Letter from Robert M. Frisby, Assistant Director, Division of Enforcement, Bureau of Consumer Protection

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Division of Enforcement
Bureau of Consumer Protection
Robert M. Frisby
Assistant Director
February 19, 2008
Mr. Bill Gouldd
20625 Cooke Drive
Reno, NY 89521
Dear Mr. Gouldd:
The Division of Enforcement has reviewed your letters of April 27, 2007, and January
25, 2008, requesting a staff advisory opinion regarding whether your proposed direct sales
program "is in compliance with your organization and does not lend itself to being defined as
multi-level marketing, pyramid scheme or endless-chain scheme." I apologize for the delay in
responding to your inquiry.
We have analyzed your proposed direct sales program to determine whether it would
violate Section 5 of the Federal Trade Commission Act as it applies to the marketing of multi-
level marketing programs and pyramid schemes, as well as the "Order Preliminarily Approving
Stipulated Final Judgment and Class Action Settlement and Setting Fairness Hearing" entered by
the Court in FTC v. Equinox lilt'! Corp., No CV-S-99-0969 (D. Nev. Apr. 20, 2000). As you
know, you are a defendant in this action and subject to the Order entered therein. Part ill of the
Order prohibits you from, among other things, engaging or participating in any multi-level
marketing program or pyramid scheme as the Order defines those terms.
Based on our review of your proposed direct sales program, we cannot at this time reach
a definitive conclusion regarding whether the program would constitute either a multi-level
marketing program or a pyramid scheme as defined in the above Order. For that reason, we
cannot opine whether the program would comply with the above Order. Nor can we opine that
the program would not violate Section 5 of the FTC Act as the FTC has applied it to the
marketing of such programs and schemes. This is so because whether the program constitutes a
multi-level marketing program would depend in large measure on how it is actually
implemented. Similarly, whether the program would constitute a pyramid scheme in actual
practice would depend on a multitude of factors.
Several features of your proposed program raise concerns regarding whether, as actually
implemented, it would constitute a multi-level marketing program or a pyramid scheme as
defined in the Order. Such features include the potential de facto cost of participation in the
program, and incentives to recruit other participants into a downline. In addition, certain parts of

Bill Gouldd
February 19, 2008
Page 2
your description of your proposed program seem contradictory, which makes us unsure of how
you will implement your program.
As you know, one feature of a multi-level marketing program or pyramid scheme as
defined in the Order is that participants must pay the promoter to participate in the program.
Although your program states that there are no sign up fees to be involved, it also notes that
participants can incur expenses for sales tools like business cards, training materials, and
presentation aids. Presumably participants would obtain such items by purchasing them from
the promoter or someone affiliated with the promoter. It is also unclear whether participants
would incur any training fees or expenses. Depending on how the program is actually
implemented, such expenses for training or for items purchased from the promoter or someone
affiliated with the promoter could become de facto requirements to participate in the program.
In addition, several features of the program as actually implemented could induce
participants to focus on recruitment rather than retail sales. You state, for example, that
supervisory personnel must "document their ability to properly train and develop other sales
people by training a nainimum of two trainees." It appears that, for these trainees to become
supervisory personnel, they will each have to recruit and train two more trainees, and so on,
creating an incentive for endless recruitment.
Your letter of January 25, 2008, states that "[t]here are only two positions under the
company," qualified supervisors and trainees, that "[o]nce a trainee qualifies as a supervisor,
they move away from their supervisor and connect directly with the company," and that "[t]here
is no third position or level." These statements do not appear to leave room in the organizational
structure for a "sales team" as described in your description under Profit Sharing that "additional
profit sharing equal to 5% of the total monthly sales generated by those they have trained
directly and their sales team." This reference to a sales team appears to indicate that a
participant has an incentive to recruit and train another participant who then acquires a sales
team, i.e., a downline, so that the original participant can then profit from the sales of the sales
teamJdownline. This concern is heightened by the program's description of a variety of classes
beyond qualified supervisors and trainees, including "certified supervisor," "supervisory
personnel," "direct sales personnel," "sales personnel," "certified sales people," "sales team,"
and "end users" without defining the classes or indicating clearly how they relate to each other.
The staff does not represent you personally and cannot offer legal advice. Determining
whether a direct sales program constitutes a multi-level marketing program or a pyramid scheme
often requires a factual inquiry into the program itself, the way it is implemented, and the
context sUITounding it. Therefore, as stated earlier, we cannot opine that your program would
-2-

Bill Gouldd
February 19, 2008
Page 3
comply with the above Order or the FTC Act. I We suggest that you seek legal advice regarding
the legality ofthe direct sales program you have proposed before beginning the program.
In accordance with Section 1.3(c) of the Commission's Rules of Practice and Procedure,
16 C.F.R. § l.3(c) (1997), this informal staff opinion has not been reviewed or approved by the
Commission or by an individual Commissioner, and is given without prejudice to the right of the
Commission later to rescind the advice and, where appropriate, to commence a law enforcement
action. In addition, the views expressed in this letter are restricted to the facts described above.
Finally, this office retains the right to reconsider its advice, and with notice to the requesting
party, rescind or revoke its opinion if the response is used for improper purposes, or if it would be
in the public interest to do so.
Pursuant to Section 1.4 of the Commission's Rules of Practice and Procedure, 16 C.F.R.
§ lA, this response along with your request for advice will be placed on the public record, subject
to any limitations on public disclosure arising from statutory restrictions, the Commission's rules,
and the public interest. Ifyou wish to request confidential treatment of any of the information
you submitted in connection with your request for an advisory opinion, please submit a separate
request stating the reasons why you believe such information is entitled to confidential treatment.
Sincerely,
Robert M. Frisby
Assistant Director
I We did not analyze whether your program would comply with statutes other than the
FTC Act or any of the regulations enforced by the FTC.

