Amway: The Untold Story: Hayden Lawsuit

 

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT
GERALD HAYDEN; EDDA HAYDEN



  V.



DEXTER YAGER; YAGER ENTERPRISES;     :      Case #3:97CV1509JCH

CONTINUING DISTRIBUTOR EDUCATION;    :

INTERNET SERVICES CORPORATION        :

NETWORK; DISTRIBUTION MARKETING      :

TECHNOLOGIES; DOWNEAST NETWORKING    :

SERVICES, INC; NETWORK OF BUSINESS   :

OPPORTUNITY ENTREPRENEURS; NATIONAL  :

BUSINESS OPPORTUNITY ENTREPRENEURS;  :

DON WILSON; NANCY WILSON;            :

COLOMBO DISALVATORE; KAREN           :

DISALVATORE; DISALVATORE             :

NETWORK MARKETING; AMWAY CORP.;      :

AMWAY DISTRIBUTOR                    :

ASSOCIATION; EDWARD POSTMA;          :

DAVID KRUER                          :     July 24, 1997
COMPLAINT
PARTIES
1. Plaintiffs Gerald and Edda Hayden ("the Haydens") are

currently and have been residents of the township of South

Windsor, State of Connecticut at all times relevant herein. The

Haydens invested and lost money in Defendants' network marketing

schemes.



     2. Defendant Amway Corporation ("Amway") is a Michigan

corporation, which is engaged in the manufacture, distribution

and sale of consumer goods, and the promotion of Amway

distributorship throughout the United States, including the State

of Connecticut.



     3. Defendant Edward Postma ("Postma") is employed by

Amway in the capacity of "Business Conduct" administrator and has

acted as the employee and agent of Amway at all times relevant

herein.



     4. Defendant David Kruer ("Kruer") is employed by Amway in

the capacity of "Senior Administrator of Business Conduct" and

has acted as the employee and agent of Amway at all times

relevant herein.



     5. Defendant Amway Distributor Association ("ADA") is

charged with development of Amway Rules of Conduct and

enforcement of those rules. The ADA is comprised, in part, by

individuals elected by other Amway distributors and, in part, by

individuals selected by Amway.



     6. Defendant Dexter Yager ("Yager") is an executive member

of the ADA.



     7. Yager also promotes Amway distributorships and

distributes Amway products through a network of thousands of

individuals who are within Yager's line of distributorship within

Amway.



     8. Yager operates his distributor network as defendant

Yager Enterprises.



     9. Defendants Don and Nancy Wilson ("the Wilsons") are

currently and have been residents of the township of the State of

Utah at all times relevant herein. Defendants were recruited by

individuals within Yager's distribution network and acted as

distributors of distributorships and products produced and

marketed by both Amway and Yager Enterprises.



     10. Defendants Karen and Colombo DiSalvatore ("the

DiSalvatores") are currently and have been residents of the

township of South Windsor, State of Connecticut at all times

relevant herein. Defendants were recruited by the Wilsons to act

as, and did act as, distributors of distributorships and products

produced and marketed by Amway, Yager Enterprises and the

Wilsons.



     11. The defendants identified in paragraphs two through ten

above are herein collectively referred to as "the Amway

defendants."



     12. Defendant Yager d/b/a Continuing Distributor Education;

Internet Services Corporation; Network; Distribution Marketing

Technologies; DownEast Networking Services, Inc.; Network of

Business Opportunity Entrepreneurs; and National Business

Opportunity Entrepreneurs (hereinafter collectively referred to

as "Yager Tools") also produces, distributes and sells audio

tapes, video tapes, and written materials ("tools"); organizes

and participates in rallies purportedly to train the distributors

within his network as to the secret of building a successful

Amway distributorship; and markets and sells tools and rally

distributorships. Yager sells these tools, rallies, and

distributorships solely to, and through, his downline

distributors.



     13. The defendant Wilsons d/b/a Wilson International

Networking participated in the creation of materials for sale by

Yager Tools; organized and participated in rallies promoted by

Yager Tools; and advertised, marketed and distributed tools and

rallies produced by Yager Tools.



     14. The defendant DiSalvatores d/b/a Distributed Network

Marketing ("DNM") and Distributed Marketing Technologies ("DMT")

advertised, marketed and distributed tools produced by Yager and

Yager Tools; advertised, and marketed rallies organized and

produced by Yager, Yager Tools, the Wilsons and Wilson

International Networking; and advertised, marketed, and organize

rallies produced by the DiSalvatores.



     15. The DiSalvatores and Wilsons also participated in

rallies organized or authorized by Yager, Yager Tools, Wilsons,

and Wilson International Networking and sold interests in Yager,

Yager Tools, and Wilson International Networking.



     16. The defendants identified in paragraphs twelve through

fifteen above are herein collectively referred to as "the Tools

Defendants."



     17. Yager acted individually and as the agent of Amway,

Yager Enterprises and Yager Tools at all times relevant herein.



     18. The Wilsons acted individually and as the agent of

Amway, Yager Enterprises, Yager Tools, and Wilson International

Networking at all times relevant herein.



     19. The DiSalvatores acted individually and as the agent of

Amway, Yager, Yager Enterprises, Yager Tools, Wilsons, Wilson

International Marketing, DNM and DMT at all times relevant

herein.
JURISDICTION AND VENUE
20. This court has jurisdiction of counts one through

twelve under 28 U.S.C. § 1331 (federal question) and 28 U.S.C.

1337 (regulation of commerce).



     21. This court has jurisdiction of counts one through four

for violation of section 12(l) and 12(2) of the Securities Act of

1933 as amended under 15 U.S.C. § 77v.



     22. This court has jurisdiction of counts five and six for

violation of section 10(b) and Rule lOb-5 thereunder of the

Securities Exchange Act of 1934 as amended under 15 U.S.C. 78aa.



     23. This court has jurisdiction of the counts seven through

nine for violations of 18 U.S.C. § 1962(c) and (d) under 18

U.S.C. § 1964(c).



     24. This court has jurisdiction of the counts ten through

twelve for violations of 15 U.S.C. §§ 1, 2 under 15 U.S.C. § 15.



     25. This court has pendant jurisdiction of counts thirteen

through twenty-two under 28 U.S.C. § 1367.



     26. The plaintiff Haydens reside within the District of

Connecticut. In addition, the Hayden's investments were

solicited within the District of Connecticut, and the Tools

defendants and the Amway defendants Yager conduct business within

Connecticut on a regular basis.



