Have you ever heard about Pyramid Scheme? If not, this article is for you. Today we will talk about what is Pyramid Scheme and what are the famous pyramid schemes in history. Let’s find out by reading the article below.
What is Pyramid Scheme?
A pyramid scheme is an illegal financial scam masquerading as a legitimate business. Pyramid schemes are similar to Ponzi schemes and multi-level marketing (MLM) firms, but there are important differences between the three structures.
What are the famous pyramid schemes in history?
1. Koscot Interplanetary
Koscot Interplanetary, an Orlando, Florida company that sells mink oil-based cosmetics, was founded in 1967 by Glenn W. Turner. Unfortunately, the multi-layered cosmetics company got into numerous legal woes and collapsed in the 1970s. Turner would later go on to run another inspirational firm, Challenge Inc., only to be sentenced to seven years in prison in 1987 for using a pyramid scheme for fraud and conspiracy.
2. Holiday Magic
Another multi-level marketing company from the 1960s was Holiday Magic. Founded by William Penn Patrick, the company originally distributed home care products and cosmetics. However, the company was forced to close in 1974 after it was found guilty of fraud and was authorized to compensate defrauded people by luring them into joining the company.
3. Metabolife
Metabolife International is a San Diego, California-based multilevel marketing company that manufactures dietary supplements. Although one of its products made hundreds of millions of dollars, the company eventually went bankrupt and was forced to close in 2005.
4. United Science of America
United Sciences of America is an American company with a diversified product portfolio that sells supplements through multi-level marketing. The company, developed by Dallas businessman Robert Adler, touted the supplements as preventing cancer and the newly discovered AIDS.
Their supplements even have celebrity endorsements, including Master Formula, Calorie Control Formula, and Fiber Bars. Unfortunately, sketchy advertising, fraudulent claims, excessive research grants, and large consulting fees led to the firm's collapse in 1987, when high-profile members distanced themselves from it.
5. Equinox International
Founded in 1991, Equinox International is another multi-level marketing company. Led by Bill Gould, the now-defunct company had a turnover of $195 million in 1996. The FTC watched them for ten months to gather enough evidence to prove it was another pyramid marketing scam before taking the plunge. In 2000, Equinox International settled a court case with a $40 million fine.
6. Burning Lounge
BurnLounge is an online music store founded in 2004 that relies on multi-level marketing. By 2006, the Federal Trade Commission (FTC) declared Burn Lounge a pyramid scheme and forced it to return $1.9 million to customers.
7. Fortune High Tech Marketing
Consumer goods and services are once again in the spotlight for another multi-level company called Fortune Hi-Tech Marketing. Based in Lexington, Kentucky, the company was founded in January 2001 and was shut down by the Federal Trade Commission 12 years later.
8. WakeUpNow
Another well-known pyramid scheme in the United States is the WakeUpNow multi-level marketing scheme. Based in Provo, Utah, the company was founded in 2009 by Troy Muhlestein. WakeUpNow sells various products and services based on health and financial management. The company shut down in 2015 after it filed 160 complaints with the FTC and found that the products it was selling were cheaper or free elsewhere.
9. MonViei
Founded in 2005, MonaVie manufactures and sells health supplements made from mixed fruit concentrates. There has been some controversy surrounding the company, including the lack of scientific basis or regulatory approval for health claims on its products. This isn't the first time its chairman, Dallin Larsen, has been embroiled in false health claims about the drink. The company was forced to close permanently after failing to pay $182 million in debt.
10. Solavei
Solavei is a social commerce network and no-contract mobile service for users in the United States. Known for its incentivized referral program, the company also uses social network advertising programs. Customers get paid for referrals. Solvei was founded by Ryan Wuerch in 2012 and went bankrupt in 2015.
I hope this article will help you to learn what is Pyramid Scheme and what are the famous pyramid schemes in history. After all, MLM only benefits those at the top of the pyramid.
