for the new person. He kept receiving the answer "we're working on it". When the corporation went against the IBOAI's wishes and announced the switch back to the Amway name, he decided that he could no longer build that business. He planned on resigning, but Quixtar terminated him instead. The stuff about the "tool/function" issues didn't even come about until the Quixtar attorneys found out that Orrin was going to quit. There is much more than what is on the surface of this, if you want to take the time to look into it. Here is a site with many of the official court documents organized by case. They make for interesting reading. http://www.freetheibo.com/Court-Documents.html

As I stated at the beginning of this post, I really do enjoy your site. I found some interesting and enlightening articles on here.

[The Executive Director]

Hi, Chris.

Thanks for your comments and kind compliments.

My disdain for Amway and the kingpins comes from my perspective as a businessman, manufacturer, and free marketer for the past twenty-plus years. I know business and I know how to turn a buck honestly. You do it by providing value in what you sell to your customers. There's no excuse for skinning anyone, shading the truth, or shell games to make a profit.

However you cut it, what Amway and the kingpins do is dishonest. Amway cons people into joining a distribution chain in which they are in fact the end customer (unless, of course, they figure out the con and then succeed in pushing their way up the chain). The kingpins, who have worked their way up to the top of the chain, parasitically feed off this con with by "tools" to those at the bottom of the chain.

I wouldn't outlaw any of this. Everyone has the right to be fleeced as a sucker. But fleecing suckers is a nasty way of making money, and I have nothing but contempt for it. This is not to say everyone who has been or is associated with Amway's multi-level marketing is a bad apple (indeed, there are many good people caught up in it), but the core is rotten.

Regards,
Bill Tingley
Executive Director, L.A.W.

[Bob H]

I welcome the candor of your pyramid power articles Mr. Tingley. You have the ability to expose the dirty underbelly of this Quixtar beast in clear language missing from mainstream media. Where are all the cutting edge exposes appearing in the "for sale" mass media? Of course their own interest with the "american way" slant their view. Criticism and truth are subverted through greed, backroom deals, and political accomidations. There is currently an ever increasing criticism of these pyramid executives and their syndicate like operations being exposed via average bloggers. Since the Quixtar Kingpin revolt began, former insiders are coming forward in print, creating a public relation nightmare for the home office in Ada. Criminals are all ways going to operate; they are going to constantly cross each other out with greed being the meat of any wolves.

I also commend your comment that says everyone has the "right to be fleeced as a sucker." That is the real "American Way". Carry on. Keep them honest there in Michigan. Wouldn't it be great if your articles could be made required reading.

[The Executive Director]

I'm glad you found the articles useful, Bob. Thanks for the thumb's up.

Regards,
Bill Tingley
Executive Director, L.A.W.

[quixtarisacult]

Tingley, my gawd it has been awful quiet up your way, or are you working on something?

[quixtarisacult]

Mr. Tingley....

This comment continues the tool kingpins tales of woe. It pulls the mask off of the Quixtar/Amway kingpins, sellers of deceit and offers a way citizens may do something to enact change.

Exactly how rational are IBOs? I have some issues I want everyone to examine whether they be an IBO or anyone interested in all things Amway. This comment also asks IBOs to test their rationality against the important issues raised herein.

I am always amazed that many discussions on this and other Amway blogs do not fully address the correct issue that is the #1 problem facing the company in the 21st century. No matter how many differing Amway issues I see, everything invariably comes "full circle" back to the TOOL SCAM. All conversations, and discourse dealing with Amway almost always revolve around what "Tex" calls the "Lying Cowardly Kingpins" or "LCK" for short.

Tex, a very different sort of new age IBO coined this term and has been vociferously expressing his views throughout the Quixtar/Amway blogosphere making him both a crusader and a pariah to many. I admire Tex's chutzpah to pierce the comfort zone of Quixtar Independent Business Owners, tool kingpins distributors and company executives alike which he makes it his mission to confronts on an ongoing basis. Tex stands out, he is an IBO of some renown as he spear-heads an effort to kick start the kind of change that Amway fails to make and many other IBOs have been hiding their heads in the sand about.

