Amway: The Untold Story: Hart v. Amway et al

UNITED STATES DISTRICT COURT MIDDLE DISTRICT FLORIDA JACKSONVILLE DIVISION

BRIG HART and LITA HART,                )      Filed

U-CAN-II, INC. and                      )      97 APR-8 PM 4:19

B&L HART ENTERPRISES, INC.,             )

                                        )

	Plaintiffs,                     )      CASE NO.

                                        )      97-349-CIV-J-20B

v.                                      )

                                        )

AMWAY CORPORATION;                      )      A JURY TRIAL

DEXTER YAGER, individually and          )      IS DEMANDED

d/b/a INTERNET SERVICES                 )

CORPORATION; RICHARD SETZER,            )      INJUNCTIVE RELIEF

individually and d/b/a                  )      IS SOUGHT

SETZER INTERNATIONAL, INC.; HAROLD      )

GOOCH, Jr., individually                )

and d/b/a GOOCH SUPPORT SYSTEMS, INC.;  )

WILLIAM CHILDERS, individually          )

and d/b/a TNT of CHARLOTTE, INC.;       )

ANGELO D'AMICO, individually and        )

d/b/a D'AMICO INTERNATIONAL;            )

TIM FOLEY, individually and             )

d/b/a FOLEY & CO.; JAMES D.             )

HAYES, JR., individually                )

and d/b/a FREEDOM EXPRESS, INC.;        )

CARLOS M. MARIN, JR., individually and  )

d/b/a MARIN & ASSOCIATES, INC.;         )

JOE RODRIQUEZ,                          )

                                        )

Defendants.                             )

COMPLAINT

Plaintiffs Brig and Lita Hart, U-Can-II, Inc. and B&L Hart Enterprises, Inc. 

bring this Complaint against the Defendants for damages, injunctive relief 

and an accounting. For their Complaint, Plaintiffs allege as follows:

INTRODUCTION



1. 

Brig and Lita Hart (referred to herein alternately as "Plaintiffs" or "the 

Harts") are Amway distributors. Over a period of 18 years, they have built 

a domestic and international network of over 200,000 independent down-line 

distributors (the "Hart Network"), achieving the coveted "Double Diamond" 

status in the Amway Corporation. The Hart Network is extremely valuable to 

the Harts as a means of selling Amway's products. And, equally important, 

it serves as a ready market for the Harts' sale of Amway-related 

motivational and training tapes, books, and other selling aids, known in 

Amway as "business support materials", or more colloquially, "tools." It 

also allows the Harts to sponsor various Amway-related rallies, seminars and 

weekend conferences that are attended by large numbers of distributors in 

the Hart Network. Many high-level distributors, such as the Harts, sell 

business support materials and sponsor functions through corporations, such 

as U-Can-II, ancillary to the distributor's independent Amway business. 

Amway encourages the provision of business support materials to distributors 

and has adopted rules to regulate their sale. The Harts obtain their 

business support materials primarily from Defendant InterNET Services 

Corporation ("InterNET"). The backbone of the business support materials 

business are audio recordings of presentations given at functions sponsored 

by high-level Amway distributors such as the Harts. The Harts routinely 

provide InterNET with such audio recordings, which are the original sources 

from which many of the business support materials sold by InterNET are 

produced.



2.

This lawsuit arises out of a series of unlawful actions by Defendants 

Richard Setzer and William Childers, both of whom are fellow Amway 

distributors "up-line" to the Harts and both of whom have achieved a status 

in Amway at least as high as the "Diamond" level. The suit also arises 

because of unlawful actions by various distributors "down-line" to the 

Harts, including Defendants Angelo D'Amico, James D. Hayes, Carlos M. Marin, 

Jr., and Joe Rodriquez. Acting alone and in concert, these "Distributor 

Defendants" are, and have been, profiting directly from the sale of business 

support materials to various members of the Hart Network without respecting 

the "lines of sponsorship" that have formed the foundation of Amway's 

distribution system since the company's inception. Over a period of time, 

the Distributor Defendants have engaged in an illegal attempt to circumvent 

or squeeze the Harts out of their distribution system so that these 

Defendants can sell business support materials to members of the Hart 

Network without compensating the Harts, as these Defendants otherwise are 

contractually obligated to do. The Distributor Defendants' conduct 

represents a wrongful and illicit scheme to misappropriate for themselves 

the Harts' share of the income generated by the huge number of down-line 

distributors that the Harts meticulously have built through a fervent 

dedication to Amway's original principles of partnership, integrity, 

personal worth, achievement and personal responsibility. Amway's own 

written rules -- which expressly govern the activities at the heart of this 

Complaint -- refer to such a course of conduct as "an unwarranted and 

unreasonable interference in the business of other Amway distributors." 

(Section B, Rule 4, Rules of Conduct of Amway Distributors).



