Dream Merchants At the top nation's growing network marketing pyramid you will find astounding wealth, the promise of absolute freedom and something surprising, perhaps; a claim to the moral high ground.


On those momentous Wednesday evenings when Kathleen Deoul makes a personal appearance at the Pikesville Hilton hotel, she arrives early to park her Rolls-Royce Bentley sedan near the hotel entrance. There, among the Saturns and minivans of those who have come here to see her, it shimmers like a dream come true.

Deoul knows the Bentley gets people hungry. Gets them jazzed. It is there to testify, as Deoul is, that anyone has a shot at this shiny green, turbo-charged, $175,000 machine and the wealth it broadcasts. You, too, it announces, could ride this beauty right out of your daily rut.

Cultivating desire. It's a skill that Deoul, a tall, elegant Owings Mills resident, has leveraged into her own sumptuous lifestyle; beyond the Bentley, there are monthly vacations, flexible hours, a monthly five-figure check, even a regal title: "Diamond Nikken Distributor."

Deoul, 53, is an independent contractor for Nikken, a multibillion-dollar Japanese manufacturer of therapeutic magnets and other health-care products. She is also a celebrity in America's growing shadow economy of network marketing, where millions of distributors draw earnings from the work of "downliners" below them, where dreams are sustained by endless pep rallies, testimonials and coaching sessions, and a strangely paradoxical celebration of rugged individualism and team spirit prevails.

Deoul's success and enthusiasm have made her a Nikken legend. She is profiled in company publications and gets top billing at seminars and conventions around the country. As one of the elite perched near the apex of network marketing's sales pyramid, Deoul's success fuels the aspirations of a broad range of society, from homemakers seeking spending money and doctors supplementing managed-care incomes to corporate defectors no longer able to square six-figure incomes with 80-hour work- weeks.

Deoul sees them all, in Sioux City, in Southern California, on Nikken-sponsored Caribbean cruises. She sees them at the weekly all-comers recruitment meetings at the Pikesville Hilton, and at monthly Baltimore Country Club luncheons, where high-end prospects like television personalities, doctors, lawyers, architects and executives are wooed.

Ask her and other successful network marketers why these prospects come, and they will tell you it's not really for the promise of fancy cars and other tangible trappings. Instead, they say, they come to revolutionize their lives, to change their way of thinking, to find a path that will lead them to true freedom. A freedom that's not just financial, but spiritual, imbued with compassion and brotherhood. Talk about having it all.

When Deoul speaks at the Hilton, she tells her personal version of the Network Marketing Creation Myth, the same basic tale told by her wealthy brethren in similar companies. Like them, Deoul testifies to making her way through stages of discontent and skepticism to a financial and spiritual epiphany. And like them, her evangelistic zeal for her new career knows no bounds.

But first, there's business to be done. It starts with a science lesson about Nikken's therapeutic magnets.

The earth's "magnetic strength" is the lowest it's ever been, she says. This, along with the prevalence of electronic appliances that bombard us with alternating currents, explains the high incidence of degenerative diseases in affluent nations, Deoul explains.

"If you reinstitute a magnetic field to the body, maybe you'd feel better," she says. Audience members jot notes, key words and phrases.

Soon, though, Deoul's tone turns confessional. She shares her early skepticism about network marketing; it was, she confides, "The last thing in the world I ever wanted to do."

How wrong she was, Deoul says. She speaks poignantly of how her flexible schedule now lets her enjoy life's simple pleasures, like munching homemade cookies with her daughter after school.

"Man!" she says. "Do you know how I savor these moments?"

You too, she tells her audience, can escape the tyranny of lousy jobs and exhausting routines.

"Freedom - that is what we are presenting to you tonight!" she says in a crescendo of emotion.

If you're black, if you're female, if you're a 50-year-old male, your place in the work force is endangered, Deoul warns. "I'm not making this up. You hear it on the news every night!"

But Deoul has more than riches to offer, more than dire warnings to make. She has the true good news of network marketing to share.

Every night, she says, she goes to sleep on her Nikken magnetic mattress pad with the soothing thought that her product has enabled her to help others even as she has helped herself. For Deoul, like other successful network marketers, has an unassailable rationale for her chosen work: Sell a product you believe in and you've "just helped somebody feel better. What a guiltless way to make a living!"

Once, network marketing, also known as multilevel marketing, could largely be summed up by businesses like Amway and Shaklee, network marketing giants built by corps of homemakers, moonlighters and part-timers.

