22nd of April, 2002
Respectfully, Dear Independent Business Owner:
Given the seriousness of the difficulties that have emerged over the past several months, we are writing to you in an extremely unusual manner. Please understand that if you are unfamiliar with the Entry Level Plan or the Maximum Achievement Program bundle, you do not need to continue reading this section of the article. If, on the other hand, you have received information on the Entry Level Plan or have purchased the Maximum Achievement Program box, you should read this message carefully since it contains crucial information that you should be aware of. We are sending you this letter at the following address:
(1) Assist you in comprehending the extensive communication process in which Quixtar has engaged in an attempt to resolve Rules concerns with the former Diamonds who have organised and implemented the Entry Level Plan; and (2) Assist you in comprehending the extensive communication process in which Quixtar has engaged in an attempt to resolve Rules concerns with the former Diamonds who have organised and implemented the Entry Level Plan.
(2) Provide an explanation of our legal judgement of the Entry Level Plan; and (3)
(3) Inform you of actions taken by the Corporation against the businesses of particular Diamonds for violating the International Business Organization's Rules of Business Conduct.
(4) Inform you of your rights under the Rules of Conduct to obtain a refund from the seller if you have purchased Business Support Materials (BSMs) from them.
In order to help you safeguard the future of your firm, we will ensure that you adhere with the Rules of Conduct in relation to the Entry Level Plan and the Maximum Achievement Program (MAP); and
(6) Make it clear to you that Quixtar is in no way associated with the Entry Level Plan or the Maximum Achievement Program, and that the company does not in any way advocate or sponsor any of these programmes in any way.
The History of Communication
In an intensive interaction with members of Team in Focus leadership over the past three and a half months, the Corporation has discussed how to best promote both the Entry Level Plan and the Foundation Plan. Based on what we've observed so far, as well as correspondence from IBOs to Quixtar, it's possible that you've been under the notion that the Corporation endorses or approves these activities, which is incorrect. On the contrary, following a thorough assessment of the Entry Level Plan, Quixtar (as well as its independent outside legal counsel) is convinced that the Entry Level Plan is a flagrant violation of the International Business Organization's (IBO) Rules of Conduct.
The following timeline outlines the events that led to the current state of affairs.
After receiving many generic questions in late December 2001, we discovered that Diamonds linked with Team In Focus (TIF) were preparing to offer a multilevel marketing scheme to Independent Business Owners (IBOs) affiliated with Quixtar.
The 9th of January, 2002 In a letter, we informed those Diamonds who were affected by the Rule's concerns and requested their cooperation in ensuring that whatever strategy they implemented was entirely compliant with the Quixtar Rules and applicable legislation.
On February 2, 2002, members of the Corporation's Business Conduct and Rules division gathered for a meeting in which the "Implementation Phase" was discussed in detail, as well as the film of the same name, which was shown to the attendees.
The date was February 12, 2002. A letter was written to all TIF Diamonds from the Business Conduct and Rules department, in which the many rules that were at issue from the presentation were clearly clarified. The letter also requested that all promotion of the Implementation Phase be suspended pending the conclusion of a meeting with three of the Diamonds, who served as representatives of the remainder of TIF's membership group.
On February 19, 2002, executives from Quixtar travelled to Tallahassee, Florida, to meet with three of the Diamonds in order to negotiate toward a settlement. In that discussion, it was explained that the planned Entry Level Plan, because of its pyramidal structure, would raise substantial legal and Rules difficulties. We brought the concerns back to the table and thoroughly examined every conceivable solution to the challenges we had discovered.
The 7th of March, 2002 When we had finished deliberating over our concerns, we distributed a comprehensive summary of the meeting to all TIF Diamonds, which clearly identified the difficulties and provided recommendations for solutions where possible.
The date was March 8, 2002. Because of the magnitude of the difficulties surrounding the Entry Level Plan, Quixtar has once again requested that all promotions for this particular Plan be terminated in its entirety. Although it was agreed that certain Diamonds would refrain from doing so, some Diamonds continued to arrange meetings to promote the Entry Level Plan.