At this point, a few words about Tex might be helpful for readers who need an introduction. Tex retains an online presence and views himself as an advocate for a changes he believes Amway must make to keep the Quixtar/Amway business opportunity viable. He wants Amway to throw off the shackles of predatory kingpin distributors and the current system which he believes serves their interest at the expense of IBOs who are struggling to make the opportunity work for them. Tex has credentials as a well known critic of the tool scam and has been interviewed on the Q-Blog Podcast, has taken on the industry "insider", ibofightback, David Steadson, in a toe to toe debate over all issues Amway in which Steadson has booted Tex from his The Truth About Amway forum. Seems like Tex has a way of getting under the saddle of Amway blog administrators and has also been banned from the Quixtar Blog and also Joecool's The Dream or the Scheme Blog. Tex is anything but resourceful and his being banished from forums and discussions has not silenced him and his message. Amway recently invited Tex to Prague for a symposium on the blogosphere where he discussed his views on the tool scam and met with other people who's presence online got them an invite. I've had a chance to have a lengthy discussion with Tex and he is very personable and easy to speak with. His online writing style doesn't necessary do him justice as some people might find his style of debate abrasive. Could this judgment be more from disagreement with his views and say something about their own combative debating tactics? If getting oneself booted from blog and forum discussions were a virtue, Tex would indeed be named a saint.

People already involved in the Quixtar/Amway online discussion really need no introduction to Tex's ideas or the opposing viewpoints of the industry insider, ibofightback. Controversy seems to follow Tex as he journeys through cyberspace, but I view that as a good thing. Tex may not be a Ghandi over the tool scandal issue, but he is steadfast in his pursuit of change which Amway refuses to make, despite all the discord that the scandal has brought to Quixtar and continues to stir among IBO insiders and critics, whether inside or outside of the business. Tex is regarded with considerable scorn by the Tool Kingpins which he hammers at with his “Lying Cowardly Kingpins” description and if eyes could shoot daggers, he would probably be hit!

The kingpin distributors Tex describe sit on top of a monopoly business, the sale of motivational training materials and the “function” business and more commonly just called “tools”. These tools make up the "how to" information to become successful in the Amway business opportunity. (In my opinion, these tools do not substitute for a conventional business education because they lack a focus on commonly accepted business practices which the kingpin distributors obviously do not wish to promote.) That being said, I have been persuaded by Tex that if someone intends to get into the business (against my advice), at least some training tools are necessary, although Tex feels these tools should not come with the price tag of scandal and are at heart of the problem that makes the pursuit of this business so fraught with loss for so many. (I believe IBOs become caught up in a cult-like relationship to these tools and the upline mentoring which is absolutely insane!) The opportunity in its present incarnation is merely an IBOs opportunity to make the sellers of these tools their king's ransom in filthy lucre!

Tex says there is a “big lie” that proponents of the opportunity promoted as gospel truth which says says success in Quixtar comes from the sale of products and commissions paid by the company to its IBOs and this farce hides the fact that the pictured success stories displayed to prospects comes from tool profits and not from Quixtar/Amway. (Isn't this the focus of the 2004 Dateline expose on corruption in Quixtar?) These tools sales create a market for a product that doesn't have a retail consumer outside of the Amway distributor network, totally unrelated to the products offered by Amway (supposedly) for resale to retail customers. Tex described to me how these upline kingpins through lesser downline pins promote these materials to the entire downline organization.

The incredible cost of tools, the "Standing Order Tapes", seminars, and attendance at quarterly rallies create a "meat grinder" situation for new distributors who begin their experience in the business by making an incredible deficit of spending that produces loss from the start and spurs potential long-term distributors to leave the business showing zero profit what so ever. Many of these ex-IBOs put the boxes of books, tapes, CDs, magazines, and videos they've accumulated for sale on ebay hoping to receive pennies back on the dollar. I've noticed that many times these tapes, CDs and books receive no bids and remain relatively worthless. The kingpins have already made their pound of flesh by this time and their downline IBOs will bring in new recruits to keep tool sales going. This is the "DIRTY LITTLE SECRET" of their “LITTLE QUIXTAR CULT” and it relies on the P.T. Barnum's idea that “a new sucker is born every day.”

The constant flux of people joining, buying tools, and then quitting is what makes pin level success for dedicated IBOs so incredibly difficult to achieve. This matters not at all to the kingpin distributor of tools because these "replacement" recruits are the true target customers for their ware and become the "Simple Simon" the upline the kingpins so need to make their tool scam work! This is the sad truth of the tool scandal and what Tex believes every IBO must view as the number #1 problem they confront.

