"Franchising in Hard Times: Hearing Before the Committee on Small Business, House of Representatives. "They conspired to get Mr. Turner," said another woman. And we need to be less credulous and stop falling for the next shiny thing. In the low-interest-rate environment of the past decade, investors put up money with little diligence, and fake it till you make it turned toxic. He was paroled in November but must be supervised by. Food delivery services such as Grubhub and Postmates included restaurants on their platforms that didnt have contracts with them. Thus one gets sentences such as Meanwhile, in a downtown Frankfurt prison, thirtyeightyearold Turner astounded a U.S. State Department official who visited his cell to explain that the British had requested his arrest on possible charges of fraud in England. Fine time to find out Turner's age. The company had been investigated by the Market Court of Sweden,[3] United States Securities and Exchange Commission, the Federal Trade Commission, and the State of California. He then started two multi-level marketing companies, Koscot Interplanetary, selling cosmetics, and Dare to Be Great, selling motivational and self-improvement courses.[30]. Wk. Employing a pyramid selling scheme and an evangelical, downhome platform style, Turner cajoled thousands of ordinary folks into putting up varying amounts, in return for which they would sell Turner's beauty products. I have remorse for these people that did not benefit by what we set out to do. [11], In 1973, a federal judge in Pittsburgh combined more than 1,000 lawsuits by unhappy Koscot investors and regulatory officials into "a single class-action lawsuit seeking more than $900 million. 0000007782 00000 n "[7], According to one report target of prosecutors "in more than 30 states" targeted him. %PDF-1.7 % Its not clear who originated the exact wording of fake it till you make it, or how Turner and his followers adopted it. Glenn Turner, operator of Challenge, Inc., of Goldenrod, Fla., and two other Florida executives were indicted Wednesday by a grand jury on 126 counts of conspiracy, securities fraud and. 0000041122 00000 n Those in the positions of Instructor General, Trainer General, and Senior General were required to take the training. The Dream, a podcast about multi-level marketing, discussed Holiday Magic and William Penn Patrick. Mr. Turner and Mr. Rechtor, who also received seven years, were. As inequality grew, almost all gains went to those already at the top, leaving many convinced that pretending to be on top already was the best way to make it so. Even as Turner attracted increasingly negative attention in 1972, he was arrested on 86 counts of violating securities laws the phrase gained popularity in a more earnest context within Alcoholics Anonymous. Corporate shareholders began to prioritize quarterly profits over long-term results. 0000037334 00000 n Turner, 53, created a $300 million empire in the 1970s by selling distributorships in his Dare to be Great and Koscot International companies. 0000001036 00000 n While prosecutors and defense attorneys haggled over legal issues for an hour before the sentencing, Turner, wearing a blue suit, boots and a shirt with a wrinkled collar, yawned and winked at more than 20 friends and supporters in the courtroom. [7] As one news story put it: .mw-parser-output .templatequote{overflow:hidden;margin:1em 0;padding:0 40px}.mw-parser-output .templatequote .templatequotecite{line-height:1.5em;text-align:left;padding-left:1.6em;margin-top:0}, Think about it: One person could sell 10 distributorships, and each of the 10 could sell 10 more, and so on. The good that I have done outweighs the bad. Since many of them were enmeshed as much by greed as by hope, one's sympathy is tempered. On this Wikipedia the language links are at the top of the page across from the article title. It is here that Mr. Maxa shows unusual ability to compress tedious and protracted legal wrangles (one trial lasted nine months) into an absorbing account. 0000032500 00000 n 0000041122 00000 n These circumstances have led us into a society that is both more cynical and more predatory, both more receptive to and encouraging of outright fakers. uOf2v]IM{7\~CPWb=sVX\IQ2ec )^y&wM9t>5YO! 271 0 obj Just before sentencing, Rector told Dougherty that Challenge had done nothing wrong. When newly minted salespeople found it impossible to make a go of it, they were told to fake it until you make it, by wearing expensive clothes and waving around $100 bills to lure in others, a disillusioned Oregon recruit testified in court in 1972. [7] He told reporters as he was led away to jail: The good that I have done outweighs the bad. 0000041306 00000 n 2(a) OF THE CLAYTON ACT Docket 8834 (1974), MLM Law - Lawyer Grimes & Reese PLLC - Attorney Specializing in Multilevel Marketing - Marshall v. Holiday Magic, Inc. (1977) 550 F.2d 1173, Door to Door Selling, Pyramid Selling, Multilevel Marketing, "L.A. Con Artist Behind Alleged Electricity Scam: Pyramid scheme linked to coming deregulation", "First Amendment Protection for Commercial Advertising: The New Constitutional Doctrine", "The Chaos of Multilevel Marketing and Pyramid Sales Laws: A Federal Remedy", In Re Koscot Interplanetary Inc., 86 F.T.C. Within a few years Turner's enterprises had made an estimated $300 million. In August 1972, he was charged with "86 counts of sale of unregistered securities and failing to register as a dealer". Dougherty also ordered Turner and Rector to pay $44,000 each in fines to be distributed to victims. Psychiatrist Alfred Adler, writing in the early 20th century, argued people could change habits by embracing an act as if strategy: assume a behavior and, eventually, it will become real. But his empire collapsed after state and federal investigators accused him of operating pyramid schemes that bilked thousands of investors. Mr. Turner's business, osten sibly, is cosmetics, the keystone product in a bizarre conglom erate called Glenn W. Turner Enterprises, Inc. 235 0 obj Glenn Turner was, as he liked to tell anyone within earshot of his pitch, sharecropper's son 'and a gradeschool dropout and had a harelip (albeit corrected by surgery) who had lifted himself. Turner's fame and wealth was to be an inspiration for others to buy franchises so that "they could all be rich and successful like him". 0000001769 00000 n 0000000016 00000 n @D[cnS: lRORRXtkLrr)==mFdQMmnM'tv6KM;J_O3 +F:C+4i[k}d Yes, Mencken would have loved it. "If anyone was hurt in our program, I am extremely sorry. 0000005760 00000 n Theres a difference between psyching yourself up and misrepresenting yourself, and the latter is where fake it has gone too far. 0000010114 00000 n Rector said the men -- Douglas Beekman of Apopka and Richard Mailman of Altamonte Springs -- never voiced such a concern to him. Our intent was to help people. Glenn W. Turner, who was frequently described himself as a "harelipped sharecropper's son" (leaving some doubt as to which of them was afflicted), built an ephemeral fortune on a pyramid. House Committee on Small Business, 1991. %PDF-1.7 % Our intent was never to go out and commit a criminal act., Later, as he was leaving the courtroom in handcuffs, Turner told reporters, I think history will tell what I really was. [12] Holiday Magic was also labeled a "pyramid scheme" and a "multi-level distributorship" by the United States Bureau of Domestic Commerce, in their 1976 published book: Crimes Against Business: A Management Perspective. Private investors also have claims against the property for $200,000 in tax certificates, under which they paid the taxes and earn 18 percent interest until the property is sold and the tax amounts are paid back to them.. Turner and his family havent paid property taxes since 1979, but investors bought tax certificates equal to the back taxes each year. In re HOLIDAY MAGIC SECURITIES AND ANTITRUST LITIGATION., James J. One bought a cosmetics distributorship for $4,500 and became entitled to sell distributorships to others, pocketing a fat commission. Although Turner was never convicted of a criminal charge, he received probation in a mailfraud case after arranging with the prosecution to plead no contest to a lesser charge. 0000003839 00000 n "Holiday Magic Inc.: An Anatomy of a Scam", United States Securities and Exchange Commission, MLM Law - Lawyer Grimes & Reese PLLC - Attorney Specializing in Multilevel Marketing - HOLIDAY MAGIC, INC., ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. Glenn Turner's Winter Park castle currently is for sale for $1.8 million. 0000023584 00000 n of plan, which will be referred to as the Glenn Turner or multi-level distributorship scheme, the promoters offer to the public a series of contracts called "Adventures." ORLANDO, Fla. (AP) _ A three-story, 16-room castle owned by onetime motivational entrepreneur Glenn Turner is going on the auction block, with the Internal Revenue Service and other creditors splitting the proceeds. endobj As we transitioned from a society that manufactured things to one whose products were intangible, reality was increasingly in the eye of the beholder or the pitchman. The history of fake it till you make it offers a lesson here, if we want to heed it. Eventually, the truth comes out. Originally the organization distributed goods such as home-care products and cosmetics. 0000005276 00000 n Oaks pleaded guilty last year to one felony count of operating an illegal pyramid scheme and agreed to testify against Turner and Rechtor. 0000023769 00000 n His sales rallies became legend. On May 16, 1974, a compromise settlement with approximately 31,000 class members, establishing a trust fund worth $2,600,381, was approved by the court. On this Wikipedia the language links are at the top of the page across from the article title. 0000005276 00000 n The judge refused and the men were led away to jail by deputy sheriffs after they gave their wallets, watches and jewelry to friends in the courtroom. Lotstein said 202 Arizona residents participated in the program. The companies collapsed in 1973 under lawsuits filed by investors and investigations by state and federal agencies. <>stream Bids on the Castle property will be advertised over the next few weeks to notify any other bidders of the pending sale. 0000001791 00000 n What does it mean for a nation to valorize faking it as a means to an end and is there any way for Americans to turn back? Turner, the son of a sharecropper, told people they. <<7C981AD2C2A8B2110A00B0784D58FC7F>]/Prev 803466>> No surprise, trust is cratering. 0000001660 00000 n In 2006 he published a book (To Beirut and Back - An American in the Middle East) dealing, in part, with his experiences. Turner himself offers one cautionary tale. that our program was a crime," he said. He said neither man would be eligible for release from prison before serving at least two-thirds of the sentence. However, the focus of the company was more about selling distributorships than cosmetics. WASHINGTON, May 17 The Securities and Exchange Commission asked a Federal District Court today to halt the sale of Glenn W. Turner's pyramid franchising scheme on the ground that it is. 0000004119 00000 n But Dougherty denied bond and ordered both men to begin serving their sentences immediately. 0000006135 00000 n Lotstein acknowledged that not all of the Challenge "victims" were pleased that Turner was prosecuted. [4], The Securities and Exchange Commission also filed a lawsuit in 1972 charging that Koscot's program should be considered a security and comply with securities laws and regulations. [3] Another has him convicted in 1987 along with Edward Rector, on charges of conspiracy, fraud and operating a pyramid scheme, and sentenced to seven years in prison. )[6] Citation Needed, a podcast, has an episode about William Penn Patrick (and Holiday Magic). A nine-month trial ended in a hung jury. As Elizabeth Holmes gives way to Sam Bankman-Fried, who gives way to George Santos, its worth pondering why our society has embraced an ethos popularized by a huckster such as Turner. In my business, theres just no faking it, Stewart said. New York: William Morrow & Co. $8.95. See the article in its original context from. But as Turners saga shows, theres a dark side baked into the fake it mentality: the fakers who attempt to win success through fraud, then never make good on their promises. An interesting man, Glenn Turner, and Rudy Maxa, a Washington Post reporter, has an interesting problemwhat do you do with a con man who doesn't know he's a con man? Generally, the product or service is of poor quality, overpriced, or has no purpose other than as a ploy to give the company the appearance of legality. Maricopa County Superior Court Judge. PHOENIX, ARIZ. Glenn W. Turner, a farmboy who built and lost a multimillion-dollar financial empire with his pyramid sales schemes, lost his freedom Thursday. <>stream By Rudy Maxa. Before the IRS gets its share, Seminole County has the right to collect $16,900 in unpaid property taxes for 1987, said county Tax Collector G. Troy Ray. Turner, who was pale and appeared tired, and Rector, his former bodyguard, had no visible reaction to the sentences. A few of their supporters cried as the sentences were read. Turner, though, had hired a lawyer for his sentencing Thursday. [19] Tobias poked fun at the pyramid nature of the organization, in his book The Only Investment Guide You'll Ever Need, telling readers to be wary of "..Holiday Magic - where the big money to be made was not in selling cosmetics, but in selling franchises to sell franchises (to sell franchises).."[20] Howe wrote in the San Francisco Chronicle that Holiday Magic was "..one of the largest of all pyramid schemes.."[21], Holiday Magic is used as an example in graduate level criminal justice coursework to analyze the nature of corporate scams. "They come from all over this country and abroad. [4], Patrick, a student of Alexander Everett (founder of Mind Dynamics), used Mind Dynamics techniques as well as the Silva Method in the Holiday Magic organization. Mr. Maxa has missed very little about Turner's operations and the soueces of his appeal. He subsequently bought exclusive rights for Middle East distribution of Holiday Magic cosmetics and formed his own company, Beauty Magic, in Beirut, Lebanon. The company called Zolene was about to go out of business. The premise of Koscot was that participants could sell cosmetics door-to-door or at parties. Charges were then dropped against Bailey. 0000037159 00000 n <<7C981AD2C2A8B2110A00B0784D58FC7F>]/Prev 803466>> United States District Court, D. Oregon. .to various charitable organizations. Turner and his best friend, Edward G. Rector, were each sentenced to seven years in state prison. It is a story that will finally end Thursday in Phoenix, Arizona, where Turner, who turns 53 on Wednesday, faces a potentially long prison sentence for the fraud convictions last month that. What happened? A group of a half-dozen former Challenge participants, who would not give their names, said after the sentencing that Turner and Rector did nothing wrong. Sign up for a weekly roundup of thought-provoking ideas and debates. Traditionally, businesses have had to state their returns using metrics that can only be faked by lying. Mr. Maxa cannot resist quoting H. L. Mencken's observation that no one ever went broke underestimating the intelligence of the American public. In 1964, after a bankruptcy and several business failures, Patrick (age 33) was walking by a garage in San Rafael, California, and noted that fruit-scented cosmetics were being sold. The $5,000 investment paid for motivational seminars and tapes, but the indictment said the real business of the pyramid operation was to induce more people to invest money to become salespeople who, in turn, were expected to recruit others. <> 0000001660 00000 n Turner was a former sewing machine salesman and son of a South Carolina sharecropper and an unwed mother, born with a cleft palate and a hair lip, who dropped out in the eighth grade, did a short stint in the U.S. Air Force before successfully finishing a school for those who had dropped out of high school. Corbins office won a civil case against Turner over Challenge in 1983, ordering him to pay $1.5 million in restitution and $1 million in penalties. "[23] One of the Holiday Magic Inc. cases was also cited by The University of Chicago Law Review[24] and the Columbia Law Review. xref Some of the most famous pyramid schemes in U.S. history. Turner had a talent for making people believe in him. The con artist became a business model, says Micki McGee, author of Self-Help, Inc. Its only in a market-worshiping economy that you can say defrauding people in the interest of profit would somehow be okay.. . ", "Opinion This all-but-forgotten con man sold America on 'fake it till you make it', Juice Plus AKA National Safety Associates, European Grouping of Marketing Professionals, https://en.wikipedia.org/w/index.php?title=Koscot_Interplanetary&oldid=1142208959, Creative Commons Attribution-ShareAlike License 3.0, This page was last edited on 1 March 2023, at 02:56. Turner ran in the Democratic primary for the United States Senate election in Florida, 1974, but lost. ", United States Congress. 1. (unrelated to Holiday Magic). According to 2019 surveys done by the Pew Research Center, almost half of us say Americans are not as reliable as in the past. "The Role of Small Business in Franchising, Hearings Before the Subcommittee on Minority Small Business. 0000045154 00000 n : A Case Study of Pyramid Sales Plan Regulation", "Glenn Turner, Empire Toppled, Trying Again to Sell Motivation", "Glenn Turner -- Out Of Luck; Fraud Sentencing May Be His Day Of Reckoning", "Koscot Cosmetics Accused Of Illegal Business Actions", "Koscot and Turner Cited in Complaint Filed by the S.E.C. 0000002201 00000 n 0000031782 00000 n Mr. Maxa, Washington Post reporter, describes this ripe chapter in the annals of Boobus Americanus with clarity and an eye for the juicy detail. deal). But this salesman extraordinaire in flashy suits was once all but omnipresent in American life. The promised El Dorado, however, was reserved for those who put up the requisite amount for becoming distributors; this gave them the right to sell distributorships to others, retaining a healthy percentage of the fee. 0000000016 00000 n And as Turner understood, making lots of money will get you almost anything, including an invitation to lecture at the Harvard Business School. Mencken, Mr. Maxa says, would have loved Glenn Turner as one of those colorful rogues who enliven the American scene, a sort of cross between Elmer Gantry and Charles Ponzi, whose name is to financial pyramids what Tutankhamen's is to the original. [5] Pyramid Schemes Versus Ponzi Schemes The labels Ponzi scheme and pyramid scheme are often used interchangeably to describe specific forms of investment fraud where sustainability depends on the influx of new "investors" to the scheme. Dougherty then passed sentence, despite receiving hundreds of letters in support of Turner. 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