     27. Thus, venue in this district is proper under 28 U.S.C.

§§ 1391(b) and (c) because the events giving rise to the

plaintiffs, claims occurred, and continue to occur, in Hartford

County.
FACTUAL ALLEGATIONS
GENERAL FACTUAL ALLEGATIONS



     RECRUITMENT - ALLEGATIONS AS TO THE AMWAY DEFENDANTS



     28. At various times between 1987 and 1992 the DiSalvatore

attempted to induce the plaintiffs to invest time, money and

effort in the "Amway system."



     29. In order to induce plaintiffs to invest in the "Amway

system," the DiSalvatores represented that they earn a six figure

per year return from their investment in Amway which allows them

to live a lavish lifestyle including the ability to purchase a

mansion, new Mercedes, yacht, diamonds, furs and early

retirement.



     30. The DiSalvatores corroborated their claim by showing

the Hayden's their new car, diamonds, furs and yacht.



     31. The DiSalvatores further represented that the Wilsons

and Yager, as well as numerous other individuals, had achieved

similar and greater returns from their investment in Amway.



     32. The DiSalvatores represented that the return from the

Hayden's investment in Amway, characterized as "residual income"

would allow the Haydens to retire and receive a six figure income

per year in return on their investment within two years.



     33. The DiSalvatores further represented to the Haydens

that, through the assistance of the DiSalvatores, the Haydens

would be able to retire and receive the "residual income" or

profit from their investment in Amway, within a matter of 2

years.



     34. The DiSalvatores also provided the Haydens with

literature produced by Amway in order to induce the Haydens to

invest in Amway.



     35. The literature produced by Amway and provided by the

DiSalvatores represented that:



          A.    the "Amway system" is one in which individuals

                earn income by distributing consumer goods

                produced or marketed by Amway and recruiting

                others to distribute these goods;

          B.    an individual need only pay Amway approximately

                $132.00 in order to earn the right to distribute

                Amway products and recruit others to distribute

                Amway products;

          C.    an Amway distributor who recruits another

                individual to distribute Amway products is

                designated an "upline distributor" of the person

                whom he has recruited. The recruit is designated

                as both the "downline distributor" and the

                "personal sponsor" of the "upline distributor";

          D.    every individual whom the "personal sponsor"

                recruits to become an Amway distributor is within

                the "downline network" of the "upline

                distributor";

          E.    every "upline distributor" has the potential to

                earn a profit from the sale of Amway products to

                all the individuals in his "downline network."

                Thus, an investor earns residual income by

                recruiting other individuals who purchase Amway

                products and who recruit other individuals who

                purchase Amway products;

          F.    Amway pays distributors an increasingly larger

                percentage of profit, designated as a "performance

                bonus" as they recruit greater numbers of

                individuals who purchase an increasing volume of

                Amway products;

          G.    an "upline distributor" earns the status of

                "Direct Distributor" within the Amway system by

                recruiting individuals and having the group

                collectively purchase approximately $15,000 worth

                of Amway products per month for six months within

                a fiscal year (which is from September to August).

          H.    in addition to a performance bonus, Amway pays

                Direct Distributors a "profit sharing bonus" based

                upon Amway's profitability during the year. This

                bonus is discretionary;

          I.    the Direct Distributor is the only person

                authorized within his "downline network" who may

                order products directly from Amway and who

                receives a performance bonus. Thus, the Direct

                Distributor controls the purchases and controls

                distribution of all the products and performance

                bonuses to his "downline network"; and

          J.    a distributor may only cite "lifestyle examples"

                where such benefits were actually accrued as the

                result of building a successful Amway business.



     36. The literature produced by Amway and which the

DiSalvatores gave the Haydens also represented that:



          A.    Amway provides individuals with a legitimate

                business opportunity which Amway supports and

                assists through numerous methods such as group

                insurance rates, advertising, public relations

                releases and other means of legitimizing Amway in

                the public eye as well as by providing extensive

                Rules of Conduct which Amway would enforce to

                protect distributors from coercive or illegal

                behavior by other Amway distributors;

          B.    Amway provides individuals with a unique business

                opportunity because the "system" is one in which

                the "upline" is required to support and assist the

                "downline" because the "upline's" income is

                dependent upon the success of his "downline";

          C.    Per Amway Rules and Regulations, Amway ensures

                that distributors and their recruits are trained

                because it requires Direct Distributors to conduct

                "at least weekly" "training" and "inspirational"

                meetings of their recruits or "downlines"; and

          D.    distributors should emulate their sponsor and

                "stay involved with your upline network and all

                its various activities . . . Take advantage of the

                experience and successful track record found in

                your Line of Sponsorship . . . there are leaders

                in your Line of Sponsorship who can show you a

                proven path to building a successful Amway

                business."



     37. The Amway Rules of Conduct, created by Amway and

distributed by the DiSalvatores to the Haydens represented, in

relevant part, that:



          A.    an Amway distributor may not sell any non-Amway

                product to another Amway distributor whom he has

                not personally recruited;

          B.    an Amway distributor may not take advantage of his

                knowledge or association with other Amway

                distributors to promote or expand his non-Amway

                business;

          C.    an Amway distributor may not require his downline

                distributors to purchase either Amway or non-Amway

                products or attend rallies as a condition of

                receiving assistance in building an Amway

                business;

          D.    an Amway distributor may not represent that there

                are exclusive franchises or territories available

                under the Amway system;

          E.    an Amway distributor may not engage in unfair or

                deceptive trade practices;

          F.    an Amway distributor may not engage in unlawful

                business enterprises or activities;

          G.    an Amway distributor may not engage in high

                pressure selling tactics;

          H.    Direct Distributors must ensure that every

                distributor within their "downline network" sells

                Amway products to a minimum of 10 retail customers

                per month (the 1110 customer rule"). Amway rules

                prohibited the Direct Distributor from paying a

                performance bonus to any individual within his

                network in the absence of proof of such retail

                sales each month;

           I.   Direct Distributors must ensure that every

                distributor within his "downline network" sells,

                or personally uses, at least 70% of the Amway

                products he purchases each month (the "70% rule").

                The Direct Distributor may not pay a performance

                bonus to any individual within his network in the

                absence of proof of such sales each month;

           J.   Distributors must enforce the rules of conduct;

                and

           K.   the Amway Rules of conduct would be enforced by

                the ADA.



     38. In reliance upon the representations of the

DiSalvatores and Amway, in April 1993, the Haydens began to

invest time, money and effort in Amway by purchasing Amway

products, selling Amway products, and recruiting other

individuals to purchase and sell Amway products.