Bill Gouldd
20625 Cooke Drive
Reno, NV 89521
January 25,2008
Mr. Peter J. Vander Nat
Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Re: Request for an advisory opinion relating to a direct sales program as it relates to the
Federal Trade Commission definitions regarding multi-level marketing.
Dear Mr. Vander Nat;
Hopefully you will remember me, I owned Equinox International, which you testified for as an
expert witness in case #CV-S-99-0969-JBR-RLH. 	Prior to this case I had spent hundreds of
thousands of dollars in attorney's fees and even employed in-house council to ensure we were
compliant with all laws, regulations and requirements, both state and federal. 	I was stunned
and traumatized when the F.T.C. charged my company with wrongdoing, as council had
continually assured me that everything we were doing was in complete compliance with all
agency regulations.
I have spent several years researching and developing a new business. 	This new business
will be invaluable to millions of businesses across America. 	Due to the current and near future
economic outlook, now would be a perfect time to launch this program. 	I have been waiting
more than nine months now, as I sent my original correspondence to the attention of Donald
Clark on April 27, 2007. 	While he assured me several months ago this issue had been
forwarded to the proper department, I have been unable to receive any further information from
him despite repeated unanswered e-mails and phone messages. 	I was looking through the
court documents and remembered you now work with the F.T.C. and certainly would be one of
those whose expertise would be involved in the determination that my new business concept
was not MLM. 	I believe there is absolutely no way this could be misconstrued as an MLM, but
I was also assured Equinox was in compliance in the past, only to discover the F.T.C. had a
different opinion.
I am writing to you as I never again want to go through another devastating incident like the
one I experienced as a result of believing and being assured by council that I was working

within the parameters of your agency, only to discover the opinion of the F.T.C. differed from
the opinion of those whom I relied upon for their expertise.
Therefore, 	I would 	like to 	receive 	confirmation, 	directly from 	your organization, 	that 	my
proposed business venture in direct sales is in compliance with your organization and does not
lend itself to being defined as a multi-level marketing, pyramid scheme or endless-chain
scheme.
I will describe my business model, marketing strategy and compensation plan, as well as why
I, and my attorneys, feel this concept does not constitute a multi-level marketing, pyramid or
endless-chain scheme. 	I understand that I am solely responsible for the facts and content of
this correspondence as you will be relying on the accuracy of the information I am providing as
the basis for the rendering of your decision. 	I would however, like to reserve the right to
possibly change the titles used to describe the level sales people achieve and the commission
amounts they can earn at those levels, as these things may need to be adjusted in order to
achieve maximum market potential. 	I will be happy to notify you in writing of any changes that
I find become necessary. 	Rest assured, with these small exceptions, the facts contained
within regarding my request and business plan will remain unchanged.
BUSINESS MODEL
Several years ago my wife started working in the credit card industry. 	From time to time she
has come to me with issues and problems merchants she had contacted were forced to deal
with. 	It became readily apparent that many independent business owners are now facing
almost insurmountable obstacles in today's business environment. 	The number of large
corporations and their fierce competitiveness is unprecedented in the history of American
business. 	Companies like Wal-Mart, Home Depot, Lowe's and Sports Authority, as well as
major restaurant chains such as Friday's, Olive Garden and Outback Steak House, just to
name a few, 	have 	sent countless 	independent business 	owners 	into bankruptcy. 	Their
massive buying power allows these companies to buy and sell products for less and advertise
more, while earning more profits than the small independent business owners. 	Additionally,
their outstanding profitability affords these large companies the ability to hire experts in the
fields of advertising, accounting, banking, insurance, computers, software, promotions, sales
training and marketing. 	As a result, they usually have superior business plans and support
systems in place and actually pay less for them, than their independently owned competitors.
Independent business owners, while understanding many specific aspects of their particular
businesses, often times have little knowledge or experience regarding advertising, marketing,
wholesale product purchasing, banking, credit card processing, check services, gift and loyalty
card programs, professional sales techniques, website development, web hosting, employee
retention and benefit programs, security and alarm monitoring, tool re-imbursement programs,
etc. 	Business owners are frequently unaware of the many alternatives available to them and
what are competitive rates for these products and services. 	As a result, large companies can
offer their customers more effective advertising and pricing while offering their employees
higher pay and benefits, putting thousands of independent businesses out of business every
year.

