Amway's Domestic Revival

If you watched any television at all over the holidays you might have wondered why there seemed to be so many commercials for a company called Amway Global (Amway being an abbreviation of American Way). Were these ads for the same company that has been accused of running a pyramid scheme and paid nearly $20 million in fines in a Canadian criminal fraud case 25 years ago?

Eric Scheibeler, author of Merchants of Deception: An Insider's Look at the Worldwide, Systematic, Conspiracy of Lies That is Amway/Quixtar and their Motivational Organizations told me that the controversies stalking the company continue to this day. Scheibeler said that he had "worked with local victims and initiated a UK government investigation in which the DTI/BERR (Department of Trade and Industry/Business, Enterprise & Regulatory Reform) took legal action against Amway and is waiting for an appeals court decision to potentially ban them from the country."

According to Scheibeler, a high level Amway member who was ostracized for uncovering fraud and deception within the company, "UK Justice Norris found in 2008 that out of an IBO [Independent Business Owners] population of 33,000, 'only about 90 made sufficient incomes to cover the costs of actively building their business.' That's a 99.7% loss rate for investors. The scheme appears to be falling apart in the U.S., UK and Australia hence the beefed up prime time ads in the U.S.

"Many of their [Amway's] highest level distributors have left to join other multi-level marketing groups," Scheibeler added, "and I now have an internal management document detailing a five year 96% drop out rate. Thousands of Amway victims from countless nations have sent me heart wrenching testimonials. Quite a few involve losses in excess of $10,000."

Through his time selling Amway products, Scheibeler, who had developed a business that extended from North America to Europe, South America, and the Philippines, met a number of politically powerful Republican politicians and conservative religious leaders, including former House Speaker Newt Gingrich, former Iran/Contra figure Oliver North, and then-Senator Rick Santorum. Former U.S. Presidents Ronald Reagan, Gerald Ford, and George H.W. Bush also spoke to Amway distributors. Religious leaders like Charles Stanley (a former distributor), Dr. Robert Schuller, and the late Dr. D. James Kennedy of Florida's multi-million dollar Coral Ridge Ministries, gave the company and its founders a credibility that seemed beyond reproach.

In 1959 Amway was founded by two high school buddies from Grand Rapids, Michigan, Richard DeVos and the late Jay Van Andel. In the intervening decades, the Michigan-based Amway became a phenomenally successful company and is now the second-largest direct-selling company in the world. In 2000 it became part of an umbrella company called Alticor Inc., which does business as Quixtar in the U.S. and Canada, and as Amway Corp. throughout the rest of the world. (Quixtar has recently been charged with fraud and racketeering in a class-action suit filed by two former distributors in California.)

Amway Global and other companies under the Alticor umbrella reported sales of $7.2 billion for the year ending December 31, 2007, marking the company's sixth straight year of growth.

Van Andel and DeVos used a portion of their wealth as a defacto insurance policy, becoming major financiers of Republican Party candidates and Religious Right causes. According to Progress for America, Amway's founders contributed $4 million to conservative "527 groups" in the 2004 election cycle. In April 2005 Rolling Stone magazine reported that Amway CEO and co-founder DeVos was connected with the dominionist political movement in the United States and that he had given more than $5 million to the Coral Ridge Ministries.

Despite the controversies and legal challenges the company continues to face, it has never gone out of business. Instead, it shifted the bulk of its efforts to overseas markets. These days, its three current growth hotspots are Russia, China, and India. "In the late 1980s, about three-quarters of our business was here in the U.S.," Steve Van Andel, Alticor's chair, co-chief executive, and (like Doug DeVos) the son of one of Amway's founders, recently told the Associated Press. "Now about 80 percent of it is outside the country."

According to the Associated Press, Alticor is "shelving the inert Quixtar label [a name that apparently never caught on] and pouring millions of dollars into reviving the Amway brand in North America with market research, national television commercials and ads in newspapers and magazines and online."

Amway Global intends to revert back to Amway in about a year. It has several goals, including reacquainting the public with the company's extensive product line, which includes health and beauty items, homecare products, jewelry, water purifiers, etc.

While times may be tough economically for a sustained re-birth, company officials "hope to repeat in the United States the kind of growth they've seen abroad in the past and to revive the mystique that helped the company spread throughout the Midwest and, by the mid-1960s, the rest of the U.S. Amway's hundreds of thousands of distributors dreamed of getting rich by selling cleaning products and by recruiting their acquaintances to join the fold," the AP reported.

Despite the fact that a U.S. Federal Trade Commission examination into Amway's business practices during the 1970s concluded in 1979 that it was not an illegal pyramid scheme because compensation is based on retail sales to consumers and because salespeople are not paid for recruiting new colleagues, it is still under government investigations in England, India, and China.

For nearly 40 years, the DeVos family has been a major benefactor of both the religious right and the Republican Party. In October, former Amway Corp. chief Dick DeVos held a private fundraiser featuring President George W. Bush to raise money for the National Republican Congressional Committee and the Republican National Committee. Shortly before the 1994 election, the Amway Corporation gave the GOP $2.5 million which, at the time, was "the largest political donation in recent American history," the Washington Post reported. In 1996 the company donated $1.3 million to the San Diego Convention and Visitor's Bureau "to help fund a Republican cable TV show to be aired during the party's national convention," the Associated Press reported. The program featured "rising GOP stars as 'reporters,'" and aired on the Family Channel, owned by Pat Robertson.

The Richard and Helen DeVos Foundation, founded in 1970, has provided major funding for such right-wing groups as Concerned Women for America, the late Paul Weyrich's Free Congress Foundation, Michigan Right to Life, Dr. James Dobson's Focus on the Family, and Tony Perkins's Washington, DC-based lobbying group, the Family Research Council. Foundations with the DeVos family name attached to it now include the Dick and Betsy DeVos Foundation (1990), the Daniel and Pamela DeVos Foundation (1992), and the Douglas and Maria DeVos Foundation (1992).

There is also a DeVos connection to Blackwater USA, the world's most powerful mercenary army and the largest contractor providing security in Iraq (until it was kicked out in January). The company is currently up to its neck in legal problems related to its activities in Iraq. Blackwater was founded by former Navy SEAL Erik Prince, the son of Edgar Prince, a wealthy Michigan auto-parts supplier. The elder Prince is described by Jeremy Scahill, in his bestselling book Blackwater: The Rise of the World's Most Powerful Mercenary Army, as a "radical right-wing Christian mega-millionaire" who is a strong financial backer of President George W. Bush, as well as a donor to a host of conservative Christian political causes.

In the 1980s, "The Prince family merged" with the DeVos family as Eric's older sister Betsy married Dick DeVos, the son of Amway's co-founder, Scahill writes. Together, the two families became one of the "greatest bankrollers of far-right causes in U.S. history, and with their money they propelled extremist Christian politicians and activists to positions of prominence."

As Scheibeler noted, "Although Bernard Madoff allegedly swindled $50 billion from about 8,000 victims, he seems to be an amateur in comparison to Amway. Amway has brought in far in excess of that amount from tens of millions of consumers who invested in 'their own Amway business' and it seems nearly all did so and continue to do so at a loss. The difference is that the Madoff pipeline is shut down, while you may be recruited to an Amway meeting tomorrow."

Z

Bill Berkowitz is a freelance writer covering conservative movements.