3.

The Distributor Defendants' activities violate long-standing contractual 

obligations that govern the relationship of the parties; the Racketeer 

Influenced and Corrupt Organizations Act ("RICO"); the Sherman Antitrust 

Act; and various other statutes. In addition, the Distributor Defendants' 

activities give rise to liability under various common law causes of action. 

In total, the Distributor Defendants' ruthless pursuit of the Harts' 

business enterprise, and interference with the Harts' relationships with 

their distributors, have deprived the Harts of tens of millions of dollars 

in revenues. This case is intended to remedy and stop these wrongful 

actions.



4.

Broadly speaking, the Distributor Defendants have engaged in a pattern and 

practice of unfair and illegal business dealings, in at least four respects:



    a. Defendants Setzer, Setzer International, Inc., Childers, and TNT of 

Charlotte, Inc., have conspired to slowly eliminate Plaintiffs from the 

business support materials distribution chain by directly providing these 

materials to distributors in Plaintiffs' domestic and international Amway 

network without Plaintiffs' permission. The conspiracy has as its purpose 

the elimination of the Plaintiffs' participation in the business so that 

these Defendants can avoid compensating Plaintiffs for sales of business 

support materials to the Hart Network. These actions violate each of these 

Defendants' agreements with Amway, which agreements prohibit distributors 

from selling such materials outside of Amway's lines of sponsorship. These 

actions also violate the course of dealing and implied contractual 

obligations that have been formed in the distribution network for such 

materials;



    b. On information and belief, as part of the conspiracy, Defendants 

Setzer, Setzer International, Inc., Childers, and TNT of Charlotte, Inc., 

have provided Plaintiffs with incomplete and false statements of the volume 

of business support materials sold to distributors in the Hart Network, and 

have refused to account to Plaintiffs for the volume of business support 

materials provided to distributors in the Hart Network. By engaging in these 

fraudulent and misleading actions, these Defendants have tricked Plaintiffs 

into accepting compensation -- or substantially less compensation than is 

due -- for the volume of business that these Defendants have engaged in with 

distributors in the Hart Network.



    c. Defendants D'Amico, Hayes, Marin, and Rodriquez, individually and on 

behalf of Defendants D'Amico International, Freedom Express, Inc., and Marin 

& Associates, Inc., acquiesced in and facilitated the circumvention of the 

Hart Network line of sponsorship and agreed to boycott Plaintiffs in the 

market for business support materials by conspiring and agreeing implicitly 

and/or explicitly with Defendants Setzer and Childers that none of the 

Distributor Defendants would purchase or sell business support materials 

from or to Plaintiffs.



    d. Defendant Childers has refused to fairly and adequately compensate 

Plaintiffs for their marketing	efforts and ticket sales in conjunction with 

"major functions", which are Amway-related events held throughout the 

country drawing tens of thousands of Amway distributors. Childers' conduct 

violates an implied contract that is based upon a course of dealing -- and 

other equitable theories of law -- and that arises out of the parties' 

business arrangements regarding past major functions.



5.

Each of the Distributor Defendants in this action is or was a participant in 

the above described conspiracy and/or scheme to commit unlawful business 

practices through fraudulent and tortious activity.



6.

The Distributor Defendants' continuing scheme was, and is, violative of the 

Federal Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. § 1961 

et. seq.) and the Sherman Antitrust Act (15 U.S.C. § 1). These Defendants' 

individual actions were, and are, violative of Florida common law tort and 

contract principles.



7.

Plaintiffs have been injured as a result of the Defendants' conduct, and 

will continue to be injured, unless it is stopped. In this action, 

Plaintiffs seek to recover tens of millions of dollars of lost revenues, 

injunctive relief to prevent future injury and an accounting.



8.

Amway has been named in this action solely for purposes of injunctive relief 

compelling Amway to enforce its rules regarding business support materials. 

No monetary damages are being sought against Amway in this Complaint.



9.

Defendants Yager, InterNET, Gooch, Gooch Support Systems, Inc., Foley, and 

Foley & Co., Inc. have been named in this action solely for purposes of 

injunctive relief compelling these Defendants to comply with their 

contractual obligations and other duties regarding business support 

materials. In addition, Plaintiffs have named Yager, InterNET, Foley, and 

Foley & Co. for purposes of obtaining and equitable accounting from these 

defendants. No monetary damages are being sought against Yager, InterNET, 

Gooch, Gooch Support Systems, Inc., Foley, and Foley & Co., Inc. in this 

Complaint.

JURISDICTION AND VENUE



10.

Jurisdiction over this action is based on the existence of federal questions 

in this case (28 U.S.C. § 1331), inasmuch as claims are asserted under laws 

of the United States -- the Racketeer Influenced and Corrupt Organizations 

Act (18 U.S.C. § 1961 et. seq. and Section 1 of the Sherman Antitrust Act 

(15 U.S.C. § 1). This Court has supplemental jurisdiction over Plaintiffs' 

state law claims (28 U.S.C. § 1367).