Many small business owners are also unaware of the many products and services available to
them that are designed to increase their sales while also decreasing their expenses and costs.
There are millions of independent businesses across America that could benefit from working
with a company, which I am currently designing, that will offer more competitive alternatives to
the products, services and methods they are currently using. 	Offering a wide variety of
business support products and services to businesses nationwide will give us the opportunity
to offer better group pricing, saving the owners money, as well as saving them valuable time,
since their needs will 	be met through one entity rather than dealing with many separate
companies.
I have found that millions of independently owned businesses across America now face the
reality that they must work cooperatively with one another if they are to remain competitive with
the major conglomerates. 	Cooperative advertising, marketing, purchasing and expert advice in
other areas are becoming a necessity if the independently owned small businesses across the
country are to survive and thrive, yet no one has developed an organization designed to fulfill
these needs and capitalize on this market. 	The opportunity now exists for the creation of a
central organization, a merchant alliance if you will, to coordinate these efforts and market
these products and services to independent business owners. 	I intend to create this alliance.
PREPARATION
I have spent limitless hours over the last seven years trying to figure out what went wrong in
my last company and 	how 	I could 	have 	prevented the 	debacle from 	occurring. 	I now
understand a large sales company must have checks and balances in place designed to
control 	rogue 	sales 	personnel. 	The 	business 	model 	I have 	developed 	and 	the 	details
described below have taken 	countless hours of thought. 	Every detail was designed to
accomplish three main objectives:
1. 	All persons who achieve a minimum amount of success will be promoted to work
directly with the company. 	The company will then be responsible for establishing a
direct relationship and accountability with each person prior to their being able to train
and supervise others. 	This system is designed to ensure control and compliance of all
sales personnel.
2. 	We can offer a true equal opportunity, one that allows each person who chooses to get
involved with the company to be immediately assigned to, and begin working directly
with someone who has already proven their ability to be successful in this business.
The immediate assistance and training that can be provided by an experienced person
will increase the chances for the success of the new person by dramatically reducing
the amount of wasted effort, improper conduct and confusion.
3. 	Sales personnel will receive just compensation for their efforts. 	This program does not
allow someone to earn income as a result of merely enrolling others. 	Those who are
responsible for establishing and managing the most business and earning the highest
profits for the company will receive equivalent earnings based on their results.

MARKETING STRATEGY
Direct sales personnel will market these products and services directly to business owners by
approaching them in person, or by phone, and presenting the products and services either
personally or with the aid of video presentations. 	The wide variety of products will allow our
sales people to present the most obvious products or services that a particular business will
benefit from initially and then add on other products and services as the business owners
begin to realize the benefits of our affiliation. 	A company that specializes in a particular area,
such as employee benefit programs, will supply each product and service we 	represent.
Should there be an apparent need for a business solution which does not yet exist, we will
work to design and develop the necessary products and programs. 	Our company will continue
to develop and offer more innovative 	products and services, 	each 	designed to 	help the
independent business owners be more successful and profitable. 	Our strategy will be for the
sales people to develop long-term relationships with the business owners through education,
communication and marketing support.
Our goal is to establish an independent business owner's network, or alliance, which will
coordinate mutual support for all members. 	By nationalizing the membership, all independent
business owners will 	have the opportunity to mutually support and promote each other's
businesses, while contributing and benefiting from the massive advertising and buying power
all members mutually can achieve. 	Obviously it will take many years to develop some of these
programs, products and services. 	I have already arranged to launch this program, pending
your response, with products that are currently available in the marketplace and plan to add
additional programs as the business network grows.
COMPENSATION PLAN
All 	sales 	personnel 	will 	be 	paid 	commission 	only. 	They will 	be 	eligible 	for 	increased
commissions and profit sharing based on the number and size of accounts that they are
personally responsible for establishing and maintaining. 	The pay structure will be a stair-step
commission program, allowing the sales people to earn a higher commission percentage as
their total sales volume increases. 	They will also have the opportunity to earn 	residual
commissions, paid monthly, for ongoing contracted products and services which are billed
monthly such 	as website 	hosting, 	alarm 	monitoring and the 	like, 	provided the 	individual
responsible for establishing the account remains actively involved with the company.
My experience 	during the trial with 	my last company 	revealed 	that the vast majority of
individuals who failed with the Equinox opportunity failed to comply with our company policies.
They either never understood the program and hurt themselves by purchasing more products
than they could sell, or did not completely understand what they were doing and passed their
ignorance 	on 	to 	others 	who 	did 	the 	same. 	It 	became 	apparent 	that 	many 	of 	the
representatives violated their signed contract with the company by purchasing more products
than they were allowed to have in their possession under our agreement. 	They did this in a
futile effort to earn checks on the production of others in their sales organization, while they
were unable to successfully sell the products themselves. 	I now realize this was a result of the

fact that there was no system in place to insure direct communication from the company to the
sales person in order to establish accountability.
My new concept assures these same short comings simply cannot occur. 	First and foremost,
the complexity of performing a business analysis, examining account statements, mastering
successful negotiation skills and the proper completion of contracts can be complicated and
will automatically eliminate the unskilled and intellectually challenged. 	Notwithstanding, it
remains imperative that the company establishes checks and balances to ensure that all sales
people 	understand 	and 	comply 	with, 	not 	only 	our 	policies, 	but 	also 	state 	and 	federal
regulations.
For these reasons, I have designed a three step "Certification" program that all supervisory
personnel 	must complete. 	In order to qualify, 	an 	individual must first demonstrate their
understanding and competence of the program, establishing accounts and selling equipment
themselves and achieving a predetermined number of personal sales. 	Secondly, they will be
required to pass a "Certification Test" demonstrating their comprehension of the company's
policies, 	qualifications 	and 	requirements, 	along 	with 	state 	and 	federal 	regulations 	and
knowledge of the various products, services and techniques necessary to achieve successful
results dealing with independent business owners. 	Finally, they will be required to document
their ability to properly train and develop other sales people by training a minimum of two
trainees, while working under the watchful eye of their certified supervisor, who has also
established their ability to successfully sell the products and services to business owners.
These two trainees will then remain under the direction of the supervisor, subsequent to the
promotion of the newly certified individual to the same supervisory level, who will now begin
working directly with the company. 	Both of these systems are designed to uncover any bad
habits, misconceptions or rogue attitudes.
As the company will obviously benefit from the expansion of the sales force by the efforts of
the certified supervisory personnel whom elect to recruit and train other successful sales
people, those who contribute to the growth of the company will be fairly compensated for their
efforts. 	Certified 	supervisors 	will 	be 	paid 	the 	difference 	between 	the 	commissions 	and
residuals the sales trainees they assist are eligible to earn and the commissions and residuals
they are qualified to receive themselves. 	For example, if a sales trainee is qualified to earn
50% commission on a sale and the supervisor who works with them is qualified to earn 70%,
the supervisor will be eligible to receive the difference of 20%. 	The same will hold true for the
residual earnings. 	These commission spreads would be permanent, provided the account
stays active and the sales personnel remain productive. 	The certified supervisory personnel
will have the opportunity to earn commission splits on the sales, leases and residual incomes
made by the new sales person, as well as on any accounts that they inherit from others
resulting from inactivity or termination.
There are only two positions under the company, qualified supervisors, who are responsible for
their own accounts, as well as assisting trainees establish accounts themselves. 	Once a
trainee qualifies as a supervisor, they move away from their supervisor and connect directly
with the company, as outlined in the diagram below. 	There is no third position or level. This is

