On a warm summer day in 2002, in
Charlevoix, Michigan, Richard
Joseph’s bad luck began. The
lawyer, husband, and father of two
was walking across the driveway
with a bag of garbage when his
bare foot slipped in a puddle of
water that had collected beneath
his car’s air conditioner. His leg
gave out and he landed on his
back. While nothing was broken,
the blow prevented blood from
reaching his spinal cord. He laid
there for an hour, unable to move,
while his daughters watched
television in the living room. By
the time he was discovered, the
damage had been done. He’d never
walk again.
Eventually, Joseph would make it
back to work at his law firm,
although he couldn’t keep up his
old pace. By August 2007,
complications prevented him from
working at all — possibly forever.
Joseph describes his mental state
after yet another stint in rehab:
“I’m moping, pretty much, and
right around Christmas time I
decided, you know, I’d better get
my butt in gear and find something
I can do from home. So, I tried to
find work as a lawyer from home,
but that was right when Michigan’s
economy started to go to hell, and a
lot of law firms weren’t
outsourcing work.”
So he took to the internet, looking
for “work from home”
opportunities and requesting
information from various
websites.
Sticky TOC engaged! Do not
remove this!
Scamworld: The Movie
Snake oil
Modern snake oil salesmen
In February 2008, “out of the blue,”
Joseph got a call from a salesman
that identified himself as Ron
Martino from PushTraffic, with a
work from home opportunity.
“I told him what had happened to
me, and he said, ‘gee… I have a
brother who’s paraplegic. I know
what you’re going through, and I
will help you out.’”
Martino couldn’t talk him into
anything straight away, so he began
calling regularly, often just to chat.
It was while this was going on that
Joseph contracted MRSA, a
multidrug-resistant infection he
wasn’t expected to survive.
“He called me enough times.
Because I knew him well enough I
told him what hospital I was in. He
called the hospital, got my room
number, talked to me in the
hospital. I remember this really
well, because I was watching
CSPAN and how the economy was
going, and I’m sitting in this ICU
room talking to him on the phone,
and he’s talking to me like a good
friend. He was being my friend.”
The courtship lasted around six
months, and eventually Joseph
agreed to purchase an e-commerce
site from PushTraffic.
According to Joseph, Martino was
going to set up the new website
while he was in the hospital, and he
guaranteed that in thirty days
Joseph would be making between $
4,000 and $5,000 a month, working
from his bed for an hour a day.
Joseph hoped that, if he didn’t
survive the infection, this source of
income would be a lasting gift to
his family.
While relating this all to me, he
starts to choke up a little. “And I
know all this stuff about ‘too good
to be true,’ but he went into great
detail about how his brother was a
paraplegic, and he helped his
brother do this, and that the reason
he was going to do it was because
of me, he could only have one
person under his wing, so to
speak.”
It was in this vulnerable state,
facing death and trying to care for
his family, that Richard Joseph
charged $20,000 on his credit card,
money that he has yet to reclaim
after phone calls, a lawsuit, and
nearly three lean years.
What Joseph didn’t know was that
Martino was part of a vast criminal
organization run by Los Angeles
resident John Paul Raygoza.
Raygoza is an Internet Marketer —
a 21st century snake oil salesman.
The term Internet Marketing
describes both a particular
business model used to sell
fraudulent products and services
online, and the community or
subculture that embraces it. It
operates out in the open — with
poorly designed websites, tacky
infomercials, and outrageous claims
designed to scare off the wary and
draw in the curious, desperate, and
naive. The Internet Marketer
positions himself as a marketing
“guru” with a product or coaching
services guaranteed to generate
income.
The path to internet riches begins
with an introductory product, such
as a book or DVD. This is often a
loss leader: the real value for the
Internet Marketer is that it allows
him to capture your contact
information. Once you’re in the
system, your inbox will be flooded
with offers for software, DVD sets,
and coaching programs costing
several hundreds or thousands of
dollars.
This is what happened to Richard
Joseph: after requesting free
information online, some
unscrupulous Internet Marketer
sold his name to Raygoza’s
company, PushTraffic, who ripped
Joseph off.
Raygoza is an Internet Marketer,
the snake oil salesman of the 21st
century
In some ways, Internet Marketing
is an evolution of the old “make
money from home, stuffing
envelopes” ads you used to find in
the back of Rolling Stone magazine,
alongside those promising to make
you a world famous songwriter or
a musclehead who no longer has to
take crap from bullies on the
beach. In the internet, con artists
have found a platform that allows
them to scale their scams far
beyond the penny stocks and
worthless real estate deals of the
past.
The Salty Droid is the
pseudonymous blog of Jason Jones,
a 36-year-old lawyer living in
Chicago. It catalogs Internet
Marketing’s misdeeds, telling the
stories of the scammers’ victims
with sarcasm and black humor.
“This is a really dark topic,” says
Jones, “and the [victims] feel raped
almost, so the sense of outrage [on
the site] is appropriate to their
level of suffering.”
When we met in the high-rise
apartment that he shares with his
wife, our surroundings belied the
image he cultivates on the site: that
of the angry, nerdy, loner-cum-
robot. According to Jones, The Salty
Droid is a satirical character he
dreamt up between jobs, while
studying the Ruby on Rails open
source web framework and
blowing off steam on Twitter and
Blogger.
“The moment where I had the idea
for The Salty Droid [blog] is
actually on the site, it’s a really
early post where I’m talking to this
guy on Twitter, he responds to me
— his name is Matt Bacak,” a well-
known Internet Marketer.
Bacak — whom Jones had
nicknamed “BallSack” — began
promoting a free newsletter on his
Facebook page (a “$197 value”). As
Jones wrote on his blog at the time,
“in the land of The BallSack: FREE!
= Automatic credit card charge of $
30 per/month.”
“I just kind of called him out on a
lie,” Jones continues, “and he sort
of freaked out. He blocked me, on
Twitter. I’d been on Twitter as
myself, you know. I’m just sort of
abrasive and irritating normally.
But no one had ever blocked me.
That’s a weird thing to do.
“This whole project kind of flashed
to me in a second. I was like, ‘This
will work against them. They’re
using all these open tools, and it’s
great for their scam, but it’s really
vulnerable to what I’m about to
do.’ And it is really vulnerable to
what I’m doing.”
Books and DVDs aren’t
products,they’re relationship
builders, a bridge to a customer’s
credit card
In Internet Marketing, there are a
few terms you have to know before
you get started: leads, lead
generation, and product launches.
A “lead” is a prospective customer,
and “lead generation” refers to the
creation of possible customers and
building lists of these people. There
are a number of ways to find
potential marks: the sale of loss
leaders like throwaway books or
DVDs, ads on Facebook or The
Huffington Post, Google AdWords,
infomercials, and even media
appearances on news programs —
or Oprah. Once an unsuspecting
consumer buys a product, they’re
trapped: they’ve become a lead.
The purpose of lead generation is
to be able to launch a product. This
is what the Internet Marketer is
after when they sell you a $20
book. The books and DVDs aren’t
products — they’re relationship
builders; a bridge to a customer’s
credit card. The real “product” will
be far more complex, and cost a
customer a lot more money.
