Feds shut down Trek for "deceptive practices"

December 14, 2002
By Rick Ross

A multi level marketing (MLM) scheme called "Trek Alliance," the brainchild of Kale Flagg and Rich Von, has been shut down by order of the United States Federal Trade Commission.

On December 6, 2002 the United States Federal Trade Commission filed a lawsuit alleging deceptive marketing practices against Trek, subsequently a federal judge issued a Temporary Restraining Order and appointed a receiver to control the company's frozen assets.

But the first action actually taken against Trek was last December, when the State of Wisconsin filed a complaint alleging "misrepresentations and other unlawful practices."

Flagg and Von were formerly associated with Equinox, another MLM founded by their mentor Bill Gouldd. Equinox was closed and later liquidated through federal action.

Now any visitors to the Trek website will see an announcement posted by Robb Evans, its Temporary Receiver. Evans was the receiver who liquidated Gouldd's Equinox.

Many complaints were generated by Trek and some were posted at my website as either personal stories or visitor comments within a designated archive.

Trek typically preyed upon young urban professionals or recent college graduates looking for work.

Trek often cold called people who posted their resumes on Internet websites such as HotJobs.com, Monster.com. and/or FlipDog.com. The company also placed misleading ads for job opportunities in local newspapers.

Their usual pitch was that job interviews were taking place and appointments were available. People who came in would then be subjected to an elaborate recruitment effort to pull them into the MLM. And instead of being offered a salary, they would be asked to buy "starter kits."

Trek gained an increasingly bad reputation, so they used an array of different names such as "Majestic Enterprise" in Minnesota, "Bay State Marketing Group" in Massachusetts, "Liberty Alliance" in Pennsylvania, "Bay Street Marketing" in Florida, "Chesapeake Group" in Maryland, "Carolina Marketing" in North Carolina, "Midwest Alliance" in Indiana, "Dynamics International" in Illinois, "Pacific Alliance" in California and "Mountain Edge Alliance" in Arizona.

Largely due to the effectiveness of the Internet through websites like MLM Survivor, the Rip Off Report and my own Rick Ross.com, potential victims of Trek were able to access information quickly before being taken in. This helped many people avoid being taken in and exploited by the MLM.

Some former Trek associates were virtually wiped out financially. It was not uncommon for the MLM's victims to run up their credit cards and take out loans to fund their participation in Trek, putting them deeply in debt.

Trek, like many other MLM schemes popular in the United States and around the world, seems to sell "dreams." Specifically, "get rich quick" dreams. And within the group environment they created some felt that dream was promoted through a kind of "cult like" "brainwashing," which appeared to be Trek's real business.

MLMs represent an unregulated industry with a troubled history and anyone considering involvement should understand that. Trek and Equinox are cautionary examples.

MLMs may provide money for those at the top, but it seems that too often little if any profit seems to flow to the distributors below and/or near the bottom.

Before becoming involved in any MLM, due diligence is important. And that process of examination should include an understanding of "What's Wrong With MLMs."

As always, "Let the buyer beware."