     THE SECRET TOOLS BUSINESS - ALLEGATION AS TO THE TOOLS

     DEFENDANTS IN THEIR CAPACITY WITHIN THE TOOLS BUSINESS AND

     THE AMWAY BUSINESS



     39. During the Spring and Summer of 1993, and continuing

through March, 1996, the defendants purported to advise the

Haydens as to the proper method to invest their time, money and

effort in order to maximize their return from Amway.



     40. The DiSalvatores consistently and continually

represented that the advice they gave to the Haydens was approved

by, and came directly from, Yager and Wilson.



     41. Between 1993 and 1996, all of the defendants, through

oral and written materials, counseled the Haydens not to expend

effort to build a retail customer base.



     42. Rather, the defendants explained that, in order to earn

"residual" income from Amway, the Haydens should purchase Amway

products for personal consumption, and recruit other individuals

to purchase Amway products for personal consumption. They

reasoned that no one in Amway since Amway co-founders Rich DeVos

and Jay Van Andel "has run the roads or built the business" and

3/4 of the Amway Rules and Regulations should be ignored or are

not applicable to building a successful Amway business.



     43. The DiSalvatores often encouraged, and promoted through

others, their recruits to purchase Amway products in excess of

their personal consumption needs in order to achieve new pin

levels and deceive new and potential recruits into believing that

the distributors had sold large volumes of Amway products and

were being successful.



     44. The DiSalvatores explained that retails sales "never

stay done," meaning that if a distributor focused on retail

sales, he would never be able to receive "residual income" but

would be required to continually service and sell to his retail

accounts.



     45. The defendants thereafter counseled the Haydens that

the Haydens could only ensure the receipt of "residual income,"

or continuing profit from their investments in Amway, by

continually recruiting new Amway distributors and inducing those

individuals to (a) purchase Amway products for personal

consumption and (b) recruit others who would do the same.



     46. The defendants claimed that the Haydens would only be

successful in recruiting other distributors who would recruit

other distributors to purchase Amway products by attending

defendants, rallies, purchasing defendants' tools, and inducing

their downline recruits and prospects to attend defendants'

rallies and purchase defendants, tools.



     47. The defendants represented that the rallies and

products were essential to the Haydens' success because "the key

to this business is the power of duplication." The defendants

claimed that duplication could only be achieved if all of the

individuals within the Yager organization received the same tools

and attended all of the rallies, in short, 'you must follow the

system", as they define it.



     48. The Tools,defendants represented that they were

affiliated with the Amway defendants in that:



          A.   the DiSalvatores represented that the advice they

               gave to the Haydens was approved by, and came

               directly from, representations made by Yager and

               Yager Enterprises and Wilson;

          B.   defendant DMT distributed to the Amway

               distributors within the DiSalvatore network

               literature that simultaneously promoted the

               purchase of tools, attendance at rallies, and the

               purchase of Amway products;

          C.   defendant DMT conducted promotions whereby Amway

               distributors could earn free tickets to rallies in

               return for purchasing Amway products and

               recruiting Amway distributors;

          D.   defendant DMT conducted a promotion whereby

               distributors could earn skybox tickets to a

               basketball game if they purchased Amway products.

               DMT represented that Amway made this opportunity

               possible;

          E.   defendant International Network Marketing Systems

               circulated literature which claimed that the tools

               "system" and Amway were integrated;

          F.   defendant Internet Services Corp. circulated a

               catalog of "tools" to Amway distributors which

               purported to sell material as to "how to go

               Diamond in two years." This material purports to

               provide direction specific to the Amway system;

          G.   all of the defendants, between 1993 and 1997,

               represented, both orally and through written

               materials, that purchase of "tools" and attendance

               and promotion of rallies organized by Yager, the

               Wilsons, and the DiSalvatores was "vital" to

               plaintiffs, success as Amway distributors or would

               "insure" plaintiffs' success as Amway

               distributors; and

          H.   Yager, by and through the Wilsons, DiSalvatores

               and other Amway distributors, strictly controlled

               the content, distribution and price of tools

               within the Yager Amway network.



     49. The defendants represented that they were competent to

advise the Haydens as to the most effective method to invest in

Amway because they had achieved lavish lifestyles and annual six

figure "residual incomes" solely by participating in the Amway

system.



     50. The defendants represented that they were advising the

Haydens solely because the defendants, incomes were dependent

upon the Hayden's success within the Amway system and because the

defendants "loved" and "cared about" the plaintiffs.



     51. The defendants made the aforesaid representations and

omissions to induce plaintiffs to continue to invest in

defendants' Amway distributorship and recruit others to invest in

defendants, Amway distributorship and to induce plaintiffs to

continue to purchase defendants' tools and rallies and to recruit

others to do the same.



     52. In reliance upon the defendants, representations,

between 1993 and 1996, the Haydens attended defendants' rallies,

purchased defendants' products, and recruited other individuals

whom they induced to attend defendants' rallies and purchase

defendants, products.



     53. The Haydens' reliance upon defendants' representations

was justified in that the Haydens, did not know, nor did they

have any reasonable means to discover, that:



          A.    defendants were not affiliated with Amway;

          B.    at least fifty percent (50%) of the defendants'

                income and represented lifestyles, etc. was

                derived from the sale of tools and rallies to the

                Haydens and other individuals, including the

                Haydens' recruits;

          C.    consequently, the defendants counseled the Haydens

                to purchase defendants' products and attend

                defendants, rallies and recruit other individuals

                to purchase tools and rallies in order to obtain

                profit from such sale;

           D.   defendants counseled the Haydens to focus on

                recruitment rather than retail customer sales for

                the purpose of ensuring an ever increasing market

                for defendants, tools and rallies without regard

                to the long term effects of such conduct upon

                plaintiffs' interest in Amway.



      54. The Haydens had no reasonable means of knowing that

defendants, conduct was in violation of the Amway Rules of

Conduct as set forth herein in that the Haydens did not know that

defendants were promoting non-Amway products and businesses and

defendants concealed this fact from plaintiffs.



     55. The Haydens had no reasonable means of knowing that

defendants' conduct was in violation of the Amway Rules of

Conduct as set forth herein in that defendants DiSalvatores

represented that enforcement of the "10 customer rule" and "70%

rule" was within the discretion of the upline distributor, that

the DiSalvatores, did not enforce this rule, and that Amway did

not require the DiSalvatores' to enforce this rule, citing they

were the Diamonds and "they could do whatever they want".