These days, network marketing is also American Communications Network, a discount long-distance phone service; Primerica Financial Services; the Book of Life, a Bible reading program; and Herbalife International, which sells weight management and nutritional products. In this alternative marketplace, you'll find cutlery, vitamins, travel and legal services, room deodorizers, fertilizer, peppermint foot scrub, water treatment and security systems and just about anything else found through standard retail outlets.

Homemakers beat the bushes for customers alongside professionals who have fled corporate life. Network marketing visionaries predict that an overwhelming number of enlightened network marketers will soon leave their Dilbert-esque corporate lives.

The industry is exploding through an underground, person-to-person network. It's a rare person who has not heard a pitch from a "relationship marketer," particularly in the Midwest, South and Southwest, the nation's multilevel hot spots.

You won't see the mainstream media embracing network marketing. It's not a beat routinely covered by the Wall Street Journal or the New York Times. Although it has its popular champions like author Richard Poe, network marketing doesn't have epic heroes, thinkers on par with a Karl Marx or an Adam Smith. As big as it's getting, the business has not yet shaken a shady reputation brought about by its association with illegal pyramid schemes, cult-like secrecy, dashed hopes and garages full of unsold products.

But the image is changing. Look at the Nasdaq and New York Stock Exchanges and you'll find Amway, Primerica and other network marketing concerns now publicly traded. Colgate-Palmolive, Rexall and other well-known corporations have multilevel arms. Five network marketing companies, including Amway, rank among top household and personal product companies in retail sales.

In 1996, the direct selling industry generated revenue of $21 billion in the United States, the Direct Selling Association estimates, with 78 percent of those sales made through a multilevel marketing sales approach. An estimated 7 million network marketers are at work in the United States.

"Ten or 15 years from now, today's media attacks on the network-marketing industry will read like pages from the Salem witch trials," Richard Poe writes in "Wave 3: The New Era in Network Marketing." Network marketing "will be so pervasive in society, it won't even qualify any longer as a separate and distinct industry."

At her pillared suburban palace in a gated Owings Mills community, Kathleen Deoul greets you in jeans and a tailored shirt. She's a casual but commanding presence in her home, a place of vaulted ceilings, white-on-white decor, expansive picture windows and art bought in Paris.

The surroundings underscore the account she gives of her transformation from stressed-out executive to radiant network marketing queen.

Once, she made good money as a broker of executive office space. But the grueling hours and commute to Northern Virginia left her with insomnia and muscular aches and pains that made it hard to walk. No doctor, no remedy could help, she says.

Then friends gave her a Nikken magnetic mattress pad. Deoul slept through the night for the first time in nine years.

"Son of a gun, I had a product experience!" she says.

By late 1993, Deoul was extolling Nikken to her friends and dabbling in sales, even though she didn't see herself as the pushy sales type.

"I didn't see the vision," she confides.

As her commission checks grew, though, so did Deoul's confidence in her new business, helping overcome concerns about the industry's dubious reputation. Then one day, a check arrived for $4,200. Deoul's embarrassment vanished; the vision she'd missed suddenly came into sharp focus. She knew what she had to do.

It wasn't a matter of pushing her products on people, she told herself; the magnets really worked. "I have to share these products," she recalls feeling. "This is something I feel morally obligated to do."

So Deoul founded Wellness Alternatives, an independent distributorship of Nikken products. Her checks doubled, then tripled. The perks accorded Nikken's top earners poured in.

Now, her so-called "downline" of distributors, thousands strong, pump nearly $60,000 a month in "reproductive residual income" into Deoul's coffers.

"The higher the checks go, the happier I am," she says, explaining that a healthy chunk of her income goes to charity.

Still, when it comes to evidence of the good life, Deoul is Exhibit A: She's kicked the 9-to-5 habit and lives lavishly. Nikken financed her Bentley, and will help with the oceanfront vacation home she's planning to build.

You don't have to go to Pikesville to learn about the revolution being preached by Kathleen Deoul. Just browse through the pages of magazines like Working at Home and Success, where headlines shout, "Start Your Dream Life Now!" and the good fortune of network marketing's stars is splashed across photo layouts of huge homes with luxurious amenities.

Rarely, if ever, does one read about a successful but frugal network marketer, or one who uses financial freedom for obscure intellectual pursuits outside the dream's material showroom.

You will, however, read about people like Frank Keefer, a decorated Vietnam veteran who left a Fortune 500 company to become a network marketing millionaire. Pictured in his Ellicott City antebellum mansion and home office, he is featured in a recent issue of Working at Home.

