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FRAME / UNFRAME
 
 
3/18/98
How IHI works
Pyramid scheme alleged
How IHI works

     According to the Securities and Exchange Commission, here is how International Heritage Inc. has operated in most states:

  • IHI signs up an independent sales representative, who pays $250 to operate a "business center." That fee is described as a "down payment" on $500 in IHI products.
        
  • The representative recruits other salespeople.
  • The representative gets commissions from those recruits, who try to sign up still more fee-paying salespeople.
  • Each representative can operate up to seven business centers, each with its own recruits, by paying IHI a total of $1,750.
  • The representatives also pay IHI $100 for a sales kit.
         What worries the SEC: At some point, the market is saturated, new sales representatives cannot be recruited, and the recruits in the last wave lose their money.
         Note: In North Carolina, the Attorney General's Office forced IHI last June to modify its methods, making it difficult for the company to do much business in the state.

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