essentially the same relationship between a sales manager and sales person working at a car
dealership or broker and agent in the real estate or insurance business.
TRAINING BONUS
The most productive certified sales people will also earn the opportunity to participate in two
incentive programs. 	The training bonus will reward certified sales people who recruit and
successfully train other certified sales people. 	Since they will essentially be working as sales
managers, training, supervising and assisting sales people, they will be rewarded for their
effort and results by receiving a portion of the profits the company is earning in the form of a
5% commission, based on the profits of the sales produced by those they personally are
responsible 	for 	training 	and 	assisting, 	provided 	they 	are 	qualified 	by 	producing 	a
predetermined number of personal account either on a monthly or yearly basis.
PROFIT SHARING
The most successful members of the sales organization will also have the opportunity to
participate in a profit sharing program and receive profit sharing equivalent to the total sales
they are personally responsible for developing. 	Those who train and develop others who
achieve the best results will be eligible to receive additional profit sharing equal to 5% of the
total monthly sales generated by those they have trained directly and their sales team.
DIRECT SALES PROGRAM
I, as well as my attorneys, believe this is a straightforward direct sales program, not to be
misconstrued as a multi-level marketing, pyramid or endless-chain scheme. 	Below I have
listed several reasons why this direct sales program does not contain aspects defining multi-
level marketing, pyramid or endless-chain schemes.
1. 	There are no sign-up fees to get involved with this company. 	The only expenses which
can be incurred would be for sales tools like business cards, training materials and
presentation aids, all of which are not required to participate in the program. 	Aside from
the business cards which are personalized, any sales tools which are current and in
resalable condition can be returned for a full refund within 30 days, should anyone

involved change their mind. 	Reasonable exceptions to the 30 day limitation certainly
will be granted.
2. 	There is no benefit or income earned for enrolling others. 	The mere act of enrolling
others into the sales program offers no incentive and will produce no income. 	The only
method of earning income in this sales company is to sell products and services directly
to the end user; business owners.
3. 	The only commissions paid to anyone will be as the result of products or services being
sold directly to end-users. 	There are no products or services which can be purchased
by, or sold to, any sales people involved in this company. 	This will be true with the
exception 	of 	someone 	who 	happens 	to 	own 	their 	own 	business 	outside 	of 	the
opportunity and decides to become end users of the services for the sole benefit of their
other business.
4. 	All sales volume needed for promotions must be personal sales. 	Sales personnel will
not be promoted based on the sales of those they enroll. 	They can however, earn
residual 	income if they inherit the 	responsibility of managing accounts which were
established by someone else, but were later transferred to them because the original
sales person was either terminated for cause or chose to no longer take responsibility
for managing that account. 	As an example; if I was a trainee and you were my certified
supervisor and I established two business accounts before deciding to quit and pursue
a different career, my accounts would then be assigned to you and you would begin
receiving the monthly residual earnings in exchange for your efforts in managing the
accounts and maintaining the relationship with those particular businesses.
5. 	There is no endless-chain pay plan. 	Those who decide to enroll other sales people into
the business receive no monetary compensation or benefit from the enrollment. All new
sales personnel will be assigned to work with an experienced and successful certified
supervisor. 	All supervisory personnel are on the same level, working directly with the
company, and are not stacked, chained, pyramided or part of any down-line. 	All sales
persons will work with the experienced certified supervisor until they achieve the same
level of success, at which time they are also transferred to work directly with the
company and are not stacked, chained, pyramided or part of any down-line. 	This will
create a direct relationship between the company and all those individuals who have
proven their ability to succeed in the business, allOWing the company to ensure proper
conduct of the certified supervisory personnel and their influences on new trainees.
This 	is 	the 	same 	manner 	in 	which 	real 	estate 	agents 	can, 	through 	sales 	and
performance, 	earn 	the 	right to 	become 	brokers and 	work directly with 	the 	parent
company while 	utilizing the 	efforts of new agents to 	help the company grow. 	In
essence, the company works directly with all certified supervisory personnel who, in
turn, 	work directly with 	all 	sales trainees in the same way a national 	retail 	sales
company would have district managers overseeing store managers.
6. 	The only products a sales trainee or certified supervisor will be able to purchase from
the 	company 	will 	be 	a 	company 	sales 	manual 	and 	possibly 	pertinent 	video

