British government seeks to close Amway

When DeVos was running for governor last year, supporters threw their weight behind him because they believed he could bring good paying jobs to Michigan like those at Amway, the company his father helped found and DeVos ran for a period of time. I wonder what his supporters think of this news from the London Times:

John Hutton, the Secretary of State for Business, Enterprise and Regulatory Reform, seeks to close the company in the “public interest”. [...]

The Government has claimed that the sales people were persuaded to join Amway on the basis that it provides “easy money” or requires “minimal effort”. It also alleged that the business’s primary aim was to recruit staff rather than sell products.

Those terms "easy money" and "minimal effort" are actually pretty flattering compared to what was recently said in court by Mark Cunningham, Queen's Counsel. I highlighted the pertinent descriptive terms.

The British subsidiary of one of the world’s biggest marketing groups was accused yesterday of breaking company law by “selling a dream” of unachievable wealth.

Amway, which had 39,000 selling agents in Britain during 2005-06, is “inherently objectionable”, operates as a lottery and is trading unlawfully, the Companies Court was told. [...]

The Government investigation claims to have revealed that just 10 per cent of Amway’s agents in Britain make any profit, with less than one in ten selling a single item of the group’s products. It claims that Amway’s main activity is encouraging other people to join its salesforce so that they pay the registration fee and buy marketing materials.

Mr Cunningham said that Amway attracted new agents, known as Independent Business Owners (IBOs), by offering “substantial financial rewards or easy money”. He said that promise of wealth was “illusionary” and amounted to “dream selling”.

The group, which has been operating in Britain since 1973, claims that agents can earn a substantial income from selling its range of dietary supplements, cosmetics, jewellery and water purifiers. They are also offered bonuses for recruiting other agents. However, an investigation by the Department for Business, Enterprise and Regulatory Reform showed that only 6 per cent of agents bought Amway products to sell on, the court was told.

Mr Cunningham said that the vast majority of products offered by Amway to its agents were overpriced even before they were expected to add a further 20 to 25 per cent for retail. “The unattractive pricing explains some the graver vices that are at the centre of the winding-up application,” Mr Cunningham said.

Agents were encouraged to buy instructions on how to grow their businesses by attracting new agents. The material contained images of success such as luxury cars, boats and foreign holidays.

Mr Cunningham told the court: “The prospect of substantial rewards and easy money has been at all times, and remains, illusionary.”

The investigation discovered that 71 per cent of agents made no income from Amway in the year 2005-06 and that 90 per cent had made a loss after paying the £18 fee to renew their registration. In fact, just 101 of the agents shared 75 per cent of the bonuses.

“The reality of being an IBO is that a substantial majority make minimal financial returns,” Mr Cunningham said. “Our case is founded on the selling of the dream on one hand and the loss or minimal financial return on the other.”

Mr Cunningham told the court that Amway operates a “pernicious” scheme, which encourages agents to recruit family, friends and colleagues to the group so that they themselves could move up to “that very narrow group that makes any money”.

He said that the Amway scheme involved targeting the “gullible”, “deluded” and “vulnerable” to join the scheme and accused the group of “dream selling.”

Those are pretty serious claims, but the Times provided numbers to support the reality behind those "good paying" Amway jobs:

39,000 - agents working for Amway [in Britain]

27,000 - (71%) had no income

11,410 - (30%) earned something

7,492 - (of the 11,410) received average of £13.53 [about $27] per year

101 - agents received 75 per cent of bonuses

£116K - paid to top earner Trevor Lowe

26 - number of years Mr Lowe was an agent

Of course, the DeVos family made out pretty well - they're worth billions of dollars.

The case is still ongoing, but if the court rules against Amway, the company will be no longer be allowed to operate in Great Britain. Either way, this case just collaborates what citizens have been saying for sometime now - Amway jobs don't help people achieve the American Dream.

(Cross posted at BFM.)

Michigan connections in the news

As Rodney Dangerfield might say, I got nothing. I'm not inspired to write, but I've been doing a lot of reading, so let me share some links that all have ties to Michigan.

First, from Schools Matter, comes this little tidbit about All Children Matter, founded by Michigan's losing gubernatorial candidate Dick DeVos:

What happens when someone like charter school kingin, David Brennan, wants to buy more influence in Ohio elections than state law will allow? You do what Tom Delay did--you simply launder the money through an out-of-state outfit like All Children Matter that turns your cash into campaign contributions for your preferred stable of candidates.

Wisconsin also filed a complaint, contending the group laundered money and failed to register, but the state elections board there refused to authorize an investigation.

Also related to the DeVos family name is this news regarding Alticor (formerly known as Amway):

Alticor Inc. has fired 15 long-term and highly influential Quixtar distributors who filed a class-action lawsuit against the direct sales giant last week.

The ramifications of the dust-up for the Ada-based parent company of Amway could be huge -- especially as the company faces increased regulatory pressure in India and the United Kingdom.

