June 13, 2005

2nd District (OH) Race: The McEwen Connections, Part 6:
The McEwens and Amway Quixtar (AQ)

Filed under: Consumer Outrage,Corporate Outrage,OH-02 US House — Tom @ 12:27 am

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: The Amway-Quixtar Business
Part 6: THIS POST
_____________

UPDATE: Note that BizzyBlog has found posts at AQ Blogharbor sites showing that Bob McEwen made speeches at AQ events as recently as late last year, and perhaps even more recently than that.
_____________

Have the McEwens Been Active in AQ?

BizzyBlog has obtained three audiocassettes (dates unknown, but based on their contents, and the fact that they are cassettes, I would estimate that they are from about 1998) from presentations made by Bob and Liz McEwen at Amway functions:
- Bob’s first tape is called “When Government Controls the Tools, It Controls the Man.”
- Bob’s second is entitled “Six Sign Posts to Freedom.”
- Liz’s tape is “How Husbands and Wives Are Different.”

Bob makes frequent reference to AQ (then Amway) and its success in the course of his speeches. Liz’s tape is important because her final statement on it (“Let’s All Go Diamond”) confirms, more than anything Bob specifically said, that the McEwens were still active AQ IBOs (then referred to as Amway, and then often called “distributors”) when they made their speeches. BizzyBlog has also learned that Liz McEwen was reported as an Amway distributor in a congressional financial disclosure form in 1991, the last full year Bob McEwen had to provide such disclosure as a congressman.

McEwen’s Speaking Fees: Who Pays Them?

So how much does Bob McEwen make for each speech? According to his Speakers Bureau page, the answer is $10,000.

Now, stop, right, there. Or more specifically, go right here, and compare McEwen’s speaking fee to that of a few people who are by any reasonable measurement higher-level luminaries than him. Some examples:
- Author/columnist David Limbaugh: $7,500
- Fox and Friends co-host Steve Doocy: $10,000
- Newsweek columnist and frequent TV guest Eleanor Clift: $8,000

(Note: The next paragraph is conjecture on my part that would been unnecessary had Bob McEwen not, as noted in Part 3, “cleverly” delayed his declaration of candidacy until May 16, meaning that his financial-disclosure forms don’t need to be completed or submitted until after the election Tuesday. If anyone has any quarrel with this now clearly identified conjecture, your complaint is not with me.)

I look at Bob’s fee and I ask “How many people are willing to pay a former congressman (not even a senator) who has been out of office and generally out of the limelight for all that time $10,000 for a keynote? I believe that AQ and its higher-up IBOs may be among the few willing to do so, and indeed may even be the only ones. And why would they be willing to pay what appears to be an outsized fee?

What Has Bob Done for AQ?

BizzyBlog has had an e-mail exchange and several discussions over the past 12 days with Eric Scheibeler, a former AQ (Amway at the time) IBO/Distributor whose performance enabled him to reach nearly the highest levels of the company. I have read his entire book, “Merchants of Deception,” and find his story not only highly credible but virtually impossible to make up out of whole cloth at the level of detail it is presented.

The e-mail I am showing below is his response to my specific request to characterize Bob McEwen’s involvement in AQ (then Amway).

(Note: The e-mail contains Mr. Scheibeler’s recounting of events and his opinions, and is slightly abridged. I exerted no influence over what Mr. Scheibeler sent me.)

Tom,

….. This is a “Reader’s Digest” condensed version to help bring you up to speed on this global “business opportunity” fraud and the participation of Bob McEwen. I am a former Federal auditor. Good friends recruited my wife and I into Amway and we quickly rose through the ranks to the top 1/25th of 1% in the nation and developed a global business. We spoke to thousands from stage and recruited all those we knew an loved. At that point, I discovered, as a former federal auditor, systematic consumer fraud. I naively thought it was limited to the kingpin level distributors and reported it to Amway President Dick DeVos. Amway responded by shutting off our sole income in an effort to starve us into silence. I was told in a face to face meeting what gun will be used to kill me if I caused trouble. My wife and young son were threatened on the telephone, resulting in a tap and trace (FBI) on our line. (stricken on May 18, 2007: See Update 3 below) When we were about to lose our home, we were offered a “sale” of our business for $75,000 while being pressured to sign a non disclosure. We left our family home to be able to speak freely and protect others.