11.

Venue is proper in this Court as the Defendants conduct business in the 

State of Florida and in this judicial district, a number of the Defendants 

reside in this district and a substantial part of the events giving rise to 

the causes of action on which this Complaint is based occurred within this 

judicial district (28 U.S.C. § 1391(b) and 18 U.S.C. § 1965).

PARTIES



12.

Brig and Lita Hart are a married couple. They are both citizens of the State 

of Florida, residing in St. Johns County. The Harts conduct business in the 

State of Florida and the United States through two corporations, U-Can-II, 

Inc. and B&L Hart Enterprises, Inc. Both corporations are incorporated under 

the laws of the State of Florida, and have at all times been in good 

standing and duly authorized to transact business in Florida.



13.

Defendant Amway Corporation ("Amway") is a privately held Michigan 

corporation with its principal place of business in Ada, Michigan. Amway is 

one of the largest direct-selling companies in the world. More than 2.5 

million distributors merchandise Amway's products on a person-to-person 

basis through a multi-level marketing network in more than 70 countries and 

territories. Amway conducts business in the State of Florida and is subject 

to suit in Florida.



14.

Defendant Dexter Yager ("Yager") is a citizen of the State of Florida. Yager 

is a distributor of Amway products and is involved in the promotion of Amway 

distributorships. He conducts business through Defendant InterNET Services 

Corporation, Inc. (as referred to previously, "InterNET"). On information 

and belief, InterNET is organized and existing under the laws of the State 

of North Carolina, with its principal place of business at 12201 Steele 

Creek Road, Charlotte, North Carolina 28273. InterNET is in the business of 

manufacturing and selling Amway-related business support materials for use 

by Amway distributors, and of organizing seminars, rallies and major 

functions, attended by Amway distributors. Yager and InterNET conduct 

business in the State of Florida and are subject to suit in Florida.



15.

Defendant Richard Setzer ("Setzer") is a citizen of the State of South 

Carolina. Setzer is a distributor of Amway products and is involved in the 

promotion of Amway distributorships. He conducts business through Defendant 

Setzer International, Inc. ("Setzer International"). On information and 

belief, Setzer International is organized and existing under the laws of the 

State of South Carolina, with its principal place of business at 3089 South 

Highway 14, Greer, South Carolina 29650. Setzer International is in the 

business of purchasing and re-selling business support materials for use by 

Amway distributors, and of organizing seminars, rallies, and major 

functions, attended by Amway distributors. Setzer and Setzer International 

conduct business in the State of Florida and are subject to suit in Florida.



16.

Defendant Harold Gooch, Jr. ("Gooch") is a citizen of the State of North 

Carolina. Gooch is a distributor of Amway products and is involved in the 

promotion of Amway distributorships. He conducts business through Defendant 

Gooch Support Systems, Inc. On information and belief, Gooch Support 

Systems, Inc. is organized and existing under the laws of the State of North 

Carolina, with its principal place of business at 6 Curtis Court, 

Thomasville, North Carolina 27360. Gooch Support Systems, Inc. is in the 

business of purchasing and re-selling business support materials for use by 

Amway distributors, and of organizing seminars, rallies, and major 

functions, attended by Amway distributors. Gooch and Gooch Support Systems, 

Inc. conduct business in the State of Florida, and are subject to suit in 

Florida.



17.

Defendant William Childers ("Childers") is a citizen of the State of 

Florida. Childers is a distributor of Amway products and is involved in the 

promotion of Amway distributorships. He conducts business through Defendant 

TNT of Charlotte, Inc. ("TNT"). On information and belief, TNT is organized 

and existing under the laws of the State of North Carolina, with its 

principal place of business at 7005 Shannon Willow Road, Charlotte, North 

Carolina 28266. TNT is in the business of purchasing and re-selling business 

support materials for use by Amway distributors, and of organizing seminars, 

rallies, and major functions, attended by Amway distributors. Childers and 

TNT conduct business in the State of Florida and are subject to suit in 

Florida.



18.

Defendant Angelo D'Amico ("D'Amico") is a citizen of the State of Florida. 

D'Amico is a distributor of Amway products and is involved in the promotion 

of Amway distributorships. He conducts business through Defendant D'Amico 

International, Inc. ("D'Amico International"). On information and belief, 

D'Amico International is organized and existing under the laws of the State 

of Florida, with its principal place of business at 11560 Old Saint 

Augustine Road, Suite 4, Jacksonville, Florida 32258. D'Amico International 

is involved in the business of purchasing and re-selling business support 

materials for use by Amway distributors, and of organizing seminars, 

rallies, and major functions, attended by Amway distributors. D'Amico and 

D'Amico International conduct business in the State of Florida and are 

subject to suit in Florida.



