“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.

Here in this example Fred Harteis guarantees a 100% success rate for those who follow the "system"

Click On MP3 Icon To Hear Fred Harteis Claim Sucess In Amway/Quixtar Is 100% Guaranteed!

(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…”)

Click On MP3 Icon To Hear Fred Harteis Claim He Helped 2200 People Achieve Millionaire Status!

"Let's look at adding to your current income. Let's look for starters at adding…Making another fifty to another one hundred thousand a year, for starters. All right, I'll show you how to make a lot more than that if you'd like to…we do. All right…I wish that's all I had to pay in taxes in a quarter. Now lets look at adding, within two years from now another 50 to 100 thousand a year or a lot more. I'll show you how myself and a few other guys helped develop over 2200 millionaires. It's a very simple process."

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:

Click On MP3 Icon To Hear Fred Harteis Claim He Helps People Add Thousands To Their Income!

"Within three to six months from today…within three to six months let me show you how we helped several thousand people add over $3,000 extra, per month, all right, my wife and I."

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:

Click On MP3 Icon To Hear Fred Harteis Instruct Distributors To Unknowingly Make False Income Representations!

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.

There are many training materials that have been in sold by either Harteis International, BizNet Productions or TEAM. First, distributors were trained to recruit others under false pretenses. Even though unknowing prospects are now being lured to a Quixtar (not Amway) recruitment meeting, they are deceived right from the start. Harteis "Initial Inviting" script advised distributors to tell prospects that the company is "BizNet Productions", not Quixtar. 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. Just a cross section of a small number of families who sent me testimonials details losses in excess of $250,000 in Mr. Harteis' "proven" system. Why have so many Diamonds, Emeralds and Platinums quit this proven success system?

New distributor IBO's have been 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. This "education" can be quite costly and the unknowing new distributor does not know that the lavish lifestyle and net worth of the "Wealthy Quixtar Diamonds" they see and hear about normally comes from the sale of books, tapes, Videos, CD's, DVD's and seminar tickets. Some of the largest Diamonds would actually LOSE money if you ran their business expenses against their Quixtar income. That is not surprising as near 100% of IBO's in the system, regardless of line of sponsorship, appear to run their business at a net loss. Is a "business" with a nearly 100% loss rate for investors a poor business opportunity or a consumer investment fraud? Does it make a difference if the promoters are on audio touting a 100% success rate in the system and "guaranteeing" the success of those who are induced to invest? Perhaps it is a good deal and the thousands who have lost money simply did not capitalize on the opportunity.

The average active distributor involved in this system may "invest" $2700 a year or more in the system. Harteis has claimed (on multiple tapes) to have tens of thousands of distributors in his organization at one time...you can do the math. On 2,000 distributors alone this can generate $5,000,000 or better:

Click On PDF Icon To Download Estimated Harteis/BizNet/TEAM Tool Costs!

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 midwest 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 came from Amway, with nearly all of it coming from books, tapes, seminars etc…

They also advised that there was a secret room set up in his warehouse where blank tapes were duplicated at a cost of approximately .50¢ and sold by the thousands to the trusting group for $6.00, week after week, year after year. Distributors were 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.

Click Here To Go To Part Two Of "Case Study/Fred Harteis."

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