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« on: August 25, 2006, 05:14:16 PM »

Citigroup, formed by the 1998 merger of Travelers and Citicorp, is the largest U.S.-- based bank holding company. It engages in questionable high interest rate lending in low income communities across the United States, and now globally, through its CitiFinancial unit. Though its investment bank, Citigroup underwrites and trades in pools of loans issued by other predatory lenders. It has assisted Enron, WorldCom, and others; it has settled a slew of securities charges on the cheap. Citigroup finances and is involved in such environmentally destructive projects, including as a purchaser, despite contrary claims and its surreal inaccurate advertisements. Citigroup is nearly the definition of "predator."

Maria Flores was frightened. She was behind on repaying a personal loan, she said, and her finance company in Atlanta was threatening to have her arrested. Flores agreed to take out another loan, which turned out to be a second mortgage on her home. When she couldn't keep up with the new debt on her yearly take-home pay of $22,000, the loan company had another solution: yet another mortgage. She wound up paying an annual percentage rate of 17.99 - three times the market rate for home loans - and nearly $700 for life, disability and unemployment insurance that was written into the contract. It's a familiar story: a consumer with modest income or bad credit being charged astronomical interest rates by a predatory lending outfit. But Flores was not the victim of some shady storefront operation. She got her loans from a division of Citigroup, the world's largest financial institution. In recent years, the bank has aggressively swallowed up so-called subprime lenders, establishing itself as a leader in high-interest loans marketed to low-income, blue-collar and minority customers.

CitiFinancial, the bank's principal subprime unit, charges many of its 4.3 million customers double or triple the prices paid by consumers with Citi credit cards and conventional mortgages - annual interest rates as high as 22% on mortgages and 40% on personal loans. In addition, a host of lawsuits accuse CitiFinancial of packing loans with hidden fees and overpriced insurance that help shove unsuspecting borrowers into foreclosure or bankruptcy. "Citigroup is the leader when it comes to predatory lending," said Matt Lee, executive director of Fair Finance Watch, a New York-based consumer group. "They've got it down to a science." Citi denies that it engages in predatory lending, insisting that high rates are reserved for high-risk customers who might not otherwise qualify for a loan. CitiFinancial helps "working people like teachers, firemen, nurses and secretaries," said spokeswoman Maria Mendler. "Our customers come back to us time and again because they like our service, our people and our product."

The high-interest loans have certainly bolstered Citi's bottom line. CitiFinancial posted earnings of more than $1.3 billion last year -- nearly one-tenth of Citigroup's total income. But the bank's subprime business has also sparked federal scrutiny and class-action lawsuits. In Pennsylvania, borrowers have accused CitiFinancial of using early-payment penalties to trap them into costly loans. A state appeals judge called the case "yet another vignette in the timeless and constant effort by the haves to squeeze from the have-nots even the last drop." Last fall, Citigroup agreed to pay $240 million to settle Federal Trade Commission (FTC) charges and a class-action lawsuit alleging that Associates First Capital, a finance company purchased by Citigroup in 2000, had manipulated 2 million customers into buying overpriced mortgages and credit insurance. It was the largest settlement in FTC history.

Citi insists that the predatory practices ended when it acquired Associates. Over the past two years, the bank has introduced a host of reforms, pledging to offer lower-cost loans to customers who have good credit but are paying prices far above the prime rate. So far, though, Citi has yet to make good on its promise. The lender has identified more than 25,000 customers being charged high interest who qualify for prime-rate mortgages. By the end of last year, however, just 110 had been moved into lower-rate loans. Former CitiFinancial employees report that the company has done little to change its ways. Kelly Raleigh, a former branch manager for CitiFinancial in Jefferson City, Tennessee, said Citi continues to pressure loan officers to ratchet up interest rates and sell more insurance. The message from above, she said, is clear: "Don't get in trouble. But you still have to do this. If you don't hit your quota, you're not gonna have a job."

In addition, borrowers say they are still being saddled with hidden costs. Gaylon Barnes, a heating and air-conditioning repairman in Atlanta, said CitiFinancial stuck him with more than $800 in unwanted insurance on a home loan in November. If Citi has reformed, he said, "I can't tell." In April, Barnes was one of 50 borrowers from the South and Midwest who traveled to New York to stage a protest at Citi's annual shareholders meeting. Organized by an advocacy group called the Neighborhood Assistance Corp. of America, the demonstrators drove through the night from Atlanta, arriving in a convoy of 8 passenger vans after 17 hours on the road. Just before the meeting, however, officials from Citigroup headed off a high-profile protest by agreeing to consider reworking the loans of thousands of borrowers who have lodged complaints. Those who made the trip say they are pleased that Citi agreed to concessions -- but some remain skeptical that the financial giant will voluntarily end its abuses. "They're trying to pacify the activists," said Maria Flores, who joined the convoy. "I think they'll take their sweet time responding -- until they're really forced to."

Current Law Students / PRIMERICA
« on: August 25, 2006, 04:55:53 PM »

Amway Corporation is among the world's largest and best-known direct sales/multi-level-marketing organizations. (Amway's IBOs - 'Independent Business Owners' - who sell via the Internet instead of offline do so under the name Quixtar). Some sociologists consider many such such organizations to be 'para-religions' - movements that, while they can not be classified as religions, include some religion-like aspects (e.g. enthousiasm for the cause, recruitment and motivational rituals, positive thinking, etcetera).