     56. The Haydens' reliance upon defendants' representations

was further justified because the defendants' representations

that their interests coincided with the Haydens in that the

defendants' income was dependent upon the Haydens' income from

Amway would have been true in the absence of the fact, unknown to

the Haydens, and concealed by the defendants, that the defendants

earned substantial income from the sale of non-Amway products and

rallies to the Haydens and the Haydens' recruits.





     CONCEALMENT OF THE TOOLS PROFITS - ALLEGATION AS TO THE

     TOOLS DEFENDANTS



     57. In addition to representing that they were affiliated

with Amway, between April 1993 and September 1994, the defendants

conspired with each other and with other organizations within

Amway who produce non-Amway products and rallies to intentionally

conceal the existence and scope of the profit earned by

defendants from the sale of non-Amway products and rallies.



     58. The defendants further conspired with each other and

with other organizations within Amway to maintain a monopoly and

price control over defendants' products and rallies.



     59. As evidence of, and in furtherance of this conspiracy,

between April 1993 and the present, the DiSalvatores represented

to the Haydens that:



          A.   Yager prohibited distributors within the

               DiSalvatores' network from purchasing motivational

               products from any other person or entity not

               affiliated with the Yager network;

          B.   Yager prohibited distributors within his Amway

               network from selling motivational products to any

               person or entity not affiliated with the Yager

               network;

          C.   Yager prohibited Amway distributors within his

               network from producing and/or selling and/or

               distributing any motivational products similar to

               defendants, products to any other person or entity

               within Amway, including the Yager organization,

               citing that "we were not allowed to compete with

               Dexter";

          D.   Yager prohibited Amway distributors within his

               Amway network from purchasing motivational

               products from any individual or entity at any

               price other than the price established by Yager;

          E.   Yager prohibited Amway distributors within his

               network from re-selling tools to any individual or

               entity at any price other than the price

               established by Yager, Wilson or DiSalvatore; and

          F.   Yager prohibited Amway distributors within his

               network from discussing his products or rallies

               with any other individual within Amway who was not

               within the Yager network.  They also represented

               that it was against Amway Rules;



     60. Between April 1994 and September 1994, the DiSalvatores

represented that these prohibitions applied to the Haydens

because they had not achieved the status of "Amway Direct

Distributor" and that the Amway Rules of Conduct delegate sole

responsibility and authority to Direct Distributors to train

their downline network.  They further enforced this by saying it

was within Amway's Rules & Regulations.



     61. The DiSalvatores threatened the Haydens that, if they

refused to comply with Yager's alleged prohibitions, the Yager

network would withdraw all support from the Haydens' Amway

organization and destroy the Haydens, credibility with their

recruits, citing "if it comes to a dispute between a Diamond and

a Direct, the people will believe the Diamond".



     62. Plaintiffs thereafter contacted other Amway

distributors who were not affiliated with the Yager network who

confirmed the representations of the DiSalvatores by refusing to

sell motivational products to the Haydens because they were

members of the Yager network and not working directly with "our

Diamond Direct".



     INVESTMENT IN THE TOOLS BUSINESS - ALLEGATION AS TO THE

     TOOLS DEFENDANTS



     63. In June 1994, the DiSalvatores sought to induce the

Haydens to purchase thousands of dollars worth of Amway products

although the Haydens did not have retail sales orders for those

products.  The purchase of those products would qualify the

Haydens as Amway Direct Distributors.  In addition, unbeknownst

to the Haydens, the purchase of the those products by the Haydens

was necessary for the DiSalvatores to re-qualify as Amway Diamond

Distributors and gain a significant monetary "Diamond Bonus".



     64. An Amway Diamond Distributor earns a greater percentage

profit from his investment in Amway.



     65. In addition, Yager and Yager Tools permit Diamond

Distributors to speak at Yager rallies for which they earn

substantial profit.  They are allowed to control their rallies and

their prices.



     66. In order to induce the Haydens to purchase the large

volumes of Amway products, the DiSalvatores Represented to the

Haydens that their purchase constituted an investment in the

"tools business."



     67. The DiSalvatores represented that, upon earning the

status of Amway Direct Distributor, Yager would grant the Haydens

an irrevocable interest in the "tools business."



     68. The DiSalvatores explained that Yager pays each Direct

Distributor within his Amway network a profit share of every tool

sold to the Direct Distributor's downline network.



     69. Thus, the DiSalvatores represented that investment in

the "tools business" was an additional method to ensure "residual

income" which would compensate the Haydens for the money with

which they purchased Amway products.



     70. In justifiable reliance upon the DiSalvatores'

representations, between June 1994 and August 1994, the Haydens

personally purchased thousands of dollars of Amway products.





      EFFORTS TO PROMULGATE THE SECRET TOOLS BUSINESS AND PROFITS

     - ALLEGATIONS AS TO THE TOOLS DEFENDANTS



     71. In September, 1994, following the Haydens' promotion t

the status of Amway Direct Distributor, the DiSalvatores provide

the Haydens with a chart indicating that the percentage return

Yager paid to each Direct Distributor for the sale of

motivational products and rallies varied each month in relation

to the volume of Amway products the Direct Distributor purchased

from Amway.  Between January, 1994 and September, 1994 they

purposely withheld requested information on profits in the tool

business.



     72. Thereafter, the Haydens began to realize that the

income earned from investment in the tools business constituted a

substantial portion of their upline's income.



     73. Between September.1994 and August 1995, the Haydens

sought to negotiate with the DiSalvatores to disclose to their

downlines the scope of the profit earned from the tools business

and to reduce the cost of the tools and rallies to their

downlines.



     74. However, during this time, the DiSalvatores represented

that Yager prohibited Direct Distributors within his network from

re-selling tools to any individual or entity at any price other

than the price established by Yager, Wilson and DiSalvatore.



      75. Moreover, the DiSalvatores represented that Yager

prohibited Direct Distributors within his network from purchasing

tools from any individual within Amway who was not affiliated

with the Yager network.  The DiSalvatores represented that the

other Amway distributors had agreed with Yager to not sell

motivational products to distributors within Yager's network and

citing "that no one would sell us tools".



     76. The DiSalvatores threatened to withdraw the support of

Yager's Amway organization to plaintiffs; refuse to supply

plaintiffs with tools or rallies; prevent plaintiffs from

obtaining tools from any other individual or entity with the

Amway organization;,and to otherwise injure plaintiffs' Amway

distributorship if plaintiffs attempted to re-sell defendants'

products at any price other than that established by Yager or

disclosed the profits to anyone.