19.

Defendant Tim Foley ("Foley")is a citizen of the State of Florida. Foley is 

a distributor of Amway products and is involved in the promotion of Amway 

distributorships. He conducts business through Defendant Foley & Co., Inc. 

("Foley & Co."). On information and belief, Foley & Co. is organized and 

existing under the laws of the State of Florida, with its principal place of 

business at 11541 Lane Park Road, Tavares, Florida 32778-9674. Foley & Co. 

is involved in the business of selling Amway products to Amway distributors 

and the general public. Foley & Co. is also in the business of purchasing 

and re-selling business support materials for use by Amway distributors, and 

of organizing seminars, rallies, and major functions, attended by Amway 

distributors. Foley and Foley & Co. conduct business in the State of Florida 

and are subject to suit in Florida.



20.

Defendant James D. Hayes, Jr. ("Hayes") is a citizen of the State of 

Florida. Hayes is a distributor of Amway products and is involved in the 

promotion of Amway distributorships. He conducts business through Defendant 

Freedom Express, Inc. ("Freedom Express"). On information and belief, 

Freedom Express is organized and existing under the laws of the State

of Florida, with its principal place of business at 1797 Old Moultrie Road, 

#101, St. Augustine, Florida. Hayes is involved in the business of 

purchasing and re-selling business support materials for use by Amway 

distributors. Hayes and Freedom Express conduct business in the State of 

Florida and are subject to suit in Florida.



21.

Defendant Carlos M. Marin, Jr. ("Marin"), is a citizen of the State of 

Florida. Marin is a distributor of Amway products and is involved in the 

promotion of Amway distributorships. He conducts business through Defendant 

Marin & Associates, Inc. ("Marin & Associates"). On information and belief, 

Marin & Associates is organized and existing under the laws of the State

of Florida, with its principal place of business at 7205 NW 19th Street, 

Suite 300, Miami, Florida. Marin is involved in the business of purchasing 

and re-selling business support materials for use by Amway distributors. 

Marin and Marin & Associates conduct business in the State of Florida and 

are subject to suit in Florida.



22.

On information and belief, Defendant Joe Rodriquez ("Rodriquez"), is a 

citizen of the State of Florida. Rodriquez is a distributor of Amway 

products and is involved in the promotion of Amway distributorships. He is 

involved in the business of purchasing and re-selling business support 

materials for use by Amway distributors. Rodriquez conducts business in the 

State of Florida and is subject to suit in Florida. On information and 

belief, Rodriquez, like the other Amway distributors engaged in the support 

materials business, uses a related corporate entity to help conduct such 

business. Plaintiffs intend to amend this Complaint, adding such entity as a 

defendant, once Plaintiffs discover the name of that company.

NATURE OF SPECIFIC CLAIMS



23.

Plaintiffs bring claims against the Defendants to recover damages and obtain 

equitable relief on the following specific grounds:



    (1) Plaintiffs have suffered and continue to suffer damages as a result 

of the Distributor Defendants' entering into and executing a combination 

and/or conspiracy -- in violation of the Federal Racketeer Influenced and 

Corrupt Organizations Act and the Sherman Antitrust Act -- to misappropriate 

Plaintiffs' business support materials network by creating distributor 

relationships directly with one another in violation of agreements that 

require Plaintiffs' participation in any such distributor arrangements; by 

misrepresenting to Plaintiffs that Plaintiffs were being fairly compensated 

for those distributor relationships that the Distributor Defendants formed; 

by boycotting Plaintiffs in the purchase and sale of business support 

materials; and by engaging in other tortious and actionable conduct as 

described below;



    (2) Plaintiffs have suffered and continue to suffer contract-related 

damages as a result of Setzer, Childers' and D'Amico's willful breaches of 

their contracts with Amway Corporation. Specifically, Setzer, Childers, and 

D'Amico have breached Rule 4 of Section B of the Rules of Conduct for Amway 

Distributors, which prohibits Amway distributors from selling business

support materials to Amway distributors whom he or she did not personally 

sponsor into the Amway multi-level marketing network. In addition, Setzer, 

Childers, and D'Amico have breached express and implied agreements that were 

created through written and oral communications and through a course of 

dealing and the business practices of the parties in this action and the 

distributors in the Amway network at issue in this case;



    (3) Plaintiffs have suffered and continue to suffer damages as a result 

of Setzer, Childers and D'Amico's tortious interference with Plaintiffs' 

business relations with Diamond-level distributors in the Harts' multi-level 

marketing Amway network and the related network for the sale of business 

support materials;