presentations. 	There are no commissions paid to anyone for the purchase of these
sales tools. 	The sales tools are solely designed and made available to sales personnel
in order to help them be more successful in their efforts of selling products and services
to businesses, the purchase of which is not a requirement to work with the company
and is strictly voluntary. 	These sales tools will be sold with a 30-day money back
guarantee provided they are returned in resalable condition. 	Certified supervisors must
sign a contract stating they understand they are not permitted to have or possess more
than ten training manuals, designed for immediate availability to new trainees, at any
time without having a documented reason and only after receiving written permission
from the company. Any violation of this policy could result in termination.
7. 	There will 	be no products, 	services or licenses purchased or inventoried by sales
personnel. 	There will be no other products or services that can be resold to other sales
personnel. 	There are no sales of equipment or services made to sales personnel either
from the company or from one another. 	No products can be stored or inventoried by
sales personnel other than a limited amount of sales tools with a refund policy in place
as defined above.
8. 	All products and services are sold, contracted and shipped directly to end users.
9. 	Any opportunity to attend sales training programs will be offered on a voluntary basis
and will not be a requirement to work with the company. 	All participants will be notified
of this policy and will be required to sign an agreement stating these facts prior to
admittance to any such events.
10. All 	persons involved will 	be required to provide documentation before making any
income claims. 	Any false, misleading or undocumented income claims will result in
termination of the individuals responsible and all participants involved with the company
will be notified of such violations and terminations.
SUMMARY
I have spent the last several years meeting with business owners and discussing the problems
they are encountering. 	I have been exploring alternatives and solutions while completing the
market research necessary to create this company. 	Most of the business owners I have
spoken with are very excited about the benefits they will gain as a result of becoming part of
this merchant alliance program. 	No aspects of this business plan have been initiated as I
understand that your agency will not comment regarding ongoing business entities. 	I am
prepared to begin this business venture after I receive a response from your office and will
continue to prepare for the initial launch as I await your reply.
I feel it is necessary to know that your agency agrees this is simply a direct sales program
before moving forward. 	Alternatively, I would also appreciate being notified if there are any
aspects of this program you feel may be defined otherwise, so that I can make any necessary
changes to ensure complete compliance prior to the launch of the company.

As unfortunate as it may be, I have learned the hard way that agencies like the Federal Trade
Commission, on occasion, have a different perspective regarding these issues than even
highly 	respected 	law 	firms. 	This 	is 	why 	I 	am 	most 	interested 	in 	understanding 	your
perspective, as the opinion of your agency is certainly of utmost importance. 	I am willing to do
anything in my power to assure you my intentions are honorable. 	My past experience with
your agency was far too costly; both emotionally and financially, to ever want to encounter a
similar experience. 	I am willing to do whatever it takes to work within your requirements, I am
simply asking for an advisory opinion so I know I am in complete compliance. 	I do not want to
be involved in anything that could be misconstrued as multi-level marketing or a pyramid
scheme and will continue to make every attempt to ensure I comply with all federal, state and
local laws.
I realize you and your offices are extremely busy and I certainly respect and appreciate your
time and response in this matter. 	If I can be of any assistance to answer any questions or
provide more information I can be reached by phone at (775) 786-2455, or bye-mail at
BG1 RHINO@AOL.COM. 	You can rest assured I will work relentlessly to make certain all
those who choose to work with this company will have a realistic opportunity to be successful
in 	this 	business-to-business 	enterprise; 	confirming 	every 	aspect 	of 	this 	endeavor 	is 	in
compliance with your agency is an important part of this objective.
Thank you for your time and consideration in these matters.
s~
Bil~'UI~I"""'-

ORIGINAL
BILL GOULDD
20625 Cooke Drive
Reno, NV 89521
April 27, 2007
Mr. Donald S. Clark
Office of the Secretary
Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Re: Request for an advisory opinion relating to a direct sales program as it relates to the
Federal Trade Commission definitions regarding multi-level marketing.
Dear Mr. Clark;
I owned and operated Equinox International and, as a result, was the defendant in case #CV-
S-99-0969-JBR-RLH. 	Prior to this case I had spent hundreds of thousands of dollars in
attorney's fees and even employed in house council to ensure we were compliant with all laws,
regulations and requirements, both state and federal. 	I was stunned and traumatized when
your agency charged my company with wrongdoing, as council had continually assured me
that everything we were doing was in complete compliance with all agency regulations.
I am writing to you as I never again want to go through another devastating incident like the
one I experienced as a result of believing and being assured by council that I was working
within the parameters of your agency, only to discover the opinion of your organization differed
from the opinion of those whom I relied upon for their expertise.
Therefore, 	I would 	like to 	receive 	confirmation, 	directly from 	your organization, 	that my
proposed business venture in direct sales is in compliance with your organization and does not
lend itself to being defined as a multi-level marketing, pyramid scheme or endless-chain
scheme.
I will describe my business model, marketing strategy and compensation plan, as well as why
I, and my attorneys, feel this concept does not constitute a multi-level marketing, pyramid or
endless-chain scheme. 	I understand that I am solely responsible for the facts and content of

