Candidate's Campaign Fundraising:
MLM or Pyramid
An Associated Press story originating from Mobile,
Alabama on February 1 reported that Jim Zeigler, a Republican planning
to announce his candidacy for the state auditor position on February
9, was ordered by the attorney general's office to immediately halt
his fund-raising campaign, labeling it a pyramid scheme.
Zeigler's fund-raising program called "$top the
Wa$te Inc.", pays commissions to campaign workers who recruit
other campaign workers. He calls it a direct marketing approach.
But Assistant Attorney General Bill Garrett said the payment plan
violates Alabama's Deceptive Trade Practices Act, and ordered the
program halted and funds from the "pyramid scheme" returned
to the donors.
The Deceptive Trade Practices Act prohibits selling
or offering to sell, either directly or associated with the sale
of goods or services, a right to participation in a pyramid sales
scheme. Violation is a misdemeanor.
Zeigler, an attorney, agreed to temporarily suspend
the fund-raising activity, pending a hearing. He says it is
free to join his plan, and that Garrett's interpretation of the
law is "clearly erroneous".
Jack Skinner, Zeigler's donor coordinator, told Associated
Press reporter Garry Mitchell that "networking is a proven
method" to raise money. "It's not an endless chain
concept. No one has tried this." He explained to
Mitchell that a person could earn $2,000 in commissions by raising
$12,600, for example, recruiting 126 people donating $100 each.
He said, "it's not a get rich scheme." He told Mitchell
it would "cut the strings" attached to a political candidate
by special interests.
Zeigler told Mitchell that politics is "too dependent
on big donors" and his method would allow more citizens to
participate in fund-raising. His donations started on December
1 with two people and he now has 36 "independent fund-raising
coordinators." He added, "we expect to have over
1,000 paid part-time campaign workers by the June 4 Republican primary."
According to Mitchell's article, Zeigler's plan calls
for coordinators to raise or donate $100 once, and recruit two independent
fund-raising contractors who each do the same. You quickly
earn $200. You then earn dozens of $5 and $25 checks totaling
$2,000, starting from a $100 base, according to Zeigler.
Money goes to the "$top the Wa$te" fund
and Zeigler's auditor campaign. A former Public Service Commission
member, Zeigler told Mitchell he came up with the "untested"
fund-raising plan because he had been outspent in his previous campaigns.
Associated Press (by Garry Mitchell), February 2, 2002