Tex paints a very realistic picture of how the system currently works. As in any occupation, a person must invest in tools of the trade; a carpenter must have a hammer, saw, ladders, and so forth, and the same thing applies with a sales job, but which are more educational than material in nature. Of course there will be the ever present easel, poster pad, and marker pens. This would apply whether a person was "selling" the Amway opportunity or selling a product line in another industry outside of MLM.

Tex says salesmen in the traditional business world are always being taught and encouraged to remain enthusiastic; their company may send them to training seminars and provide them with additional educational material as part of their employment. In Amway, the distributor pays out of pocket for all these things to include seminars and rallies to inspire enthusiasm. It is easy to see how distributors are forced into the mouth of the "tool sales money extraction machine" by upline mentors allowing the kingpins to sock piles of green back under their mattress. Is it any wonder that new distributors end up prematurely discouraged and eventually quit a system that basically takes advantage of them from the start and almost always guarantees they will lose money? Tex believes this should not have to be.

This is the current bad state of affairs that Tex described to me. My personal views of the business are no where near as optimistic as Tex, after all he is an IBO and I am not. I align myself with all the people who have been harmed and are being harmed by the business. My view is that not only the tool pyramid scheme exists, but also a product based one as well. My view is that both groups should be put out of business so the utter fleecing and pernicious harm done might finally be brought to an end. That being said, Tex holds his view of things which might make sense if one is currently an IBO and has already sacrificed so very much to the business, not wanting to see the "baby" thrown out with the bad "bath water". The baby here being the "company" and the bath water being the "tool kingpins".

Tex advocates drastic changes be made; these changes he believes will put some potential profit back into the business and stop many of the new distributors from being run through the tool kingpin's money making machine and subsequently being forced out of the business by lack of profit and unfulfilled expectations. Tex further describes long term IBOs as being much like a carpenter who has been in his trade for a long time. They are no longer as profitable to the kingpin sellers of tools because they are already saturated with tools and require much less in regards to these materials. The idea being that a carpenter does not need to constantly buy tools that he already has on hand; he has the saw horses, the ladder jacks and the like that, and once bought need not be bought again so the local hardware store see less of him.

Tex's point is this: the kingpins perpetuate a system that quickly renders the opportunity unprofitable and keeps it that way. The new distributors are encouraged that they must buy the tools and then they very quickly find themselves in a catch 22 situation. Many new IBOs buy tools for a while, drop out and do not renew their business; they make their IBO recruiter anguish over the situation because he or she is trying to run up an escalator that is always going down, and must constantly keep replacing those IBOs that leave with a fresh enthusiastic face. Tex's view is that this works out perfectly for the kingpin sellers to the detriment of everyone else in the business. Each enthusiastic distributor showing the plan has an upline pin with a hidden agenda encouraging him/her onward. These upline platinum, emerald, or diamond pins have their own interests foremost in mind as their bread is buttered by selling tools, and encourage their downline IBOs to keep recruiting the many new IBOs the tool business requires. New IBOs are in the kingpin's cross hairs and become canon fodder for these sellers of deceit who Tex says really operate a "bait and switch" con job. I most emphatically agree with this observation!

I believe that Tex's view of the current state of affairs within the Amway business opportunity is correct. This flies in the face of all the deceit that online pundit ibofightback David Steadson constantly pushes to keep IBOs operating in their current state of self deception. The current tool kingpin is a vulture feeding on the flesh of all the IBOs and revelations of this scandal SCREAMS OUT FOR CHANGE! People falling for the deception move forward in cult-like lockstep with their upline fellows forming "the business cult" to their own undoing.

For IBOs in the business steadfastly devoted to making the opportunity somehow work, wholesale changes to the tool system would be of incredible help! It would keep more people in it for the potential long term benefits and provide an improved chance for short term profitability. This should make good sense to any IBO. Tex believes that resolving the tool scam and vanquishing the tool kingpins would resolve many if not all of the problems with Amway. He believes the tide would stop going out and start coming in again and this would raise all IBO ships.

Tex's arguments are based on those of the company founder Rich Devos. Founder Devos expressed his views passionately in his Directly Speaking tapes. Tex points to these views as the correct answer to the problems confronting the entire company today now in the 21st century. A testimony to the wisdom of the top dog of his time. Are you listening Alticor?

