Have I discovered a pyramid scheme? What should I do?

[bills217]

Sunday night about 10 PM I get a voicemail. Guy says his name is Jack Hendricks, he is a friend of (my friend's name here) and wants me to give him a call back.

I do, worried that something may have happened to my friend.

Mr. Jack Hendricks says no, everything is fine, but my friend gave him my name and Mr. Jack Hendricks wants to know if I want to get involved in his internet business, as my friend is. I ask for details, he gives none, except to say that I could expect to make $2-$3k/month for about 5 hours a week, and he makes much more than that, and his wife is even more successful than him and is about to retire at age 32. He asks me to meet him at a Starbucks close to where I live (even though he claims to live over an hour away from where I do)...I tentatively accept pending talking to my friend about it. I ask him how he met my friend, he claims to have just bumped into him at a Starbucks. Mr. Jack Hendricks is very polite and courteous the entire time on the phone and has a way of making me feel like I've known him forever.

I call my friend and ask him about what's going on. He says Mr. Jack Hendricks is a fabulous guy who is helping him get started on his own internet business. He seems pretty early on in whatever process this is and either can't or doesn't offer any details and says Jack will explain everything. (Note: My friend is kind of a space cadet. Not farfetched at all that he could have already been tricked into buying something.)

I meet w/ Hendricks at Starbucks. I show up a few minutes late, and he is sitting at a table with 2 girls talking to them in his usual polite tone and pointing to and scribbling on a brochure. I buy my drink and sit down and introduce myself. The two girls are vaguely connected to my friend in some way.

He continues scribbling on the brochure which is pretty vague. It lists companies they work with which is basically a laundry list of well-known retailers. He also talks about how they have a support system and a supplier in place, and vaguely indicates that it is an internet business. He then discusses how Starbucks wants each franchise to succeed (obv.), and uses that to illustrate why he is recruiting other people to join him, in a roundabout way. Basically the more people you get to join after you the more money you make, at this point it sounds like a standard pyramid scheme to me. Again he emphasizes how much money you can make in a short period of time, asks us if we could use that money (obv., we're in college), but at the same time says he doesn't want our money, doesn't need us to invest, and it isn't a get-rich-quick scheme. He also has some other people there he claims have been working with him, and they talk about how successful they've been, again, no specifics.

When I press for details, he directs us to a "class" this Thursday at a nearby hotel, saying everything will be explained there and all my concerns will be assuaded. He says to wear a suit and tie. The other two girls can't make it Thursday, even though he asked one of them, who he JUST MET, to reschedule her birthday plans so that she can make it. He says they can come next Monday instead, they enthusiastically agree (the two girls are taking it hook line and sinker at this point).

When they leave, I stay and press for details further, explaining to Mr. Jack Hendricks as politely as I can that I don't need the money very badly and that I want to know what is up. He finally divulges the name of his company, Hendricks International, when I comment that he must be a higher-up and press for details, he simply claims that he is an "owner" and it will all be explained Thursday, and bids me farewell.

I go home and google "hendricks international." I find traces of it on some "trade" websites that I can't make heads or tails out of, then I find the company webpage: www.hendricks-intl.com

Shockingly, the front page offers no details, basically repeats Hendricks' mantra, and no one can get further into the site without logging in (not even a guest).

So, I guess at this point, I should be expecting the meeting on Thursday to be:

1) A hard sell to be a part of whatever it is
2) A request for money in some form or fashion
3) Tips on how to recruit other ppl and make $$$ in some unclear way

Standard assumption?

Given what I've told you, is there any chance at all this could be a legitimate "business?"

Pyramid schemes are illegal, correct? Could this be some quasi-legal variation on a pyramid scheme? How would I go about reporting it if it is an illegal scheme? Are these common?

And, most importantly...what should I do from here? I'm not going to drop it entirely because I'm not that type of person. If it's a scam, I'd want to do some combination of warn my friend/warn the ppl at this meeting/call Mr. Hendricks and press for more details, perhaps mentioning that I think he is running a pyramid scheme and threatening some sort of action.

Any thoughts or suggestions greatly appreciated.

P.S. "Mr. Jack Hendricks" is Asian, pretty much what Johnny Chan would look like 50 pounds lighter.

[rothko]

>100% chance this is a scam. this is worse than a pyramid scheme. don't give this guy any money or even time. try to get your friend out of it, too.

i hope you were merely pointing out he is an asian with a caucasian name, otherwise that's pretty weak of you.

[sillyarms]

https://rn.ftc.gov/pls/dod/wsolcq$.s..._ORG_CODE=PU01

[Freakin]

It's probably Quixtar. I'd bet money on it (with odds) if I was bored...

I doubt it's an actual pyramid scheme, probably just MLM.

[farang0]

Umm, Just forget about it. Tell your friend to forget about it to.

[Jimbo232]

[ QUOTE ]
It's probably Quixtar. I'd bet money on it (with odds) if I was bored...

I doubt it's an actual pyramid scheme, probably just MLM.

[/ QUOTE ]

I would agree. I have a relative who has been with Quixtar for a few years. Sounds like the same sale tactics, and basic ideas - Hendricks Int'l is most likely just another internet based multi-level marketing company. There is a lot of controversy around MLMs as they promise riches to get individuals to sign up, but it isn't as easy as they typically make it sound. Just like any sales-based business, if you work hard and are a good at sales you can have success. I highly doubt it is an actual pyramid scheme.

[James Boston]

This is a complete waste of your time, most likely, and I wouldn't get involved.

As for your legality question...

Multi-Level Marketing, or pyramid schemes, are not inherently illegal, and most that are operating illegally get away with it. I can't remember the percentage point, but what determines whether they are operation legally is how much of their revenue (as a percentage of total revenue) comes from its "sellers." Alot of old-school MLM's required you to buy a bunch of stuff to get involved and "be on you way to millions!" As it turned out, that was pretty much the only way they made their money. They didn't care if the product got to the "consumer" as long as people kept buying it with the hopes selling it and getting rich. Does this apply to your deal? I don't know.

[Shoe]

Report it to the FBI -- they have a website for this, not sure if it is fbi.gov or what but it is easy to find.

[Freakin]

[ QUOTE ]
[ QUOTE ]
It's probably Quixtar. I'd bet money on it (with odds) if I was bored...

I doubt it's an actual pyramid scheme, probably just MLM.

[/ QUOTE ]

I would agree. I have a relative who has been with Quixtar for a few years. Sounds like the same sale tactics, and basic ideas - Hendricks Int'l is most likely just another internet based multi-level marketing company. There is a lot of controversy around MLMs as they promise riches to get individuals to sign up, but it isn't as easy as they typically make it sound. Just like any sales-based business, if you work hard and are a good at sales you can have success. I highly doubt it is an actual pyramid scheme.

[/ QUOTE ]

I'd be willing to bet that Hendricks Int'l is just his quixtar page. it's basically just a huge affiliate program with a bunch of big companies like dell, circuit city, clothing companies, plus all the quixtar/amway products.

[elus2]

Why not educate your friend by coming up with realistic expectations from signing up with this MLM scheme? Add websites with testimonials about the program as well as company history.