Unlike mainstream sales, where a
product launch is an
announcement, in Internet
Marketing the product launch is a
process. First, information about a
new service or product trickles out
slowly, among people in the IM
community, creating hype and what
marketers call social proof —
essentially, “proof” that this is a
quality product, not through actual
evidence, but because the IM
community’s echo chamber
progressively reinforces the
marketers’ claims. The product
(again, there’s nothing of value
here) is only available for a short
period of time, creating a false
scarcity that increases its perceived
value. Affiliates in the IM
community hammer their leads
with ads for this “get rich quick”
scheme, “magic bullet” business
product, or whatever it is, hoping
that a small percentage purchases
it. The affiliate gets a small cut of
the sale; the rest goes to the
Internet Marketer selling the
product.
An Internet Marketer can go on for
years like this, continuously
rehashing and re-releasing slight
variations of the same product.
After the launch, there is usually
some sort of self-congratulatory
video release, where the frazzled-
looking marketer addresses a
webcam, talking about the amazing
success he’s had.
Glen Ledwell is an Australian
transplant to the west coast who
(along with his wife and their
business partner) constitutes a
third of Mind Movies, a company
specializing in “enhanced
visualization tools.” That is, they
offer software that helps you make
video slideshows. (They also offer
the Mind Mastery World Summit
DVD Package, “the world’s top
Mind Masters guide to achieving
your goals, manifesting your
dreams, and becoming happier and
healthier than ever before,” for $
499.)
It’s all based on the
psuedoscientific “law of attraction”
popularized on Oprah and in the
movie The Secret, as Ledwell told
me in a hotel lobby in Maryland.
“Visualization, you know the
movie, The Secret? We help people
to visualize. What Mind Movies is,
basically, is like a digital vision
board. You put the pictures up and
write up your goals? A mind movie
is a digital version of that.”
The day after his Mind Movies
Matrix product launched, Ledwell
posted a video on his website.
“We’re just about to crack the
million dollar markers,” he says,
before rattling off sales stats. He
also assures his affiliates: “every
promotion we do, you will get paid
on.”
Richard Joseph was not the only
person who had been nailed by the
PushTraffic scam. Douglas Mattern,
of Palo Alto, California, lost a total
of $30,000 to two of the front
companies formed for Raygoza’s
enterprise. His first purchase, in
August 2008, was a $5,000 IM
training package that lasted a mere
two sessions before the company
ceased communication. About six
months later, in March of 2009,
PushTraffic contacted him again,
this time through a salesman who
identified himself as Matthew
Silver. At this point, according to
the criminal complaint, “Silver
made many false statements
including claiming that a large
amount of hits to plaintiff’s website
that would be guaranteed to
recover his investment in a couple
of weeks and then make substantial
profits. Silver cited a figure of $
40,000 profit and more.” This is a
common tactic: use the victim’s
desperation (desperation that is
caused by being ripped off in the
first place) to bilk him for even
more money.
After losing an additional $15,000
to PushTraffic, Mattern would then
pay out $10,000 for further training
from a company called IncFortune,
with the hopes of finally getting
into online sales and recovering his
losses. As it turned out, IncFortune
was another Raygoza front.
Boiler room
Inside the boiler room
“The basic objective of all boiler
rooms is the same. Find out how
much credit is available on the
victim’s credit card [and] take all of
it.”
PushTraffic was what is known as
a boiler room. As Dan Thines, an
SEO professional and former
employee of an Internet Marketing
company called StomperNet,
explains, Internet Marketers often
“sell super-cheap products so they
can get the names and phone
numbers, and turn people over” to
boiler room companies who try to
sell the unsuspecting consumer
fraudulent goods.
By way of example, Thines tells me
a story about an employer sold a
customer list “to some operation in
Nevada… you know, it was
supposed to be business setup
services, but when they called
people up on the phone they
weren’t offering stuff like that,
they were pitching this thing that
was a guaranteed business grant
which, as far as I can tell, it
basically involves you take out a
second mortgage on your house.
To me, that’s just indescribably
fucking evil.”
The Verge obtained a number of
these recordings for this story, one
in which a salesman places a call to
a lead and identifies himself as
Brent Austin. He’s just checking in
with Leigh*, who bought a “make
money off the internet” e-book
called Power Cash Secret. The book
probably cost her around $50, but
the purchase got her on a lead list,
and soon she received a call from
the boiler room.
“Our marketing team is telling me
that you’re not generating the
traffic that you could be to your
home-based business,” Austin says
aggressively.
There is a good reason, explains
Leigh*: “I don’t know what I’m
doing … I’m not very computer
savvy.”
Over the course of the next forty
minutes, Austin spins a tale of once
being “in the same boat” as Leigh.
“Running a website myself? That’s
like a foreign language to me. Well,
it was… now I’m actually on top of
my game, and I’m an internet guru.
There’s a lot to the internet that
people just don’t realize
nowadays.”
After feeling her out a bit, the
questions get more personal —
these are the kinds of questions
you would never expect a
salesperson to ask you.
“Are you in debt?” “Could you
ballpark that debt for me?” “And
how is that split? Is it a 60-40 split
between [credit] cards and car?”
Leigh, in her mid-50s, is a nurse
who rents a house. She’s not
greedy, she’s not looking to get
rich — she just wants to be able to
stash away some money for when
she retires.
Incredibly, Austin says, “We’ve got
a pilot program that we do every
two years, we have been doing it
since the beginning of the
company’s start. We give twenty
people five websites. And with
these twenty people we gauge
what’s been selling the best,
because each person has these five
websites — so that’s five products,
there’s a hundred products out
there that we can test.”
Austin asks Leigh to grab a pen and
paper so he can give her a little
lesson about affiliate marketing,
which he calls “the best, first way,
and actually the best way, to make
money online.”
“I’m sorry. What, sir?” She sounds
stunned.
“Affiliate marketing,” Austin
repeats, “is actually the number
one way to make money online
right now.”
It’s clear he has her turned around.
“OK. This is … affiliated
marketing?”
Austin describes how the program
is supposed to work — hell, he says
he has a client generating $12,000 a
month “from e-book sales alone.”
And then, after Leigh expresses
some confusion, he goes on to
explain that e-book stands for
“electronic book.”
“You should be bringing in at least
$1,200 per week, every week …
that’s the minimum that anyone
within our coaching program is
doing now.”
Leigh seems to relax. At one point
they talk about her interest in
flowers. Austin continues to pitch,
but it’s obvious Leigh is still at sea
when it comes to his descriptions
of internet businesses.
Austin goes on to say that he is
“cutting checks for at least $5,000 a
week, for each client.” The
implication being, of course, that
soon she’ll be getting her own $
5,000 checks.
This part sounds good, but he’s
talking pretty fast and with all the
terminology he uses — landing
pages, proven success method, earn
while you learn — Leigh’s
obviously confused.
When asked if she has any
questions, Leigh responds: “I don’t
have any questions, because I don’t
know what to ask you, you know.
You’ll have to tell me what I’m
doing here, and how I do it.”
“I’m trying to get a gauge. How
long have you been trying to make
money online?”
“Oh, I haven’t. Like I said, I joined
on your site… and that’s been three
months ago? And I just haven’t
done a thing with it… I actually
tried to get out of it and, I don’t
know, I received your call and I
thought, well, maybe I should at
least talk with you, because I don’t
know what I’m doing at all.”
“Have you even looked at the e-
book that we sent you?”
“No, I don’t know how.”