     77. Thereafter, as of September 1995, the DiSalvatores

refused to continue to pay the Haydens any profit from the sale

of defendants, products and rally tickets to the Haydens'

downlines.



     78. Between 1994 and 1997, the Tools defendants sold tools

and rally tickets directly to plaintiffs, downline distributors

during rallies and failed to pay plaintiffs any profit from such

sales.



     79. On September 17, 1996, the DiSalvatores admitted that

they had withheld the Haydens, profits from the sale of

defendants, products and rallies in order to induce the Haydens

to comply with Yager's prohibitions.





     AMWAY KNOWLEDGE, RESPONSE AND PARTICIPATION - ALLEGATIONS AS

     TO AMWAY CORP., ADA, KRUER, AND POSTMA



     80. Between 1993 and 1997 Amway represented that it would

protect plaintiffs from coercive conduct such as alleged herein

by enforcing its rules against every distributor.



     81. At various times between September 1994 and December

1995, the Haydens attempted to contact Amway to discuss the

DiSalvatores' and Yager network's violation of Amway Rules of

Conduct.  Amway refused to respond to the Haydens' requests and

informed the Haydens that Amway would not participate in any

conflict involving the sale of tools or rallies.



     82. However, after the Haydens informed defendant Kruer

that they intended to increase the price at which they re-sold

Amway products to their downline recruits, Kruer agreed to

conduct a meeting between the Haydens and the DiSalvatores to

resolve their dispute.



     83. Kruer also contacted the DiSalvatores and informed them

of the Haydens intent to increase the price at which they re-sold

Amway products to their downline recruits.



     84. In March, 1996, Kruer and Postma, on behalf of Amway,

met with the DiSalvatores and the Haydens.



     85. The Haydens disclosed to Kruer and Postma the practices

of the "Tools Defendants" as set forth in herein, and also

indicated the fraud in Portugal and 70/30 violations throughout

the network.



     86. At the meeting, the Haydens only request was that they

be permitted to reduce the price at which they resold tools to

their downline distributors and disclose the price and profit

earned by the Tools Defendants without being subject to

retaliation.  However, the DiSalvatores refused to agree to the

Haydens I request stating "I am the Diamond and I can do what I

want".



     87. Thereafter, Postma suggested that the Haydens and

DiSalvatores divide the Haydens, recruits into two groups, which

Amway termed Plan "B".  One group would continue to purchase

motivational products and rallies from the DiSalvatores.  The

second group would continue to rely upon the Haydens as the

source of motivational products and rallies.



     88. The Haydens explained to Postma that Yager, through the

DiSalvatores, was their only source of motivational products and

rallies because no other Amway distributor would agree to sell

motivational products to the Haydens.



     89. In order to induce the Haydens to agree to the group

split, Postma represented that he would later provide the Haydens

with the name of ten other "Diamonds" within Amway who were not

members of the Yager network who would be willing to supply the

Haydens with motivational products which the Haydens could resell

at any price they deemed appropriate.  The Haydens were also told

who not to buy them from.



     90. Postma rejected the Haydens' suggestion that the

parties disclose the source of the dispute between them and

permit the Haydens' Amway recruits to choose whether to continue

to purchase tools and rallies from the DiSalvatores or the

Haydens.



     91. Rather, Postma insisted that the facts underlying the

dispute remain secret and that the Haydens and DiSalvatores

jointly divide the Haydens recruits.



     92. In order to further induce the Haydens to agree to the

group split, Postma promised the Haydens that all aspects of the

Haydens, distributorship with respect to Amway would remain

unchanged.  Postma represented that the Haydens would continue to

receive all paperwork regarding the Amway activity of their

recruits and would continue as the upline sponsor of all

individuals whom they had recruited, and that the Amway part of

the business would be unchanged.



     93. Based upon Postma's representations, the Haydens agreed

to the group split.  However, the parties agreed that the split

would not occur until Postma had provided the Haydens with an

alternative source for motivational materials and rallies.



     94. During all times relevant herein, Amway knew that the

lifestyles presented to plaintiffs by both Amway and Amway

distributors reflected income earned primarily or solely through

the recruitment of individuals to act as Amway distributors,

purchase Amway products for personal consumption and recruit

other distributors to do the same as well as the investment in,

creation and development of a distributorship of tools and

rallies.  Amway omitted to inform plaintiffs of this fact.



     95. During all time relevant herein, Amway was aware that

defendant Yager and other similar Amway distributors' integrity

had been compromised by their motivation to sell non-amway

products to distributors within the Amway system and to utilize

their position and knowledge of the Amway system to promote and

expand their non-Amway businesses and that Amway had taken no

action to enforce its rules of conduct against Yager and Yager

Enterprises.



     96. During all times relevant herein, Amway knew that, in

practice, retail sales represented a minimal portion of Amway

sales and that, instead, the "Amway opportunity" was represented

and practiced as an illegal pyramid scheme in which distributors

were trained and induced to personally purchase large volumes of

Amway products and to recruit others to personally purchase large

volumes of Amway products in order to purchase status levels

within the Amway system and earn profit in the Yager Tools

scheme.



      97. Amway further knew that defendants Yager and Yager

Tools as well as other distributors within the Yager

distributorship would act to prevent, injure and otherwise harm

plaintiffs, Amway distributorship in the event that plaintiffs,

failed or refused to participate in the Yager "system" which

included coercing plaintiffs and plaintiffs' recruits to purchase

large volumes of Amway products for personal consumption.



     98. Nevertheless, on March 18, 1996, Postma wrote a letter

to the Haydens in which he stated that "Amway finds no rules

violations documented for Amway's review or decision."



     99. As of May, 1996, the DiSalvatores refused to provide

tools to the Haydens, or any of the Haydens, recruits who were

not on the DiSalvatores, list in the group split.



     100.  Although the Haydens continued to request the names of

individuals within Amway from whom they could obtain motivational

materials, Postma failed to provide the Haydens with the name of

any Diamond from whom they could obtain motivational materials.



     101.  The Haydens contacted other Amway distributors who were

not members of the DiSalvatore network, all of whom refused to

supply the Haydens with motivational products, because they were

under the Yager network.



     102.  Thereafter, the DiSalvatores contacted individuals who

were on the Haydens' list in the group split and solicited them

to continue to purchase tools and rallies from the DiSalvatores.