   (4) Plaintiffs have suffered and continue to suffer damages as a result 

of D'Amico, Hayes, Marin and Rodriquez's inducement of Setzer and Childers 

to breach Setzer and Childers' Amway distributor agreements and the implied 

contractual agreements among the distributors in the Amway network to which 

the Harts belong -- specifically Rule 4 of Section B of the Rules of Conduct 

for Amway Distributors as applied through the parties' course of dealing and

business practices -- by cutting Plaintiffs out of business support 

materials sales to the Hart Network;



    (5) Plaintiffs have suffered and continue to suffer damages as a result 

of the Distributor Defendants' conspiracy to boycott Plaintiffs in the 

market for Amway-related business support materials by agreeing not to 

adhere to or enforce Rule 4 as applied through the parties' course of 

dealing and business practices -- thus turning all distributors who purchase 

business support materials from InterNET into competitors in the business 

support materials market -- and by agreeing to not purchase or sell business 

support materials from or to the Plaintiffs; and



    (6) Plaintiffs are entitled to injunctive relief against Amway to compel 

Amway to enforce its business conduct rules, which prohibit Amway 

distributors from unreasonably and tortiously interfering with the business 

of other Amway distributors for personal financial gain, and prohibit 

distributors from selling business support material except through the line 

of sponsorship. Plaintiffs are also entitled to injunctive relief against 

the other Defendants to force their compliance with these rules and the 

other obligations they accepted in becoming Amway distributors.

FACTUAL ALLEGATIONS

Amway's Distributor Network

24.

Amway is a business engaged principally in the sale of consumer products and

services. Through its employees and more than 2.5 million distributors,

Amway engages in over $6.5 billion worth of sales a year, consisting of both

products manufactured by Amway and other companies.

25.

Amway's distributor network was -- and still is -- created by active

distributors sponsoring new distributors into the business. Distributors

earn income directly from the sale of Amway's products as well as

performance incentives based on the sales volume of individuals they have

sponsored into the Amway business.

26.

Amway's distributor network is sometimes referred to as a multi-level

marketing plan. In the United States, this network consists of hundreds of

thousands of Amway distributors linked together through lines of sponsorship

consisting of "up-line" and "down-line" distributors.

27.

The "up-line" of an Amway distributor is comprised of that distributor's

recruiter or "sponsor," that recruiter's recruiter, and so on "up the line"

of distributors. The "down-line" of an Amway distributor is comprised of

individuals that the particular distributor recruits, the recruited

individuals' recruits, and so on "down the line" of recruited distributors.

Every Amway distributor has the opportunity, through these arrangements, to

build and maintain a "business within a business", forming an independent

business network from which the independent distributor can profit. Respect

for a distributor's line of sponsorship is an essential component of that

business and is the foundation upon which the business acquires its value.

Distributor Relations

28.

The Amway business is based on two fundamental concepts: merchandising and

sponsoring.

29.

In the Amway Business Reference Manual, Amway encourages its distributors to

build their networks by starting with a list of those having a close

personal relationship to them -- friends, neighbors, and relatives.

(Business Reference Manual at p. 17).

30.

One of the essential and enduring standards by which the Amway business is

operated is "Partnership". Amway is built on the concept of partnership,

beginning with the partnership between its founders and continuing with the

concept of partnership among the founders, the distributors and Amway's

employees. Amway represents that the partnership concept means building

trust and confidence within the distributor network.

31.

Amway presents the Amway distributor organization as a unique association of

people known for its high level of teamwork, commitment and communication.

Indeed, an Amway distributor's up-line sponsor is required to work closely

to train the distributor and his or her recruits. Amway states that a

recruit's fellow distributors are available to help the recruit introduce

others to the business and to assist the recruit as he or she expands their

business.

32.

Amway promotes and sells to its distributors a voice-mail communication

system known as "Amvox Network Voice Messaging" or "Amvox by Voice-Tel".

Amway encourages the use of this system to foster communication among its

distributors, foster trust, confidence, and the partner relationship among

its distributors, to promote the Amway business, and to recruit

Amway distributors. This system utilizes the telephone lines of interstate

commerce.

33.

Amway distributors and their recruits are encouraged to, and often do,

develop a confidential relationship of friendship, trust and confidence.

Indeed, distributors are encouraged to bring their problems, including

personal problems, to their Amway sponsors and others in their up-line

distribution chain.

Business Support Materials

34.

In addition to the profits distributors earn from sales of Amway's products,

certain mid-level and high-level distributors obtain revenue (and profits)

from the sale of Amway-related products -- books, cassette tapes, selling

aids, videotapes, flip-charts, etc. -- called "business support materials".

These materials are used by distributors to help train and motivate their

down-line distributors. Although the great majority of these materials are

not manufactured or distributed by Amway, Amway has recognized the existence

of this aspect of the business and has promulgated various rules regulating

the manufacture, sale and distribution of these business support materials.

These rules require the sale of these materials to follow a distribution

system that is parallel to the lines of sponsorship used to sell Amway

products. For some distributors, including Plaintiffs, the sale of business

support materials produces revenues far exceeding the revenues generated

from the sale of Amway's consumer goods.

Amway Rules

35.

The conduct and business dealings of Amway distributors are governed by various

rules promulgated by Amway, including but not limited to the following:

a. Amway's Sales and Marketing Plan, and the terms of its contracts with

individual distributors, including the Distributor Defendants;

b. Amway's Code of Ethics, Rules of Conduct, and other various rules,

prohibitions, regulations, and requirements promulgated by Amway;

c. Amway's Business Reference Manual and Business Compendium, which

detail the rules and standards of conduct required of Amway distributors;

d. Violations of these rules can result in Amway disciplinary action,

such as censure, admonishment, reprimand, penalties, suspension or removal

of certain rights and/or privileges, including termination of the Amway

distributorship.

36.

The terms and conditions of Amway's binding contractual relationships with

its distributors are set forth in (1) the Amway distributor application form

(SA-88); (2) the Intent to Continue Form (SA-469); (3) the Amway Business

Compendium (SA-1500); (4) the Business Reference Manual (SA-3145); (5) the

Direct Distributor Addendum (SA-6589); and (6) the Warehouse Ordering

Authorization form (SA-150).

37.

The Amway Business Compendium and the Business Reference Manual contain

Amway's Code of Ethics and Rules of Conduct for distributors. The

Introduction to the Rules of Conduct of Amway Distributors explicitly

provides that "The Rules are designed to preserve the benefits available to

all independent distributors under the Amway Sales and Marketing Plan."

38.

The Code of Ethics and Rules of Conduct represent written agreements binding

every distributor to a unitary contractual framework on which every Amway

distributor is required to operate his or her business. In the section

entitled "Amway's Commitment to You", contained in the introductory chapter

to Amway's Business Reference Manual, Amway explains the integral role its

Code of Ethics and Rules of Conduct play in each distributor's business:

Amway prescribes a Code of Ethics and Rules of Conduct to guide every

distributors. As an integral part of the Amway Sales and Marketing Plan,

these rules help ensure that everyone has the same opportunity to build

a successful Amway business through a balance of sponsoring and

merchandising. Pride in their system of rules and ethics is a main

reason some distributors are so committed to their Amway business.

39.

Section B of The Rules of Conduct of Amway Distributors sets forth the

requirements to remain a distributor. Rule 4 of Section B was written to

govern business support materials sold by Amway distributors. It provides,

in pertinent part that:

No Amway distributor who personally sells products other than AMWAY

products, who personally sells literature or sales aids not produced by

Amway, or who sells services (e.g., tax services, insurance, et cetera)

will induce another Amway distributor whom he or she does not personally

sponsor to sell such products, literature, sales aids, or services, nor

shall he or she sell such products, literature, sales aids, or services

to any Amway distributor except those personally sponsored by him or

her.

Rule 4 also explains that the purpose of this prohibition is to protect

Amway distributors from less ethical distributors who may be enticed to take

advantage of their peers' hard-work in building a successful distributor

network:

Amway distributors may engage in selling activities related to non-Amway-

approved or non-Amway produced products and services if they personally

desire to do so, but they may not take advantage of their knowledge of,

or association with, other Amway distributors, especially those not

personally sponsored by them, to promote and expand their non-Amway

business. To do so constitutes an unwarranted and unreasonable

interference in the business of other Amway distributors.

A primary purpose of Rule 4 is to prevent an up-line distributor from "going

around" a down-line distributor to sell business support materials directly

to the down-line's down-line distributors, and to prevent a down-line

distributor from "going around" his or her up-line to purchase business

support materials from the up-line's up-line. In other words, Rule 4

prohibits distributors from cutting out or boycotting a distributor in the

"middle" of the line of sponsorship, dividing his or her, profits between

his or her up-line and down-line distributor(s).

40.

Section I of The Rules of Conduct of Amway Distributors is entitled

"business support materials", and provides that distributors who sell such

products must comply with the Rules of Conduct of Amway Distributors:

Some distributors offer for sale to other distributors in their line of

sponsorship a variety of non-Amway produced sponsoring and merchandising

aids such as audio and video tapes, literature, and flip-charts

("business support materials" or "Materials"). Such Materials are

entirely optional and distributors who choose to sell or distribute such

Materials must comply with these Rules.

41.

The Amway Rules of Conduct provide that for violations of the Rules, a

distributor may be subject to, among other penalties, a written

admonishment, compensatory remedies, imposition of censure, revocation of

the right to sponsor, withholding of bonus monies, suspension of distributor

rights and termination.

42.

By signing the Amway Distributor Application, Amway distributors expressly

agree to comply with the Amway Sales and Marketing Plan, Code of Ethics and

Rules of Conduct as they are amended and published from time to time in

official Amway literature.

43.

Amway and each Amway distributor incorporates by reference the contents of

the Amway Business Reference Manual (SA-3145) or Amway Business Compendium

(SA- 1500), the Direct Distributor Manual (SA-6589) or Direct Distributor

addendum, if applicable, and Warehouse Ordering Authorization (SA-150), if

applicable, into their Amway Distributor Application agreement.

Course of Dealing Under Rule 4

44.

Over time, a course of dealing and set of practices has shaped how Rule 4 is

followed at Amway. Since not all distributors participate in the tool

business, it is accepted that the line of sponsorship for purposes of

selling business support materials includes only those distributors

who actively participate in the tool business and who are at certain levels

in the Amway organization. In addition, from time to time certain

distributors have agreed to allow slight departures from a strict adherence

to Rule 4 to facilitate direct shipments of business support materials to

down-line distributors and for other reasons. In each such instance, the

modification has been pursuant to a specific agreement, voluntarily made,

and the distributor's right to renumeration from the sales of business

support materials has been, or was supposed to be, protected.

45.

Amway is aware of this course of dealing and of these practices and has

acquiesced in and accepted them. The dealings or practices under Rule 4 are

fully consistent with the core objective of Rule 4 -- to protect a

distributor's investment in his or her down-line network for purposes of

selling business support materials.

Antitrust Exception for Amway

46.

In the 1970s, the Federal, Trade Commission ("FTC") investigated Amway to

determine, among other things, whether the Amway multi-level marketing

structure was a pyramid scheme in violation of the Antitrust laws.

47.

The Federal Trade Commission determined that Amway was not an illegal

pyramid scheme. In reaching its decision, the FTC relied upon several rules

contained in the Rules of Conduct for Amway Distributors.

48.

As part of its investigation, the FTC examined Amway's "cross-group selling"

rule, which requires Amway distributors to purchase all of their "AMWAY

products and literature supplies from or through their own sponsor unless

there is a servicing agreement between direct distributors." (Rules of

Conduct, Section B, Rule 3).The cross-group selling rule is -- for purposes

of the sale of Amway products -- the equivalent of the Rule 4 prohibition on

selling non-Amway products, including Amway-related business support

materials, to distributors whom the selling distributor does not personally

sponsor.

49.

The FTC concluded that the cross-group selling rule was not an unreasonable

restraint of trade, but found that if the "restraints in the cross-group

selling . . . rule[] were horizontally agreed to or induced, rather than

vertically imposed by Amway on its distributors, the agreements would

probably be illegal per se as horizontal divisions of market.

50.

Rule 4 of Section B of the Rules of Conduct for Amway Distributors -- like

the cross-group selling rule -- is imposed by Amway as a term of every

distributor's agreement. As long as distributors abide by Rule 4, the

materials business, like Amway's consumer products business, is legal. The

Distributor Defendants, however, have begun to form horizontal divisions of

the business support materials market -- ignoring Rule 4 as applied through

the distributors' course of dealing and business practices. When these

horizontal agreements are used to engage in a group boycott, as these

Defendants are doing, the agreements constitute violations of the antitrust

laws.

The Relationship of the Parties

51.

The Plaintiffs and the Distributor Defendants are all members of one of

Amway's largest multi-level distributor networks (hereinafter referred to as

"the Amway Network"). Yager is one of the distributors at the top of the

Amway Network, which consists of hundreds of thousands of domestic and

international distributors.

52.

In the Amway Network line of sponsorship, Yager is up-line from Gooch, Gooch

is up-line from Childers and Childers is up-line from the Harts.

53.

Continuing down the Amway line of sponsorship, the Harts are up-line from

D'Amico and D'Amico is up-line from non-party James Nealis ("Nealis").Nealis

is up-line from Hayes.

54.

The Harts are up-line from Foley in a branch of the Hart Network separate

from the branch containing D'Amico and Hayes' networks. In the "Foley

branch" of the Hart Network, non-party Steve Woods ("Woods") is up-line from

Foley, Foley is up-line from Marin, and Marin is up-line from Rodriquez in

the line of distribution.

55.

The portion of the Amway Network involving the parties in this suit and the

relevant non-parties can be graphed as follows:

Yager

Setzer

Gooch

Childers

------Brig and Lita Hart------

| |

non-party Woods D'Amico

| |

Foley non-party Nealis

| |

Marin Hayes

Rodriquez

56.

Yager takes advantage of his position at the top of the Amway Network to

schedule various Amway-related conferences, seminars, rallies, and major

functions, and to record these events and provide the cassette tape

recordings as business support materials to distributors in the Amway

Network.

57.

Yager derives a substantial portion of his income from the sale of business

support materials down the lines of distribution in the Amway Network. On

information and belief, over 70% of Yager's Amway-related income is derived

from the sale of business support materials, constituting $40,000,000.00 per year in gross income.

58.

Amway recognized the value of the materials-side of the Amway business more

than 14 years ago. Rich De Vos, one of the original Amway founders, in

January 1983, in a tape series entitled "Directly Speaking", addressed the

issue of major distributors earning more revenue from the materials business

than from the Amway business itself and expressed concern that certain

disreputable distributors would not recognize the lines of sponsorship:

[W]e accept the fact that motivation is vital to this business. Good,

honest motivation is important to the business. But, it must be

motivation that builds the business -- not become a business in itself .

. . . And, some of you have made it a business unto itself.

(Directly Speaking, Rich De Vos, Amway Cassette Series VAL-2150, Side A).

59.

The business support materials produced and sold by Yager and InterNET,

although Amway-related, are non-Amway products. Thus, these materials are

within the meaning of -- and subject to -- Rule 4 of Section B of the Rules

of Conduct of Amway Distributors.

60.

Through courses of dealing among the distributors in the Amway Network and

through their past business practices, the parties have agreed to adhere to

Rule 4 on a "Diamond-to-Diamond" basis in the market for business support

materials. In other words, the distributors in the Amway Network who

participate in the materials business have agreed that those distributors

who have achieved the "Diamond" status or higher in the Amway business shall

adhere to Rule 4 by not "going around" other Diamonds in the Amway lines of

sponsorship.

61.

Amway distributors achieve the "Diamond" status by sponsoring six qualified

groups that qualify at the maximum Performance Bonus level during at least

six months of the fiscal year. The Harts, Yager, Gooch, Foley, non-parties

Nealis and Woods, and all the Distributor Defendants have achieved at least

the Diamond status in Amway.

62.

All distributors above and below the Harts in the distribution line for

business support materials -- whether or not they have achieved the Diamond

status -- understand and recognize the implied agreements to adhere to Rule

4 on a Diamond-to-Diamond basis.

63.

In accordance with Rule 4 and the parties' implied agreements, the Diamond-

to-Diamond line of distribution begins with Yager and continues to Setzer.

Setzer International is obligated to provide business support materials only

to the Diamond immediately below him -- Gooch. Gooch is then to provide the

materials to Childers and Childers, in turn, to the Harts.

64.

Continuing down the Amway Network distribution line, under Rule 4 and the

parties' implied agreements, D'Amico's source for business support materials

is contractually limited to the Diamonds directly above him in the

distribution line -- the Harts. D'Amico is to then sell business support

materials only to the Diamond directly below him in the line of distribution

-- non-party Nealis. Nealis then sells the materials to Hayes, the Diamond

directly below Nealis in the line of distribution.

65.

In a separate branch of the Hart Network, the Harts are non-party Woods'

immediate up-line Diamond in the business support materials line of

distribution. Likewise, under Rule 4 and the parties' implied agreements,

Woods serves as Foley's immediate up-line Diamond, and Foley serves as

Marin's immediate up-line Diamond. Marin, in turn, serves as Rodriquez's

immediate up-line Diamond in the line of distribution for business support

materials.

66.

Thus, Rule 4 of the Rules of Conduct of Amway Distributors and the parties'

course of dealing and business practices limit the Diamond-to-Diamond

sales flow of non-Amway products, including InterNET business support

materials, to the following distribution method:

Yager

Setzer

Gooch

Childers

------Brig and Lita Hart------

V V

non-party Woods D'Amico

V V

Foley non-party Nealis

V V

Marin Hayes

Rodriquez

67.

For several years the Defendants followed the distribution structure

mandated by Rule 4 and the distributors' implied agreements, applying Rule 4

on a Diamond-to-Diarnond basis as shown in the flow-chart above or making

alternative arrangements satisfactory to the Diamonds in the Amway Network.

Actions Giving Rise to Suit

Setzer, D'Amico, Hayes, Marin and Rodriquez's Violations of Rule 4

68.

Upon information and belief, Yager, individually and on behalf of InterNET,

and Setzer and Setzer International agreed that Setzer and Setzer

International would directly distribute to certain distributors in the Hart

Network -- in violation of Rule 4 and Setzer's other contractual duties --

business support materials that Yager and InterNET previously had agreed

would be sold through the Harts and their company, U-Can-II. The effect of

this agreement was to circumvent the Harts in violation of Rule 4.

69.

Setzer and Setzer International have been providing business support

materials to D'Amico, Hayes, Marin and Rodriquez, all of whom are

distributors in the Hart Network. In addition, D'Amico has assisted Setzer

in providing business support materials to Hayes in violation of Rule 4.

But, these Defendants have refused to account to U-Can-II for the volume of

business support materials purchased by D'Amico, Hayes, