Ponzi Schemes Everywhere? Newbies Beware!

The below article was posted in the Conquer Your Niche forum by Josh Anderson and I think it deserves more attention. The article is very important and should be read and heeded by all new marketers looking to start a business on the Internet or offline for that matter. As in my previous blog articles, newsletters and forum, this very important point has been made over and over. There is no free ride, there is no miracle money, no easy money, all businesses require work and effort on your part to achieve success. Please read and heed Josh's post below.

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I notice a lot of fairly new warriors posting questions about things like "randomizers," "investments," and other scams. These "newbies" are looking at these programs and their offerings with serious interest and feeling the temptation that comes when promised easy money. I am going to be strait forward and completely honest:

1. When you are getting started online it is hard to hear the legit opportunities because of the multitude of scams and ponzi schemes.

2. Opportunities that offer you fast money by making an "investment" into a "matrix" or "randomizer" or other such Ponzi scheme are almost all illegal.

3. There are so many illegal schemes online that it may seem like very few are exposed and prosecuted by the authorities but this does not make them any more legit.

4. In the US 70% of your revenues must come from the direct sale of goods or services and only 30% can come from the recruitment of other distributors in order for the opportunity to be legal. This is known as the 70/30 rule and is used by the feds when taking on mlm and other opportunities. Otherwise the companies are getting into "ponzi" and "chain" schemes which are federal offenses in the US.

5. "Referral sales" are illegal in all 50 states. A referral sale is where you offer a discount or other value in exchange for "leads" or the names of prospective purchasers (do a search for legal info regarding "referral sales" on Google and you will learn some very interesting facts). Here is a link to a page with some basic legal definitions for ponzi or pyramid schemes and referral sales: http://ag.ky.gov/cp/367_830.htm

6. A program does not have to pay out in the form of a "pyramid" to qualify as Ponzi.

7. Just because their is a product or service offered as a front does not mean that a program is not Ponzi. Here is a good example:
http://www.crimes-of-persuasion.com/Crimes/InPerson/MajorPerson/telecom2000.htm

8. There are many involved in ponzi who will claim that their program "works" and has passed the scrutiny of the FTC... most of them have no clue what they are talking about and are simply subconsciously excusing a lie that they have convinced themselves to ignore. http://www.ftc.gov/bcp/conline/pubs/alerts/doznalrt.htm

9. Self deception is a destructive illness. I got on the internet for the first time in 2001 and began researching internet business. I was stuck by the amount of "investment" and "matrix" opportunities that were available. Many of them were "ground floor" startup opportunities that claimed they were going to sell a product or service once they got off the ground but that they needed a few "investors" to grab "top positions" before they "launched." I found that almost all of them never actually offered a legit product or service and operated as an unabashed and obvious pyramid scheme.

Most sites would disappear within a year and I would see the same founders starting different opportunities with varying "payout" plans all of them Ponzi. I also saw that some of these Ponzi creators spent time posing as "consumer advocates" for those who had lost money in other schemes. These ponzi scammers would lure in victims of other failed ponzi schemes by publishing submitted complaints on their websites in behalf of the victims. They would act as if they were trying to assist the victims in recovering their lost "investments." I would then see these very same "advocates," after building a list of victims sufficiently large enough who trusted them, launch their own ponzi schemes with claims like "everyone gets paid" and "guaranteed not to fail." They would tout themselves as saviors claiming that no one would get hurt and that they were out to help everyone who lost money when other companies failed.

10. A majority... let me say that again a MAJORITY of opportunities I see advertised in safelists are illegal investment schemes. The reason for this is because most people who are attracted to these type of opportunities cannot build a mailing list to market to (the reason is because the mainstream business world immediately sees you as illegit) and they congregate in safe lists in hopes of spreading their opportunity virally. Most members of safe list communities (the one's who spend every day reading and mailing safelists and investing in ponzi) are inexperienced deceived and looking for easy money.

*I know I will get heat for saying that but I also know it is true. There are legit ways to use safe lists but the majority of the opportunities advertised in them are complete garbage.*

11. Light attracts light. Darkness attracts darkness. Scammers attract easy money seekers who have deceived them selves into believing their lies.

12. There are many members of this and other marketing forums making money in illegal investment and ponzi schemes. There are many members of this and other marketing forums loosing money in illegal investment and ponzi schemes.

13. If you align your self with such opportunities (even if you make money) your business will be seen as illegit and your own reputation will be tarnished by those whom you associate with.

14. It is illegal to offer an investment opportunity, collect funds, and then spend the money on other projects: Read the Matthew Bowin example on this page: http://www.sec.gov/investor/pubs/cyberfraud.htm

Not to long ago dozens of warriors were lured into investing in a software development opportunity run by a well known marketer that was never fully delivered. I settled out of court with that marketer to regain my own investment back after I threatened to bring in the FBI and SEC.

15. It pays to educate your self on the laws that govern your business. I have personally interviewed attorneys, legal experts, authors, and a federal expert witnesse on the subject of mlm, one up referral, and ponzi style compensation programs during my own investigation into the online "money for nothing" phenomenon. http://www.firstgov.gov/Citizen/Topics/Internet_Fraud.shtml

16. You should also read what the SEC has to say about "internet investment" schemes. It may shock you to know that: "...the following companies must file reports with the SEC: All U.S. companies with more than 500 investors and $10 million in net assets;" Companies that fail to do that are in violation of federal laws and many cases send the owners of such companies to prison. The SEC governs most "investment" opportunities and when their hammer falls on a company it is not pretty.

Anyone interested in online business opportunities should read this page about "internet investment fraud:" http://www.sec.gov/investor/pubs/cyberfraud.htm

Also it may surprise you how many internet businesses violate these areas of the law:
Franchising - http://www.ftc.gov/bcp/franchise/netrule.htm
Endorsements - http://www.ftc.gov/bcp/guides/endorse.htm
Earnings Claims - http://www.ftc.gov/opa/2003/11/dojsweep.htm

http://www.ftc.gov/opa/2005/11/wealthsys.htm
http://www.lawpublish.com/mlm.html
http://www.ftc.gov/opa/1998/05/greenhorse.htm

17. Robert Fitzpatrick is one of the foremost experts and has served as an expert witness in many federal cases, been published on the subject of ponzi, and has been featured on nationally syndicated television shows speaking on the subject. His website is one of the greatest resources for educating you self against ponzi and other related illegal scams: http://www.pyramidschemealert.org/PSAMain/home.html

Mr. Fitzpatrick's site is not another anti scam site where people post their grievances it is one of the most educational sites on the subject of ponzi and mlm legal battles on both side lines that you can read. I don't care if there are any detractors to this post. I am not going to debate what I have written. I have written it for the benefit of those who are truly interested in educating themselves on the subject and making educated decisions based on the laws that govern the businesses they are getting involved in.

There are many on the internet and in this forum who will seek to excuse their illegal activities and continue to live in self deception. That is fine. Everyone is entitled to their own decisions and opinions. This post is to provide a powerful education to the multitudes who desperately need it including the newbies who keep posting questions about whether such scams "work" in various marketing forums around the internet.

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Post was written by Josh Anderson
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For more education on Internet marketing and more interesting posts, you might want to join the "Conquer Your Niche Forum" where Josh and other Internet marketers post many helpful and interesting information on building an Internet business.

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Ray White
http://www.creativemeasure.com
http://www.privatesuccessteam.com
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My Money Tree

The photo I have uploaded here and on most of my sites and forums on the Internet reminds me about the plant in the background of that photo. Called a money tree in layman's terms. I write about this plant only because my Internet business and this plant were both acquired at approximately the same time.

This photo was not chosen because of the plant but is rather a coincidence. Actually it's a bad photo of me :) (after a long day on the golf course) but one that just happens to fit the size that I needed to upload. For those that are not familiar with money trees, a brief description follows.

Money trees - good luck plants, botanical name Pachira, range in height from a few inch petite to seven feet giant, are characteristic of the figure of thick trunks, and thin branches with five big green leaves on the top, like human hands with five fingers. This one actually stands a bit over 6 feet tall and the leaves vary in number. Some branches have as many as seven leaves, while others have 4, 5 or 6. For comparison I'm 6'3" so you see the height of the tree.

Money trees may have their trunks twisted. There are braid designs made of three to five twisted trunks, and a golden cage design made of eight twisted trunks. Mine is braided. Money trees are great gifts for business grand opening, new house purchase, office and home Feng Shui improvement.

You're probably wondering, why I would write about a plant on an Internet Marketing Blog? It's rather a shock to me as well but it is so closely related to my Internet business that I just had to tell someone.

