[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,In 2004,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,a new company called Vemma Nutrition
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,started offering a life-changing \Nopportunity
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,to earn full time income \Nfor part time work.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Vemma’s offer was open to everybody,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,regardless of prior experience \Nor education.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,There were only two steps to start \Nget started earning:
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,purchase a $500-600 starter kit \Nof their liquid nutrition products,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and recruit two more members \Nto do the same.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Vemma Nutrition Company grew quickly,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,becoming a global operation
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,that brought in 30,000 new members \Nper month at its peak.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,There was just one problem—
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,while the company generated $200 million\Nof annual revenue by 2013,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,the vast majority of participants \Nearned less than they paid in.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Vemma was eventually charged with \Noperating a pyramid scheme:
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,a common type of fraud
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,where members make money
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,by recruiting more people to buy in.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Typically, the founder solicits an initial\Ngroup of people
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,to buy in and promote the scheme.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,They are then encouraged to recruit others
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and promised part of the money \Nthose people invest,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,while the founder also takes a share.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,The pattern repeats for each group \Nof new participants,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,with money from recent arrivals funneled \Nto those who recruited them.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,This differs from a Ponzi scheme,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,where the founders recruit new members
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and secretly use their fees to \Npay existing members,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,who think the payments come \Nfrom a legitimate investment.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,As a pyramid scheme grows,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,it becomes increasingly difficult for new \Nrecruits to make money.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,That’s because the number of participants\Nexpands exponentially.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Take a structure where each person has \Nto recruit six more to earn a profit.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,The founder recruits six people to start,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and each of them recruits six more.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,There are 36 people in that second\Nround of recruits,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,who then each recruit 6 people—
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,a total of 216 new recruits.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,By the twelfth round of recruiting,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,the nearly 2.2 billion newest members \Nwould have to recruit
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,over 13 billion more people total \Nto make money–
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,more than the entire world population.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,In this scenario,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,the most recent recruits,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,over 80% of the scheme’s participants,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,lose all the money they paid in.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,And in real life,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,many earlier joiners lose out too.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Pyramid schemes are illegal \Nin most countries,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,but they can be difficult to detect.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,They are presented as many \Ndifferent things,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,including gifting groups,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,investment clubs, and multi-level \Nmarketing businesses.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,The distinction between pyramid schemes \Nand legitimate multi-level marketing
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,can be particularly hazy.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,In theory, the difference is that members \Nof multi-level marketing companies
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,primarily earn compensation from selling\Na particular product or a service
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,to retail customers,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,while pyramid schemes primarily compensate\Nmembers for recruitment of new sellers.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,In practice, though,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,many multi-level marketing companies make \Nit all but impossible
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,for members to profit purely \Nthrough sales.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,And many pyramid schemes, \Nlike Vemma Nutrition,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,disguise themselves as legal multi-level\Nmarketing businesses,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,using a product or service to hide the\Npay-and-recruit structure.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Many pyramid schemes also capitalize \Non already existing trust within churches,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,immigrant communities, \Nor other tightly knit groups.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,The first few members are encouraged \Nto report a good experience
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,before they actually start \Nmaking a profit.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Others in their network follow \Ntheir example,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and the schemes balloon in size
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,before it comes clear that most members\Naren’t actually profiting.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Often, the victims are \Nembarrassed into silence.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Pyramid schemes entice people with the\Npromise of opportunity and empowerment.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So when members don’t end up making money,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,they can blame themselves \Nrather than the scheme,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,thinking they weren’t tenacious enough \Nto earn the returns promised.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Some victims keep trying,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,investing in multiple schemes,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and losing money each time.