this correspondence as you will be relying on the accuracy of the information I am providing as
the basis for the rendering of your decision. 	I would however, like to reserve the right to
possibly change the titles used to describe the level sales people achieve and the commission
amounts they can earn at those levels, as these things may need to be adjusted in order to
achieve maximum market potential. 	I will be happy to notify you in writing of any changes that
I find become necessary. 	Rest assured, with these small exceptions, the facts contained
within regarding my request and business plan will remain unchanged.
BUSINESS MODEL
Several years ago my wife started working in the credit card industry. 	From time to time she
has come to me with issues and problems merchants she had contacted were forced to deal
with. 	It became readily apparent that many independent business owners are now facing
almost insurmountable obstacles in today's business environment. 	The number of large
corporations and their fierce competitiveness is unprecedented in the history of American
business. 	Companies like Wal-Mart, Home Depot, Lowe's and Sports Authority, as well as
major restaurant chains such as Friday's, Olive Garden and Outback Steak House, just to
name a few, 	have sent countless 	independent business owners into bankruptcy. 	Their
massive buying power allows these companies to buy and sell products for less and advertise
more, while earning more profits than the small independent business owners. 	Additionally,
their outstanding profitability affords these large companies the ability to hire experts in the
fields of advertising, accounting, banking, insurance, computers, software, promotions, sales
training and marketing. 	As a result, they usually have superior business plans and support
systems in place and actually pay less for them, than their independently owned competitors.
Independent business owners, while understanding many specific aspects of their particular
businesses, often times have little knowledge or experience regarding advertising, marketing,
wholesale product purchasing, banking, credit card processing, check services, gift and loyalty
card programs, professional sales techniques, website development, web hosting, employee
retention and benefit programs, security and alarm monitoring, tool re-imbursement programs,
etc. 	Business owners are frequently unaware of the many alternatives available to them and
what are competitive rates for these products and services. 	As a result, large companies can
offer their customers more effective advertising and pricing while offering their employees
higher pay and benefits, putting thousands of independent businesses out of business every
year.
Many small business owners are also unaware of the many products and services available to
them that are designed to increase their sales while also decreasing their expenses and costs.
There are millions of independent businesses across America that could benefit from working
with a company, which I am currently designing, that will offer more competitive alternatives to
the products, services and methods they are currently using. 	Offering a wide variety of
business support products and services to businesses nationwide will give us the opportunity
to offer better group pricing, saving the owners money, as well as saving them valuable time,
since their needs will be met through one entity rather than dealing with many separate
companies.

I have found that millions of independently owned businesses across America now face the
reality that they must work cooperatively with one another if they are to remain competitive with
the major conglomerates. 	Cooperative advertising, marketing, purchasing and expert advice in
other areas are becoming a necessity if the independently owned small businesses across the
country are to survive and thrive, yet no one has developed an organization designed to fulfill
these needs and capitalize on this market. 	The opportunity now exists for the creation of a
central organization, a merchant alliance if you will, to coordinate these efforts and market
these products and services to independent business owners. 	I intend to create this alliance.
PREPARATION
I have spent limitless hours over the last five years trying to figure out what went wrong in my
last company and how I could have prevented the debacle from occurring. 	I now understand a
large sales company must have checks and balances in place designed to control rogue sales
personnel. 	The business model I have developed and the details described below have taken
countless hours of thought. 	Every detail was designed to accomplish three main objectives:
1. 	All persons who achieve a minimum amount of success will be promoted to work
directly with the company. 	The company will then be responsible for establishing a
direct relationship and accountability with each person prior to their being able to train
and supervise others. 	This system is designed to ensure control and compliance of all
sales personnel.
2. 	We can offer a true equal opportunity, one that allows each person who chooses to get
involved with the company to be immediately assigned to, and begin working directly
with, someone who has already proven their ability to be successful in this business.
The immediate assistance and training that can be provided by an experience person
will increase the chances for the success of the new person by dramatically reducing
the amount of wasted effort, improper conduct and confusion.
3. 	Sales personnel will receive just compensation for their efforts. 	This program does not
allow someone to eam income as a result of merely enrolling others. 	Those who are
responsible for establishing and managing the most business and eaming the highest
profits for the company will receive equivalent eamings based on their results.
MARKETING STRATEGY
Direct sales 	personnel 	will 	market these 	products and 	services to 	business 	owners 	by
approaching them in person, or by phone, and presenting the products and services either
personally or with the aid of on-line video presentations. The wide variety of products will allow
our sales people to present the most obvious products or services that a particular business
will benefd: from initially and then add on other products and services as the business owners
begin to realize the benefits of our affiliation. 	A company that specializes in a particular area,
such as employee benefit programs, will supply each product and service we represent.
Should there be an apparent need for a business solution which does not yet exist, we will
work to design and develop the necessary products and programs. Our company will continue