Tex's believes tools should be free, and if not free, should be sold at or very near cost. Just as Rich Devos said on the Directly Speaking II tapes, these training materials should not approach the millions of dollars in profit they currently do and their sales should not amount to the the current high percentage of expenditures IBOs make on them. (My personal opinion is that we live in the computer age and distribution of information has become incredibly cost effective with the advent of e-books, video, mp3, and video conferencing.) Rich Devos heard the horror stories back in his day as he admits, and are not the same horror stories being heard in Ada, Michigan today by the Alticor executives? Shouldn't the current Amway Pharaoh be bold enough to finally put an end to the tool problem the company's founder viewed as the top threat to his beloved business?

Okay, what can be done in the meantime you might ask? If you are an IBO you can CHANGE YOUR WORLD and the future of your business because you have a voice! THE FEDERAL TRADE COMMISSION NEEDS A SIGNIFICANT NUMBER OF COMPLAINTS IN ORDER TO OPEN UP A FRESH INVESTIGATION OF THE AMWAY TOOL SCANDAL AS IT CURRENTLY EXISTS. Just as Rich Devos said, the "tools have no end customer" outside of the business and the money spent by the IBO faithful amounts to a MONEY EXTRACTION scheme. Anyone holding to Rich Devos's view of the situation therefore share Tex's view. Although controversial, the kingpin's tool scam must be brought to an end, otherwise the IBO accept a situation and a system that is not the opportunity that it purports itself to be. The enemy of the IBO is really the same catbird who sits on the tool scam perch with a vulture's eye for prey!

What do I believe should be done? First, if the tool scam cannot be dismantled and shut down, the company should be put out of business in the US along with the likes of Goldquest, Jewelway, and Burn Lounge. I would suggest that other countries of the world re-examine their relationship with the American Scam. Secondly, the tool scam should be shut down if Amway hopes to remove itself from scandal. A new modern age system could then be instituted that would give the IBO a better chance to succeed at building the business.

This is a fresh approach to the tool kingpin greed that does way more to stifle growth than promote IBO success. The riches that the top tool kingpins display as way of palatial estates, luxury automobiles, and the like are at the pinnacle of the deceit that drives people to get involved, see through the hoax and get out. There needs to be ideological changes made that bring the opportunity as it is presented to prospects back to reality. All the back room dream selling (fostered by the tool scam) can end. Amway needs to engineer a new compensation system that provides a reasonable reward for reasonable work and achievement. People holding their own greedy dreams of being the next wealthy tool kingpin will be gone. This insane idea sadly motivates people who want to be like the people they view as successful in the business and one which is taught over and over again. The entire motivation industry has been built on the idea of being with successful people and emulating their life to become as they are. Sadly, with the present system, all these aspiring people want to be like the—as Tex describes them—“lying, cowardly, kingpins!”

Readers of this comment should not view it as a softening of my personal views about Quixtar/Amway. Tex is calling for the vanquishing of the tool kingpin system of deceit and fraud, which I just happen to agree with. The ball is now in the company's hands and they must come to grip with the tool scam, stop obfuscating and do something about it if they want to clean their business up. If they will not do something, then a call must be sent out to a higher power to step in and take action. The tax payers and citizens of this country need to see some action out of their regulatory agencies and court system! In this election year, the candidates should be prodded to make their positions on this corruption made know. Current and future IBOs should be shielded from being prey to these vultures. Real people are harmed and victimized by their little Quixtar cult.

IBO, you can do your part: complain about the tool kingpins who are ruining your business and put your signature on a complaint to the Federal Trade Commission. Take the next step necessary!!! Write your senator and congressman as well. Add your one little drop to the bucket of water the FTC deems necessary to open up an investigation into the tool scam that has the potential to CHANGE YOUR WORLD FOR THE BETTER. As the UK decision has revealed, the company will only enact changes when pressure is applied by a power greater than themselves. A sort of scared straight program for MLM executives. Amway/Alticor is already overburdened with litigation, and your voice could be the straw that breaks their camel down, cause them throw up their hands, turn over all the money changers tables and run the lying cowardly kingpins out of the Amway temple! Should they fail to put corruption out of their company, then the baby should be thrown out with the bad bathwater as well!

In conclusion, what should IBOs make of Orrin Woodward's recent admissions that he made five times more money selling tools than he did in compensation from Quixtar? Have you ever wondered why these kingpins can move between companies and continue to prosper? Aren't tools really the fleecing of the American Way? These tools that kingpins sell for high dollar in Amway but are worthless on ebay! Think about it?