A small crowd gathered at Auckland’s plush Langham Hotel last week to hear how a visiting American infomercial marketer could help them make lots of money and leave them feeling calmer, healthier and more in control of their lives if they just coughed up US$1000 to become a member of what he calls his secret society.
Thirty people, who travelled from all over New Zealand, started applauding the speaker, Kevin Trudeau, before he’d even opened his mouth. From the reception, you would have thought he’d already made them rich.
Several had paid the stiff joining fee and said they had also been paying Trudeau US$150 monthly to belong to the Global Information Network he created.
Dressed in a smartly cut suit and gesturing at the audience with his right hand so the enormous diamond ring he wore caught the light, Trudeau is a smooth salesman and persuasive speaker.
But he’s had a chequered past.
As a leading infomercial presenter in the 1990s, he had already been convicted of credit card fraud and larceny. He pleaded guilty on the fraud charges in 1991 and was sentenced to two years’ jail. The year before he’d also pleaded guilty to charges relating to US$80,000 of worthless cheques.
Trudeau then moved on to become a self-described consumer advocate, selling a range of self-improvement and health products via informercials.
Infomercials for his Mega Memory audio tapes that promised to teach listeners how to get a photographic memory were a familiar sight on New Zealand television screens.
But in 1998 the US Federal Trade Commission, which works for consumers to prevent fraudulent and unfair business practices, filed a complaint against Trudeau, alleging he made false or misleading claims in infomercials for six different products.
He had claimed the products could deliver dramatic results including significant weight loss, the reversal of baldness, and achievement of a photographic memory. He also claimed certain products could cure addictions to heroin, alcohol, cigarettes and food, as well as cure depression.
He wrote books to support the TV segments, including his Natural Cures ‘They’ Don’t Want You to Know About, which he claimed could cure cancer. Despite selling so many copies that it made the New York Times bestseller list in 2005, the book failed to include a single remedy.
The court issued a preliminary injunction and then a permanent one in 2004 banning the infomercials, but allowing him to publish informational books providing he didn’t misrepresent the content.
That injunction remains in place and three years ago a US federal judge ordered the marketer to pay more than US$37 million for violating the 2004 order by making claims in a new book that he could help people lose weight.
When in Auckland Trudeau said he had a “contempt fine which he was still arguing about”.
The popularity of infomercials has waned with the rise of the internet and none of Trudeau’s legal battles so far have prevented him from selling get rich quick schemes online – or in person.
He’s appeared on current affairs shows 20/20 and Nightline in the United States where he was confronted by journalists over his books on natural cures. However, his invitation-only society, the Global Information Network (GIN), appears to have flown under the media radar so far.
He confirmed the GIN network and his Your Wish is Your Command CDs were not classified as products so fell through a loophole.
“This is classified in the US as informational publications so it’s all protected by the First Amendment anyway. But we don’t sell this on television,” he said.
In promotions, Trudeau compared his GIN society to others groups exclusive to “the privileged elite” such as the Illuminati, the Freemasons and Yale University’s Skull & Bones. He claims membership of GIN will tell people how to turn their US$1000 membership fee “investment” into millions of dollars in just a few years, how to get out of debt, buy gold or silver, protect assets, invest in real estate, get a better lover, overcome phobias, get cars for free and gain inside information about unidentified flying objects and psychic phenomena.
If that isn’t enough, members are also told they’ll get access to free cruises where many seminars about GIN’s teachings will be held.
Several Kiwis attending the Auckland presentation attended one such cruise last year. It sailed from Miami to the Cayman Islands with speakers giving live presentations about the topics GIN advises on along the way. In future, Trudeau told the audience, members-only exclusive luxury club houses all around the world would be available.
He said he also planned to open a bank in the safe haven of the Cayman Islands, just for his members, so they would never need to pay tax again.
In his presentation Trudeau was open about the fact that the cost of his club was pricey, but if the joining fee and US$150 a month seemed like a lot of money, “you probably need [this club] more than you realise”, he said.
