Equinox Hits the Fan

The Santa Clara Valley Metro/November 14, 1996
By Ami Chen Mills

'Pyramid Dreams' elicits nightmare stories from MLM distributors

ALMOST BEFORE THE INK had dried on Metro's Oct. 3 cover story, "Pyramid Dreams," about Equinox International and multilevel marketing companies, Metro was deluged with calls and letters from readers. In the weeks following publication, Metro received 42 emails, a dozen phone calls and a half-dozen letters from both multilevel marketing (MLM) cheerleaders and detractors. Some readers claimed success with Equinox. "Why did you write such a negative story?" one unidentified Equinox rep wanted to know. "I've been successful." We also received calls from Amway distributors, who had gathered for a "Free Enterprise" conference at San Jose State's Arco Arena the weekend the story was on the stands.

But the majority of responses were critical of the hierarchical, recruitment-based organizations, and included former reps of Equinox, Amway and other MLM distributors who reported losses from a few hundred dollars to $50,000. One former Equinox distributor called to say she had racked up $40,000 in debts, depleted her daughter's college fund, nearly lost her house, and contemplated suicide in the bathroom of her threatened home. "Equinox raped my soul," she told Metro. "I call them the soul-rapers." Some who wrote or called were concerned about friends or family members currently involved with Equinox or other multilevels. One fretting mother said she recently discovered that her daughter, who claims to be enrolled in graduate school, actually dropped out three years ago and has been working with Equinox. After sending her daughter an estimated $18,000--thinking the money was for tuition and other school expenses--the woman says her daughter won't return phone calls and gives an address at a P.O box.

In other, legal aftermath, Metro has learned that former distributor Jack Baugher--quoted in the story as a plaintiff in a lawsuit in Yakima County, Wash.--has been the target of legal action by Equinox, which claims Baugher violated a court order by speaking to Metro for the story. Baugher faces a $5,000 fine. The law firm representing Baugher and other plaintiffs in the Yakima suit--Salem, Ore.­based Ferder, Brandt and Casebeer--says similar suits against Gouldd and his associates have been filed in Texas and Nevada. According to Carla French, a partner there, phone calls from disgruntled and broke former Equinox distributors "have come in from across the country," and suits may be filed in other states. In the Yakima case, a court date has been set for September 1997, and if the case makes trial, French expects to prevail. "The nature of the beast is just so offensive, I don't think we'll have a problem." French adds that one defendant in the suit, Equinox "heavy-hitter" Rick Frisk--mentioned in our story--failed to appear for depositions in Las Vegas.

Persistent rumors of an ongoing federal-level investigation of Equinox International were not confirmed by Assistant U.S. Attorney Stephen Freccero. "All I can tell you is that the matter has been referred to us," Freccero told Metro from the U.S. Attorney's office in San Francisco.

Before publication, until the 11th hour, Hill and Knowlton, Equinox's PR firm and Equinox attorneys (some from Williams and Connolly, Bill Clinton's firm during Whitewater proceedings) barraged the offices of Metro in attempts to keep part of the story from publication.

Despite legal storm clouds gathering over the company, founder Bill Gouldd and Equinox International made a remarkable debut on the national business scene when, three weeks ago, Inc. Magazine ranked the multi-level as No. 1 in its annual list of the 500 fastest-growing private companies in the United States, and featured Gouldd--among others--on the cover of the Inc. 500 special edition.

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