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“You
never built this business. But, I’ll guarantee
ya one thing. You do what I recommend, I’ll guarantee
ya this business will work for you. You just do what
I recommend.”
- Fred Harteis E-227 Audio tape
My wife and I were “fortunate” enough
to meet Fred Harteis
at a recruitment meeting within a few weeks of being
sponsored into Amway.
He and his wife Linda
lived not too far away from us in Harrisburg,
PA. He was a charismatic, engaging speaker and
had incredible rags to riches story in Amway.
We were told that
he had helped many
become millionaires and had helped thousands of people
add several thousand dollars a month to their net income.
(See sidebar photo.)
We rose through the ranks quickly
with a lot of hard work and tireless effort. Again and
again we were assured we could attain any level of financial
success if we were willing to do the work and humble
enough to listen to Fred
& Linda’s guidance
as “they only
benefited if we succeeded.” As
a matter of fact, Fred
would often “guarantee”
the success of these he was showing the Amway business.
His own words are the
most accurate.
" Hey, ya
mentioned when I was showin’ the plan, ya’d
like ta have a farm of your own. Ya serious about that?
Would ya really like ta have a farm? What’s it
gonna be like? I’ll guarantee, you can have that
farm in a few years, if you just do what I recommend.
You can do it. Heck, I’ll tell ya somethin’.
With me helping ya, you can’t lose. I’ll guarantee
we’ll get it done together."
- Fred Harteis E-227 Audio tape
" Now, I
wanta tell ya somethin’ else. I’ll personally
guarantee ya any level a success you want, if you just
do what I tell ya. And, here’s a seminar comin’
up. Ya need ta get there. Ya need ta get there. You
just, you and your wife just have ta be there. We’re
gonna be there. It’s gonna be a fantastic time.
Alright. And, ah, it’s two in the afternoon til
five in teachin’ how to build the business. And,
I’m gonna get ‘em all excited about the seminar.
Now, if I don’t go to the seminar, they’re
not gonna go. For sure. I’ve cost ‘em the
business."
- Fred Harteis E-227 Audio tape
These types of guarantees
were normally combined by Fred
Harteis with some very specific income representations
at recruitment meetings. Fred
would often speak of helping
many people become millionaires
in Amway.
Here it is in his own words, speaking to distributors
and prospects at an recruitment meeting in a local hotel.
(In this case, he refers to helping anyone
in the room, in
the next two years, add
$50,000 to $100,000 a year to their income and
the fact that he
and several friends have helped over “2200 people
become millionaires…”)
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Click On MP3 Icon To Hear Fred Harteis Claim
He Helped 2200 People Achieve Millionaire Status!
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Fred
often spoke of he
and his wife helping thousands of people add several
thousand a month to their income in “three to six
months” time. Here
he describes it:
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Click On MP3 Icon To Hear Fred Harteis Claim
He Helps People Add Thousands To Their Income!
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Showing
the plan is a term that
refers to showing the Amway
or Quixtar sales and marketing plan.
It was critical that distributors become proficient
at this as it is the key to building a large organization.
Fred's
seminars in which he gave specific instruction on what
representations to make to prospects to induce participation.
These seminars were later sold to the organization in
the form of video or audio tape cassettes. Here, Fred
instructs distributors
to tell prospects they can earn $54,000 a year in addition
to what they are doing for a job:
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Click On MP3 Icon To Hear Fred Harteis Instruct
Distributors To Unknowingly Make False Income
Representations!
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We
believed these representations to be true and repeated
many of them. We
were later shocked to learn that every single representation
above was/is fraudulent.
Nearly 100% of
all who participated in the Harteis “system”
of success did so at a significant loss. The
Amway and Quixtar
businesses have been utilized
by Harteis in a clever bait and switch scheme.
As soon as distributors are recruited, they are “sold”
on the necessity
of buying books, tapes and seminar tickets from Harteis.
Here are the training materials from BizNet
Productions.
First, distributors
are trained to recruit others under false pretenses.
Even though unknowing prospects are now being lured
to a Quixtar
recruitment meeting, they
are deceived right from the start.
Harteis “Initial
Inviting” script
advises distributors to tell prospects that the company
is BizNet Productions.
They are also advised
they have the benefit of a “proven” system.
Documentation reveals that this system has “proven”
to do one thing, drain
consumers pockets.
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Click On PDF Icon To Download Fred Harteis Script
Instructing To Deceive Prospects!
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New
distributors are advised that there is an eight
step pattern of activity to follow.
This pattern involves getting the new distributor to
“invest” in his education to become successful
building his own business.
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Click On PDF Icon To Download New Distributor's
8-Step Pattern Of Activity!
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The prices for the tools “recommended” in
the Eight Step Pattern are priced here:
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Click On PDF Icon To Download The Recommended
Tools Price List!
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The average
active distributor involved in this system may
“invest” $2700 a year in the system.
Harteis
has claimed to have
tens of thousands of distributors in his organization
at a time...you can do the math.
On 2,000 distributors
this can generate $5,000,000 or better:
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Click On PDF Icon To Download TheHarteis/BizNet
Tool Costs!
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After I discovered the fraud,
I was able to track down four
former employees of Harteis.
Each had a different angle on his
secretive tool operation and cash business.
One, who I tracked down to the mid west was afraid of
him and left
with a year’s financials as “protection”.
These were extremely interesting as
they revealed that of his multi-million dollar annual
income, almost none came from Amway.
A small fraction of his income comes from Amway
with nearly
all of it coming from books, tapes, seminars etc…
There is a secret room
set up in his warehouse
where blank tapes are duplicated at a cost of only .50¢
and sold in
the thousands into the trusting group for $6.00,
week after week, year after year. Distributors are constantly
told that the tool
business is often run at break even or a loss.
This is completely
false. It is the only
viable business in that Harteis
financials reveal he would
show a large net
loss if he only had his
Amway
income, despite claiming to have become a multimillionaire
from Amway.
Anther former employee who provided an affidavit and
was interviewed by the FBI
noted that she and her
husband would sell tens
of thousands of dollars of tapes and books for cash
at weekend seminars. It
appears from her statements and that of a long term
former book keeper that very
large sums of money may have never been reported as
income or deposited in a bank.
The Harteis’
former driver was tracked down in Alabama
and he acknowledged helping
load the briefcases of cash into the limo for delivery
to the safes in Harteis’ home.
We had seen Harteis
firsthand with any where from $10,000-$25,000
in “flash cash” that
he used at training session to get people excited about
how much they could make in Amway.
It appears this money
came from another source entirely
and may
have never been declared for tax purposes.
I was asked to meet with the Criminal
Investigation Division of the IRS
and provide Merchants
of Deception as evidence/documentation
in another state.
Click Here
To Go To Part Two Of "Case Study/Fred Harteis."
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