Chicago Pols Push Controversial Sales Programs
For more than a year and a half, state Sen. Patricia Van Pelt (D-Chicago) recruited people into a home-based sales organization that she called “the opportunity of a lifetime.”
Other local politicians, including Cook County Circuit Court Clerk Dorothy Brown and Illinois Secretary of State Jesse White, also have belonged to the company, 5Linx. But Van Pelt was one of the most visible company cheerleaders, seen on one promotional video for 5Linx boasting of her two luxury cars, a BMW and a Bentley. She was convinced to join the company after she heard about a “million-dollar earner” with 5Linx, she says on the video.
By recruiting scores of people who also recruited others into 5Linx, both Van Pelt and Brown rose to high levels in the company’s organization. It’s a controversial pitch, especially from public officials who wield power and influence, because critics of these types of sales organizations — so-called multilevel marketing firms — say a vast majority of people who pay to join end up failing. In multilevel marketing, people pay to become sales representatives and then move up in the company by recruiting more people to also sell products. Critics say the problem with these organizations is that they sell hope to people when only a small percent actually make money working at the companies.
“You are not permitted to make people think you are going to be rich with a company if the fact of the matter is 85 percent or more of people involved will not be successful,” said Bonnie Patten, executive director of advocacy organization Truth In Advertising. Patten’s non-profit organization has helped the Federal Trade Commission investigate multilevel marketing companies that made such claims, but 5Linx is not among them.
A spokesman for 5Linx defends the company’s business model and says representatives are advised not to make claims about potential income.
The Illinois attorney general’s office has received a handful of consumer complaints against 5Linx. In each case, the attorney general asked the company to work out problems with those who had filed the complaints.
Van Pelt said she left 5Linx in June to join a similar company, Utah-based Ariix International. In an interview with the Better Government Association, Van Pelt downplayed the wealth opportunities of 5Linx. Asked if many people make money after joining the company, she said: “I don’t have the slightest idea.”
Rochester, N.Y.-based 5Linx recorded sales of $109 million in 2014, a 3 percent decline from a year earlier, the company said. The company representatives sell a combination of services, such as satellite TV packages, and products, including coffee and diet supplements. The company’s revenue includes purchases by its own representatives and their families. Sales representatives are independent contractors, mostly working from their own homes. There are around 1,100 representatives in Illinois, roughly half from Chicago, the company says.
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“Anybody can get into this business and they can find their way to financial freedom,” Van Pelt said in the promotional video posted earlier this year.
In the video, titled “Senator Patricia Van Pelt’s 5Linx Platinum Lifestyle,” she blurs the line between her public office (a part-time job) and her sales position. Twice on the video Van Pelt’s name, title and the seal of the State of Illinois are featured prominently.
Despite the rhetoric in videos from Van Pelt about the wealth potential of 5Linx, she told the BGA that saving money on services, such as satellite TV and utilities, is the benefit most people realize after joining 5Linx. “It’s not about making money,” she said. “It’s about saving money.”
Van Pelt rose to platinum senior vice president — one of the highest rankings in the 5Linx organization. Van Pelt said she quit 5Linx and joined Ariix this year because she liked that company’s products. Ariix contributed $10,800 to Van Pelt’s political committee in September.
As the BGA previously reported, Brown is being investigated by federal authorities for possible corruption. Among the questions from investigators: Whether she exchanged jobs and promotions for money.
The BGA previously reported that Brown asked some of her own government employees to join 5Linx, an accusation she’s denied. Brown also has been criticized for soliciting campaign donations from her workers, and one of her employees was recently charged in federal court with lying to a grand jury. The employee allegedly gave a loan to a company affiliated with Brown and her husband.
Last spring, Brown was named a senior vice president of 5Linx.
In a video posted in October, Brown tells a cheering audience that 5Linx, which sells a wide range of services and products, can help anyone become prosperous: “I’m an attorney, a CPA and an MBA but, ladies and gentlemen, I joined 5Linx to be financially free. I knew that those credentials would not get me where I wanted to be and where I deserved to be.”
Van Pelt recruited political ally White to 5Linx. According to White’s spokesman, he wasn’t interested in being an active member after paying $249 to join the company.
White “was simply trying to be supportive of the Senator as part of her network. He was never an active member and did not sell company products or services.”
The BGA’s Andrew Schroedter contributed to this report.