Seventeen distributors are named as plaintiffs in a scathing suit that says Quixtar operates as a pyramid scheme selling merchandise at prices so inflated it cannot be sold to anyone other than distributors.

Did the company really fire them or did some of them resign? Webraw reports that eight distributors posted their letter of resignation online the day before the Quixtar announcement.

The big news this week was Karl Rove's resignation, but did you know there might be a Michigan connection?

What Really Brought Rove Down?

When the Bush administration angered one of its most hard-right officials, he launched an investigation into Karl Rove's politicization of the federal government -- which may be what led to Rove's resignation.

Scott Bloch, director of the Office of Special Counsel (OSC), may have been Rove's ultimate undoing. As you might recall, Bloch embarrassed the Bush administration in 2004 when he removed from his agency's website a notice of long-standing protections for gays and lesbians. Bush officials were forced to contradict Bloch's stance and Rove reportedly referred to Bush's religious-right supporters as "out of control." Shortly after this, Bloch demanded that most career attorneys in his office accept involuntary transfers or lose their jobs. Nearly all of these attorneys had challenged Bloch's decision to remove the nondiscrimination policy statement about gays and lesbians from the Web site and two were openly gay.

So, where's the Michigan connection, and how does this relate to Karl Rove? Read on:

One of the agency locations to which transfers were being made was a new office Bloch was opening in Michigan, even though the agency was dealing with very few cases in that region. However, the region was home to Ave Maria Law School, an institution founded by Thomas S. Monaghan, the Daddy Warbucks of new-right Catholics... Bloch ended the standard competition for law internships in his office and began hiring straight out of Ave Maria. [...]

Bloch may have thought that his brand of anti-union, homophobic loyalty to the Bush-Rove cause of misappropriating the taxpayer-funded apparatus of the federal government for partisan political purposes would win him some major kudos. But it was not to be. Apparently Bloch's Ave Maria-boostering and overtly anti-gay (hating both the sin and the sinner) antics were a bit over the top, as it were, so in 2005, Clay Johnson, the No. 2 at the Office of Management and Budget (OMB) called on Bloch to resign, according to columnist Robert Novak. Then, wrote Novak, some mysterious, unnamed, Bush-loving Catholic was dispatched to Bloch to gently suggest the same.

When Bloch refused to tender his resignation, Johnson, according to Novak, set off an investigation of Bloch via a referral to the inspector general of the Office of Personnel Management. Bloch responded in kind, launching an OSC investigation into the administration's politicization of government agencies -- an investigation that landed at Rove's door.

Bloch's investigation led to the discovery of Rove's infamous PowerPoint presentation that "listed Democrats the White House has targeted for defeat in 2008" and to the discovery that Rove deployed officials from various government departments to appear with Republican members of Congress engaged in tough 2006 re-election fights (paid for by taxpayers). How ironic that a Bush appointee, one who was stereotypically loyal, hard-right and religious, might be responsible for Rove's resignation. It's too bad it took so long.

Finally, Romney says he could win Michigan if nominated. I don't think so. Romney is the wealthiest candidate in the race and isn't afraid to spend his own cash to get elected, but that didn't influence Michigan's voters when DeVos spent $35 million of his own kitty. He lost to Jennifer Granholm by a 14 point margin.

I don't think voters will be influenced by the fact his father, George Romney, was once our governor either. The voters bought that line of logic when they elected George Bush the son and look where that got us. Sorry, Mitt, but the Mitten says NO!

DeVos speaks, MIGOP listens

Why are state Republicans still listening to DeVos?

Republicans who control the state Senate got a pep talk Tuesday from GOP businessman and 2006 gubernatorial candidate Dick DeVos.

DeVos, who lost to Democratic Gov. Jennifer Granholm in the November election and is rumored to be eyeing another bid, spoke for 20 to 30 minutes during a Senate GOP caucus meeting at the start of session. [...]

DeVos said Republicans outside Lansing support the GOP's stance that significant structural changes in government must be made before there is any consideration of a tax increase.

I guess the party feels obligated because the man spent millions of dollars of his own money trying to unseat Gov. Granholm, but the fact that he was trounced should be a clue that the public finds him as irrelevant as George Bush.

Seriously. DeVos based his election on somewhat dubious, if not downright untruthful claims. He ran around crowing that, "49 other states are doing great. 49 other states are moving forward. 49 other states are adding jobs. And yet, Michigan is the only one lagging behind," and he placed the blame squarely on Gov. Granholm.

That's not how several papers saw it. As the Ludington News Daily said, "The near collapse of the Big Three is not the fault of the Legislature nor the governor. It’s in part the fault of the Big Three for failing to adapt to a global economy, work together with their unions to comply with that increased competition and changing consumer desires."

It wasn't how the voters saw it either. CNN reported that the economy nearly tied Iraq as the reason voters across the country came out to vote last November.