She doesn’t know how to read a
PDF, she doesn’t want to be an
internet marketer, she doesn’t
understand what Austin’s saying —
but she needs something like this
— and this makes her vulnerable.
Leigh asks how much all of this will
cost.
“It’s not a thing of you paying us,”
says Austin, reframing the
question. “We want you to prove
to us that you’re actually willing to
participate and willing to learn, and
you actually invest into your
marketing.”
“Well, what is that going to cost me
to invest?”
“That depends on your level, uh ,
let’s — we’re contracted with big
names, such as Visa and
Mastercard.”
He is implying some sort of
endorsement by these two well-
known and trusted companies,
when in reality all this means is
that he can accept payments from
either major credit card.
“So it kinda depends on your level
of investment,” he continues.
“What we like to do here is OPM:
Other People’s Money. Before you
actually see a bill for your credit
card, you’re on the way by paying
that back before your 45 days is up
on that credit card statement [sic]
is actually coming to you. So we
actually let our clients tell us what
they can bring to the table and
invest into their own market.”
OK, so again: “What kind of money
are we talking about?”
“We’ve got three different
platforms, Leigh, that we actually
bring people in on. Now, I’m going
to give you a breakdown, tell me
what platform you might be able to
come in on, and I’ll work with you
to get you through this platform, or
get you up to the next platform.
Because what I can do is, as a
senior principal here, I can go
down to my financial department,
and if you can bring ‘so much’ to
the table I’ll tell them to invest the
rest into you, because you sound
like someone I want to work
with…”
He rambles on in this way for a
while, which is calculated to put
Leigh further off-balance. Then he
gets around to the cost of the
program, which “depends on what
I can get you approved for.”
In other words, the product costs
whatever she can get her hands on.
In other words, he’s going to bleed
her only credit card dry.
“Leigh,” he asks. “Do you work
better with Visa or with
Mastercard? Because what we’re
going to do is try and get you
approved on some type of level
and see what we can, what level I
can bring you in on. OK?”
This is always the point in the sales
call where people start to freak
out, when strangers start asking
for credit card info. And Leigh is no
different.
“Well, what I have is a Visa card,”
she says, sounding wary.
“If you can cough up $5,000,”
Austin explains, “it’s gonna be a
return after a full year of one
website, it will get you to that $
70,000 that I had you give me your
goals and dreams about. Because of
our proven success method, we
actually have to analyze each client
that comes through at what level
they bring in, so we can make sure
that if you come in on the $5,000
level you will make this amount of
money, which is the $70K a year.”
“Well, to tell you the honest truth,
I cannot do $5,000. I don’t have
any money laying around.”
Eventually, he talks her into a $500
investment, and when she agrees to
that he tells her he’s going to “try
to put you on that platform of at
least $1,000.” He just talked her up
to a grand without her realizing it:
“Now, we have to bring you in on
at least $1,000. That way, it’s a
secure tool into your investment,
and we invested more into you
also. We went ahead and invested
the $4,000 into your marketing.”
“Do I need to pay that back to
you?”
“No. What I need you to do is
prove to me that you’re actually
gonna be a loyal [sic], a client, and
willing to learn.”
After this, all Brent Austin needs is
for Leigh to print out a form, sign
it, and fax it to him. Then she will
be well on her way to earning big
money as an internet guru.
The recording winds up after ten
more minutes, with Brent trying to
teach Leigh how to use a printer.
*This name has been changed
“What we like to do here is OPM:
Other People’s Money.”
Over the years, there have been a
number of Federal Trade
Commission lawsuits aimed at
Internet Marketing.
In November 2011, the FTC
dismantled an operation called
Grant Connect with a $29.8 million
judgement. Kyle Kimoto and
Juliette Kimoto, his ex-wife and
former Mrs. Nevada, were among a
large group implicated in a wide
range of scams, including fake
government grants, credit offers,
and acai berry dietary supplements.
The group had a number of front
companies and websites, and used
a call center based in the
Philippines. Kyle is currently
serving 29 years in a federal prison
on a separate fraud conviction.
In another case, the FTC issued a $
247,000 judgement against Frank
Kern and Instant Internet Empires
for selling a $47.77 collection of
web templates that “promised that
buyers could make more than $
115,000 a year using the product.”
The rumor is that Frank Kern was
selling leads generated by sales of
Instant Internet Empires to a boiler
room called I Works, owned by a
man named Jeremy Johnston.
Johnston, or “the millionaire
adventurer,” as he is known in
Utah, became a national news story
in 2010 when he organized a trip to
Haiti to deliver medical supplies in
the wake of the earthquake. As the
Mormon Times gushed, Johnston
lives in a six million dollar home
that “looks like a European
palace… only a little smaller,” with
porticos, balconies, a turret, and
the one accessory that no European
palace could be without: a rock-
climbing wall.
Johnston is currently being pursued
by the Federal Trade Commission
to the tune of $275 million.
According to the complaint, I
Works is “a far-reaching Internet
enterprise” using all the scams
from the Internet Marketers’
playbook, including generating
leads by selling cheap entry-level
products, and “forced upsells,”
which is IM-speak for tricking
customers into purchasing more
expensive products or simply
charging their credit cards for
products they didn’t order.
According to Roberto Anguizola of
the FTC’s Bureau of Consumer
Protection, who worked to take
down Grant Connect, “savvy
internet fraudsters use fake
information, they use a host of
shell companies [and they] use
internet registrations that are
private or themselves are
fraudulent” to cover up their
tracks. “If it’s a hydra of an
internet scam, and you just chop
off one tentacle, you may be
missing the rest of it, and it will
regenerate in a form that will not
be recognizable — if you’re not
careful how you do it. One of the
things we do is, we follow the
money trail. To make sure that
we’re really getting to the bottom
of it. A lot of the time, a lot of
these fraudsters have front people,
so you’ve completely failed in a
fraud investigation if all you do is
get the front men that the real
scamsters want you to get.”
Hidden millionaires
Hidden millionaires
The unconnected masses making up
most of the IM community
definitely don’t make money
buying Internet Marketing
materials
My first true look inside the world
of Internet Marketing came
courtesy of a 37-year-old
businessman named Bedros
Keuilian. The Chino Hills-based
Californian specializes in fitness
and personal training marketing,
and he is also something of a
would-be auteur. I discovered him
through Add To Cart, a still-
unreleased documentary that he
made with a fellow fitness
marketer named Chris McCombs.
Keuilian and McCombs undertook
the project as a way to ingratiate
themselves with the luminaries of
the IM community.
“It’s really critical,” Keuilian says,
“that you either go to these
seminars or somehow find a way to
penetrate their knowledge base
because each of them are good at
one thing. This is a pretty small
community, Internet Marketing, a
pretty weird subculture. Everybody
knows each other, they all lean on
each other’s strength to better
their business, and we found that
the common denominator amongst
all these guys is they’re
unemployable.”
That sounds pretty bad, but I know
what he means. If I wasn’t getting
paid to write, I would be pretty
damn unemployable, too.
“It’s the same learning disability,”
he continues. “They lose interest in
things quickly. It was interesting to
interview them and talk to them
and say… you all have the same
profile here. And as I see new, up-
and-coming internet marketers
coming into the industry, no matter
what their niche is, they kind of fit
into that.”
Whether or not he meant to,
Keuilian hit upon a basic truth
about how Scamworld operates.