to develop and 	offer more innovative products and 	services, each designed to help the
independent business owners be more successful and profitable. 	Our strategy will be for the
sales people to develop long-term relationships with the business owners through education,
communication and marketing support.
Our goal is to establish an independent business owner's network, or alliance, which will
coordinate mutual support for all members. 	By nationalizing the membership, all independent
business owners will have the opportunity to mutually support and promote each other's
businesses, while contributing and benefiting from the massive advertising and buying power
all members mutually can achieve. 	Obviously it will take many years to develop some of these
programs, products and services. 	I have already arranged to launch this program, pending
your response, with products that are currently available in the marketplace and plan to add
additional programs as the business network grows.
COMPENSATION PLAN
All 	sales 	personnel 	will 	be 	paid 	commission 	only. 	They will 	be 	eligible 	for 	increased
commissions and profit sharing based on the number and size of accounts that they are
personally responsible for establishing and maintaining. 	The pay structure will be a stair-step
commission program, allowing the sales people to eam a higher commission percentage as
their total sales volume increases. 	They will also have the opportunity to eam residual
commissions, paid monthly, for ongoing contracted products and services which are billed
monthly such as website 	hosting, alarm monitoring and the 	like, 	provided 	the 	individual
responsible for establishing the account remains actively involved with the company.
My experience during the trial revealed that the vast majority of individuals who failed with the
Equinox opportunity failed to comply with our company policies. 	They either never understood
the program and hurt themselves through ignorance, or did not completely understand what
they were doing and passed their ignorance on to others who did the same. 	It became
apparent that many of the representatives violated their signed contract with the company by
purchasing more products than they were allowed to have in their possession under our
agreement. 	They did this in a futile effort to eam checks on the production of others in their
sales organization, while they were unable to successfully sell the products themselves. 	This
was a result of the fact that there was no system in place to insure direct communication from
the company to the sales person in order to establish direct accountability.
My new concept assures these same short comings simply cannot occur. 	First and foremost,
the complexity of performing a business analysis, examining account statements, mastering
successful negotiation skills and the proper completion of contracts can be complicated and
will automatically eliminate the unskilled and intellectually challenged. 	Not with standing, it
remains imperative that the company establishes checks and balances to ensure that all sales
people 	understand 	and 	comply 	with 	not 	only 	our 	policies, 	but 	also 	state 	and 	federal
regulations.
For these reasons, I have designed a three step "Certification" program that all supervisory
personnel must complete. 	In order to qualify, an individual must first demonstrate their

understanding of the program and their ability to establish 	accounts and sell 	equipment
themselves by achieving a predetermined number of personal sales. 	Secondly, they will be
required to pass a "Certification Tesf' demonstrating their comprehension of the company's
policies, 	qualifications 	and 	requirements, 	along 	with 	state 	and 	federal 	regulations 	and
knowledge of the various products, services and techniques necessary to achieve successful
results dealing with independent business owners. 	Finally, they will be required to document
their ability to properly train and develop other sales people by training a minimum of two
trainees, 	while working 	under the watchful eye of their certified 	supervisor, 	who 	is also
successful at selling the products and services to business owners. 	These two trainees will
then remain under the direction of the supervisor, subsequent to the promotion of the newly
certified individual to the same supervisory level, who will now begin working directly with the
company. 	Both of these systems are designed to uncover any bad habits, misconceptions or
rogue attitudes.
As the company will obviously benefit from the expansion of the sales force by the efforts of
the certified supervisory personnel whom elect to recruit and train other successful sales
people, those who contribute to the growth of the company will be fairly compensated for their
efforts. 	Certified 	supervisors will 	be paid 	the difference between the commissions 	and
residuals the sales trainees they assist are eligible to eam and the commissions and residuals
they are qualified to receive themselves. 	For example, if a sales trainee is qualified to eam
50% commission on a sale and the supervisor who works with them is qualified to eam 70%,
the supervisor will be eligible to receive the difference of 20%. 	The same will hold true for the
residual eamings. 	These commission spreads would be permanent, provided the account
stays active and the sales personnel remain productive. 	The certified supervisory personnel
will have the opportunity to eam commission splits on the sales, leases and residual incomes
made by the new sales person, as well as on any accounts that they inherit from others
resulting from inactivity or termination. 	This is essentially the same relationship between a
sales manager and sales person working at a car dealership or broker and agent in the real
estate or insurance business.
TRAINING BONUS
The most productive certified sales people will also eam the opportunity to participate in two
incentive programs. 	The training bonus will reward certified sales people who recruit and
successfully train other certified sales people. 	Since they will essentially be working as sales
managers, training, supervising and assisting sales people, they will be rewarded for their
effort and results by receiving a portion of the profits the company is eaming in the form of a
5% commission, based on the profits of the sales produced by those they personally are
responsible for training and assisting.
PROFIT SHARING
The most successful members of the sales organization will also have the opportunity to
participate in a profit sharing program and receive profit sharing equivalent to the total sales
they are personally responsible for developing. 	Those who train and develop others who

achieve the best results will be eligible to receive additional profit sharing equal to 5% of the
total monthly sales generated by those they have trained directly and their sales team.
DIRECT SALES PROGRAM
I, as well as my attorneys, believe this is a straight forward direct sales program, not to be
misconstrued as a multi-level marketing, pyramid or endless-chain scheme. 	Below I have
listed several reasons why this direct sales program does not contain aspects defining multi-
level marketing, pyramid or endless-chain schemes.
1. 	There are no sign up fees to get involved with this company. 	The only expenses which
can be incurred would be for sales tools like business cards, training materials and
presentation aids, all of which are not required to participate in the program. 	Aside from
the business cards which are personalized, any sales tools which are in current and in
resalable condition can be returned for a full refund within 30 days, should anyone
involved change their mind. 	Reasonable exceptions to the 30 day limitation certainly
will be granted.
2. 	There is no benefll: or income earned for enrolling others. 	The mere act of recruiting
others into the sales program offers no incentive and will produce no income. 	The only
method of earning income in this sales company is to sell products and services directly
to end user business owners.
3. 	The only commissions paid to anyone will be as the result of products or services being
sold to retail, end-user accounts. 	There are no products or services which can be
purchased by, or sold to, any sales people involved in this company. 	This will be true
with the exception of someone who happens to own their own business outside of the
opportunity and they decide to become end users of the services for the sole benefit of
their other business.
4. 	All sales volume needed for promotions must be personal sales. 	Sales personnel will
not be promoted based on the sales of those they enroll. 	They can however, earn
residual income if they inherit the responsibility of managing accounts which were
established by someone else, but was later transferred to them because the original
sales person was either terminated for cause or chose to no longer take responsibility
for managing that account. As an example; if I was a trainee and you were my certified
supervisor and I established two business accounts before deciding to quit and pursue
a different career, my accounts would then be assigned to you and you would begin
receiving the monthly residual earnings in exchange for your efforts in managing the
accounts and maintaining the relationship with those particular businesses.
5. 	There is no endless-chain pay plan. Those who decide to enroll other sales people into
the business receive no monetary compensation or benefIT from the enrollment. 	All new
sales personnel will be assigned to work with an experienced and successful certified
supervisor. 	All supervisory personnel are on the same level, working directly with the
company, and are not stacked, chained, pyramided or part of any down-line. 	All sales