I wrote an exceptionally well documented book titled Merchants of Deception that ….. is the result of near 5,000 hours of investigative research. Perhaps what stunned me the most was to learn that this fraud has been perpetrated with near franchise like precision for two decades, as supported by 20 banker boxes of documentation. Amway has collaborated and financially rewarded the most egregious offenders. A twisted, perverted version of Christianity is utilized as bait to lure good people to their economic demise. Research and documentation reveal that over 99% of those recruited lose money and have for over 20 years. This is perhaps the most well organized consumer fraud in history, currently culling literally $6 Billion annually.

…… Since launching the (Merchants of Deception web site, over 127,000 have downloaded the free e-book version of Merchants of Deception ….. I am receiving hundreds of contacts from victims or family of victims in China, Italy, France, Germany, UK, Netherlands, South Africa, Malaysia, Indonesia, India, Australia, New Zealand, Canada, Russia, the US and others. Distributors have lost $20,000 to in excess of $100,000 and four distributor suicides have been reported to date; two in the US and two in Australia. Hundreds of victim testimonials are pouring in from around the world.

The FBI has added an additional agent to the fraud investigation and set up a specific e-mail account for me to forward victim testimonials to. Additionally, I flew to Orlando and provided my book and supporting documentation of tax fraud in another investigation being conducted by the Criminal Investigation Division (CID) of the IRS. My motivations in this punishing task are neither anger nor revenge. My involvement is most unlikely as I am non confrontational by nature. This simply must be stopped. The heartbreaking testimonials of families torn apart by this come in every single day.

Please find enclosed one critical report. The author is a gentleman who is perhaps the world’s foremost expert on organized crime. He, in fact, wrote the RICO laws that broke the back of the Mafia in the early 1970′s. He was hired in one of countless lawsuits against Amway to review how they do business. This confidential report was sealed in a case and was never to see the light of day for reasons that are self evident when you read it. Please feel free to contact me if I can provide you with additional information. I will be glad to do an interview should you have an interest.

This would not have gone on for so long had the credibility of prominent politicians and religious leaders been utilized. Former US presidents Reagan, Bush and Ford were all brought in to speak for enormous fees. I was at multiple meetings in which Bob McEwen spoke. His hands on involvement in what appears to be the largest consumer fraud of our time may need to be scrutinized by those deciding to vote. This has a near 99% failure rate among those many people in Ohio who have been induced to invest in this business opportunity fraud. Some have lost tens of thousands while others have lost in excess of $100,000. Others leave requiring cult exit counseling. Why would Mr. McEwen be involved on any level with this? Has his credibility been unknowingly hijacked or is he reaping the benefits from the many Ohio constituents who lose month after month in this? How much has he taken in speaking fees to date? Is he an active recruiter for this organziation?

Thank you very much for your time. You cannot imagine how many people this story will help.

So what have learned from Mr. Scheibeler, if we are to believe him (and that’s frankly up to you, dear reader), and other sources?
1. There is an FBI investigation into AQ and/or certain of its high-level IBOs.
2. There has been a comprehensive study of AQ’s business model and methods. BizzyBlog has received reviewed the “RICO Report” referred to in bold above, and in the interest of clarity has decided to put it on the web site here (warning: PDF file) for anyone who wishes to read it (May 2007 — the report was removed in the interest of preserving space; please e-mail me if you wish to see it or have me repost it after I cut over to a new server in June 2007). I will simply note the overall conclusion of the author, who in addition to the credentials cited above was at the time of the report a law professor at Notre Dame Law School:

3. Bob McEwen was a frequent AQ speaker, and perhaps continued to be one until very recently.

Mr. Scheibeler, in a different e-mail, informed me that McEwen’s tapes were sold to IBOs along with other motivational materials on the “we expect you to buy these because you’re on the team” basis described earlier in Part 5.

(Note: the following sentence is also conjecture) BizzyBlog also believes the CDs and DVDs available for sale at Bob McEwen’s personal web site through “Freedom Question International” are tapes of presentations at Amway and AQ with all Amway/AQ-specfic references removed.

So, Where Does This Leave Us?