It’s by accessing the inner circle,
and by working with them on your
product launches, that you make
money. The unconnected masses
making up most of the IM
community, those outsiders who
create the social proof enabling the
big players to rake in the profits —
they don’t make a ton of money.
And they definitely don’t make
money through buying Internet
Marketing materials.
Frank Kern, of Instant Internet
Empires fame, divides IM into two
groups, which he calls the A-Team
and the B-Team. According to Kern,
in one of his product launches, 90
percent of his sales came from
seven of his affiliates: his top-tier
A-Team. The rest of his 400-odd
affiliates, or his B-Team, sold the
leftover ten percent.
The A-Team are the power players.
They’re the only ones making any
money, and they’re what
everybody in IM wants to become.
Graduating to the A-Team means
more than buying a few DVDs or
attending a seminar.
The Verge has been known to make
a movie or two in its time, so I
took a page from the Bedros
Keuilian playbook and headed to
the Crystal City Marriott just
outside Washington, D.C. for an
event called Underground Online 8.
I wanted to talk to these people,
even if it meant enduring three
days of sessions by an “ultra-
secretive group of underground
internet millionaires,” according to
the promotional material.
Joseph Flatley with Anthony
Morrison in Las Vegas
The plan was pretty simple,
actually. I would arrive the day
before the conference and plant
myself at the hotel bar. Simply
through charm and wit, and by
waving around my new Verge
business cards, I would find myself
among the inner circle of the true
Internet Marketing underground.
Unfortunately, I had vastly
overestimated my wit, my charm,
and the impressiveness of my
business cards to this group of
would-be entrepreneurs. So I tried
my backup plan: standing around
awkwardly and wondering what,
exactly, I had gotten myself into.
The first night in Maryland I
spotted another loner who was also
sort of standing around
awkwardly. Dillon Miles is
currently employed by Anthony
Morrison, a self-described internet
mogul whose infomercials were
once a late-night TV staple.
Ironically, Anthony Morrison is the
man who kicked off my interest in
the world of Internet Marketing,
his 3:00 AM commercials promising
riches through an undefined
“internet business” simply too
good and too confusing to be true.
“I’m in the business of selling
information. It’s a business
model… just like a journalist sells a
subscription to a magazine.”
Miles tells me he assembles
“information products.” These are
a staple of the Internet Marketing
business, easy to manufacture and
cheap to distribute data files
(generally e-books, audio, video, or
a combination) that can cover
topics as diverse as affiliate
marketing, training your parrot to
talk, and how to start raking in all
that “hot dog cash.”
Miles recently graduated from
college, and is in the unenviable
position of finding himself saddled
with debt, yet only qualified for a
“$10 an hour job at McDonald’s,” as
he put it.
So, I asked him, what’s it like
working for the world-famous
Anthony Morrison?
“It’s pretty cool. I’m learning a lot
about Internet Marketing, and
marketing in general.”
I have to ask: is Morrison a
“hidden millionaire?” Is he a
millionaire at all?
“Yeah. I mean, I think. I don’t
know. He does all right.”
“He doesn’t have a butler or
anything?” I joked.
“No, he’s a pretty down to earth
guy. He’s a pretty cool guy. I like
him.”
Every Internet Marketer has an
origin story, and a “major success”
that he can tout as evidence of his
financial acumen. In his book, The
Hidden Millionaire, Morrison talks
about Cool Blue Performance, the
business he started in college after
his father lost his retirement
savings in the WorldCom collapse.
Of course, this all could have been
avoided if he’d heeded young
Anthony’s advice: “I had always
told Dad not to hold stocks
overnight because you have no
control over the information
released once the stock market is
closed.”
As far as I can tell, Cool Blue
Performance purchased auto parts
from vendors who would ship the
parts directly to the customer,
acting as a middle man. Drop
shipping, as it’s called, lets
someone start a business without
having to worry about inventory.
This lowers overhead as well as
profit margin. Despite a company
that was “dominating the
industry,” as Morrison puts it in his
bio, he sure seemed to abandon the
scheme quickly. In July, 2002,
WorldCom filed for Chapter 11
bankruptcy protection, and by July,
2004, Morrison was trying to
unload Cool Blue Performance
(which he claimed at the time was
making $6,000 a month profit) for
$144,000. Not bad, but hardly
“dominating” the auto parts
industry. As of this writing,
coolblueperformance.com and
coolblueperformance.net are Go
Daddy placeholder pages.
In the Internet Marketing world,
more often than not this is the type
of person who’s teaching you to
embrace your hidden millionaire.
The morning after I met Miles, I
experienced my first Internet
Marketing seminar. The ballroom
could probably hold 500 people,
and the stage looked like a Mixed
Martial Arts ring designed by
Playskool. Three tripod cameras,
an additional camera on a boom,
and a couple folks running around
with DSLRs captured the
proceedings, while the PA played
stuff like Lady Gaga on a short
loop. In the lobby, some vendors
set up tables. There was a strange
sort of muted excitement in the air,
as if everyone were relieved to
escape their weekday lives and
connect with people they only
really knew from Facebook and d-
lists.
The proceedings began with a
video by Yanik Silver, the event
organizer and the man behind a
product called Instant Sales Letters
(“In Only 2½ Minutes You Can
Quickly and Easily Create A Sales
Letter Guaranteed To Sell Your
Product or Service… Without
Writing”).
The “slick” professional video
starts playing on the big screens
that swamp the stage, showing
typical action movie footage —
people skiing, then shooting guns,
then dodging bullets, and so on.
Keep in mind, this isn’t “Hollywood
slick,” more like Left Behind -slick.
It’s aspiring to be slick. If anything,
the production recalls something
you’d see down south, in a
megachurch.
As I chew on that one, Yanik
appears on the screen. He is
dressed in a trenchcoat and fedora,
escaping his pursuers, and then
running into the hotel, and
eventually into the ballroom. Then
a series of fake Yaniks enter the
room, in overcoat and sunglasses,
to the delight of the over-
caffeinated conference attendees.
After killing this joke, the real
Yanik runs into the room and takes
the stage.
“Are you ready to learn how to
build massive lists and bullet-proof
launches?” he bellows at the
crowd. Not interested? How about
“super-targeted, geo-local pay-per-
click?”
I hope they aren’t charging by the
hyphen.
If every person here really does
represent a $3,000 ticket (I have
my doubts about that one), that
means that, after the B-movie
lighting and special effects, the
speaker’s fees and other expenses,
Yanik is still making some money
— that’s before the livestream and
cash bar sales from the closing
night party are counted.
Additionally, I am pretty sure that,
had I booked my hotel room
through the link he emailed me, he
would have received a cut of that,
too. If that weren’t enough money-
making angles, Yanik offered to
make The Verge an affiliate partner
in his livestream of the event: the
site “would get 40% on any sale
that came through [the] link. Right
now the livestream is selling for $
995.” Maybe we should have taken
him up on it.
As Silver pointed out in his intro
speech, he personally spends up to
$100,000 a year on coaching,
seminars, and other tools that give
him “a slight edge in business.” You
have to be in the game to win it,
right?
And thus began a series of panels,
interminable panels that took the
content from the first few chapters
of your basic business book and
stretched it out for days.
INTERNET MARKETING’S
GREATEST NICHES
Internet Marketing is a
business model (if one based on
fraud), but it’s also a niche in its
own right. This is the ultimate
example of how Scamworld folds
in on itself: material by Internet
Marketers, for Internet
Marketers, that purports to
teach you Internet Marketing.
