In 1990, Keith Raniere started a business called Consumers’ Buyline, a multilevel marketing company which offered an opportunity for members to purchase groceries and consumer goods at a discount and earn a commission by recruiting other members. CBI did not negotiate the discounts on products but sold memberships under an arrangement with a buying club called Purchase Power, which was owned independently, had been in business since 1964 and had established products-savings with vendors.
Raniere’s company expanded within a couple of years to have tens of thousands of members. But like a meteor it rose quickly then crashed to earth. Raniere’s position is that “by standing up to some of the largest [retail] corporations in the United States, Consumers’ Buyline ruffled feathers and disrupted the hold these corporations had on the American consumer,” which resulted in “state investigations by several government entities, the expense of which served to strain the company economically.”
The investigations were in response to complaints in various states into the company’s multilevel marketing practices.
Raniere’s Pre-Sentence Investigation Report states that Consumers’ Buyline was shut down because of fraud. However, legally, there was actually never a finding of fraud nor an admission by anyone associated with the company that a fraud or other crime took place. The company however did agree to pay fines and to cease conducting business in a number of states to resolve the litigation.
On September 3, 1996, Raniere, Karen Unterreiner and Pamela Cafritz, each of whom had executive positions with the company, entered into a Consent Order and Judgment with the New York State Attorney General stipulating that the representatives of Consumers’ Buyline deny improper conduct and that no finding had been made of any such conduct, and that Consumers’ Buyline will pay the Attorney General $40,000 to resolve all claims. Similar settlements were made with other states.
A woman, who is known to Frank Report and some of our readers for her previous comments, worked for Purchase Power and came in contact with Raniere during this period of his life, about eight years before he became Vanguard. Here are some of her observations. She has asked that her name and her photograph not be used in this story.
By A Woman Who Knew Him Before He Was Vanguard
He said, “I have a new idea. Something different. I have one of the world’s highest IQs. Trust me. I know how to make this work.”
And thus Keith Raniere seduced one of the country’s most ethical businessmen – a man once lauded by Ralph Nader.
Not me. I had an inborn distaste for multilevel marketing, with its false, evangelical fervor. But for a brief time I thought to myself, maybe this harmless looking young man and his friendly, attractive entourage might be on to something.
His buying club plan included members making money by recruiting other members for commissions.
This was pre-Internet, pre-Facebook, and pre-fact check. Suddenly, we were all in.
So we drove, at various times, to Upstate New York and elsewhere, meeting, greeting, and glad-handing the connected people.
Everyone was swell and smiling, with high hopes for the future. What could go wrong? Our modest-sized buying club company had been successful and respected for decades.
We devoted ever more resources to serving our new mammoth client — Consumers’ Buyline.
Complaints rolled in, of double debiting and lack of response, but were dismissed by the client as easily explained and resolved.
In 1990, on assignment, I drove to Flintlock Lane as a company representative. It was undeniably benign and suburban. Welcomes all around. The home was opened to me even though I had said I ought to stay in a hotel.
These were the nicest, most hospitable people you could imagine.
Keith smiling brightly. Pam and Karen – beautiful, accomplished and smart. I recall their long, luxurious hair and bright eyes shining with
They seemed perfectly comfortable and content.
I slept uneasily upstairs (as a vendor who really should have been in a hotel). In the morning, they were all out running, presumably.
The house was silent. No indication of wrongdoing anywhere.
Our company’s General Manager grew enamored and star struck. At lunch in a fancy Austin hotel, he, a lawyer, and a CBI henchman asked if I would betray my generous mentor and cooperate with them to help wrest control of the company.
I said, No, and lunch was quickly done.
Then, suddenly, all eggs were in one, horrible basket with no way of turning back.
Our smaller company predictably collapsed under the weight of CBI and its demands, and was sold off in short order.
The Guru moved on to the next endeavor without a care or a thought. National Health Network, ESP, and on and on.
I often wonder what the lovely, intelligent women in his orbit got out of the whole thing.
Certainly not luxury, ease, or fidelity in any meaningful sense of those terms.
These things are not traditional crimes. Much of it smacks of manipulation, and harassment. Does Keith Raniere deserve to be imprisoned?
I cannot say, though the RICO charges seem sound to me. I believe the relentless, vengeful lawsuits and threatening letters tell a darker tale. It’s OK to fashion your own mythical country, but only if you can do so without intimidation, tyranny, and disdain for the laws of the land in which you live.
I for one am glad he’s stopped, at least for now.
The final consent decree shows there never was a factual finding by any court that the company engaged in fraudulent conduct or that Raniere was found guilty of any fraudulent activities.