     103.  On June 13, 1996 Kruer submitted a proposal for the

Haydens to sign in which the Haydens agreed to split their Amway

group into two halves, one of which would continue to purchase

motivational products from the DiSalvatores.  Amway sought to

require the Haydens, within the proposal, to sign a general

release of liability as to Amway and the DiSalvatores.



     104.  Kruer represented that, if the Haydens signed the

Agreement, Amway would permit the Haydens to continue to receive

Amway "group activity reports upon request" and that Amway would

give the Haydens a list of Diamond Distributors from whom the

Haydens could obtain motivational materials, and in fact,

promised that Amway would participate in the negotiations.



     105.  The Haydens refused to sign the release of liability

and, despite Postma's acts, recommendations and representations

at the March meeting, and Kruer's written proposal and

representations of June, 1996, Kruer thereafter claimed that

Amway would not participate in any dispute regarding motivational

products, including assisting the Haydens to find a new source of

motivational products, claiming that the Haydens "must sign the

contract first".





     COOPERATION BETWEEN THE AMWAY DEFENDANTS AND THE TOOLS

     DEFENDANTS



     106.  On August 20, 1996, Kruer requested that the Haydens

provide written evidence of Amway Rule violations if the Haydens

continued to protest the conduct of the DiSalvatores.



     107.  On August 23, 1996, and August 27, 1996, the Haydens

requested that Kruer provide them with clarification regarding

the "70% rule" and the "10 customer rule." The Haydens informed

Kruer that the DiSalvatores had expressly stated that Amway

distributors need not comply with the "10 customer rule."



     108.  The Haydens requested that their distributors provide

them with evidence of compliance with the "70% rule" and the "10

customer rule."



     109.  However, the DiSalvatores contacted the Haydens' Amway

downlines and instructed them not to have any communications with

the Haydens and not to provide the Haydens with any "group

activity reports."



     110.  Despite the representation at the March 1996 meeting

that the group split would have no effect upon the Haydens, Amway

distributorship, the DiSalvatores, with Amway's knowledge,

claimed that the Agreement prohibited the Haydens from contacting

their Amway distributors in any way, even though no Agreement

existed.



     111.  On August 30, 1996, Kruer claimed that the "10 customer

rule" was not required by law and that Amway would not enforce

this rule but delegated sole discretion for its enforcement to

Direct Distributors.



     112.  Thereafter, both Amway and the DiSalvatores refused to

provide the Haydens with group activity reports through which the

Haydens could confirm that their recruits were in compliance with

the "10 customer rule" and "70% rule."



     113.  On October 11, 1996, Kruer claimed that the

DiSalvatores had "provided documentation to support their claim

that promotion of retail sales is an important part of their

business activities.  The documentation includes a list of

product promotion activities and copies of literature used to

support these activities.  Amway is satisfied that the

DiSalvatores understand the importance of retail sales in

building a successful Amway business and promote them

accordingly."



     114.  Although Amway has specific documentation to verify

whether the DiSalvatores in fact comply with the 10 customer and

70% rules, Amway did not rely upon, or allege the existence of,

such documentation.



     115.  Amway also refused to provide the Haydens with "group

activity reports" from which the Haydens could verify that the

DiSalvatores complied with the 10 customer and 70% rules.



     116.  Amway continued to support the DiSalvatores refusal to

provide information to either the Haydens or individuals within

the Haydens' Amway organization regarding compliance with the 10

customer rule and the 70% rule.



     117.  In November 1996, Amway amended its rule that prohibits

the sale of non-Amway products to Amway distributors to permit

the Tools Defendants to freely market their products within

Amway.



      118.  The DiSalvatores have contacted numerous distributors

of plaintiffs, and induced them to cease all business relations

with the Haydens, to remove the Haydens, name from their line of

sponsorship, and to induce their recruits to do the same,

including encouraging others to falsify documents in violation of

SFC.





COUNT ONE       [Section 12(l) of the Securities Act of 1933 as to all

                defendants with respect to the Amway System]



     119.  Plaintiffs reallege as if more fully set forth each and

every allegation contained in paragraphs 1 through 118, and

further allege as follows against all defendants:



     120.  Investments in the Amway marketing scheme, as described

in the Factual Allegations, constitute investment contract

securities (hereinafter "Amway Securities") as described in

Section 2 of the Securities Act of 1933, 15 U.S.C. § 77b, and for

the purpose of the registration and anti-fraud provisions of the

Act, in that, as a matter of economic reality, the different

income positions in the Amway network marketing plan are

investments in a common enterprise, with profits to be derived

from the essential managerial efforts of the Amway defendants,

and others in the pyramid and in that defendants represented that

plaintiffs, financial success was dependent upon:



          A.   defendant Amway's reputation and integrity

               communicated to the public and potential recruits

               through Amway's tradename, public relations,

               advertising, promotional literature, superior

               products, Rules of Conduct, and enforcement

               mechanisms; and

          B.   defendant Yager, Yager Enterprises', Yager Tools,

               Wilsons', DiSalvatores', DNM and DMT training,

               products, assistance, and promotions;



     121. Defendants represented that their aforesaid efforts

made Amway a superior investment opportunity and that plaintiffs,

businesses would not obtain profits in the absence of the

aforesaid efforts by defendants.



     122. Defendants, severally and in concert, directly and

indirectly, have participated in a continuous course of conduct

at all relevant times herein, by the use of mails, wires and

other means and instruments of communication, transportation, and

interstate commerce, and offered for sale, sold and were the

proximate cause or substantial and necessary factors in the sale

of the subject securities in violation of Section 5 of the

Securities Act, 15 U.S.C. § 77(e), in that no registration

statement was in effect or had been filed with respect to such

securities, and the offer for sale and sale of such securities by

defendants was not exempt from the registration requirements of

Section 5 by Section 3 or 4 of the Securities Act, 15 U.S.C.

77(c) and 77(d).



     123. Between 1994 and 1997, plaintiffs were and are being

induced to pay thousands of dollars to purchase the subject Amway

securities, as a direct and proximate result of defendants'

violations of Section 5, and plaintiffs accordingly seek to

recover the full amount of consideration paid for said

securities, with interest thereon, upon tender of such

securities, which tender is hereby made, or, in the alternative,

seek damages sustained as a result of the sale of such securities

pursuant to Section 12(l) of the Securities Act, 15 U.S.C.

771(l).



     124. This claim under Section 12(l) is asserted with respect

to damages sustained as a result of plaintiffs' purchase of Amway

securities within one (1) year of filing this action.