A-Z Money Machine: Are you
“fed up trying to outsmart
Google, pump out affiliate sites,
or peddle crappy Kindle ebooks
to make a few bucks online?”
Yours for four payments of $
277!
Undercover Commissions: The
inventor of the “Undercover
Traffic Pump,” which combines
an “undercover traffic source”
and something called the “cash
tripler method.” Available
courtesy of a self-described
“family man” named Matt
Bacak. $49 + $49/month.
New Age. Yep, that’s right.
Having psychic powers is one
thing, but how are you going to
monetize?
Spiritual Practitioner Secrets:
Lisa Turner offers ways to both
“get more deeply connected to
your intuition & innate psychic
abilities” and the advice that
will help you “make a great
living helping other people with
your amazing talents.” This
one-time investment comes at a
price of £497 (roughly $800).
But don’t worry‚ you are
protected by Turner’s sixty day
“Get Psychic” money-back
guarantee.
Mind Movies: This comes
courtesy of our old friend Glen
Ledwell. “Mind Movies is a
unique ‘Law of Attraction’
solution that has already
brought astounding success to
millions of people around the
world.” And you can too! Ready
to “manifest [your]
aspirations?” Try the Subliminal
Success Accelerator for free at
MindMovies.com
Pick-Up Artistry. This is a
classic, and more often than not
the pages here speak for
themselves. Not that all Internet
Marketers remain stuck forever
in the PUA ghetto: indeed,
Double Your Dating impresario
David DeAngelo / Eben Pagan
has moved on to full scale
membership in The Syndicate.
Female Mastery for Men:
Tristan Del Toro (definitely his
real name) knows the three
things every woman needs to
know before she will sleep with
you. This e-book costs $4.95
“for the first seven days of
service” plus a future payment
of $40.05.
Eben Pagan and Annie Lalla
were able to turn their recent
nuptials into a three day
“intimacy intensive,” where
couples could shell out $997 to
learn “how to take the intimacy,
trust and love in your
relationship to a much deeper
level.” On the website, it was
not explained why a pair of
newlyweds were qualified to do
this. In addition, there was a
“woman and man couple”
registration, but nothing for
same-sex couples, implying that
this event was strictly
heteronormative.
Rather than develop something
useful, Internet Marketers create
something out of thin air
When you first discover Internet
Marketing, whether online or at an
event like this, it’s tempting to
overthink things. Internet
Marketers like to make their
industry appear complicated to the
point of obfuscation. In reality,
things are pretty simple.
“The product is really irrelevant,”
Frank Kern tells an audience of
Internet Marketers on one of his
many videos floating around the
web. “Now, that’s not to say that
you can’t, or don’t need to, or
should not make an absolutely
kick-ass product. That is not what I
am trying to tell you at all. But we
should never put the cart before
the horse.”
Later in the same video, he
explains that “the market” (what
people are willing to buy) is the
most important factor when
developing an information product,
and not whether you’re actually
qualified to teach someone about a
subject.
If anything, Internet Marketing is a
form of “pure marketing” that
exists often without the
complication of an actual product.
Rather than develop something
useful, Internet Marketers create
something out of thin air: likely a
worthless e-book, or some sort of
coaching session that consists of a
semi-regular phone consultation.
“Well, yeah,” Dillon Miles said, a
little uncomfortably, when asked
about this. “I think there’s a lot of
that going around. There’s a lot of
people that will teach you how to
make money. It’s just, the thing is,
like, an information product in that
niche, is, I mean, how tangible is
that information? What is someone
going to do with what you tell
them. Most people won’t do
anything with it. You know, 90% of
the people who get that
information product, really aren’t
going to do anything with it. It’s no
different than when our country
tells people to go to college for,
you know, eight years, four years,
like I did and expect a job when
they come out. And then there’s no
job.
It was hard to get him to stay
focused. I couldn’t tell if he was
talented at deflecting this kind of
criticism, or if he just couldn’t
follow a train of thought. Or
maybe he felt bad about the whole
thing and refused to think about it.
When pressed, he would either
offer a variation of the “it only
works if you work it” language of
Alcoholics Anonymous, or express
his frustration at not being able to
get a job. He repeatedly positioned
his Internet Marketing materials as
a replacement for college, or said
that college is the real scam.
“I just want to make sure we’re
clear,” I said towards the end of
our conversation. “You said that
this was no different than going to
college, but then you said college
was a rip-off. Is this [Internet
Marketing info-products] a rip-off?
Is that what you meant?
“Well, it could be. I mean, that
depends on what the person
thinks. I mean, the products we
sell, you get a sixty-day, money-
back guarantee. I don’t remember
the last college that gave me a
money back guarantee. But I mean,
it’s all relative. Like, I try to put
projects together that people find
valuable, but information is such
an intangible asset that it’s hard to
qualify.”
Are you going to try putting this
information to use for yourself?
“I’m in the business of selling
information. It’s a business model,
you’re selling information. Just like
a journalist sells a subscription to a
magazine.”
Besides conferences and email lists,
the Internet Marketing
underground is held together by a
weird fascination with video. It’s as
if you’re not really an Internet
Marketer until you’ve inundated
the web with hundreds of hours of
shouting, gesticulating, boasting,
and mugging for the camera —
preferably delivered through a
third-party Flash player with the
transport bar disabled, meaning
viewers can’t fast-forward through
the boring parts or even see how
much more of the thing there is to
sit through.
I’ve heard a few explanations for
this phenomenon: it’s easier to
control your message through
video; video is more subtle than
print; claims made on video don’t
leave a paper trail for the FTC; web
video isn’t archived; the claim that,
after Google, YouTube is the
second largest driver of traffic.
These are all possible, but vanity
seems to play a large part as well.
How else can you explain Anik
Singal’s feature-length Bollywood
Internet Marketing masterpiece,
Lethal Commission ?
“In order to really dominate a
market and make lots of money
fast, I’m advising you to form a
syndicate.”
On the other side of the fence,
Jason Jones has used video to great
effect. I am tempted to say that
détournement (the old Letterist
International technique of remixing
media and using it to express a
counter-argument) is alive and well
in his video work, but I am not
sure this is strictly accurate. The
truth is that the videos of Internet
Marketing often do the marketers
themselves no favors.
Videos on The Salty Droid generally
consist of lectures, marketing
material, images, audio, and other
media edited in ways that
underscore the criminality (or just
plain creepiness) of the source
material.
Probably the most infamous video
to appear on Jones’ site is called
Frank Kern’s Criminal Confession .
In this three minute clip, Frank
Kern advises his students to form
what he calls a “syndicate,” just like
he and his cronies have.
To a spooky audio bed with
superimposed titles in a garish
font, Kern appears in front of a
whiteboard to inform the viewer
that, “in order to really dominate a
market and make lots of money
fast, I’m advising you to form a
syndicate.” Then he dials it back a
bit, or tries to, by explaining that
syndicate “is a fancy way of saying
‘trade union.’” (Here he is
confusing syndicate with the
French word syndicat , which he
must have read on Wikipedia or
something.) As you may have
guessed, this fancy French “trade
union” of his is not actually a trade
union at all. In this case, Kern is
talking about organizing those
Internet Marketers selling the
same or similar products, “your
peers, who some would call your
competitors.” This borrows a page,
not from the trade unions, but
from cartels: you’re “meeting with
your competitors, you’re sharing
information, you’re helping each
other.” You’re setting the price for
your goods, instead of the
“market.” And you’re collaborating
on release schedules that
emphasize a false scarcity (“we
only have two weeks left and then
our product will disappear
forever”).