The 25th of March, 2002 Therefore, we sent the TIF Diamonds a letter informing them that they had engaged in deceptive trade practises and illegal activity, and we backed up our judgement with a 13-page opinion from independent legal counsel, as required by the International Bullion Organization's (IBO) Rules of Conduct.
We can't emphasise enough how serious Quixtar takes the threat that the Entry Level Plan poses to the long-term viability of the Quixtar enterprise. Every Quixtar-affiliated firm is jeopardised by the Entry Level Plan, and the Corporation will not allow a small number of persons to put the entire business at risk on behalf of all IBOs. Therefore, the Diamonds were given one more request: that they refrain from launching the Entry Level Plan at this year's Nashville event. As you are most likely aware, the Entry Level Plan was implemented in direct violation of the Rules of Conduct when it was first implemented. In spite of our best efforts, certain Diamonds put Quixtar in the position of having to enforce the Rules of Conduct, and as a result, the Quixtar companies of select Diamonds have been terminated as a result of their actions.
Evaluation from a legal standpoint
As previously stated, we have spent numerous hours talking with the Diamonds about the various components of the Entry Level Plan. Our previous communication outlined our understanding of the facts, and our analysis of the documents included in the Maximum Achievement Program bundle proved that we were correct in our assessment. In our opinion, the Entry Level Plan is illegal, and we have no doubts about that.
What are unlawful pyramid scams and how do they work? It goes without saying that if you have any questions or concerns regarding these legal considerations, you should check with your own counsel. What follows is a very succinct and simplified description of the fundamental legal principles that prohibit illegal pyramid schemes from being operated. In a pyramid scheme, participants are encouraged to make a significant up-front payment, the majority of which represents compensation paid upline immediately for the act of recruiting or inducing the new participant to pay the money, and they're told they can earn back their up-front payment by persuading others to make similar payments, based on similar promises that they can make money from r All of these negative characteristics appear to be present in the Entry Level Plan.
Where the money from the MAP programme is spent. When we met with TIF leaders on February 19 in Tallahassee, they informed us that the sale price of the Maximum Achievement Program pack would be roughly $300, with the cost of generating each MAP pack estimated to be approximately $100 for the TIF leaders. They also informed us that around $120 of the $300 purchase price would be paid in instant bonuses to the seller and upline, with the remaining $80 being held in trust by the Diamonds as a down payment. In spite of our request for correction if the information provided was wrong, we have not received any information indicating that there has been a meaningful change in this information.
As you can see, $200 of the $300 payment for the MAP pack is set aside to repay the salesperson and upline for their efforts in persuading a participant to purchase the MAP package. It has also been confirmed by TIF leadership on numerous occasions and in their literature that the MAP pack will only be available to Quixtar-affiliated IBOs, and that each of these IBOs will be told that they can quickly recoup their $300 investment plus a profit by convincing other people to sign up as IBOs and purchase the MAP pack. Consequently, the only method to make money from the MAP pack is to recruit others; there is no mechanism to sell MAP packs to non-IBOs and no incentive for a non-IBO to be interested in purchasing a MAP pack, as outlined above. As a result, the selling of non-Quixtar items and services to non-IBOs through the line of sponsorship is prohibited by Quixtar's Rules.
Who has the upper hand and who has the lower hand. Finally, and probably most crucially, the Entry Level Plan as presented to us by Team In Focus is structured in such a way that those who start at the top will automatically gain more than those who start at the bottom and purchase the MAP pack later on in the process. In essence, this is due to the fact that no one will ever purchase more than one MAP pack, but everyone who purchases a MAP pack will need to sell two additional MAP packs in order to earn any money ($50). An IBO will require more than a dozen MAP packets sold in each of his or her "right" and "left" legs in order to break even, according to TIF's marketing materials. If you want to break even, each of those dozen must find 12 or more one-time MAP pack clients; and so forth. As a result of the Entry Level Plan's intrinsic deception and unfairness to Quixtar-affiliated IBOs, we believe it is unavoidable that the final people to purchase the MAP pack will have no chance to earn the revenue promised by the Entry Level Plan.