COUNT TWO       [Section 12(l) of the Securities Act of 1933 as to all

                defendants with respect to the Tools System]



     125. Plaintiffs reallege as if more fully set forth each and

every allegation contained in paragraphs 1 through 124, and

further allege as follows against all defendants:



     126. Investments in the Tools marketing scheme, as described

in the Factual Allegations, constitute investment contract

securities (hereinafter "Tools Securities") as described in

Section 2 of the Securities Act of 1933, 15 U.S.C. § 77b, and for

the purpose of the registration and anti-fraud provisions of the

Act, in that, as a matter of economic reality, the different

income positions in the Tools network marketing plan are

investments in a common enterprise, with profits to be derived

from the essential managerial efforts of the Tools defendants,

and others in the pyramid and in that defendants represented that

plaintiffs, financial success was dependent upon:



          A.   defendant Amway's reputation and integrity

               communicated to the public and potential recruits

               through Amway's tradename, public relations,

               advertising, promotional literature, superior

               products, Rules of Conduct, and enforcement

               mechanisms; and

          B.   defendant Yager, Yager Enterprises', Yager Tools,

               Wilsons', DiSalvatores', DNM and DMT training,

               products, assistance, and promotions.



     127. Defendants represented that their aforesaid efforts

made both the Tools and Amway a superior investment opportunity

and that plaintiffs, businesses would not obtain profits in the

absence of the aforesaid efforts by defendants.



     128. Defendants, severally and in concert, directly and

indirectly, have participated in a continuous course of conduct

at all relevant times herein, by the use of mails, wires and

other means and instruments of communication, transportation, and

interstate commerce, and offered for sale, sold and were the

proximate cause or substantial and necessary factors in the sale

of the subject securities in violation of Section 5 of the

Securities Act, 15 U.S.C. § 77(e), in that no registration

statement was in effect or had been filed with respect to such

securities, and the offer for sale and sale of such securities by

defendants was not exempt from the registration requirements of

Section 5 by Section 3 or 4 of the Securities Act, 15 U.S.C.

77(c) and 77(d).



     129. Between June 1994 and June 1996, plaintiffs were

induced to pay thousands of dollars to purchase the subject Tools

securities, as a direct and proximate result of defendants'

violations of Section 5, and plaintiffs accordingly seek to

recover the full amount of consideration paid for said

securities, with interest thereon, upon tender of such

securities, which tender is hereby made, or, in the alternative,

seek damages sustained as a result of the sale of such securities

pursuant to Section 12(l) of the Securities Act, 15 U.S.C.

771(l).



     130. This claim under Section 12(l) is asserted with respect

to damages sustained as a result of plaintiffs, purchase of Amway

securities within one (1) year of filing this action.





COUNT THREE     [Section 12(2) of the Securities Act of 1933 as to

                all defendants with respect to Amway Securities]



     131. Plaintiffs reallege as if more fully set forth each and

every allegation contained in paragraphs 1 through 130, and

further allege as follows against all defendants:



     132. Defendants severally and in concert, directly and

indirectly, participated in a continuous course of conduct,

throughout all times relevant herein, by use of the mails, wires,

and other means and instruments of communication and

transportation and interstate commerce, and offered for sale,

sold, and were the proximate cause and substantial and necessary

factors in the sale of the subject Amway securities to plaintiffs

by means of written promotional materials, oral communications,

and violations of Section 12(2) of the Securities Act, 15 U.S.C.

§ 77(l)(2).



     133. In the course of their offer for sale and sale of said

securities to plaintiffs, defendants have made untrue statements

of material fact and omitted to state material facts necessary in

order to make the statements, in light of the circumstances under

which they were made, not misleading, at the time they offered

for sale and sold said securities to plaintiffs.



     134. Each of the defendants at various times have made or

assisted the other defendants in making the untrue statements and

omissions of material fact enumerated above in connection with

the offer and sale of securities to plaintiff. As a result of

the material false representations and omissions of said

defendants, plaintiffs have been induced to purchase the subject

securities.



     135. Plaintiffs have relied on the untrue statements of

material fact above,made by defendants in connection with the

offer and sale of said securities to plaintiffs.



     136. By virtue of the defendants' actions, the plaintiffs

have suffered loses, costs and damages including but not limited

to their investment in Amway products, their investment in

motivational products and rallies, severe emotional trauma, and

injury to their reputations.



     137. Pursuant to 15 U.S.C. §§ 771 and 770, plaintiffs are

entitled to recover the consideration paid to defendants with

interest.



     138. Plaintiffs claims are within the applicable statute of

limitations as set forth in 15 U.S.C. § 77m in that this action

is brought within one year of plaintiffs, discovery of the

defendants, misrepresentations and omissions and defendants,

prevented plaintiffs' earlier discovery by the use of fraud.



     139. Plaintiffs claims are further within the

applicable statute of limitations as set forth in 15 U.S.C. § 77m

in that the investment contracts alleged herein were ongoing and

were entered into within three years of this action, between 1994

and 1997.





COUNT FOUR      [Section 12(2) of the Securities Act of 1933 as to

                all defendants with respect to Tools Securities]



     140. Plaintiffs reallege as if more fully set forth each and

every allegation contained in paragraphs 1 through 139, and

further allege as follows against all defendants:



     141. Defendants severally and in concert, directly and

indirectly, participated in a continuous course of conduct,

throughout all times relevant herein, by use of the mails, wires,

and other means and instruments of communication and

transportation and interstate commerce, and offered for sale,

sold, and were the proximate cause and substantial and necessary

factors in the sale of the subject Tools securities to plaintiffs

by means of written promotional materials, oral communications,

and violations of Section 12(2) of the Securities Act, 15 U.S.C.

77(l)(2).



     142. In the course of their offer for sale and sale of said

securities to plaintiffs, defendants have made untrue statements

of material fact and omitted to state material facts necessary in

order to make the statements, in light of the circumstances under

which they were made, not misleading, at the time they offered

for sale and sold said securities to plaintiffs.



     143. Each of the defendants at various times have made or

assisted the other defendants in making the untrue statements and

omissions of material fact enumerated above in connection with

the offer and sale of securities to plaintiff. As a result of

the material false representations and omissions of said

defendants, plaintiffs have been induced to purchase the subject

securities.



     144. Plaintiffs have relied on the untrue statements of

material fact above made by defendants in connection with the

offer and sale of said securities to plaintiffs.



