False Profits: How Utah Became a Multi-Level Mecca

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Utah is known for many things. Beautiful ski resorts, awe-inspiring natural landscapes, the Church of Latter Day Saints and, more recently, Multi-Level Marketing. In fact, thanks in part to Senator Orrin Hatch’s efforts, Utah has become the world capital for nutrition supplements and direct sales.

There are at least 15 major MLM companies in Utah County alone, generating billions in revenue, and making direct sales the second largest industry in Utah, behind tourism, according to Lori Israelsen, executive director of the Utah-based United Natural Products Alliance. Per Capita, Utah has more MLM companies than any other State.

“It must have something to do with the way LDS culture works in the valley,” said Ann Dalton, CEO of the beauty product direct-seller Perfectly Posh, based in Salt Lake City. Dalton attributes the connection to the large number of young Mormon missionaries who return home to Utah fluent in foreign languages. However, many industry experts and Mormons describe the relationship between MLMs and the LDS as being a direct result of the stay-at-home mom culture fostered by the church. “There’s so much pressure in LDS culture to be a stay-at-home mom,” said Alyx Garner, a devout Mormon who took up direct sales while raising her children.

The statistics certainly support Garner’s claim: Utah has one of the highest concentrations of stay-at-home mothers in the country, according to a report by the New York Times, which estimates roughly 46% of working-age women in Provo, Utah are unemployed, compared to only 8% of men.

Many of these women aren’t technically unemployed, they’re just not employed traditionally. A growing majority are joining direct sales networks to contribute to the household income, while working around the busy schedule of being a mother. However, less than 1% will earn more than $12,000 a year, according to the industry average.

A brief look at several of the successful MLM businesses in Utah shows one thing they all have in common: exaggerated claims on how much an independent sales rep can expect to earn with their program. Fraudulent five figure coaching and mentoring upsells are a key component in most of the best scam operations.

Dallin H. Oaks, an elder in the LDS church, wrote in his book Pure in Heart about what makes Mormons susceptible to the temptations of pyramid schemes.

Dallin H. Oaks Mormons and MLMs

“There have been a succession of frauds worked by predominately Mormon entrepreneurs upon predominately Mormon victims,” wrote Oaks in the book, which was recently excerpted on LDS Living, citing stock manipulation, gold and diamond sales and pyramid schemes.

“Whether inherently too trusting or just naively overeager for a shortcut to the material prosperity some see as a badge of righteousness, some Latter-day Saints are apparently too vulnerable to the lure of sudden wealth.”

The growing number of MLM founders convicted of fraud, embezzlement and other white collar crime in Utah illustrates Oaks’ statements, the vast majority of whom are members of the LDS.

Mentoring of America sold “coaching packages,” which cost as much as $15,000 from a Utah boiler room as the darkside backend to John Beck’s real estate riches infomercial. According to an FTC lawsuit, the company fleeced victims for as much as $300 Million.

“People would come to work so drunk or stoned, they couldn’t hardly walk—and they’re collecting credit-card information from people all over the country… You’re talking heroin, coke, meth, every type of uppers and downers. They were even pumping out Adderall to people, OxyContin— anything you needed,” says former Mentoring of America manager Tim Lawson in a 2009 article from the Salt Lake City Weekly.

 

2 COMMENTS

  1. As a Mormon in SLC I can attest to the truth of this. It’s very sad, many LDS families lose their savings or even their homes to these scum and it’s usually our own doing it to us

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