Keefer's distributorship for Market America, a clearinghouse for a variety of products, is not just a job, it's a lifestyle, he testifies in Powerline, the Market America magazine. He and his wife, Gingie, he says, earn close to $1 million a year through residual income, and command up to $25,000 a session to run training seminars.

"I'd rather live in a pup tent before going back to the corporate world. I was making a strong six-figure income, but my life wasn't worth much," he says.

Now, Keefer says, "Our business is about so much more than making money or lifestyle.

"For us, it's the opportunity to set an example, by promulgating family values and promoting brotherhood."

How? Simply by spending more quality time with his family, says Keefer. And if you have all the money you need, he explains, you can devote yourself to more important pursuits, such as helping 14 other Market America distributors reach millionaire status.

"This all starts by freeing folks from economic bondage," Keefer says. "And elevating their consciousness to a higher level to accept a greater mission than satisfaction of self through material gain."

Jim Grande is also a believer. A chemical engineer, he left the corporate world after 18 years, tired of the punishing pace and cutthroat mentality. In 1992, he became an independent distributor for Watkins Inc., a network marketing firm specializing in health products.

Today, Grande and and his wife, Marge, live near the pinnacle of the network marketing pyramid. They shuttle between homes outside of Newark, Del., and at the Delaware beach, and envision a new 18-bedroom oceanfront house.

One weekday morning, Grande, cell phone at the ready, relaxes at a favorite spot, a health food cafe and bookstore near the University of Delaware. His shiny Rolex and well-tailored clothes advertise his good fortune.

"Wherever I go, I'm essentially an ambassador of this lifestyle," Grande says. It's still a challenge to find converts, though.

"People are trained not to dream anymore," he says. "Some people you talk to are already there, but very, very few. Some you would scare" if you told them they could live as he does, says Grande.

"I wake up in the morning and the only thing I have to do is share with people something that will help them out," he says. And helping others, it's clear, can be profitable.

Grande says he earns a couple of hundred thousand dollars a year at present. "Ultimately, I want to make 10 million bucks a year," he says. It's a goal he thinks he can reach within eight years. And when he does?

"That [goal] may change," he says.

Despite their impassioned claims that their blend of capitalism and compassion can happily coexist, the testimonies of people like Deoul, Keefer and Grande haven't diminished long-held apprehensions about network marketing.

In their book, "False Profits: Seeking Financial and Spiritual Deliverance in Multi-Level Marketing and Pyramid Schemes," Robert L. FitzPatrick and Joyce K. Reynolds attack network marketing's claim to be a fulfilling career opportunity.

"It belittles pursuits which do not amass great wealth," the authors say. "It limits our work opportunity ... and distorts the pursuit of happiness."

The industry has perverted the idea of prosperity, the authors say. Once associated with community responsibility and personal standards of behavior, network marketing equates prosperity solely with wealth. And that wealth is not as accessible as it would seem.

"The ultimate lie is that 'anyone' can make money at this when mathematically those at the top of the pyramid can't lose while those at the bottom can't win," the authors say.

While hard numbers are elusive, the authors of "False Profits" cite a critical book about Amway, in which Stephen Butterfield found that "failures by the thousands were needed to support the small group of winners at the apex of the hierarchy."

As a result, relationships with friends, family members and colleagues can be permanently damaged by the need to pull them into multilevel marketing systems to meet the "relentless mathematical requirements of pyramid expansion," FitzPatrick and Reynolds say.

But as its reach and influence grows, network marketing is beginning to overcome its unsavory stigma. And its legitimacy isn't hurt when it attracts young entrepreneurs like Jason Pappas, an Ivy League graduate for whom network marketing was not a last resort, but a first choice.

A graduate of the prestigious Gilman School and Yale University, and a football star at both schools, Pappas attended the University of Maryland law school with the expectation that he would enter his godfather's law firm. Instead, he became a full-time distributor for American Communications Network.

"It's the first time I can honestly say that I love what I do," he says.

At first, he struggled with network marketing's questionable image and the psychic energy it took to be a salesman. The hardest things to overcome were the perceptions of family and friends, he says, especially those of his godfather and mentor.

Today, Pappas has a new mentor, Larry Raskin, a local American Communications celebrity who has helped him become a network marketing champion. Pappas' downline of distributors now numbers 600, through which he has acquired 5,500 customers. He hopes to become financially independent in the next three years. Any doubts about his chosen profession are gone.

