William Keep has openly expressed his strong dislike for multi-level marketing (MLM) and has built a career by presenting his theoretical views on what constitutes a pyramid scheme. These views are based on his academic studies rather than personal experience in the field. His opinions have some basis in guidance from the Federal Trade Commission (FTC), although this guidance has changed and contradicted itself over the years.
Congress has not enacted any federal law specifically prohibiting actions related to pyramid schemes. Instead, it has delegated the regulation of pyramid schemes to the Federal Trade Commission (FTC) under the authority of the FTC Act, treating them as civil regulatory violations. Legal definitions are typically established by Congress through legislation. However, Congress has failed to define a pyramid scheme in the anti-pyramid acts proposed in 2017 and 2018. As a result, there is currently no federal law that criminalizes pyramid schemes or participation in them. It is important to note that these proposals aimed to include a definition of pyramid schemes as part of the FTC Act, which regulates unfair business practices as civil violations.
The Neora Court recently cleared Neora of all charges related to being a pyramid scheme. The court criticized the views of the FTC’s pyramid scheme expert, identical to Keep’s, labeling them rigid opinions with no basis in reality. It relied on the only legal standard applicable in civil regulatory cases, the Koskot standard.
According to this standard, for a business to be considered a pyramid scheme, the rewards for recruiting distributors must not be directly tied to product sales, as illustrated in the I2G case. In this instance, the direct compensation rewards were linked to customer usage of i2G’s digital products connected via an API. This connection disqualifies i2G from being classified as a pyramid scheme under the Koskot definition.
The I2G compensation plan paid out 25% of the online casino and fantasy sports transactions, as documented through 101b. Over 1.5 million retail customer transactions paid distributor rewards through binary, matching, and leadership bonuses. Therefore, based on the Koskot standard and the data presented, it is clear that I2G is not a pyramid scheme.
Dr. Keep ignored the definition of Koskot and instead attempted to create his own benchmarks. He insisted that only retail sales should be considered legitimate sales. He informed the jury that internal consumption should not count, which contradicts a long-standing precedent that recognizes “internal consumption” as a valid measure of sales. This aligns with what the Neora Court ruled according to existing law. Additionally, he included his theoretical measures, which have no legal basis. These measures encompass sales margins, sales metrics, promotions, and earnings statistics that apply to all MLMs.
Unbelievably, Keep could not identify a single company that he did not believe had the characteristics of a pyramid scheme. Disturbingly, one year after the government hired him, he expressed his frustration in a blog post about how pyramid scheme prosecutions were solely civil regulatory cases that failed to target the top promoters. He mentioned that it would be interesting to see the outcome of a prosecution and conviction of a top promoter, particularly if it involved the Department of Justice. Subsequently, he played a role in making that happen and boasted about it on a popular anti-MLM blog.
For Blog proof of Keep’s statement expressing interest in seeing top mlm promoters go to prison
For Keep’s reliance on False Data for his pyramid scheme analysis and false statements by Keep.