persons will work with the experienced certified supervisor until they achieve the same
level of success, at which time they are also transferred to work directly with the
company and are not stacked, chained, pyramided or part of any down-line. 	This will
create a direct relationship between the company and all those individuals who have
proven their ability to succeed in the business, allowing the company to ensure proper
conduct of the certified supervisory personnel and their influences on new trainees.
This 	is 	the 	same 	manner 	in 	which 	real 	estate 	agents 	can, 	through 	sales 	and
performance, 	eam the 	right to 	become brokers and 	work directly with the 	parent
company while utilizing the efforts of new agents to help their company grow. 	In
essence, the company works directly with all certified supervisory personnel who, in
tum, work directly with 	all sales trainees in the same way a national retail sales
company would have district managers overseeing store managers.
6. 	The only products a sales trainee or certified supervisor will be able to purchase from
the 	company 	will 	be 	a 	company 	sales 	manual 	and 	possibly 	pertinent 	video
presentations. 	There are no commissions paid to anyone for the purchase of these
sales tools. 	The sales tools are solely designed and made available to sales personnel
in order to help them be more successful in their efforts of selling products and services
to businesses, the purchase of which are not a requirement to work with the company
and are strictly voluntary. 	These sales tools will be sold with a 30-day money back
guarantee provided they are retumed 	in resalable and current condition. 	We will
obviously make announcements prior to, and make exceptions immediately following,
any changes in the sales materials. 	Certified supervisors must sign a contract stating
they understand they are not permitted to have or possess more than ten training
manuals, designed for immediate availability to new trainees, at any time without having
a documented reason and only after receiving written permission from the company.
Any violation of this policy could result in termination.
7. 	There will be no products, services or licenses purchased or inventoried by sales
personnel. 	There will be no other products or services that can be resold to other sales
personnel. 	There are no sales of equipment or services made to sales personnel either
from the company or from one another. 	No products can be stored or inventoried by
sales personnel other than a limited amount of sales tools with a refund policy in place
as defined above.
8. 	All products and services are sold, contracted and shipped directly to end users.
9. 	Any opportunity to attend sales training programs will be offered on a voluntary basis
and will not be a requirement to work with the company. 	All participants will be notified
of this policy and will be required to sign an agreement stating these facts prior to
admittance to any such events.
10.AII persons involved will be required to provide documentation before making any
income claims. 	Any false, misleading or undocumented income claims will result in
termination of the individuals responsible and all participants involved with the company
will be notified of such violations and terminations.

SUMMARY
I have spent the last several years meeting with business owners and discussing the problems
they are encountering. 	I have been exploring alternatives and solutions while completing the
market research necessary to create this company. 	Most of the business owners I have
spoken with are very excited about the benefits they will gain as a result of becoming part of
this merchant alliance program. 	No aspects of this business plan have been initiated as I
understand that your agency will not comment regarding ongoing business entities. 	I am
prepared to begin this business venture after I receive a response from your office and will
continue to prepare for the initial launch as I await your reply.
I feel it is necessary to know that your agency agrees this is simply a direct sales program
before moving forward. 	Alternatively, I would also appreciate being notified if there are any
aspects of this program you feel may be defined otherwise, so that I can make any necessary
changes to ensure complete compliance prior to the launch of the company.
As unfortunate as it may be, I have learned the hard way that agencies like the Federal Trade
Commission, on occasion, have a different perspective regarding these issues than even
highly 	respected 	law firms. 	This 	is 	why 	I 	am 	most 	interested 	in 	understanding 	your
perspective, as the opinion of your agency is certainly of utmost importance. 	I am willing to do
anything in my power to assure you my intentions are honorable. 	My past experience with
your agency was far too costly; both emotionally and financially, to ever want to encounter
another one. 	I am willing to do whatever it takes to work within your requirements, I am simply
asking for an advisory opinion so I know we are in compliance. 	I do not want to be involved in
anything that could be misconstrued as multi-level marketing or a pyramid scheme and will
continue to make every attempt to ensure we comply with all federal, state and local laws.
I realize you and your offices are extremely busy and I certainly respect and appreciate your
time and response in this matter. 	If I can be of any assistance to answer any questions or
provide more information I can be reached by phone at (561) 702~1321, or bye-mail at
BG1RHINO@AOL.COM. 	You can rest assured I will work relentlessly to make certain all
those who choose to work with this company will have a realistic opportunity to be successful
in this business-to-business enterprise. 	Confirming that every aspect of this endeavor is in
complete compliance with your agency is an important aspect of this objective.
Thank you for your time and consideration in these matters.
Cc: Phil Sechler
Williams & Connolly