Kern practices what he preaches.
He is part of a syndicate that is
infamous in Internet Marketing
circles. Its name, as appropriate as
it is unoriginal? The Syndicate.
“I’ve been bitten by a rattlesnake…
stung by a scorpion, and attacked
by an asp.”
When I spoke to Andy “Video Boss”
Jenkins via Skype, he was working
on a movie in Austin, Texas. He
described the project, Exists, as
” Blair Witch-meets- Bigfoot.” He
seems more eager to talk about his
work as an editor, assistant
director, or producer on horror
films with titles like Lovely Molly
and Killer Instinct than to discuss
Internet Marketing.
“I’ve been bitten by a rattlesnake
since i’ve been [on location],” he
tells me, “stung by a scorpion, and
attacked by an asp.”
Eventually, Jenkins and I discuss
The Syndicate. It began in late 2006,
he says, as a mastermind, or peer
support group. A mastermind is a
concept that mostly exists in the
business world, and it derives from
a depression-era book called Think
And Grow Rich by Napoleon Hill. In
the book, Hill describes “a
coordination of knowledge and
effort, in a spirit of harmony
between two or more people, for
the attainment of a definite
purpose.”
According to Jenkins, a bunch of
Internet Marketers decided to start
this mastermind, “so we wrote
down The Syndicate, syndicate@
listbox.com, and it just sort of
stuck. But at the time in 2006, it
was me and Brad Fallon, and then
Frank [Kern] came along… and we
all just sort of rose in the
marketplace.”
“The name stuck, and then Jason
Jones, The Salty Droid, got a hold of
it, and thought it was this massive
conspiracy of price fixing and
illegal offshore money laundering,”
Jenkins laughs. “Then, that was
sort of ‘beware of the boogie man,
The Syndicate. They’re out there
going to strip clubs and taking your
money’ and that kind of thing.“
He describes the list of “about
fourteen” members as a blend of
technical discussion,
entrepreneurship, product
launches, “and about twenty
percent dick jokes.”
As you’d imagine, Jones has a
different take on this. “The
Syndicate, as they call themselves,”
he says, “is a group of twelve or so
Internet Marketers who early on
decided that they would all band
together, work together against the
interest of the customers, to
maximize the amount of money
they can make [and] to really game
social proof” by flooding the
internet with fake reviews and
testimonials.
“The only reason that Frank Kern
is a ‘big guy’ or he’s described like
a ‘genius’ in Internet Marketing is
because all these other, non-
geniuses have agreed to call him a
genius,” Jones says. “And he’s not a
genius: he doesn’t have any
interesting insights into marketing,
[his products are] just a bunch of
rehashed garbage.”
Fake social proof and syndicates
are the real drivers of sales in
Internet Marketing, according to
Jones, and the Syndicate are
representative of a much bigger
problem.
“Fortunately,” says Jones, “for the
sake of illustrating my point one
group decided to call themselves
‘The Syndicate,’ to make it really
clear what’s going on. Most of
these niches have a group like that.
The top group in Internet
Marketing, The Syndicate, they
teach other people to form these
groups. Frank Kern says, ‘You got
to run your business like a Mafia-
like organization.’ He just straight
out says it, and he’s right, too.
That’s his one great insight: if
you’re not part of the insider cartel
in the scam niche you’re in, you’re
going to fail. You’re going to fail.”
“Just to really drive that home,”
Kern says in the Criminal
Confession video, “it’s probably
very obvious to you, that all the
top people in the Internet
Marketing space promote each
other, right? What you might not
know is that a lot of the top people
are in a ‘trade union.’ Because now
I view my former competitors as
partners.”
Why the internet?
Why you? Why now? Why the
internet?
Historian James Truslow Adams, in
The Epic of America (1931), writes
that the American Dream is “that
dream of a land in which life
should be better and richer and
fuller for everyone… a dream of
social order in which each man and
each woman shall be able to attain
to the fullest stature of which they
are innately capable,” rather than a
dream of material goods. There is
something very American about
the idea that social class shouldn’t
limit you from achieving your
fullest potential.
There is also something very
American, if lazier and not quite as
smart, in the notion that everyone
who wants Success, deserves
Success — with a capital “s.” This
sort of Bastard American Dream is
the underlying message of Internet
Marketing and “self-help,” IM’s
older cousin. Success, vaguely
defined in this context, would seem
to mean “being your own boss” or
“working your own hours,” or
“doing whatever you damn well
please.” This must be a very
attractive idea to anyone — not just
those of us who Bedros Keuilian
describes as “unemployable.” But is
it realistic?
In a conversation with Steve
Salerno, the journalist and author
of SHAM: How the Self-Help
Movement Made America Helpless
told me recently, “There’s a couple
of things that guys like Tony
Robbins and, you know, the early
fathers of the guru movement,
have done. First of all, they have
established this climate where they
have persuaded people of things
that we used to institutionalize for,
or at least put them on Thorazine.
They have actually persuaded
people to believe that the physical
laws of reality don’t apply to them,
and anything that you think of — if
you think of it passionately enough
— you can get.”
A lot of damage has been done
over the years by people who think
that the world owes them success
This lays the groundwork for the
main theme of Internet Marketing:
“make money fast.”
Salerno also blames the self-help
movement in general (and figures
like Robbins and Oprah Winfrey in
particular) for an emphasis on the
individual that leads to narcissism.
“I really think [this] has completely
undercut the notion of conscience,
so now it’s just about, ‘can I make a
buck with this [product]?’ You
know, it doesn’t matter if it
actually does anything.”
Anthony “Tony” Robbins is the
American motivational speaker and
self-help guru that specializes in
infomercials, TV appearances,
walking on hot coals, and standing
almost seven feet tall. He is
generally considered either a
genuine inspiration or, at worst, an
oddball personality, an “only in
America” success story.
Robbins’ message finds its perfect
distillation in a quote from his
Unlimited Power: The New Science
of Personal Achievement.
“Happiness and success in life are
not the result of what we have,” he
writes, “but rather of how we live.
What we do with the things we
have makes the biggest difference
in the quality of life.” This vaguely
inspirational message powers a
wide range of self-help products,
things like Love and Passion: The
Ultimate Relationship Program, The
Path to Permanent Weight Loss,
The Ultimate Edge: A 3-Part System
for Creating an Extraordinary Life
in Any Environment, and The New
Money Masters: Meetings with the
Masters of Marketing.
And who are those “New Money
Masters?” You guessed it. The
Syndicate, essentially — guys like
Frank Kern, Eben Pagan, and Jeff
Walker, the man who first devised
the IM launch process.
Of course, cutting a deal with
Tony Robbins isn’t the only way to
get your message into the
mainstream. You can always go the
infomercial route or, you can hire a
publicist and get yourself placed on
the news. At the Underground
Online seminar, a bargoer
remarked to me one night that “for
$5,000 you can get on any news
station.” This was my first
exposure to what’s called pay-for-
placement public relations.
