Business Schemes

Also at TWS I note the apparent suicide of infomercialist Don Lapre. There was something about him that reminded me of a young Joe Pesci. In any event, while surfing for news of Lapre, I stumbled across It’s pretty sad stuff.

But what I forgot to mention was the time I attended a job interview that turned out to be a recruitment-sales pitch for the multilevel marketing firm Equinox. It was the summer of 1995 and I was jobless. The ad targeted recent college graduates and mentioned a sizable salary. This particular branch of Equinox was out in Reston, Virginia. I remember the younger employees in suits eating McDonald’s at their desks while CNBC was airing on the television. The whole thing was a sham.

The Equinox spokesman explained after some time that they sold water filters, and we would do the same. Sure it would cost us initially in the purchase of various products and seminar fees, but we’d make it all up in sales—and by our getting more recruits.

As Inc. explained,

Distributors, who were recruited through newspaper ads and by word of mouth, were promised incomes upwards of $3,000 a month. However, that promise included some fine print: according to regulators, fledgling distributors were expected to purchase $5,000 worth of Equinox products to “buy in” as managers — the level at which they could begin to earn commissions on sales made by distributors whom they recruited, also known as their downline…. But the Equinox system was soon creating many disenchanted distributors, who later contended in court that they were snookered by false claims and high-pressure salesmanship into investing in the company’s products and training seminars…. From 1995 to 1998 more than 80% of them earned less than $1,000 a year, and fewer than 2% of them earned more than $20,000, according to FTC figures. Even some of the seemingly successful distributors sometimes sank deep into the red.

This pyramid scheme led to the downfall of its founder, Bill Gouldd. And Equinox would be dissolved in 2001 following a $40 million settlement with these distributors.

Leaving the recruiting session that hot summer day in 1995, I remember thinking this wasn’t for me and that something seemed off about the operation. But I still wonder how many of the other attendees ended up buying all those water filters.

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