It appears that Pre-Paid Legal Services, BlastOff’s primary partner, is under investigation by the SEC for their business practices, causing their share price to dive. Robert FitzPatrick at Pyramid Scheme Alert, who has previously documented a history of deception by Pre-Paid Legal Services, released a report earlier this year with details of a scheme to divert wealth from sales associates to company insiders.
Robert explains that the U.S. market for pre-paid legal services sold to individuals through a MLM network has saturated, evidenced by flat sales the last several years. When companies stop growing, their stocks naturally decline. However, despite the zero growth and a collapsing global economy, Pre-Paid Legal’s stock price has held surprisingly steady.
How is this possible? An ingenious massive stock re-purchase program has masked the declining market capitalization, allowing insiders to dump their shares while propping up the stock price. You see, they are using money from new recruits to purchase their own stock, a significant portion of which is held by the company directors. This means there are less shares in existence, so the remaining ones will naturally have a higher value.
Without understanding that a company is valued by it’s stock price multiplied by the number of shares, it’s associates still perceive the company as being an engine for growth. That is why people continue to be duped into joining the network. Kudos to China for banning MLM.
Well, the SEC is finally looking into this practice and legal action will most likely follow. Any bets on whether their own pre-paid legal services cover the cost of litigation with the government?
I’m moving over to a Pligg site, not dedicated entirely to Blastoff. Hoping you will join in this “Life Changing Opportunity” that promises zero income and absolutely no reward.
Haha, the same promise of this site, I’m in!
Out of the mouth of babes, comes this cub reporter:
http://www.cavalierdaily.com/2009/10/15/the-undiscovered-madoff/
You won’t be surprised at the Kool-Aid drinking commentators, but one brave lad nailed it with a football analogy:
“The great threat to PPD is the ongoing decline in their associate ranks. At present they are trying to throw a “Hail Mary” pass by linking up with a new online pyramid sales scheme(the soon-to-be-launched online shopping portal, “Blastoff”), but it smacks of desperation.”
As to Mr. Harland Flinstone, danger, Will Robinson:
“The story is company legend. In 1969, Harland C. Stonecipher, founder of Pre-Paid Legal Services, was involved in a car accident. The driver of the other car survived the crash. But, as Stonecipher later wrote in a corporate memoir, “I faced thousands of dollars in legal costs stemming from an accident in which I was blameless.”
Stonecipher’s account of his accident leaves out a few details, however. According to his attorney at the time and copies of the suits obtained by BusinessWeek Online, he was the first to sue in court for injuries. He later settled. Meanwhile, the driver of the other car sued Stonecipher the following year for just a fraction of what Stonecipher had sought for injuries incurred in the accident.”
http://www.businessweek.com/bwdaily/dnflash/apr2002/nf20020425_0617.htm
Ruh-roh, Scooby-Doo…
Thanks for the research Doo Dilly, nice finds. The key number I saw in those reports was $80. That is the annual amount PPL pays to it’s attorneys for each new member. In a society where lawyers regularly charge $200-$500 / hr, you can easily discern the quality / amount of help you will get with their service.
And many law firms are earning more than chump change from their association with PPL. To be fair, there is a trend in the legal industry towards fixed fees for routine services:
http://www.legalmarketingblog.com/legal-fees-alternative-fees-vs-billable-hour.html
http://nysbar.com/blogs/Tipoftheweek/2009/08/changes_in_pricing_legal_servi.html
BUT: If I speak to someone at the law firm of, say, Dewey, Cheatem & Howe, I would expect to speak to a lawyer or paralegal about my needs, and receive a quote, perhaps with a caveat for unexpected fees, from the folks at the firm. The “associates” at PPL are MLM’ers who have been recruited to recruit more people under them. The product is secondary:
http://mlm-thetruth.com/
http://www.pyramidschemealert.org/PSAMain/home.html
AND: Some insurance is mandated by law (auto), or contract (mortgage/homeowners), or for catastrophic needs (health). Most of the rest is unnecessary and wasteful spending. I couldn’t find any unbiased reports on the need for legal plans, but I don’t believe many people REALLY need it. People use it if they have it, especially if they work for a company that offers more comprehensive plans as a benefit (Hyatt: http://www.legalplans.com/ ).
BUT: PPL’s other product (ID Theft protection) has been reviewed:
http://money.cnn.com/2005/08/22/pf/idtheft_0509/
MEANWHILE: Back to the Rancho chez Blastoff:
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_P/threadview?m=tm&bn=14512&tid=111826&mid=111826&tof=11&frt=2
I know for certain the BO hype successfully recruited a FEW Silly Wabbits into the PPL fold, but the hype is fading fast… at least until they start their massive media blitz, coming sometime in the next millennium. I heard it straight from the mouth of Walter Mitty himself.
Breaking news:
Nov. 19 /PRNewswire-FirstCall/ — Pre-Paid Legal Services, Inc. (NYSE: PPD) announced that on November 18, 2009, we received a proposed draft complaint from the Federal Trade Commission (“FTC”) seeking permanent injunctive relief, disgorgement of proceeds and other relief, including costs, relating to our Identity Theft Shield and Affirmative Defense Response System (“ADRS”) Program. The proposed draft complaint alleges our ADRS program and related materials violate Section 5(a) of the FTC Act regarding asserted misleading representations, express or implied. The proposed draft complaint also names Harland Stonecipher, our Chief Executive Officer, and Mark Brown, our Chief Marketing Officer, as defendants. We previously received a Civil Investigative Demand from the FTC on March 23, 2007 on the ADRS program. We have made voluntary revisions to the marketing materials originally provided to the FTC in 2007 and 2009. The FTC may decide to commence federal court proceedings with this proposed draft complaint. The ultimate outcome of the matter is not determinable but we will vigorously defend our interests in this matter.
http://www.prnewswire.com/news-releases/pre-paid-legal-services-announces-ftc-developments-70524402.html
Their stock is crashing. Average volume has been 100K, but today the volume is over 1M, and the price is down 20%.
“Oh what a tangled web we weave, When first we practice to deceive!”–Sir Walter Scott
Danger, Little Miss Muffet… and Humpty Dumpty…