One eighteen year veteran of the
PR industry told me that, in
addition to traditional, retainer-
based services, publicists
increasingly offer individual
placements on media outlets on a
sliding scale basis. With this model,
the bigger the media outlet, the
more you pay. “A top-tier media
hit,” he says, “for my business, I
would charge $2,500 for that type
of placement,” but he’s seen firms
ask double that amount. Moving
down the scale, “If you want an
ABC affiliate in, say, Philadelphia, a
network affiliate TV show, that
would range, depending on the size
of the market, anywhere from $100
- $1,000.”
Another firm sent me a price guide
that reads like a menu, with items
like:
Cost of National Print
Campaign: $5,695
Cost of Talk Radio
Campaign: 15 Interviews
@ $350 per: $5,250
Cost of Local Media
Campaign: Estimated $
3,000 per city
Shows on Cable TV: $3,500
(CNBC, MSNBC, FOX News,
Oxygen, Lifetime, HGTV,
etc.)
Shows on Network TV: $
5,000 (ABC, NBC, CBS)
When asked if a PR agency has an
ethical obligation to not work with
someone they feel is misleading or
criminal, the publicist (who asked
to remain anonymous) told me he’s
turned away potential clients over
ethical qualms. “If anyone comes to
me claiming they are a so-called
guru,” he said, “that is my first red
flag toward rejecting them as a
prospective client.”
Anthony Morrison must have
passed some publicist’s “guru”
filter in 2008, when he appeared on
CNN to plug his book The Hidden
Millionaire. Morrison looked
chipper with his large, toothy smile
and signature five o’clock shadow,
while a visibly distracted Don
Lemon killed time between
segments about college football
and a “life-changing” diet.
Morrison touts The Hidden
Millionaire as the sage business
advice of a wunderkind, but it
reads like a children’s book. One
can only speculate about the
business lesson on page forty,
where Morrison gets into his
supercharged Ford Mustang and
drives around the block to
confront “four or five” bullies
intent on beating up his younger
brother: “Martial arts will not only
teach you self-defense, but also
how to build your confidence by
increasing your ability to remain
fearless in situations that may
otherwise be troubling. Knowing I
was outnumbered didn’t bother me
in the least… Once I was out of the
car, I had no trouble dispatching
several of them in just a few
minutes.”
As we’ve seen , after leads get sold
to boiler rooms, bad things happen.
Debbie* is a single nurse living in
the Dallas-Fort Worth area. She
became interested in Internet
Marketing not through a CNN
appearance, but through a late-
night infomercial.
It was not long after she purchased
her first Anthony Morrison product
that someone from a company
called PMI contacted her. Generally
a high-pressure sales call comes in
two parts. First, a salesperson
initiates the call, and then a
“closer” will, well, close the sale.
Chris Bartold, the salesman, begins:
“You’re single, a secretary, 56 years
old, making $24,000 a year, looking
to make a change, where at 56
years old we want to put you in a
position where you can take the
next 20, 30 years of your life and be
able to enjoy things without having
to worry about money.”
Our lead, Debbie*, responds on the
other end: “That would be great.”
The specific product he’s selling is
affiliate marketing training. He
tells her about his family, and what
a great team member she’d make.
Then he asks:
“How do you feel about this? Are
you scared? Nervous? Excited?
Motivated? Ready to make a
change? How do you feel about it
all?”
“Oh, I’m very nervous about it, but
I’m also excited at the same time. I
have a lot of confidence in Anthony
and I just, I hope and pray that this
all pays off.”
He reassures her, and tells her that
the only thing that would keep her
from succeeding is if she doesn’t
put in the work.
He frames it as if she is competing
for the opportunity to join his
“team.”
“If I interview a dozen people for
the position on the team, what
would separate you from them,
Debbie? The question is, ‘why you,
why now, why the internet?’”
Why you? Why now? Why the
internet? That would be a great t-
shirt.
“I don’t know, I have… I just have a
good feeling about [Anthony
Morrison],” she says as the
salesperson gets her to open up a
bit about the fact that she is
searching, searching for a way to
improve her situation. “I’ve had
people try to get me on board with
their companies and businesses,
with the same technique and
approach that y’all are using and
I’ve backed out of it because I was
just too scared… I don’t know why,
but I don’t have the same fears…”
“It’s a sign. Fear does a crazy thing
to you, it can motivate you or hold
you back.”
“Exactly. It has held me back, and
you know, it seems crazy for me to
even want to think about, investing
this kind of money in something
like this because of the place that
I’m at right now, because I’ve got a
lot of debt, that’s one of my big
concerns right now, and an even
bigger concern is retirement. At my
age, I should have something set
aside, but I don’t. I’ve recently
gone through, I’m hoping it’s my
last divorce.”
At this point, Debbie is opening up
and telling this salesperson
everything he needs to exploit her.
“I think I’m getting to the place
where I just don’t care, it just
doesn’t matter as much as it did in
the past. I don’t know if it’s
because I’m getting older, or what.
I also know that my time is running
out, and I just don’t have a lot of
time to get myself prepared and get
ready for my future…”
Jesus Christ, this is depressing.
Bartold then explains to Debbie
that “affiliate marketing” is how
she will get rich, if she follows the
Anthony Morrison system.
Affiliate marketing, says Bartold, is
“just like eBay was ten years ago,
twelve years ago.” (Except that it
isn’t.) “For the next ten years,” he
maintains, “you’re going to be
successful.” And later, “affiliate
marketing is brand new.” (Except,
of course, it isn’t.)
“Nine out of ten millionaires are
self-made. So if it takes money to
make money, where do they get
their money from, where do they
start their business? They have to
borrow. There’s four ways you can
obtain money. You can earn it,
inherit it, steal it, or borrow it. We
basically want to borrow from the
bank, we want to beat the bank at
their own game…”
This is getting her primed to hand
over her credit card.
“Now you’ve been fortunate
enough to have some decent credit
here, from when I was talking to
Matt and Mitch, you have some
decent credit. Let this credit
perpetuate yourself towards
financial independence and making
this change. . . on the success team,
we don’t call them credit cards, we
call them investment cards.”
These “investment cards,” claims
Bartold, will pay for “all the tools,
all the training” necessary to build
a business that runs essentially on
autopilot. While Debbie sleeps,
travels, lives her life, the story
goes, this will generate an income.
“What I’ve laid out for you, I
assume that is something that you
do want to do. Is that right?”
“Yes. It is.”
“Why is it something that you want
to do?”
“Well, because it’s something that
I’m interested in. First of all, I
always wanted to learn more about
the internet, about doing business
on the internet, and so, this will
give me the opportunity to do that.
I just don’t know enough about it.
Later, we learn that Debbie doesn’t
“have a computer at home yet, but
[is] in the process of getting one.”
Which is fine, according to Bartold:
“We can get you through the first
monetary goal of $25,000 right now
without you having to have one.”
*This name has been changed
Boiler rooms are a contentious
topic in the Internet Marketing
subculture, and Syndicate member
Mike Filsaime is one of the few
people that publicly attempts to
justify the practice.
In an interview on The Salty Droid,
Filsaime claims Internet Marketing
companies were operating
legitimately in their own happy
world when reps from boiler room
call centers starting popping up at
marketing events with these sweet
deals that his fellow marketers
couldn’t refuse. “Hey,” Filsaime
recites their pitch, “if you send us
your leads, we’ll offer these people
coaching programs, and they sell
for anywhere between $2,000 to $
8,000 dollars and we’ll pay you
twenty percent to twenty-five
percent or thirty percent. And we’ll
just send you checks, all you got to
do is send us an Excel file.”
