Scams - Cults

The following message provides general information on cults. The information was obtained from a paper entitled "Marketing or Commercial Cults" written by Corporal F. Reed Leary, of Edmonton Integrated Intelligence, the Canadian contact on this subject.

The real purpose of most cults is to make money for their leader, the point that distinguishes this type from any other is the fact that these cults do not pretend they have another purpose in life other than making money. They have no political or religious dogma, nor do they have any altruistic goals.

They purport to be legitimate businesses operating a free enterprise, for profit, operation. The senior corporation will usually identify themselves as a wholesaler, manufacturer, distributor or liquidator. Some have purportedly independent businesses that buy their products and retail them to the public. Common to all of them is that they utilize independent sales persons, called distributors, who market the products to the public as street peddlers (hawkers). Often, these peddlers are young adolescents between 18 and 25 years of age who have little to no work experience. They sell a wide range of products such as magazines, toys, T shirts, or books. They may state that they are working their way through school, or saving for a special holiday. They will certainly claim that their product is superior and that they will be able to sell it to you at a price no store can match due to the fact that they are selling in volume, buying directly from the manufacturer, or are clearing it out. They will claim to be independent contractors, and often they will have no provincial or municipal license for peddling, and if questioned by the police they will claim that they understood that they were covered by the company's business license.

The recruiting and treatment of their independent contractors is where the use of cult type techniques becomes apparent. The recruits are solicited through want ads placed in classified ads of local newspapers. They interview and choose applicants selecting mainly naive, eager, and money-motivated young people. They question them as to their family ties and their willingness to work out of town. If considered, the applicant is then told about the prospects of making large amounts of money through direct sales, street peddling. The company will provide all the training and products, they will be working for themselves. A couple of carrots are offered, first they will be paid commissions at the end of each day so they do not have to wait for a paycheque and second, if they work hard (12 to 16 hours a day) and maintain a high sales level, they could be offered the opportunity of owning their own company. They are told that the business demands young aggressive people with a good attitude and a strong desire for financial success. With these attributes, the candidate can expect to become extremely wealthy and own their own company within 6 months to a year.

The training sessions consist of two, one day sessions.

1. Observation Day. A trainer takes the recruit out on the street with them to have them observe the peddling. A super positive attitude is projected and the trainer makes a concentrated effort to find out the recruit's personal history. They are told how much fun they will have and how much money they will make.
2. Pitch Day. The recruit is given a chance to try their pitch. If they make a sale, they are allowed to keep the commission as part of the encouragement, if they do not make the sale, they are highly praised for their efforts. They are continually congratulated on making it past both the interview and observation stages.
3. On the third day they are promoted to distributor and again congratulated while receiving a lot of personal attention. Most days start at 8 am but most recruits are expected to show up at 7:30. They work under a supervisor who ensures that they stay motivated. The days begin with what is termed morning impact, loud music and a variation of chanting to motivate them. After Hype Session they hit the streets. They work six days a week, taking Sunday off, working anywhere from 12 to 16 hours a day with only one junk food break. It is common for these persons to be shipped away from the city where they were hired, and sent to points all across Canada and the U.S. The road trips enforce isolation, and create a new circle of friends who are all they have while they are on the road. The commission structure is as follows.

20 dollars for 1 piece rental where they then receive 7 dollars commission less forced savings to cover bad cheques of 3 dollars. Immediate net 4 dollars.

The distributor on average sells about ten rental products a day. That means they gross 40 dollars a day. From this they deduct their share of the gas, meals, accommodation and any other miscellaneous items. Thus there is little or no money left over. As can be seen we have sleep and food deprivation and social isolation combined with super hype motivation, music and chanting. There is also extreme peer pressure to succeed and compete with others in the group. The 3 dollars forced savings is said to be to help the individual accumulate a pool of cash, but it is also to cover bad cheques. One contact said that when they went to collect this fund, he received 50 dollars for selling 500 pieces, instead of 1500 like it should have been. They were simply told that NSF cheques accounted for the other 1450 dollars and they refused to provide documentation. These groups have tremendous turnover, with some requiring exit counseling, but they mostly need love and support of their families.

The criminal acts breached by these groups are fraud, employee/labour act violations, tax evasion and immigration violation. Some groups encourage the use of drugs and use them as well as sex to hold members to the group. Others are the exact opposite and discourage those practices to do the same thing. These groups are big money makers, and it is very likely you have encountered them either through work, or purchasing one of their products.