DeVos also ran a series of ads about our depressed housing market and the glut of homes on the market. The implication was that housing was doing great in 49 other states. Yeah, right. Foreclosures rates have been growing across the country since last spring, right about the time DeVos started running his first campaign ads.

From ABC News:

New data released this afternoon indicates that one in every 656 homes in the United States went into foreclosure during May. [...]

"The principal source of the slowdown in economic growth that began last spring has been the substantial correction in the housing market," said Fed Chairman Ben Bernanke in a speech in late March. [emphasis added]

Michigan currently ranks eighth among states, with one in every 448 homes in foreclosure, but we're certainly not alone in our misery like DeVos wanted us to believe.

Aside from the misleading and disingenuous twisting of facts, why are state Republicans listening to DeVos on taxes? He supports the GOP's stance that structural changes in government must be made before there is any consideration of a tax increase, yet he and his family are willing to let taxpayers help build a new stadium for their basketball team in Orlando. If they don't see this as a double standard, shame on them.

And what about the millions of taxpayer dollars that benefit his brother-in-law, Eric Prince, owner of Blackwater Security? I've never heard DeVos raise objections about that money, not even when it came to light that Rep. Henry Waxman wrote Sec. Donald Rumsfeld requesting answers as to why taxpayers paid exorbitant prices for Blackwater's services. Waxman is still waiting for those answers (and so is the public).

And why are state Republicans listening to DeVos when they should be questioning him and his family about Blackwater's lack of transparency and accountability: Blackwater Heavies Sue Families of Slain [Fallujah] Employees for $10 Million in Brutal Attempt to Suppress Their Story.

If taxpayer money provides funding for Blackwater Security, then taxpayers deserve to know if the company cut corners in order to maximize profit - and in the process jeopardized those mens' lives. Surely, Michigan's GOP believes in accountability and transparency, right?

Whatever their reason for listening to DeVos, there's an old adage they might want to consider: When you lie down with dogs, you get up with fleas. They need to ask themselves if that's a risk they're willing to take. It hasn't worked out so well for many Bush loyalists and it just might not work out so well for them either.

Two Documentaries With Michigan Ties

This is a golden time for documentary films. Over the past several days, discussion has revolved around the ABC docudrama The Path to 9/11, and earlier this summer Al Gore's film about global warming, An Inconvient Truth, did well at the box office. I'm not surprised that filmmakers are producing documentaries about the war or climate change, but I was surprised to learn about two new documentaries that touch us here in Michigan. Even more interesting is the fact that both films touch the DeVos family.

Robert Greenwald's film, Iraq for Sale: The War Profiteers, uncovers the connections between private corporations making a killing in Iraq and the decision makers who allow them to do so. One profiteer the film focuses on is Blackwater Security, which was founded by Erik Prince. Erik's sister Betsy was the head of the Michigan Republican Party until early 2005, and she is married to Dick DeVos, Amway heir and Michigan Republican gubernatorial candidate. There are numerous sources and articles about Blackwater, but you may remember the company's name because they're being sued by the families of the contractors killed in Falluja in March 2004. The DVD documentary goes on sale September 26 and grassroots screening is October 8th-14th.

The second documentary with links to Michigan and DeVos I learned about from Zack @ Pohlitics. BELIEVE takes a satirical yet critical look at a fictional MLM company, Believe Industries and its devotees. And while the story is fictional, much of BELIEVE’s dialogue and events are based on the actual experiences of Loki Mulholland (writer and director), a former Amway distributor.

Zack recently interviewed Mulholland and asked him questions about DeVos, Amway and the gubernatorial election. Here's the exchange [emphasis added]:

POHLITICS: Since your film skewers multi-level marketing firms, do you see anything wrong with Michigan electing someone like DeVos as its next governor, considering that he used to run one of the largest MLMs on the planet?

LM: I’m an independent and I don’t tell people who I’d vote for but I can tell you who I wouldn’t vote for and that’s DeVos. Amway’s business culture is one of, in essence, taking advantage of people’s dreams and having them part with their money. When you have better odds of succeeding in Vegas than you do in multi-level marketing something’s not right. And, I think it’s fair to say, DeVos has been raised in that culture. You really can’t separate the two.

I think Amway and the DeVos camp have realized this and that’s why Amway has been airing their, “I am Amway” ads. If people are going to rightfully associate DeVos with Amway and 83% of the state has an unfavorable opinion of Amway they have to do something to change people’s opinions. It’s just like Bush and the War in Iraq. As the war goes, so goes Bush. As Amway goes… so goes DeVos.

That's the quote, folks, from a former Amway distributor.

If you're interested in seeing BELIEVE, they're doing a special screening in Lansing on the 21st of September. Then they're releasing the film October 13th in Detroit, Lansing, Flint, Ann Arbor, and Grand Rapids. Following it's debut in Michigan,the film will make a 20 city whistle stop tour of the country with a future release date in the Mountain West region in February/March. I BELIEVE I'll make it a point to see both of these films.