While thinking about John Beck today on the one year anniversary of his disappearance, I read through some of the court documents. I'll post the links below for anyone who is interested.
Here are some of the details I gleaned...
Gravink and Hewitt owned the companies that distributed the courses offered by Beck, Alexander and Paul...Family Products and Mentoring of America. As I understand it, people who wanted to order the information offered called Family Products and paid $39.95 by credit card. They were not told that the $39.95 would be billed each month after their initial "free" month belonging to an information service each "guru" offered. This was against the FTC regulations and was a major part of the case.
After the original purchase, Mentoring of America reps would call, offering extra training by the guru, ranging from $195 to $14,000. Even when told to stop calling, they persisted. Another violation.
And of course, the FTC zeroed in on the false claims of easy and quick money to be made using each of these systems. In truth, John Beck misrepresented in the commercials the number of houses he had purchased using his system as well as the amount of money his daughter had made (supposedly more than she could make with her masters degree). He misrepresented how easy it was to own a house "free and clear" with his Free and Clear system.
Once the buyer received the $39.95 kit with instructions, only then did they find out that Beck's system could not be used in most states as described and involved more money up front than the ads revealed. It was the same with Alexander and Paul systems. All of them wrote the instructions in their kits. In other words, it was a ripoff and each guru knew it.
Meanwhile, Gravink and Hewitt were raking in millions of dollars. Of the three gurus, Beck sold the most. It wasn't stated how much of a percentage he received from Gravink and Hewitt. It may not have been the $113 million he was fined. However, the court held that each guru was held responsible "jointly and severally" with Gravink and Hewitt for the losses to consumers who bought their products. So even if Beck never made $113 million he was responsible for the amount his system brought in.
Only Beck appealed the judgement against him and his main argument was that he should not be responsible jointly and severally with Gravink and Hewitt. The Ninth District Court of Appeals disagreed in April 2016, after Beck disappeared, leaving his wife holding the bag, probably losing everything because the bankruptcy was never finished.
My personal opinion is that Gravink and Hewitt were the evil geniuses. They had been in various businesses together for many years and had been in trouble with the FTC before with some kind of exercise equipment infomercial. So they switched to something that played on the desire people have to make money easily in a slowing economy. But I also believe that Beck, Alexander and Paul were well aware that their systems were unusable by the average person. Beck admitted as much in his deposition for his appeal.
I don't know if they knew about the repeated charges for $39.95 or the high fees charged for further training. But the law holds them responsible jointly and severally with Gravink and Hewitt, and I don't think they ever expected that outcome. The FTC stated that their suit against them was to make an example of them to deter other "get-rich-quick" schemes. Here's hoping the plan worked. But as long as gullible people want to make a quick buck, there will be other Gravinks, Hewitts, Becks, Alexanders and Pauls willing to take a chance and take advantage of them. JMO
Initial court filing by the FTC in 2009, U.S. District Court, Central District CA:
https://www.ftc.gov/sites/default/files/documents/cases/2009/07/090630mentoringofamericacmplt.pdf
Court decision April 2012:
http://www.leagle.com/decision/In Adv FDCO 130117-000078/F.T.C. v. JOHN BECK AMAZING PROFITS, LLC
Brief filed by the FTC April 2013 in response to Beck's appeal to the Ninth Circuit Court of Appeals. This contains rather damning admissions by Beck in his deposition:
https://www.ftc.gov/system/files/documents/cases/2013-04_johnbeckamazingprofits_9cir_ftcbrief.pdf
Summary of court arguments Feb. 2015. Beck says he only licensed the use of his name and that the judgment was 90 times what he earned.
https://www.law360.com/articles/619855/get-rich-quick-schemer-takes-ftc-s-113m-win-to-9th-circ
Decision against Beck April 2016 by the Ninth Circuit Court of Appeals:
http://cases.justia.com/federal/appellate-courts/ca9/12-56665/12-56665-2016-03-03.pdf?ts=1457038929
I've been sitting on this for quite awhile, hesitating because technically it's not MSM, and waiting for the conversation to pick up again. I agree that Reed has made a really good case for JB to be alive and well. I'm inclined to think that's exactly what JB did with his money long before he got caught up in the informercial/FTC case. One of his buddies was caught with an overseas account during the bankruptcy proceedings. I suspect that was the tip of the iceberg in that case.I believe JB very smartly lived well below his means. He had lived in his house in Alameda for many years. I grew up in Alameda and it's a nice older home that's worth something, but the neighborhood is pretty average, not a wealthy one. He didn't appear to drive high end new cars. So the money he made over the years in real estate went somewhere besides putting his kids through college and investing in more real estate. And if he didn't made a lot of money using his system, why was he selling it to people?!What hangs me up is that his wife would lose everything protected by chapter 7 because he disappeared. Would he do that to her without telling her where he was at some point? That seems unlikely to me. She was definitely part of his business before the infomercials, so if money was parked offshore, I think she'd know. The sudden silence doesn't necessarily mean they think he committed suicide IMO. I'd love to know what the federal government thinks!