"I don't apologize for being a network marketer," Pappas says. "I've got to do what's best for me."

For Peggy Hightower, a career in network marketing has made the difference between ground chuck and sirloin on the dinner table.

Before discovering her new career, "I did all the things the system said [to do]," Hightower says. "But I couldn't afford to get what I wanted ... Iwasn't in the right arena."

She was a registered nurse and a struggling single mother of two when a neighbor introduced her to Primerica Financial Services, an investment and insurance adviser that operates like a network marketing firm.

Today, along with her husband Eric, Hightower manages nine Primerica offices in Maryland and other states. The couple lives in a sprawling home in a gated Prince George's County community and travels frequently. Like Deoul and others who have found success, she and her husband believe that accumulating wealth is a God-given gift that must be shared.

"That's why I wake up every day so excited, not so much for me now, but for other people," Hightower says.

"It's not the money, but the ability to do things with it. ... It's just the freedom of [being able to help] people to find out who they are."

It's a message that seems to resonate with the hundreds who turn out for the weekly Pikesville Hilton recruitment meetings. By 7 p.m. each Wednesday, the parking lot overflows and guests fill conference rooms occupied by multilevel marketing representatives.

In one room, Pappas' mentor, Larry Raskin of American Communications Network, earns a standing ovation. Next door at the Nikken meeting, those in attendance testify to the power of magnets to soothe aching backs, feet, knees, indigestion, snoring.

Deoul, part Joan Rivers, part Billy Graham, delivers a bravura performance before a crowd more than 150 strong. Only a few are here for the first time. Seasoned network marketers return faithfully to these meetings. It's like coming to church to hear your favorite preacher.

But not everyone at the Hilton tonight shares Deoul's ambitious goals. Tony and Dawn Kreiner, two letter carriers from Pasadena, distribute Nikken products, but generally sell only enough to cover a monthly car payment.

But it doesn't matter to them, or their friend, Helen Piluk, a 76-year-old Nikken distributor, that Deoul's pitch assumes discontent on their part.

Instead they focus on Deoul's compassion; it's the key to her success, they agree.

"No matter what stage she's at, she's always helping people," Piluk says. "The only way you're going to make money is to help people."

Betty E. McFarland, a preschool teacher near retirement, drove up from Silver Spring to hear Deoul speak. At 60, she fears being idle after she retires, and so has become a Nikken distributor. The money is not her only motivation, though.

"I have so many friends who are ill," she says. "My very best friend has cancer. I can't wait to [help her]."

Finally, all the pitches are finished; all the testimonials uttered. The downliners trickle into the early spring night, renewed in their faith that direct sales is a conduit to freedom and salvation.

But just in case there's any doubt, there, shining in the evening light, is Deoul's Bentley, the one with the vanity plates that say "Nikken1."

Growth industry

In 1996, network marketing comprised about 78 percent of the $21 billion direct sales industry in the United States. During that same year, an estimated 7 million people in the United States worked in the network marketing field.

The top 5 product groups

1. personal-care products (cosmetics, jewelry, skin care)

2. home/family-care products (cleaning products, cookware, cutlery)

3. services (long-distance calls, vocational training, art)

4. wellness products (weight loss, vitamins)

5. leisure/educational products (travel, personal development, toys)

A network marketing parable

Many networkers claim that persistence is the critical factor in MLM [multi-level marketing] success. All other traits can be learned or acquired, with time. But unless you persevere through every obstacle, neither hard work, positive attitude, thick-skin, enthusiasm, generosity, nor teachability will have a chance to work their magic.

Richard Brooke is a case in point. For three years, after becoming a full-time network marketer, Brooke hung on by his teeth. He ended up begging money from relatives, running every credit card he had to the limit, selling his house, moving on to his sister's couch, and borrowing her car to get around. After three years, Brooke was $25,000 in debt and making about $4,000 a year. His family suggested as nicely as they could that maybe it was time to grow up and get a real job.

"I got a lot of pressure from my parents and sister," Brooke remembers. "They told me it wasn't working, that I shouldn't trust these MLM people, that I was spending money I didn't have."

But Brooke refused to give up.

"I just hung in there," he says, "I believed it would work. I'd seen it work for others."

It took three years of this torment before Brooke's ship came in. But, Brooke's dogged persistence was ultimately rewarded with fabulous wealth.

-- Excerpted from "Wave 3: The New Era in Network Marketing," by Richard Poe

Pub Date: 5/12/98

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