As with so many other aspects of Bob McEwen’s last 12 years, his involvement with AQ leaves a number of questions for which voters should have answers before they enter the voting booth on Tuesday, and which probably are not forthcoming. Among them are:

  • Why hasn’t he said a word about his apparently still-current or near-current involvement with AQ (based on the endorsements cited in Part 4 at numerous Quixtar Blogharbor sites, and reference to speeches made in late 2004)? All along voters have been led to believe he is (implication: solely) a lobbyist and consultant.
  • How much and what percentage of his income from speaking engagements, and from sales of books and tapes, is from AQ?
  • How much of his income from sales of books and tapes, is from his web site with non-AQ customers, vs. sales strictly within AQ (a small hint that his personal site’s sales are very small is that it is not equipped for e-commerce, a situation that would normally only be appropriate in a low-volume situation)?
  • Has McEwen ever become aware of any information that would lead him to suspect that AQ is engaging or has engaged in illegal activity? Has he followed up on any suspicions?
  • (If Eric Scheibeler is correct) Is he aware that AQ is under investigation? Has he done anything to distance himself from AQ as a result?
  • Is anyone from AQ expecting any special favors from McEwen when he enters office (some observers believe, based on legislative activity taking place in some states and the increased visible political involvement noted earlier, that there is reason to be concerned that AQ might attempting to have portions of consumer law quietly revised to make their business model pass legal muster before the investigations referred to earlier make too much headway)?
  • What do (or perhaps would) McEwen’s Washington-insider, values-guru, and celebrity endorsers (including the recently ubiquitous-on-the-airwaves Anthony Munoz) make of all this? Do they have any idea that he is involved with AQ? Will anyone ask them how they feel about his involvement?

Once again, an aspect of Bob McEwen’s life after Congress is fraught with uncertainty at best, and perhaps other problems beyond that. Somehow, he expects voters to put all of these uncertainties aside and bet the district on his character, even though they haven’t seen it up close and personal in 12 years, even though what has been learned provides scant reason for comfort, even though he has avoided the kind of financial disclosure voters have a right to expect before an election, and even though the other candidates in this race who have lived here and worked here have no remotely similar baggage.

For the life of me, I don’t understand why any voter would take such a gamble.

____________

Update 1: Zheesh, I forgot to mention the hard-hitting story that Dateline NBC carried in May of last year about AQ.

Excerpt A (about halfway through–the named people are all ex-AQ IBOs, except Hansen, who is the interviewer):

Short: There is another business.

And it’s a business that is completely separate from Quixtar, a hidden business that most recruits don’t realize exists. Short says many of those high-level distributors singing the praises of Quixtar on stage are actually making most of their money by selling motivational books, tapes and seminars — not Quixtar’s cosmetics, soaps and electronics.

Hansen: This was the dirty little secret.

Short: That’s exactly what it was, absolutely.

Hansen: That’s not what you hear at the conventions.

Short: No, and that’s not what you’re told in somebody’s living room when you see it either.

In fact, about 20 high level distributors are part of an exclusive club, one that those hundreds of thousands of other distributors don’t get to join. For years only a privileged few, including Bill Britt, have run hugely profitable businesses, selling all those books, tapes and seminars — things the rank and file distributors can’t sell themselves, but are told over and over again they need to buy in order to succeed.

Hansen: Why are the recruits told to listen to the tapes and read the books over and over and over again?

Short: Because it creates a dependency and it creates a habit that keeps you bound to that business.

Excerpt B (Fredericks in an AQ IBO and recruiter, bold is mine):

Hansen: So how much does an average Quixtar distributor really make? Well, only about $1,400 per year. What’s the source for that figure? It’s Quixtar itself. You can find it in the fine print of the company’s own registration materials. That’s $248,600 less than what our recruiter, Greg Fredericks, said we could make.

We caught up with him at one of his recruitment meetings.

Hansen: We’re doing a story on Quixtar and Quixtar distributors.

Fredericks: Okay.

Hansen: And these folks here work with me.

Fredericks: Oh, great.

Hansen: And we wanted to ask you a couple of questions.

Fredericks: Sure.

First we reminded him about the money he said we could make.

Hansen: Are you really making…

Fredericks: “I’m not disclosing that.

Hansen: “A quarter million dollars by working merely 15, 16 hours a week?

Fredericks: [affirms] But I’m not going to disclose to you my information as far as my personal income.