He repeatedly stressed the presentation was “only the beginning” of the club’s presence in New Zealand.
“A couple of years from now, here in New Zealand, we’ll have probably dozens of local chapters. We will have a club house here in the next three years, we’ll probably have some lodges as well. We will have one-day seminars here as well … probably every other month we’ll have a live one-day event. John Grey [author of Men Are From Mars, Women Are From Venus] could be coming in to give a seminar on relationships, it could be a whole host of world famous people coming, and there’s no cost to you – absolutely free! We’ll have the bank, we’ll also have insurance offered to members at incredible rates because if we have a … club with a lot of members we’ll have a lot of buying power. So there will be a lot of advantages,” Trudeau promised.
When questioned later on his plans to open a bank here, Trudeau said it seemed like a big undertaking.
“Because we own the global enterprise it could be multiple [banks]. Our goal and objective is to set up in some countries, it may be a credit union and in some countries it may be a different financial institution,” Trudeau said.
When further questioned on the club houses he alluded to in his presentation, Trudeau admitted none were open yet but the first was planned for next year.
“We have several markets right now where the biggest members are so it could change but Chicago is looking like a very strong possibility for the first one. Similar to, uh, do you have Knights of Columbus halls? In America, we have Knights of Columbus, Moose lodges and Elks lodges – there’s a couple of dozen of these fraternal groups and they all have local club houses,” Trudeau said.
Members are further wooed with a 14-CD set of audio recordings, Your Wish Is Your Command, which he claims was taped at a private seminar that took place at a secret spot in the Swiss Alps where attendees paid him US$10,000 each for the two days. After signing up to GIN, members are encouraged to buy the CDs – 10 packs of 14 discs costs US$500 – and give them out to potential members. If they convince someone to sign up, they’ll pocket 20 per cent of that person’s monthly membership fees and a smaller percentage of the fees from anyone signed up by the members they signed up, and so on.
Pyramid schemes are illegal in New Zealand. Under the Fair Trading Act both the promoters and participants can be charged. The Commerce Commission defines a pyramid scheme as something that offers a financial return based on the payments made by new recruits.
Ministry of Consumer Affairs spokesman Alastair Stewart said the main problem with pyramid scams was not only did they hook you in, but they encourage you to hook other people in.
The Commerce Commission had not received any complains about GIN. Its spokeswoman Allanah Kalafatelis said while the commission was not in the business of providing financial advice, it was always prudent before parting with a significant sum of money to thoroughly check out what’s on offer.
“Generally, if a get-rich-quick scheme sounds too good to be true, it is. We can’t tell people how to get rich quick, but we can tell them how to get poor quick – by investing in pyramid selling schemes.”
Financial Advisor Association of New Zealand spokesman Edward Richards said anyone being offered financial advice or opportunities, particularly if they’re overseas opportunities or unsolicited, should get an independent view from a qualified financial adviser.
Trudeau refused to discuss the identities of the alleged 30 other founding members of GIN. He said that was confidential because they were members of other US societies. He also refused to say how many members the club had in New Zealand but it was in the “tens of thousands” worldwide.
In his presentation, Trudeau told the audience that one member had made US$5.4m through GIN by selling memberships and collecting commission on those members’ fees but later refused to provide proof of the claim or the name of the member he’d referred to.
“No, you can’t interview him, he actually is – when you become a member you can also remain anonymous, be an anonymous member, keep a low profile.”
He said his previous run-ins with the law were all explained in his books. While he claimed not to have been convicted of either fraud or of producing misleading ads, court documents clearly show his conviction of credit card fraud and larceny and subsequent run-ins with the FTC over his informercials.
“What I’m doing worldwide – exposing corporate and government corruption – I’m also obviously putting myself in the cross-hairs of governments for a lot of those attacks,” he said.
Originally published in the Sunday Star Times