     145. By virtue of the defendants, actions, the plaintiffs

have suffered loses, costs and damages including but not limited

to their investment in Amway products, their investment in

motivational products and rallies, severe emotional trauma, and

injury to their reputations.



     146. Pursuant to 15 U.S.C. §§ 771 and 77o, plaintiffs are

entitled to recover the consideration paid to defendants with

interest.



     147. Plaintiffs claims are within the applicable statute of

limitations as set forth in 15 U.S.C. S 77m in that this action

is brought within one year of plaintiffs, discovery of the

defendants, misrepresentations and omissions and defendants'

prevented plaintiffs' earlier discovery by the use of fraud.



      148.    Plaintiffs claims are further within the

applicable statute of limitations as set forth in 15 U.S.C. § 77m

in that the investment contracts alleged herein were ongoing and

were entered into within three years of this action, between 1994

and 1997.



COUNT FIVE      [Section 10(b) of the Securities Exchange Act of

                1934, and Rule lOb-5 Thereunder as to all

                defendants with respect to Amway Securities]



     149. Plaintiffs reallege as if more fully set forth each and

every allegation contained in paragraphs 1 through 148, and

further allege as follows against all defendants:



     150. The Amway Securities, as described in the Factual

Allegations section of this Complaint, are investment contract

securities within the meaning of, and regulated by, the

Securities Exchange Act of 1934, 15 U.S.C. § 78(c).



     151. Defendants, severally and in concert, directly and

indirectly, participated, aided and abetted one another, and

conspired with one another to participate and to aid and abet one

another in a continuous course of conduct in connection with the

purchase and sale of unregistered securities, in violation of

Section 10(b) of the Exchange Act, 15 U.S.C. § 78(j), and in

contravention of Rule l0b-5 promulgated thereunder, 17 C.F.R.

240.10b-5, at all relevant times herein, and, by use of the mails

and other means and instruments of transportation and interstate

commerce:



          a.   employed manipulative and deceptive devices,

               contrivances, schemes and artifices to defraud

               plaintiffs;

          b.   made untrue statements of material fact and

               omitted to state material facts necessary in order

               to make the statements made, in light of the

               circumstances under which they were made not

               misleading; and

          C.   employed acts, practices, and a course of business

               which operated or would operate as a fraud or

               deceit upon the plaintiffs.



     152. The purchases of such securities by plaintiffs has been

made in reliance upon the manipulative and deceptive devices,

contrivances, schemes and artifices employed by defendants, and

in reliance upon the untrue statements and omissions of material

facts made by defendants in connection with the offer and sale of

said securities to plaintiffs.



     153. Defendants knew and know that the devices,

contrivances, schemes and artifices were fraudulent at the time

they employed them, or employed them in reckless disregard

thereof, and employed them for the purpose and with the intent to

deceive and defraud and oppress plaintiffs in reckless disregard

of plaintiffs, interests and the truth.



     154. Defendants also knew and know that the untrue

statements and omissions of material fact that they made were

false and misleading at the time they were made, or were made

with reckless disregard thereof, and made them for the purpose

of, and with the intent to, deceive, defraud and oppress

plaintiffs or in reckless disregard for plaintiffs' interests and

the truth.



     155. Defendants have conspired with each other to market

securities which were essentially worthless, and fraudulently

promoted as legitimate, sham investments which were not entitled

to be placed on the market.



     156. By virtue of the defendants' actions, the plaintiffs

have suffered loses, costs and damages including but not limited

to their investment in Amway products, their investment in

motivational products and rallies, severe emotional trauma, and

injury to their reputations.



     157. Pursuant to 15 U.S.C. § 78j(b), plaintiffs are entitled

to recover actual and consequential damages in addition to

disgorgement of defendants' profits earned as a result of

defrauding plaintiffs.



COUNT SIX       [Section 10(b) of the Securities Exchange Act of 1934,

                and Rule lOb-5 Thereunder as to all defendants with

                respect to Tools Securities]



     158. Plaintiffs reallege as if more fully set forth each and

every allegation contained in paragraphs 1 through 157, and

further allege as follows against all defendants:



     159. The Tools Securities, as described in the Factual

Allegations section.-of this Complaint, are investment contract

securities within the meaning of, and regulated by, the

Securities Exchange Act of 1934, 15 U.S.C. S 78(c).



     160. Defendants, severally and in concert, directly and

indirectly, participated, aided and abetted one another, and

conspired with one another to participate and to aid and abet one

another in a continuous course of conduct in connection with the

purchase and sale of unregistered securities, in violation of

Section 10(b) of the Exchange Act, 15 U.S.C. § 78(j), and in

contravention of Rule lOb-5 promulgated thereunder, 17 C.F.R.

240.10b-5, at all relevant times herein, and, by use of the mails

and other means and instruments of transportation and interstate

commerce:



          a.    employed manipulative and deceptive devices,

                contrivances, schemes and artifices to defraud

                plaintiffs;

          b.    made untrue statements of material fact and

                omitted to state material facts necessary in order

                to make the statements made, in light of the

                circumstances under which they were made not

                misleading; and

          c.    employed acts, practices, and a course of business

                which operated or would operate as a fraud or

                deceit upon the plaintiffs.



     161. The purchases of such securities by plaintiffs has been

made in reliance upon the manipulative and deceptive devices,

contrivances, schemes and artifices employed by defendants, and

in reliance upon the untrue statements and omissions of material

facts made by defendants in connection with the offer and sale of

said securities to plaintiffs.



     162. Defendants knew and know that the devices,

contrivances, schemes and artifices were fraudulent at the time

they employed them, or employed them in reckless disregard

thereof, and employed them for the purpose and with the intent to

deceive and defraud and oppress plaintiffs in reckless disregard

of plaintiffs, interests and the truth.



     163. Defendants also knew and know that the untrue

statements and omissions of material fact that they made were

false and misleading at the time they were made, or were made

with reckless disregard thereof, and made them for the purpose

of, and with the intent to, deceive, defraud and oppress

plaintiffs or in reckless disregard for plaintiffs, interests and

the truth.



     164. Defendants have conspired with each other to market

securities which were essentially worthless, and fraudulently

promoted as legitimate, sham investments which were not entitled

to be placed on the market.



     165. By virtue of the defendants, actions, the plaintiffs

have suffered loses, costs and damages including but not limited

to their investment in Amway products, their investment in

motivational products and rallies, severe emotional trauma, and

injury to their reputations.



     166. Pursuant to 15 U.S.C. § 78j(b), plaintiffs are entitled

to recover actual a

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