This is a violation of the rules. IBOs are prohibited from engaging in any deceptive or unlawful commercial practise or from operating any illegal or unlawful business venture under the terms of Rules 4.9 and 4.10 of the IBO Rules of Conduct. Visit www.quixtar.com > office > business info > business rules to view the complete text of the Rules in their entirety.
This is against the law. Compensation systems such as the Entry Level Plan have been repeatedly condemned as deceptive and unlawful pyramid schemes by courts as well as state and federal law enforcement agencies such as the Federal Trade Commission (FTC), the Securities and Exchange Commission (SEC), the United States Postal Service, and numerous state consumer protection organisations. When in doubt, you should speak with an experienced attorney, and you should recommend that he or she read the 1979 Federal Trade Commission judgement, which explains in full why the compensation model on which the Quixtar firm is built is not an illegal pyramid scheme. The Federal Trade Commission's judgement highlights numerous forms of illegal pyramid schemes that are quite similar to the Entry Level Plan but are fundamentally distinct from the Quixtar system. The following website provides additional information on the elements of an illegal pyramid scheme and fraudulent schemes: http://ftc.gov/bcp/conlin/
It was our honest expectation that the Diamonds who were dismissed would have complied with our repeated pleas not to launch the fraudulent and illegal Entry Level Plan out of a sense of mutual respect and partnership. We spent months consulting with them in an effort to assist them in building their Quixtar-affiliated businesses and teaching others how to develop successful Quixtar-affiliated enterprises without the use of misleading or unlawful practises. We were successful in our efforts. Although the Entry Level Plan was not officially offered until the weekend of April 12-13, 2002, it was announced at the Nashville event.
As a result of the introduction of the Entry Level Plan and its associated Maximum Achievement Program, certain Quixtar Diamonds found themselves in direct violation of the Corporation's repeated warnings, and as a result, the Quixtar-affiliated businesses of certain Diamonds have been terminated as a result.
Refunds are available to you if you meet the requirements.
IBOs that purchased the MAP pack are entitled to a full refund from the supplier in accordance with the IBO Rules of Conduct. According to the IBO Rules of Conduct, suppliers of BSMs are required to issue refunds upon request within 180 days of the purchase date. If you desire to receive a refund, you must first contact the individual from whom you purchased the MAP pack. If you have sold a MAP pack and collected money, you are expected to provide a complete refund to any person to whom you sold the MAP pack if they so request it within 30 days. Furthermore, you may want to investigate any extra refund provisions that may have been included in the MAP pack's purchase agreement.
Compliance with the Rules on an ongoing basis
Quixtar claims that the Entry Level Plan, as well as the assertions made about it, were deceptive and deceptive in nature. Any IBO who continues to promote the Entry Level Plan would be in violation of the same regulations that resulted in the termination of several Diamonds in the past. As a result, any IBO who promotes the Entry Level Plan will be liable to disciplinary action under the IBO Rules of Conduct (up to and including termination).
The bottom line is that the entry-level plan is not Quixtar-friendly. The recipient of this letter is a Quixtar-affiliated independent business owner (IBO), who has taken the initiative to establish an independent business under one of the most successful and time-tested business opportunities in the world.
With Quixtar, the former Diamonds had achieved tremendous success, and their position of success provided them with a platform from which they could, as independent entrepreneurs, educate others how to achieve the same levels of success they had achieved with the company in question. Unfortunately, this small group chose to create an unlawful pyramid scheme known as the Entry Level Plan instead of a legal one. The Entry Level Plan has no connection to Quixtar and, as previously discussed, it is in violation of Quixtar's Rules as well as federal and state law in several ways.
We hope that our swift and immediate action against some of the former Diamonds has made it crystal obvious that Quixtar will do whatever it takes to protect you and the Quixtar business opportunity for the millions of other IBOs who follow the Rules as we have in the past.
In order to study FAQs (Frequently Asked Questions) on this subject, please send an e-mail to entrylevelplanFAQ@quixtar.com with the subject "entrylevelplanFAQ."
Sincerely,
Rob Davidson is a writer who lives in the United Kingdom.
Vice President of the United States
Global Business Ethics / Business Rules
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