But what he did let slip when he didn’t know the camera was rolling was that one of the elite distributors we saw on stage is making most of his money from the motivation business.

Fredericks: Probably three quarters of it.

Sandler: And that’s from seminars — holding seminars?

Fredericks: Seminars, rallies, functions, motivational tools, tapes, books, speaking engagements, appearances.

But he didn’t seem to remember saying that.

Fredericks: I don’t know where that number came from. You’re mentioning a number, three quarters of what his income is…

Hansen: “That’s what you said, not what I said.

Fredericks: Did I say that?

UPDATE 2: In the interest of equal time, I just came across Quixtar’s reaction to Eric Scheibeler’s book claims (but note the lack of response to substantive claims about IBO success or lack thereof–also to be clear, McEwen’s name does not appear in his book; Scheibeler says that is because so many other people of higher stature and celebrity have lent unwarranted credibility to AQ that McEwen was on a relative basis a second-tier celebrity):

(click “more” to read the response)

Eric Scheibeler was an Independent Business Owner (IBO) for several years before a business dispute arose between him, several other IBOs, and Quixtar. Despite efforts to resolve issues in Quixtar’s dispute resolution process, Eric Scheibeler sued Quixtar and other Quixtar IBOs, demanding millions of dollars in alleged damages. With Eric Scheibeler’s consent the court ordered him to submit his claims to confidential arbitration and, after the arbitration process was complete, the court reviewed and confirmed the results of the arbitration. The details of the dispute resolution process as well as the arbitration in which Eric Scheibeler voluntarily participated are subject to a confidentiality order, confirmed by the state court, that protects his privacy as well as the privacy of other individuals involved in the dispute.

Eric Scheibeler chose not to appeal the court’s ruling. Instead he embarked on a smear campaign. First he posted claims on the Internet under the fictitious name “John Jacob.” He claims to have gone to the state police and the FBI about supposed threats by anonymous phone callers, but after more than three years there has been no arrest to corroborate that Eric Scheibeler was ever threatened by anybody. (Ed. Note: Scheibeler informed me that he wrote his free Internet e-book under a pseudonym to protect his and his family’s safety, and that after some time had passed he decided to use his real name as author, without changing the pseudonyms of AQ IBOs in the book, as his personal and family safety concerns lessened. BizzyBlog further notes that pointing out the lack of an arrest is not in any way a denial by AQ that threats occurred, a denial that AQ could have made but clearly chose not to.)

Now Eric Scheibeler is trying to make a profit from his claims. He has created a fund-raising Web site on which he admits that he wrote the “John Jacob” stories and solicits money, supposedly to support his “legal defense” against the people and companies he has attacked. Eric Scheibeler claims to need a lot of money because he is taking on not just Quixtar, but President George W. Bush, former Attorney General John Ashcroft, Senator Rick Santorum, the FBI, and the Attorney-General of Pennsylvania, all of whom he portrays as his enemies because they “support” Quixtar.

Quixtar remains committed to providing a high-quality, low-cost business opportunity that will help individuals achieve their personal goals through their own efforts. While Eric Scheibeler at first achieved considerable success in the Quixtar business, eventually his business failed. His efforts to use the court system to blame that failure on others also failed. His efforts to persuade law enforcement officials that there was a threat to his personal safety have failed. His stories attacking Quixtar and Quixtar IBOs have failed. We believe his latest efforts to profit from claims about a conspiracy stretching from the White House to his hometown also will fail.

UPDATE 3, May 18, 2007: Mr. Scheibeler contacted me and asked me to add the clarification that follows to replace the text that has had “strikethrough” applied to it in the first paragraph of his e-mail above –

“A posting on an article about Amway and Quixtar contained statements that should be clarified.

Quixtar has filed a lawsuit against me
(see http://merchantsofdeception.com/news.html)

I discovered deception in the Amway Quixtar distributor force and reported it to Dick DeVos. Long after that, my wife and son received an anonymous death threat on the telephone. I had been threatened in a meeting by a person known to me who is not an Amway employee nor acting upon their direction. The threats have never been attributed to either Mr. DeVos nor Amway, Quixtar nor any of their employees. I am issuing this statement in order to clarify publicly that I did not receive a death threat either from Amway or from Mr. DeVos. As I indicated in my book, Merchants of Deception, I do not know who threatened my wife and son on the telephone.”

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