This plant was given to me a bit over 2 years ago at a very rough time in my life with a very bleak financial future. My dearest friend gave me this plant with words of encouragement that went something like this. She said that the plant would bring me good luck if I nurtured it and took the care necessary for it to grow and thrive. She also said that it really didn't need a lot of care, just water thoroughly about twice per month and place it in an area that would receive light sun. She said it also would be nice to just touch and pay attention to it occasionally.

Of course I thanked her, but being of old school didn't put much faith in the lucky portion. Have always believed that everyone makes their own luck, it's not given. Two years ago when she gave me the plant it was about 8 inches tall.

About the same time she gave me the plant, I started searching for a way to make money from home. Looked in newspapers, magazines, and the Internet. Watched late night infomercials as I was always up late worrying about my next move. Saw this infomercial about SMC. Sure most people in the U.S. have seen or heard about it by now. Anyway, thought this might be something I could do since the money needed to start was not so much.

Made the call, jumped into the system, borrowed money to open a shop, built a website, and six months later was worse in debt than when I started. No sales from the website and not enough in the shop to cover rent and expenses.

My money tree was also turning yellow and not adding any new leaves. Looked as if it might not make it. Moved it to a different location, gave it water and went back to the computer to search for directions on how to care for the money tree.

While searching started typing in searches like "make money from home"-"work at home business"-"work at home on the internet" - "internet home business"-"free internet business" instead of "help my money tree" :)

Actually what happened next is history but I had no idea at the time. Came across this site where some guy said he would build me a money making website in approx 24 hours, setup and ready to take orders. But, I had to join something like 5 programs of which most were free to join. I would have to pay for a domain name and hosting account.

Already knew that to have a web presence those two were a must. First thought, this was just too good to be true, so I just bookmarked the site and forgot about it, sounded like b.s. to me!

Kept struggling with the gift shop, trying to invent new sales, working and tweaking my website, of course I really had no knowledge of how to promote a website, was using a site builder that was part of the hosting account. Would take me hours to add one simple item and make it display correctly.

The company that was hosting my site were very helpful with any questions I had. I look back now and see how ridiculous and ignorant I was and wonder how many laughs I must have supplied for the support staff at Host4Profit. I would email them sometimes 2 to 3 times a day because I just didn't get it! Really had no business trying to build a site but was determined it would be my answer to turn my business around.

In the mean time, my money tree was looking a little better but still not healthy. Saw one new leaf starting to grow from a branch and was actually thrilled that at least I hadn't killed the gift my friend had given me.

While trying to learn more about building a website, searched all the FAQ's, on the host account, read all the tutorials, kept reading things that totally confused me. Didn't know the terminology at all so would have to search for the definition of these words. In doing that kept running across this reference to something called the Plug In Profit Site. For some reason this sounded familiar, but just thought I had probably searched the back office of the hosting account so much that it was somehow part of their system.

Was in the process of cleaning out my favorites on the computer one day and there was this link that referred to Plug In Profit Site again. Was no wonder it sounded familiar, had put it there probably a month earlier and forgot about it. Clicked the link and started reading the sales page. On the sales page it made a reference that you would be required to set up a hosting account with, you guessed it, Host4Profit.

Why not, this guy (Stone Evans) looked like a decent guy, plus he lived in Texas, about 300 miles north of me. Already being familiar with Host4Profit, having an account already, it would only cost me an additional $5 to host the website Mr. Stone Evans said he would build for me. At that time the domain name registration was priced at $30, so I took the leap to see what this was all about. It's now only $15.

My first thoughts were at least with the promise of 30 days of training on Internet marketing, I could certainly use the help. Was certainly a bit over whelming at first, all the programs to join, the lessons to be learned, and what my next step was suppose to be. Honestly, after going through the first few days of training, was getting somewhat confused and even a little angry that I would need to purchase certain tools and upgrade in the free programs to really make money. Was thinking, okay this really was b.s. and this guy was just trying to get me to spend more and more money every day.

Even though in the lessons he stated you could do it the free ways, not spend money but it would take longer. Didn't understand that at the time, but did take some of the advice and started promoting my gift website with some of the free methods.

Time period is now around November of 2004, so decided to forget about the Stone Evans site for now and concentrate on trying to make some money during the shopping season. Oh, the money tree was starting to grow and was looking much greener. Had lots of new leaves and more seem to be coming every day. Added a little plant food to see if that would boost the growth even more.

November and December showed some fairly decent sales and profits, but certainly not enough to repair the damage done the previous months in business. The gift website had actually contributed a few sales, but certainly not enough to cover the cost of the site and the advertising that was being done.

