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She Did It Amway

Amway funded Sue Myrick and taught her to reach the top by climbing on the backs of people on the bottom. Now she's pushing the company's conservative agenda and its expansion into markets abroad.

Amway measures a distributor's success by how many products the person sells and by the size of the distributor's "downline." Each time the distributors get a new recruit, they add to their personal sales force and elevate their own position, increasing the amount of money they get from the people below them while acquiring ever-loftier titles -- first Direct, then Ruby, Emerald, Diamond, and so on. Dexter Yager, a multimillionaire and one of the largest distributors in the country, is a Crown Ambassador.

The distributors use Amvox, Amway's massive voice-mail network, to communicate with their far-flung downlines. But their messages can go far beyond business matters, ranging from the overtly political to the bizarre. According to a transcript leaked to Mother Jones, Yager apparently forwarded the following message, left on his voice mail, to some of the hundreds of thousands of distributors under him: "If you analyze Bill Clinton's entire inaugural address, it is nothing but a New Age pagan ritual. If you go back and look at how it was arranged and how it was orchestrated, he talked about forcing the spring. So what they're trying to do is...force the emergence of deviant lifestyles, of a socialist agenda, and force that on us as American people."

Charlotte Courtney, a distributor in Hot Springs, Ark., says most of the political messages come from Yager, a member of the religious right who let Jim and Tammy Faye Bakker broadcast their religious show from his house after they lost their PTL ministry. "He puts out things about helping people how to think, educating people about welfare," Courtney says. "It's very helpful."

Sue Myrick was in need of a little help when she joined Amway in August 1992. She had failed at one race for the Charlotte City Council, then succeeded in 1983; lost a bid for mayor in 1985, and then won in 1987. But her 1992 campaign for the Senate faltered from the start, in part because she didn't have the funds to match rival Lauch Faircloth in the primary. After she joined Amway as a distributor, she began selling motivational tapes at company rallies to raise money. She also received contributions totaling about $16,500 from Amway -- $13,000 from Yager and his family. But the cash infusion came too late in the race, and Faircloth trounced her.

Soon, however, Myrick became a regular on the Amway circuit, speaking at hundreds of rallies, according to a former campaign staffer, and selling $5 and $10 audiotapes. Many lower-level Amway distributors say they also heard about Myrick via Amvox. "Dexter Yager told us about [Myrick]. We had messages from him on Amvox," says Jerry Barber, of Yellville, Ark. According to Charlotte Courtney, Yager sent Amvox messages touting Myrick's 1994 run for the House to "everyone in [his] downline."

Those messages may violate campaign laws. "The use of corporate resources on behalf of a federal campaign is illegal," says Kenneth Gross, a former head of enforcement at the FEC. Gross says that if Yager used the voice-mail system for fundraising, the law required either Amway or Yager to report it as an "in-kind contribution" that should have been reimbursed by the Myrick campaign. "If corporate resources are not properly reimbursed, then it would result in a violation of federal election laws," Gross says.

There is no FEC record of any such contribution from Amway or from Yager. Amway spokesman Robin Luymes says Yager rents the Amvox service for $16.95 per month. "What he does with it is his business," Luymes says. (Yager would not respond to repeated requests for an interview.) Kelly Huff, a spokeswoman for the FEC, says Yager's use of Amvox "raises a lot of questions."

The messages seem to have worked. A review of the FEC filings shows at least 171 Amway distributors and family members -- 143 of whom did not live in Myrick's home state -- apparently gave Myrick $178,660 in 1994. (The Charlotte Observer reported last year that when Amway distributors and their families contributed money to Myrick, they listed their occupation as "marketing" on FEC records, making the distributors' contributions easy to document.)

Myrick also reported to the FEC an unusually large number of small, mostly $10 contributions, including $117,211 recorded almost entirely on days she spoke at Amway rallies. That means $295,871 -- nearly half of Myrick's total -- appears to have come through Amway.

Once in office, Myrick gave her fellow distributors something to cheer about. She co-sponsored the home-office deductibility bill, which allows tax write-offs for independent contractors who use their homes as offices--a boon for Amway distributors. (On July 24, the day before Amway's $1.3 million funding of GOP convention coverage was revealed, Dole announced his support for the home-office deduction, as well as for an increase in health insurance deductions for the self-employed -- another measure benefiting Amway distributors.)

Myrick quickly became a favorite of the GOP leadership. Speaker Newt Gingrich appointed her to the powerful Budget Committee. Her peers named her as a freshman class liaison to the leadership. And she joined an increasingly powerful team: the Amway caucus, an informal group that includes Amway distributors Dick Chrysler (R-Mich.), Jon Christensen (R-Neb.), and Richard Pombo (R-Calif.).

The caucus, says Amway lobbyist John Gartland, meets to discuss legislation or to receive visiting Amway distributors. "We'll tell them Amway's opinion," Gartland explains. "We can't guarantee their votes, but they love Amway."

If Amway distributors put their money where Dexter Yager's mouth is, it's no wonder. From the beginning, according to more than a dozen former distributors, they learn that success in Amway depends on how well they follow their leaders.

