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Is the Tea Party Movement Like a Pyramid Scheme?

One of the movement’s leaders, Mark Meckler, was once a top operator in a company accused of conning consumers. Is he applying the same tactics to the tea party?

| Tue Oct. 19, 2010 6:00 AM EDT

There's a book Mark Meckler likes to recommend to reporters and others seeking insight into the tea party juggernaut. Called The Starfish and the Spider, it explores the "unstoppable power" of decentralized and leaderless organizations. "We're like the starfish," Meckler, a national coordinator for the Tea Party Patriots, said earlier this year. "There is no head, there is no leader of the organization. There are thousands of starfish out there and they are self-replicating in that way."

It's certainly an inspiring metaphor. If one tentacle is chopped off, the starfish grows a new one, making it a model of resilience. Yet there's another type of organization that's resilient, decentralized, and reminiscent of the Tea Party Patriots, a national umbrella organization that claims to represent 15 million activists and 2800 local affiliates. You can find it in companies like Amway, Herbalife, and others that rely on what's known as multilevel marketing (MLM), a business model some consider to be nothing but a pyramid scheme.

Like the tea party movement, these companies also operate as "leaderless," grassroots organizations. Organized by "networks," they espouse a bottom-up approach and depend on a neverending supply of people willing to work long hours with no assurance of pay. Meckler, it turns out, is intimately familiar with these types of outfits, having spent years at the highest ranks of one accused of preying on consumers with promises of easy money.

Meckler was a top distributor for Herbalife, a controversial company that peddles dubious nutritional supplements and weight loss programs by way of "direct selling" or "network marketing."

Few tea party activists—or journalists, for that matter—seem to know much about Meckler's life before he became one of the best-known faces of the movement. A regular TV presence and a veritable quote machine for the mainstream media, he's often identified in the media as an Internet lawyer, and the National Journal's Jonathan Rauch dubbed him "the closest thing the movement has to an organizational visionary." But before he became a go-to guy for the press and old-line conservative groups seeking a tutorial on the tea party movement, Meckler was a top distributor for Herbalife, a controversial company that peddles dubious nutritional supplements and weight loss programs by way of "direct selling" or "network marketing." Photo of Mark Meckler by Hector Amezcua/Sacramento Bee/ZUMA Press Photo of Mark Meckler by Hector Amezcua/Sacramento Bee/ZUMA Press

The company has a long history of run-ins with state and federal regulators, as well as congressional investigators, for its business practices and products. As early as 1982, the Food and Drug Administration sent Herbalife a notice of adverse findings for falsely claiming that its nutritional products could cure pretty much any disease. As a result, the company ended up removing questionable ingredients from some products and promised to modify the claims that it made in sales materials. The FDA also received a host of complaints from consumers about noxious side effects from Herbalife's products as well. A few years later, in 1985, the state of California sued the company for making false claims about its products and for running a pyramid-style marketing scheme. Herbalife settled the case for $850,000 without admitting wrongdoing. 

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Becoming successful in Herbalife requires a certain ability to both persuade and suspend disbelief, given the need to recruit ever more distributors rather than simply sell weight-loss shakes. Herbalife distributors sell "opportunity," relying on a prospecting pitch that emphasizes the financial and personal freedom available to anyone who joins the business. Meckler was fluent in the pitch. In July 1999, he and his wife, Patty, wrote an article for Upline Magazine, a trade publication for "network marketers," that came right off the Herbalife script. They claimed that MLM work can provide a "lifestyle offering total time freedom" and an opportunity to build an "unlimited residual income stream." Meckler, who lists the Dale Carnegie-inspired motivational book Think and Grow Rich as a favorite on Facebook, advised readers looking for new prospects to get out there and hit up some lawyers like himself. "Don't be timid!" he coached.

His pitch was apparently convincing. By 2002, according to an Herbalife spokesperson, Meckler had qualified for the "president's team," a group that constitutes less than 1 percent of the company's distributors. To attain this elite status, distributors need to bring in at least $200,000 a month for several months running. One study of Herbalife's business model concluded that president's team members earned about $600,000 a year. Herbalife's in-house magazine profiled Meckler and his family when he qualified for the president's team. According to the story, as soon as the Mecklers started taking Herbalife products, Patty lost "a substantial amount of weight, while Mark gained weight after years of trying and experienced relief from his allergies and asthma. And the business took off too!"

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