By Jake Rossen
By Jesse Marx
By Michelle LeBow
By Alleen Brown
By Maggie LaMaack
By CP Staff
By Jesse Marx
WHAT'S GREEN, MAKES the world go 'round, and could slip through your fingers if you don't get busy? "You want to answer 'the environment,' right? Good. But just between us, you'd be wrong." Craig, our thirtysomething seminar leader at North Star Marketing leans toward an audience member in the front row. He puts a hand on the guy's shoulder and looks him straight in the eye. "The answer, people, is simple: It's money. And I'll tell you what--before I started selling the products I'm showing you tonight, I didn't give a damn about the environment. If you do, great. If you don't, let me ask you this: Could you do it for a six-figure salary?"
As if on cue, all 70 potential recruits in the audience nod. They've shown up at North Star, housed in a generic office complex in St. Paul, for a meeting that's as much a religious revival as a well-oiled corporate pitch. The gist is this: North Star is a local affiliate of Las Vegas-based Equinox International, a 6-year-old company that peddles "environmentally-friendly products" like water filters, shampoos, and vitamins.
Its "multi-level" marketing is organized much like the Amway or Mary Kay Cosmetics empires. Reps buy in the bottom, sell products, climb the ladder by recruiting new reps who feed a percentage of their sales to the higher-ups, and so on all the way to the top, where Equinox's founder, Bill Gouldd, sits by the swimming pool of his West Coast dream home.
Before Gouldd's testimonial on the massive video screen, we heard from Joe, a former pro hockey player who's making more now than he did in the big leagues. We heard from Tiffany, who gave up the paycheck-to-paycheck grind and just bought herself a brand new Corvette. And from Sandy, who purchased 19,000 acres in Montana for her parents. Every doubt, every fear "holding you back from success" is answered by those who've gone before. Take their word for it, Craig says. And if you can't see yourself in the Equinox lifestyle, now would be the time to leave.
The conference room's walls bear framed pages from an Inc. magazine 1996 cover story listing Equinox as the fastest-growing company in America. According to the article, in 1995, EI recorded sales of nearly $200 million. As of late 1996, its sales force numbered more than 100,000--most still sitting on the bottom of the trickle-up ladder.
What EI's leaders don't tell recruits is that in 1989, the California Attorney General's office filed suit against Gouldd, accusing him of operating a pyramid scam under the name Advanced Marketing. He was ordered to refrain from "contriving, preparing, setting up, proposing, operating or selling opportunities in an endless chain scheme." Gouldd settled out of court for $75,000, and surfaced two years later as the mastermind behind Equinox.
Still, since 1991 dozens of complaints in at least 14 states have been filed against the company by recruits who paid up to $2,000 for highly orchestrated, grueling "training" seminars that left them deep in the hole with garages full of Equinox products. Other allegations range from misrepresentation to more serious charges, including mind control, fraud, and pressuring sales reps to forge documents. In the past five years, the National Cult Awareness Network has received hundred of calls from former EI reps who've lost their shirts. MLM Insider, the industry's newsletter, has characterized Gouldd as "network marketing evil personified."
"We've gotten a bunch of calls locally about Equinox," says Heather Svoboda of Free Minds, a Twin Cities group that collects information on cult-like organizations. EI's strategy, Svoboda says, is not to sell their products so much as to "sell people the opportunity to sell." Which we learn, as the break ends and Craig nods to his assistant to shut the doors, involves an initial outlay of at least $5,000 to buy yourself a manager's position--the ladder's second rung--which EI will finance. Gouldd, we're told, is sitting on top of a dream that, with or without us, is about to come true. "We're talking pocket change here, people. If the money's a big deal now, you're stuck in the wrong line of work," Craig chides us. "We're talking a small investment that'll get you a lifestyle beyond belief."
The spiel winds up and the crowd heads for the stacks of $50 training manuals. "Wow," I overhear the man seated behind me say. "Between my dad and my savings, I could ditch my dumb job and get started with Equinox tomorrow!"