After the Christmas season, no business...died, dead, bury it, call the undertaker. Plenty of time on my hands and more sleepless nights to contend with. Went back to the Plug In Profit Site that I now owned and started over on the training in the 30 days to success program. Had already been well over 60 days for me, but what the heck, no pressure here, right? Started reading about search engine optimization, ways to get your website noticed, etc. Downloaded books, reports, read every thing I could find about ways to generate traffic, improve your website, accumulate leads, anything I thought was possible.

Well you guessed it, started getting offers of all this free affiliate programs you could make money with over night...etc.. Make a long story very short, by the time I was finished, had 3, four inch binders filled with programs I didn't even remember joining. Talk about confusion. Was trying to add all of them to my website, both the gift site and the affiliate site set up by Stone Evans. Nothing, nada, no sales, no money, no real hits.

Talk about discouraging, this really did suck. Spent hours, days, weeks, building, adding, reading, and nothing was generated from those efforts. Had also been ignoring the money tree and it was showing the ill effects. Watered it, moved it again to get more light and then for some reason, it hit me. Why couldn't an online business be as simple as growing this puny little money tree. Why was I trying to make it so difficult?

Started rebuilding the gift site, removed all the links, the ugly banners, links to other affiliate programs and uploaded more products, used what little knowledge I had to make the site more search engine friendly. Also started back over the 30 days to success (not for me, more like 90 or 120 now) grabbed some hints on free ways to advertise your site and went to work. Joined the Warrior Forum, which was actually open to me from the beginning but didn't see the benefit.

Started reading what others were posting, some pretty knowledgeable people in that forum. They also had a section for the Plug In Profit Site members as well, what a surprise. Knew it was there, just never cared to take the time to go there.

Saw what others were posting, some of the same questions I had, and yes some were a little negative. Started seeing a pattern though, the negative posts were from those that had only been involved for less than a year for the most part. The remarks they made and the questions they asked made you realize that these were people that had high expectations of making a lot of money quick without really having to do anything themselves or put any money or effort into their business. Being in the corporate world for a number of years you learn to spot the lazy and uninspired.

It struck a nerve, this could also apply to me. Needed to start thinking more positive, work the system as outlined, be patient, learn, listen, read, and most important never give up! The ones that fail are the ones that give up and quit! It really is that simple.

Just like my money tree, it's so simple, give it water, right amount of light and it will flourish.
I'm sure you're probably bored to death by now, so to end this saga, let me just say that if you want to grow your money tree, keep it simple and follow the system, but never get negative or give up! The Plug In Profit Site has changed a little over the last couple of years but the basic system is the same.

Guess the closing statement is this. My money tree is over six feet tall. I've had to increase the size of the pot at least three times.

My gift website has been modified with major overhaul at least three times, but look at it now. CMGifts-Usa.com
Have my own affiliate program, vip membership discounts, forum, blog, reminder service, wish list, gift registration, etc. , result, doing better and growing every month. :) I'm happy!

The Plug In Profit Site that Stone Evans set up for me? Well, lets just say that I've made many changes, but I've kept the core programs of PIPS that have gotten me where I am today. http://www.creativemeasure.com

I now also publish my own newsletter, blog, post in forums, add scripts & pages to my site in a matter of minutes (not days), created a private forum, and started my own team sites:

http://www.privatesuccessteam.com/r/admin
http://www.creativemeasure.com/team/r/admin

Both come with training sites and forum for support and assistance. What's really kool is that now I can offer advice and assistance to others that are where I was, that really feels great.

Most of the credit is owed to Stone Evans and the PIPS program, without it, I would probably still be floundering in a sea of ignorance and negativity. Perhaps the remainder of the credit should go to my dearest friend that gave me a gift---"The Money Tree"--- maybe there really is magic in "them thar" leaves.

This is the very page that captured me and eventually pushed success down my throat:
PlugInProfitSite.com

If you don't know where to start and want to learn the right way, have reasonable expectations, a desire or need to succeed, and willing to work and invest realistically, then I highly recommend you start there.

Of course you will also need a money tree to remind you to keep it simple and supply the necessary ingredients for growth. By the way, there really are no $20 bills hanging from the limbs of my money tree, but the websites, very well could be. :)

How big will your money tree grow?
Mine is still growing, trying for a world record!

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Ray White
Who Is
http://www.creativemeasure.com
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