2nd District (OH) Race: The McEwen Connections, Part 5–
The Amway-Quixtar (AQ) Business

Part 1: Advantage Associates
Part 2: Jefferson Consulting and the 12-Year Gap
Part 3: The Non-Disclosure Gambit
Part 4: Those “Self-Employed” Contributors
Part 5: THIS POST
Part 6: The McEwens and Amway-Quixtar (AQ)
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Part 4 stated that Bob and Liz McEwen are an Amway-Quixtar distributorship Team, and that BizzyBlog believes they make substantial incomes from those endeavors they have chosen not to disclose to Second District voters.
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Overview of Amway (parent company Alticor) Business Structure

Amway, which began in the late 1950s, is a privately-owned company that is the pioneer in what is called network marketing or multilevel marketing. For those who need an instant education on the topic, this Federal Trade Commission Consumer Alert should get you up to speed.

Today, Amway is structured as follows:
- Alticor, the parent company
- Amway Corporation
- Quixtar
- Access Business Group, which appears to be peripheral to this discussion.

Alticor has worldwide sales of over $6 billion. A well-known public figure once noted that sales are more like $7 billion.

The two ownership families in this empire are named Andel and Devos. 49 year-old Dick Devos (the “retired” contributor I mentioned in the previous post, and for whom there is a bio here) has announced his candidacy for governor of Michigan in 2006. Individuals with Devos as their last name collectively contributed $6,300 to McEwen’s campaign. Though they are most likely centimillionaries or billionaires, the other two Devos family members, in the Amway tradition, characterized themselves as “Self/Small Business Owner.”

Who and What Is Amway (now Quixtar)?

Amway describes itself thusly:

Amway Corporation is a global leader in the multi-level marketing industry. Our longevity, stability and global expansion are unparalleled.

For more than 45 years, Amway Corporation has been committted to offering people a business of their own. Amway Corporation operates in more than 80 countries and territories, and we have never closed our door of opportunity in any market.

Nothing has ever been taken away from the Amway Sales and Marketing Plan. Instead, over the years Amway has provided a wide variety of additional sales incentive plans. New and better ways to reward Independent Business Owners (IBOs) have been introduced, just as new and better products have been added to support IBO businesses.

The Amway Business Opportunity offers choice. Whatever their goals, IBOs control the page of their business growth.

Business owners may simply choose to use a variety of products and share them with their friends and family. They may choose to specialize in a specific product line or category. They may focus on achieving specific income levels to finance personal goals. Or IBOs may dedicate themselves full-time to build their Amway business for the long term.

Whether they are loyal product users, part-time business owners or career building, IBOs are given many options through the Amway Business Opportunity.

If you click on the “Buy products” link, then “Americas,” and the “United States,” you get to this link, and two things become clear. First, you can’t buy things on the web site. Second, in the US, Amway is now Quixtar:

Amway and its affiliated Business Owners do business in more than 80 countries and territories worldwide. In the U.S. and Canada, however, one of Amway’s sister companies, Quixtar, provides an Internet-based business opportunity that includes a wide range of products and services. To contact an Independent Business Owner (IBO) powered by Quixtar, click here to locate a Quixtar IBO in your area.

Based on all of this, I’m going to use the term “AQ” to describe Amway and Quixtar from this point on.

Characterizing the Amway Business Model

The opinion on AQ breaks into three distinct camps:

• The company line, of course, is that is a tremendous business opportunity for those willing to work at it. It’s not just the company that says so. Dozens of leading lights of the Republican Party through the years have sung the praises of AQ. Here are just three:“We at Empower America are interested in bringing Democracy and freedom and entrepreneurial capitalism to the rest of the world. I’ve got a great way to do it. If we want to bring down astro and bring down Communism in Cuba…send them some Amway distributors…that will do it!”- Jack Kemp

  “Amway distributors are dramatic proof that the American spirit of free enterprise is, and will continue to be, a vibrant force for good at home and around the world.” - Gerald R. Ford

  “Nothing would do more to help the people that used to live in what was called the Soviet empire to achieve prosperity, to achieve freedom, to achieve opportunity than to have sixty or seventy thousand Amway folks go over there and start recruiting.” - Newt Gingrich

• The second camp believes that it is a business opportunity at which the vast majority of people fail, with relatively little financial consequence. This camp points to the fact that if AQ’s US sales are $5 billion of the roughly $6 billion total, and if, as is occasionally disclosed, there are 3 million distributors (also called Independent Business Owners) in the US, each distributor has Gross Annual Sales of less than $2,000, or may $4,000 considering their possible markups, before deducting purchasses, operating, and other costs. Further, those at the top of Amway who are making well above the average certainly cause the median income of an AQ IBO to be at least somewhat below the straight mathematical average.
• The third camp believes that AQ may be close to The Mother of All Scams, specifically close to The Mother of All Pyramid Schemes (which I will shorten to “The MOAPS Claim”).Those who make The MOAPS Claim about AQ point to the second and third paragraphs of guidance at that FTC link (bolds mine and represents their two core contentions):
  

  Some multilevel marketing plans are legitimate. However, others are illegal pyramid schemes. In pyramids, commissions are based on the number of distributors recruited. Most of the product sales are made to these distributors - not to consumers in general. The underlying goods and services, which vary from vitamins to car leases, serve only to make the schemes look legitimate.

  Joining a pyramid is risky because the vast majority of participants lose money to pay for the rewards of a lucky few. Most people end up with nothing to show for their money except the expensive products or marketing materials they’re pressured to buy.

  Those making The MOAPS Claim say that the overwhelming majority of IBOs sacrifice hundreds and thousands of hours of time in return for mediocre earnings, and then are induced into using most, all, and sometimes even more than all of those earnings purchasing ancillary products (called “tools”), and to attend frequent and costly out of town seminars and events at their expense to be able to stay in the good graces of the other AQ people they work with, and report to. Only those at the very top of the pyramid share in the profits from the “tools,” seminars, and events, while the lower-level IBOs only earn money on the various products and services AQ sells (and very few of those sales occur to non-AQ people).

Until two weeks ago, I had no idea that there are so many former AQ IBOs who are making The MOAPS Claim. Now it’s clear to me that there are so many of them (who you would expect to have better things to do with their lives than spend countless hours making stuff up) that it would be foolish not to at least take their positions into account.

IF, IF, IF those making The MOAPS Claim are right, Bob McEwen and his wife Liz, who are an AQ IBO couple (especially Bob as an AQ event speaker), are somewhere between these two extremes:
- Enablers who, with their status as a former congresscouple, are lending credibility to an organization that they have not come to realize doesn’t deserve it.
- Knowing and active participants in, and beneficiaries of, the “tools,” seminars, and events.

(While we’re at it, if those making The MOAPS Claim are right, AQ [given its stated conservative political stances, given the laundry list of dozens of high-level Republicans who have lent it credibility, given the more-than-small number of GOP politicians who have IBOs, and now - thanks to the Devos gubernatorial run - given the beginnings of high-level AQ people stepping into the political arena] has the potential to at least embarrass and possibly seriously damage not only the GOP but conservatism itself for years to come.)

So what direct and indirect evidence can we look at to get an idea of the level of Bob McEwen’s knowledge of and participation in AQ? That’s why there’s Part 6.