Filsaime claims that once most of
his colleagues realized the moral
and legal dubiousness of the boiler
room industry, they ended their
relationships. Except for Filsaime
himself, who even tried to start his
own, Higher Level Strategies.
Eventually, he decided it was easier
for him to work with Prosper, one
of the bigger names in the Utah call
center industry.
He sends leads to Prosper, which
uses them to push coaching
programs starting at $2,500. At
some point down the road after
ordering a Filsaime product,
customers receive a call from Utah
offering training through one of his
“coaches.” For $2,500. Except the
organization doesn’t have anything
to do with Filsaime (beyond the
fact that he’s the source of the
leads). Instead, some guy who
makes as little as $10 an hour
(according to Jones) coaches
customers from material
developed by Prosper. Filsaime
gets about a quarter of the take,
another quarter goes to whoever
fulfills the order, and half goes to
Prosper. And $10 per hour goes to
some kid in Utah.
Salty Droid: And the curriculum
is about Internet Marketing?
Mike Filsaime: Yes.
SD: But it was developed by
Prosper, not by you.
MF: Correct.
SD: So the only part you really
play is the lead gen part.
There’s a long pause on Mike’s
end of the line.
MF: That’s correct…
Scamworld
Scamworld
“Just about every English speaking
country was hit by those guys,
except maybe India.”
As we’ve seen, the basic premise of
Internet Marketing is
straightforward: find customers,
sell them useless products, and
then send the leads on to industrial
strength “boiler rooms” that
separate them from what little
money they have left. A simple
con, it still requires a massive
infrastructure to maintain:
mainstream media outlets like CNN
and the major broadcast networks,
and websites like The Huffington
Post and Facebook, all play a part
in getting the message of Internet
Marketers out to a wider audience,
either through paid advertising or
programming. Google sells
AdWords for phrases like “make
money fast,” and when
unsuspecting consumers use their
credit cards to give boiler rooms
money, the payment has to be
processed through a merchant
account.
“The kind of people that they were
preying upon were other people
like me,” says Richard Joseph,
looking back, “who I think were
naive enough, and new enough to
this way of life, and desperate
enough, that we were pretty easy
targets.” Internet Marketers, he
says, are “kind of like carnival
guys.” It was only when he got
back home and started to recover,
and “started thinking like a person
again” that Joseph realized that
Rob Martino, the salesman from
Raygoza’s operation, the one who
claimed his brother was also a
paraplegic, had ripped him off.
“And I was never able to speak to
[Martino] again,” Joseph says. “And
I could never find him anywhere…
I don’t think he exists. He’s not on
any social network or anything.”
Joseph would wheel himself out of
earshot of his family and work the
phone. Many hours were spent in
vain, trying to hold the voices on
the other end of the line
accountable. Ultimately, that’s all
they were — voices. Apparitions,
almost.
“I remember being out in my
driveway on many occasions going,
‘Look, you guys. I am going to lose
my house. I’ve got American
Express [that’s] going to foreclose
on me. They are gonna sue me.
I’ve given you $20,000, I can’t make
the payment on my credit card, you
haven’t done the website, you
won’t talk to me, you won’t let me
talk to Rob. How is it not possible
for me to get my money back? I
don’t understand.’”
Searching online, Joseph started
finding others throughout the
world that had been ripped off by
PushTraffic. At first, he appealed to
the U.S. Attorney General and the
California state Attorney General.
According to Joseph, the response
was that these agencies simply
didn’t know what to make of a case
like this. “We don’t have a
department for it,” they explained,
“and it’s too complicated, we’re
not doing those kinds of
prosecutions.”
“The civil process gave them time
to hide everything.”
Eventually, he teamed up with two
fellow attorneys, Dr. Jon Levy and
Thomas Easton, with experience in
international law and money
laundering. A class action
complaint was filed in California in
May of 2011. “The clients were
really diverse,” says Levy. “This
was amazing. We had people in
England, South Africa, Malaysia…
Canada, Australia; just about every
English speaking country was hit by
those guys except maybe India,
the only reason India wasn’t hit is
because I think they have currency
transfer restrictions. This thing was
amazing in its scope.”
Once filed, the case lingered on for
six months or so. Raygoza, for his
part, barely acknowledged it,
effectively stalling until September
2011, when the court ordered a
default judgment in the amount of
$941,790 to the plaintiffs — just a
handful of people. A tiny
percentage of Raygoza’s actual
victims.
But they’ll never see that money.
Raygoza says he doesn’t have it.
“The process took way too long,”
Levy concludes. “The government
could have frozen their assets until
the litigation was settled. Then, if
we won, we would’ve had
something to recover. But the civil
process gave them [time] to hide
everything.”
For victims of the PushTraffic
scam, John Paul Raygoza isn’t much
more than a crudely designed web
page, johnraygoza.com — complete
with buttons that don’t work and
an offer for sales floor training
that starts at $500 a day (which, for
some reason is rated “M for
mature,” like Grand Theft Auto IV).
And this is the case for the whole
of Internet Marketing. While some
marketers made themselves
available to me by phone, they only
existed to tell me what they
thought I wanted to hear: namely,
that they were nothing more than
successful businessmen, and that
any of the darker stories about
their industry were not to be
believed. As for Raygoza, he was
never anything more to me than an
overflowing voicemail box, and a
series of tweets from Los Angeles
fine dining establishments.
Scamworld is in many ways a
primitive, naive place. It’s
populated on one side by mock-
businessmen with a cartoonish
view of their own existence. On
the other side are their victims,
people for whom the internet is a
mystery, people who are inclined
to believe that with the right
software, or by purchasing a
website, they can get rich.
Many, like Richard Joseph — just a
regular guy who’d had awful luck
— aren’t trying to get rich. He
wasn’t interested in the most
bizarre claims of the Internet
Marketers. He wasn’t looking for a
Philosopher’s Stone, a way to
create great wealth out of zeros
and ones. And he wasn’t trying to
turn the universe into his personal
mail order catalog, to borrow a
phrase from The Secret. He just
wanted to keep working, to help
support his family. He thought he
had found a way to do that through
the internet, and he thought he had
found someone to help him do it.
Instead of being a conduit for help,
the internet was just one more part
of a complicated trap — a trap
which perverts intimacy and turns
it into money. The disembodied
voice that identified itself as Ron
Martino was able to single out
Joseph, fabricate a bond, and then
exploit that trust for financial gain.
And after he had Joseph’s money,
Martino simply vanished. Almost
like he never really existed.
Ron Martino and PushTraffic are
both phantoms of a sort, part of a
culture that thrums on the edge of
the real world, a culture that only
really works in the dark. When you
shine the light on them, they
disappear.
In time, they’ll return in another
form — reintroduce themselves
with some new name or new scam
— looking for new victims but
feeling remarkably familiar. And
they’ll likely find people like
Richard Joseph, people who should
know better, but find themselves
desperate, at their wit’s end, just
waiting for a phone call. An
understanding voice on the other
end of the line, ready to offer them
a way out.
Scamworld is available on the
Kindle Store. You can download it
right here .
[Via The Verge]