Regarding Amway, others go further, claiming that certain recruitment and motivational tactics used within the Amway network make this organization something of a "corporate cult."

So-called "corporate cults" are businesses whose techniques to gain employee commitment and loyalty are in some ways similar to those used by traditional cults.

Amway is a multi-level-marketing (MLM) company in which participating sales people can earn extra income by getting others to sign up (rather than merely earn a commission on items sold). Amway produces and sells recruitment literature, audio messages, pep-rallies and incentives to help its sales force bring other distributors on board. It is said that successful Amway distributors make the bulk of their income from these motivational products, rather than from sales of Amway's other products.

It should be noted that often individual distributors become so focused on Amway's promises that they seemingly can think and talk about nothing else. They try to recruit friends, co-workers, fellow church-members, neighbors and just about anyone they meet in order to try and build their 'downline' (sales network). Many people are turned off by such an unhealthy, cult-like, 'devotion' to a business scheme. In addition, many people who join and try to make money by working for Amway (or similar MLM companies) discover that they spend more on marketing-, recruitment and training packages than they earn from actual sales and/or recruitment efforts.

Not surprisingly, Amway itself states that it is not a cult:

- I've heard rumors that Amway is a cult. Is this true?
- No, Amway Corporation is a business and, similar to other large and established companies, has a distinct environment defined by shared business goals. Shared business philosophies should not be misinterpreted as a cult.

As a part of a group of companies whose most recent fiscal year global sales totaled $4.5 billion and which manufacture and distribute quality products and services, Amway offers a business opportunity that is open to all, regardless of religious beliefs, race or gender. Amway really is a microcosm of the world, with more than 3.6 million entrepreneurs worldwide representing nearly every culture, ethnic background, and political and religious belief finding in the Amway business a way to meet their goals.

While unique as individuals, Amway IBOs share a desire to succeed in a business of their own and recognize Amway as an excellent opportunity to achieve their goals. New IBOs receive training, motivation and support in building independent businesses, and are rewarded for their achievements.

A close look at Amway will reveal that any reference to Amway as a cult is incorrect.

In an unrelated issue, Amway has been the subject of a legal fight on charges of spreading rumors about competitor Procter & Gamble's alleged involvement with Satanism. But court records show that such rumors were spread by a small number of independent, indivdual Amway distributors. Moreover, as a lawyer for Amway pointed out, "Those individuals did nothing more than the thousands of other people who innocently talked about a rumor that they did not know at the time to be false. And the Amway distributors promptly retracted and denounced the message once they learned that it was false."

Note also that the Tenth Circuit Court of Appeals has ruled that the Amway Corporation is blameless in this matter:

The Federal Court of Appeals for the 10th Circuit held Amway Corporation blameless [additional] in the spread of an old rumor about Procter & Gamble being involved with Satanism. This decision should finally put to rest Procter & Gamble's unjust efforts to hold Amway responsible for the false rumor.

The Court of Appeals, reviewing a decision by a Utah federal district court, soundly rejected P&G's accusations against Amway by ruling: "In the present case, P&G cites no facts to show that Amway told the distributors to spread the [Satanism] message.'' The court also stated that "Nothing in the record supports the conclusion that spreading ... satanic rumors regarding P&G ... was naturally and ordinarily incident to Amway's business." (...)

"If a $40-billion dollar corporate Goliath like P & G continues to pursue its case against the four individuals in Utah, P&G will only prove that it is a corporate bully," said Mohr. "Those individuals did nothing more than the thousands of other people who innocently talked about a rumor that they did not know at the time to be false. And the Amway distributors promptly retracted and denounced the message once they learned that it was false. I am confident that these individuals will prevail; P&G is picking on them just because they are Amway distributors."

Earlier this week, Procter & Gamble and its attorneys, the Cincinnati firm of Dinsmore & Shohl, were ordered to stand trial in Michigan federal court on charges that they inappropriately funneled misleading documents to an anti- Amway web site run by an individual who was also a paid consultant.

"Before filing its first lawsuit, P&G praised Amway for its efforts to quash the Satanism rumor," Mohr said. "Since then, P&G has been cynically using Amway as a publicity scapegoat for a rumor they have not been able to stop for almost 20 years, and they let things get personal. We're glad to be vindicated."

"Primerica is a key distribution hub for Citigroup, the largest financial services company in the world."
The Wall Street Journal, April 19, 1999

Primerica Financial Services says it engages in direct marketing of financial services, notably term life insurance, long term care insurance, mortgage refinancing, mutual fund investing, and prepaid legal services.

Yet, Primerica exists primarily to gather new recruits rather than provide financial services. If the scholarship program is not taken advantage of, Primerica charges a $199 contribution to state licensing fees which total an average of $600-$700 (depending on state). The recruiting system of some representatives also sucks ass. Although rebuked in Annual Compliance Meetings, certain representatives invite guests to the business opportunity meeting under the impression that they are interviewing for a salaried position.

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