Karen and Craig Jones, both former distributors, attended one rally where Myrick spoke. "She got up with her husband and said, 'You're the kind of people we like,'" Karen says. After Myrick's speech, Amway leaders passed around buckets for contributions, and asked donors to write their names and the names of their Amway sponsors, or "upline," on the envelope.

Karen's husband, Craig, adds, "It wasn't like, 'You need to do this or else.' It was more like, 'If you're smart and you want your business to grow...' I'm sure your upline was aware if you gave or if you didn't."

Amway's camaraderie -- "They're the most likable people," says Karen -- and its strong Christian tradition appealed to the Joneses. So did the company's promise of financial success.

After paying about $100 for a starter kit, the Joneses started buying motivational audiotapes, recorded by such Amway leaders as DeVos, Yager, and Bill Britt, another well-known distributor. Before long, Amway pressured them to place a standing order for new tapes, which cost $6 apiece. "They'd tell you that the people who are serious about their future in the business do this," Craig says. Soon, the Joneses were receiving two tapes a week by mail. Amway also expected them to buy at least $200 in Amway products each month.

"You start believing them," says Karen. "You want to do what they did to get to where they are." Karen quit her cleaning business. The couple sold their three-bedroom home in Charlotte and moved their three young children an hour north to Concord to be closer to their upline.

They contacted every acquaintance they could think of, trying to recruit new distributors. It didn't work. Karen says they lost friends and, within a year, were broke. "We would eat beans all week long. We sold our living room furniture and our TV."

As Craig lost interest in Amway, Karen says she received a less-than-Christian response from her sponsors, who implied she should file for divorce. "They'd tell me, 'Flush him.' Flush my husband," says Karen. "'If he's not doing his part, then flush him.'"

After Karen stopped going to meetings in April 1995, and Craig returned to work full time as an architectural engineer, Amway squeezed the Joneses out. Their business had peaked at revenues of only $300 a month.

Now back in Charlotte, the couple says Amway cost them about $50,000 and "four and a half years of our lives." But while the Joneses are quietly rebuilding their lives, three other former distributors have filed a class-action suit against Amway, Yager, and Britt in the U.S. District Court of Eastern Pennsylvania. They claim that when Amway distributors recruit, they promise that Amway will pave the road to vacation homes and yachts, but never reveal that the average distributor makes only $88 a month, a disclaimer required by the Federal Trade Commission.

If the court, which has quashed three attempts to have the suit dismissed, rules that it can proceed, any distributor who purchased the company's motivational tools between 1990 and 1996 may join the suit. Stacy Hanrahan, one of the three plaintiffs, established a hotline in September 1992 and has received, she says, "literally thousands" of calls from potential plaintiffs.

Dick DeVos, president of Amway and son of co-founder Richard DeVos, probably isn't too worried. In 1979, the FTC dropped a decade-long investigation into whether Amway was an illegal pyramid scheme. But Canada's trade office hit the company with a $125.4 million suit, accusing it of undervaluing its merchandise to avoid paying full custom duties. Amway agreed to pay $38 million to settle the suit in 1989. This came on top of a $25 million fine in 1983 by the province of Ontario when Amway pleaded guilty to fraud.

Amway has survived those scrapes with the law. Flourished, actually. It boasts a faster growth rate than just about any major company outside Silicon Valley, with sales increasing from $500 million in 1978 to $6.3 billion today. Much of that growth has occurred overseas. Japan accounts for nearly a third of the company's revenues, earned by about 980,000 distributors -- nearly 1 percent of Japan's population.

Should Amway duplicate that success in China, where it is waging its greatest recruitment campaign ever, it may eventually boast a Chinese sales force of 10 million.

That's why Amway relies so heavily on a politically friendly Congress. And it's what made Dick DeVos so particularly testy in the spring of 1995, when a block of Republican freshmen fought the president's peso-rescue loan to Mexico. "I'm very concerned," DeVos told Business Week. "Among some of those [newcomers], there is an increasingly persistent tendency to reject free trade."

At the time, Amway had just opened a manufacturing plant in Guangzhou, launched its massive Chinese recruitment campaign (a $100 million expense), and brokered a careful relationship with the Chinese government. It had also received approval for its first rallies in Shanghai -- a major coup, considering the Chinese government's general disapproval of large assemblies.

Last fall, when Congress debated whether to revoke China's "most favored nation" trading status, Chinese officials chilled relations with the U.S. businesses establishing plants there. In November, China issued a temporary halt on Amway's activities, saying the company's expansion needed further review.

But in February, China tentatively lifted the moratorium, and in June, Congress reaffirmed China's trading status -- with the support of Myrick and others from the Amway caucus. Now, the DeVoses and Amway can look on the bright side: In less than a year, they've recruited a reported 300,000 distributors in Guangzhou alone.

Rachel Burstein is a Mother Jones investigative reporter in Washington, D.C. Kerry Lauerman is the magazine's investigative editor.

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