Amway Quixtar Kingpin Settles Lawsuit to Avoid Multi-Million Dollar Charges of Fraud

In what looked to be a damaging courtroom battle between one of Amway Quixtar's top distributors and a small internet development company based in Arizona, parties reached a settlement this week ending a three year lawsuit. Originally filed in July of 2002 as a federal case CIVIL DOCKET#: 02-CV-367 in U.S. District Court of Arizona (Tucson) and later amended in April 2004, this multiple count complaint alleges behind the scene business deceptions of the highest order.

This comes on the heels of a Dateline NBC undercover investigation that revealed a "hidden tools business" operated by some of the same high ranking distributors or independent business owners (IBOs) as cited in this federal case. It seems that while professing to the public that riches can be made selling Amway or Quixtar products, a select few high ranking and wealthy IBOs rake in millions selling "tools" like books, tapes, seminars and web sites to their downline members.

One of these tools, according to the complaint, was a member web site (called an IBO site) that was sold to thousands of members for anywhere from $10.50 to $14.95 a month. Such IBO sites are supposed to serve as an "online business card" helping existing members recruit new members into the Quixtar business opportunity. The technology behind this web site replication system was developed by an Arizona based company who held a federal copyright on the proprietary web software.

In a plot that could easily serve as the basis of a high-tech crime novel, court documents reveal a well orchestrated plan to steal the profitable IBO web site system, rake in millions of dollars in profit, and drive the rightful owner out of business. "In the world of multi-level marketing (MLM)" states former federal auditor, Eric Scheibeler who has reviewed the public records, "you just don't see these type cases make it into the public eye. We have allegations here of high-tech theft, fraud, millions of dollars, and even a clandestine affair. I'm not surprised there was a settlement."

In the end, one wonders who the losers are in such a case. The kingpins are still selling the tools, Amway and Quixtar are still selling their products, the attorneys got their fees and an unknown settlement amount goes to the plaintiff. Did the plaintiffs fight the good battle until they ran out of money and finally succumb?

A jury will never get to hear this case and a settlement agreement will likely silence the parties involved. It's the public that's left scratching their head as they wonder why such greed flourishes in a business touted as the "best business in the world". If Amway Quixtar is such a good opportunity, why all the fuss over these "tools"?

Maybe Dateline NBC got it right? It's a "dirty little secret" and once again, it's the public that's left in the dark. ( Source: http://www.msnbc.msn.com/id/4375477/ )