The Last Anti-MLM Pyramid Scheme Regulator?
Bruce Craig, retired Asst. Attorney General of Wisconsin who very recently passed away, may have been the last anti-pyramid scheme regulator with the qualities needed to combat today's epidemic of pyramid and ponzi schemes. His record as a regulatory official and private citizen sheds a harsh light on the current regulatory world characterized by dereliction, inaction, shocking displays of lack of understanding of disguised pyramids and flagrant conflicts of interest.
As a state regulator, Bruce sued the largest of all MLMs, Amway. He did this as Asst. AG of one state, after, at the national level, the Federal Trade Commission had over-ruled its own staff attorneys and dropped its pyramid scheme case against Amway. To Bruce Craig's astonishment, the FTC endorsed Amway's "endless chain" proposition, the financially-lethal mechanism of pyramids and ponzis. Without supporting data, verification or even investigation, the FTC inexplicably accepted Amway's claim that an unmonitored set of "rules" somehow superseded math, FTC research data, market saturation, laws of supply and demand, and the inevitable consequences of "infinite" recruiting.
Bruce Craig saw, and he knew that many others in government had to see also, that pyramid schemes disguised as sales companies would infect the marketplace, distort the meaning of work and business and harm millions of people.
Bruce authored Wisconsin's rule against "chain distributor schemes", arguably the best state regulation on MLM in the country. He worked with AGs in other states, collaborated with federal officials who, as he often attested, unequivocally understood in an earlier time that all "endless chain" financial schemes are inherent frauds. He extended his public service through his retirement years. Bruce sought to educate younger people that there is no basis in law for MLM's current immunity from law enforcement.
Almost Alone
In the years following his successful prosecution of Amway in the 1980s, Bruce was seemingly alone or rapidly becoming among the last few in the regulatory world willing to speak out and to act against "endless chain" schemes disguised as "direct selling." Pyramid recruiting or "multi-level marketing" as it began to call itself was being normalized and the enormous losses it caused were covered up or ignored. The media averted its eyes. The FTC, SEC and DOJ went silent.
Bruce often told me, and he had also written, that his discovery in the 1990s of my first book, False Profits, refreshed and reinforced his judgment about MLMs, which he had begun to doubt in the face of a national lock down on anti-pyramid law enforcement. We quickly connected and joined in dialogues and actions to combat MLM. Bruce never relented from telling the plain truth, even as he witnessed MLM spread across the land, not just immune from law enforcement but enjoying privileged access to legislators and regulators. He remained a mentor and friend, a life-raft of history and truth in a sea of lies and revisionism.
Looking for Allies in High Places
For my part, as an independent, a non-attorney and non-academic, I focused on developing tools for public education about MLM and occasionally serving as expert in court cases against MLMs. I assisted and tried to prompt news media coverage and to influence popular culture, which, to my dismay, behaved as if MLM were not a pervasive presence on Main Street, disrupting and impoverishing millions of households.
For his part, as a practicing attorney and retired government official, Bruce Craig directed much of his effort toward higher places – members of Congress, university law schools, think tanks, public interest consumer groups, FTC Commissioners, and centers of investigative journalism. He was shocked that individuals in these institutions were not treating MLM as a public threat. He was amazed that the law was being twisted to protect "endless chain" scams. He formally requested the FTC to review its 1979 decision on Amway to determine if the FTC's reliance on the so-called "Amway rules" was valid. No response. He wrote ProPublica, New York Times, Senator Elizabeth Warren, among so many others.
He sounded the alarm on Harvard University when that university entered into a "partnership" with Amway to "educate" regional government officials from China on governance. Bruce Craig asked Harvard how it justified the association with Amway and asked if it was aware of the enormous scale of losses to consumers recruited into Amway. Harvard got millions from Amway to pay for Chinese government officials to come to its campus. In this Harvard program the Chinese participants were called "Amway Fellows." It included tours, presentations and meetings at Amway's facilities. It was later reported that at least one of these "graduates" was accused of squelching and covering up government action against Amway in one province of China. Finally, responding to one of Bruce Craig's repeated inquiries and warnings, Harvard cryptically wrote him that it was no longer working with Amway.
Moral Anger
A powerful attribute that Bruce Craig possessed as a regulator and citizen advocate, which appears absent in the bare ruined choirs of regulators now, is moral anger -- anger at seeing fellow citizens preyed upon, anger at unchallenged lies, anger that those in positions to stop the harm were doing nothing. He saw individuals in positions similar to what he had held in public office taking jobs with MLMs and defending MLM's financial interests over the public's. He encountered fellow retirees from regulatory work who said they agreed with him but did not want to offend current officials.
The revolving door between FTC officials and MLM companies, "consultancies", lobbying firms, and MLM law firms point to what happened to the good regulators. Where political pressure is exerted by politicians taking MLM "contributions", careers for good regulators dimmed, while those of opportunists flourished. Bruce Craig saw all this from the distressing perspective of knowing it once was different, when the profession of "regulator" attracted and supported civic minded, idealistic attorneys like he was.
Fortunately, Bruce left a legacy of truth-telling and public service that has helped inspire many other people. If not within the ruined regulatory world, the beneficiaries of his example operate within new power structures of civil society, including social media, class action law firms, independent podcasting, documentaries, investigative journalism, writers of cable TV sit-coms and biting satire that are now the countervailing forces against the corruption and inaction of regulators.
Thank you, Bruce Craig. Rest in Peace.
