The news headline tells of multi-level marketing con-man, Alan Kippax, convicted for pyramid scheme fraud, and in unrelated crimes, causing death and injury with reckless driving and later being caught in a drug selling ring, now being deported from Canada to the UK where he was born.
Kippax has been in Canada since he was two-years old. And his MLM fraud, called “Business in Motion” is a Canadian-born pyramid scheme. Indeed, it was all the rage in Canada from coast-to-coast for a long time, with Canada’s impotent “Competition Bureau” doing nothing to protect consumers from it. BIM and Kippax and his success at fleecing thousands of Canadians were pure Maple Leaf.
The real story, therefore, is not about deportation – as if deportation rids Canada of “alien” problems associated with pyramid scheme frauds. That is a false narrative. The actual and relevant story is that while Kippax’ criminal activity was dressed up with the title of “multi-level marketing” it was largely protected by the Canadian government. With its “Competition Act”, Canada created a safe haven for MLMs from Canada’s own clearly-worded anti-fraud law.
In Canada, pyramid fraud can be practiced openly if it falls under the definition of “multi-level marketing.” This is because the Competition Act exempts pyramid schemes and endless chain scams from the intent and plainly stated wording of the anti-fraud law, by defining it as a legal even though it operates in violation of the anti-fraud law. Said another way, what Canada’s criminal code defines as illegal, the Competition Act redefines as “multi-level marketing” which is treated as legal. This is done by first asserting that MLM is “legitimate” and then setting nuanced and unenforceable criteria to distinguish MLM fraud. The end result is that no MLMs ever seem to cross the incomprehensible line into illegality. BIM operated illegally in plain sight but was willfully unseen by the Competition Bureau even when it was put right in front of its face.
Here’s the shortened text of Canada’s applicable criminal law:
206. (1) Every one is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years who (e) conducts… any scheme… by which any person, on payment of any sum of money… shall become entitled under the scheme… to receive from the person conducting … the scheme… a larger sum of money … than the … amount paid … by reason of the fact that other persons have paid … money … under the scheme.
This a a textbook definition of a pyramid scheme. You make an investment to join, and then if you are able to recruit others to do exactly as you did “under the scheme”, you get not just a reward, but a net profit, all your initial investment plus plus. The cycle repeats without limit to “infinity.” This is also the textbook definition of MLM. Few MLM participants, if any, “sell”; none makes a profit from only selling; profit requires recruiting other to participate “under the scheme.” Participants get rewards for successful recruiting, after their recruits make their own investments in the scheme in the form of fees and purchases, and then continue extending the “endless chain”, etc., etc. Some MLMs promise that you get your initial investment in products recouped, making them “free”, and then some more rewards to boot. Most MLMs promise that the “larger sum of money” is “unlimited” and “beyond your imagination”. This is because the scheme’s pay plan links all future reruiting activity, as in a chain letter. The income is advertised as “exponential.” Five recruit 25 who recruit 125, who recruit 625, etc;, with rewards from all flowing back to the top.
What brought BIM into public light and led to its criminal prosecution, even though it was “multi-level marketing” is difficult to pinpoint. BIM was courageously targeted by anti-fraud activist David Thornton who should get the greatest credit for ending the BIM fraud. But Thornton was put through purgatory for his efforts. He was sued by the scheme for $10 million for stating that it was a fraud. All alone, he defended himself in court without an attorney and won a decision from a judge that he was within his rights to call BIM a fraud, based on the facts. He showed how the BIM plan was mathematically impossible and had to steal from the “last ones in.” Still, even with the judge’s ruling, the Competition Bureau did nothing. Clearly, this agency’s role is to protect MLM schemes from the public, not the other way around.
Finally news media publicity, in the form of national documentary exposé in which I and David Thornton were featured, and Kippax’s criminal driving behavior attracted enough attention, in addition to a consumer class action lawsuit. At this point the police got involved.
As an epilogue, it should be noted that Kippax’ cousin – the one who died in the criminal car accident – had run the same scheme as BIM in the UK. It was prosecuted over there and he then came to Canada to join his famous cousin who was running BIM with impunity. UK authorities will be wise to keep a keen eye on Kippax. MLM schemes have an uncanny way of rising from the dead under new names and MLM schemers have a near perfect record of recidivism.