How to Identify a Pyramid Scheme

A Wonderful entry from the Skeptic Detective…

I have a special treat for you today. Earlier this week I received an e-mail, addressed to my Skeptic Detective e-mail address, inviting me to realize my financial freedom, have more free time and pay less in taxes. Sounds great right, I mean, who wouldn’t want that?

Well, call me skeptical, but I immediately thought that something was fishy. Here is the e-mail I received, in its entirety.

01 February 2014

I came across you online. I have just three questions for you.

Would you like to earn money working part-time from the comfort of your home?

Do you want more time in your life to do those things that you always wanted or dreamed about doing but could never do because of lack of time?

Do you want to pay less in taxes?

If you answered yes to two out of three of those questions above simply reply to this email and I will follow up with you.

Joe Richard

Naturally, I requested more information. “Specific” information. This was the response I received.

02 February 2014


Yes I am searching for people that are serious in working from home and helping other people. We provide an outstanding product called limu fucoidan which is a seaweed off the coasts of the Island of Tonga that has amazing health benefits. Would it be ok if I could give you a call so you can have more info?


Joe Richard

Hmmm, seaweed? With amazing health benefits? Lets see what the internet says about that…

So, I headed on over to the Memorial Sloan-Kettering Cancer Center (MSKCC), I like this site because they provide information on “integrative” medicines in two formats, one for medical professionals and one for consumers. This is very useful if you want a more scientific take on the medicinal qualities of a given product.

Fucoidan is a complex polysaccharide (a carbohydrate found in compounds such as starch, glycogen, cellulose and chitin) found in brown seaweed. It can slow down blood clotting and studies show that it may prevent the growth of cancerous tumors. However, there is no human trial data to substantiate these claims.

The following list summarizes purported medical benefits of Fucoidan:

·  Immunostimulation – Although in vitro data suggests a role for fucoidan in boosting host defense mechanisms, human data is lacking.

·  Allergies – There is no clinical data to support this use.

·  Lower blood pressure – This use is not supported by clinical trials.

·  Decrease cholesterol – There is no data to substantiate this claim.

·  Inhibit blood clotting – Laboratory studies suggest that Fucoidan has anticoagulant and antithrombotic effects.

·  Inflammation – There is no data to support this use.

·  Antibacterial – There is no clinical data to evaluate this use.

·  Antiviral – No studies have been conducted to investigate this use.

Bottom Line: Fucoidan has not been shown to treat cancer in humans.

From this it is evident that Fucoidan has no “amazing health benefits”. Having discovered this for myself, I decided to try again to get Joe to commit to specific claims about the product he sells. Also, with a growing suspicion that I was dealing with a pyramid scheme, I asked the following question:

02 February 2014

What exactly are the health benefits of limu fucoidan and what are the costs to me to get involved?

I was not surprised by Joe’s response a few days later:

04 February 2014


Here is a great article Click Here

You can pay $30 to be a distributor. You can do the starter pack which is $297
that is what I did. You receive about $400 dollars worth of supplements and you get
your money back after only three sales. We have a fabulous system in order to do this even if you don’t like to sell or just don’t know how. There is a package that is $997 which you get practically a year supply of all our products and you get to earn higher bonuses as well.

What would you like to know next?

Joe Richard

Joe’s “great” article is a treatise on the (already doubtful) health benefits of the product he sells as a front for his pyramid scheme. They claim that Fucoidan can be used to treat viruses and cancer. Specifically stating the following:

When battling viruses it seems that the fucoidans bolster the cellular protection to prevent the introduction of the virus into the healthy cell. Further, they seem to inhibit the ability of the virus to replicate by preventing the replication of the virus in adjacent healthy cells.

On a cellular level cancer acts much like a virus, spreading through a replication of the diseased cellular structure. Again, due to the fucoidans’ ability to protect the healthy cell there is increased resistance to the spread of the disease throughout the body.

Wait, what? A virus spreads by inserting copies of its RNA into a cell’s nucleus and copying its self billions of times until the cell walls break and the virus goes pouring out to infect more cells . Cancer spreads by growth. Viruses spread by reverse transcriptase, cancer spreads by mitosis, it divides like any other cell. The “great article” is so wrong it’s impossible to take seriously.

Joe’s response also confirmed my suspicion that there would be some kind of buy in. $30 to register and you have to purchase the product. I’m not sure if you are expected to use the starter pack, but from my experience with Amway and Golden Products, I assume that this is the case. And $300 is not chump-change. But this was mostly confirming my suspicion that Joe Richard is trying to rope me into a pyramid scheme. The line in his e-mail which raises the giant red flag in my brain is “you get your money back after only three sales. We have a fabulous system in order to do this even if you don’t like to sell or just don’t know how.”

What would I like to know next? How about this Joe?

04 February 2014

Hi Joe,

So, if I sign up to be a distributor, do I also have to buy the products or is there a way to sign up without doing that?
And, what would I be selling? If I don’t like to sell, how would I make any money?

Kind regards,
Angela Meadon

Joe took about a day to respond, and I think I might be starting to get to him.

05 February 2014


To sign up you do not have to buy the products right away, but as a distributor I do recommend it. I have just started and the guy that signed up with me wanted to do it.
I did not even really have to “sell” it to him, he just wanted to make extra money, those in my upline did the alot of the talking which is nice. We are working together as a team. I just look for people who would like to earn extra money from home. If there is someone with an illnees I ask them what do they want to do about it and that I can help them.

Ah, the meat of the matter at last! Joe strongly recommends I buy the products, but it’s not compulsory. You see, what makes this a pyramid scheme is that you have to pay to join. You have to pay to become a “distributor” and your upline does the talking. You are just a sucker who has to pay to be a salesman for an expensive product, and to sell it you have to make bogus health claims.

From the website of the US Securities and Exchange Commission:

In the classic “pyramid” scheme, participants attempt to make money solely by recruiting new participants into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for doing nothing other than handing over your money and getting others to do the same.

The fraudsters behind a pyramid scheme may go to great lengths to make the program look like a legitimate multi-level marketing program. But despite their claims to have legitimate products or services to sell, these fraudsters simply use money coming in from new recruits to pay off early stage investors. But eventually the pyramid will collapse. At some point the schemes get too big, the promoter cannot raise enough money from new investors to pay earlier investors, and many people lose their money.

The chart below shows how pyramid schemes can become impossible to sustain:


My final e-mail to Joe:

06 February 2014

Hi Joe,

That sounds interesting, what is the name of the company you work for? Thank you for answering all my questions.

Kind regards,

Angela Meadon

Please tell me who you work for Joe, I’m going to report you to the FTC.


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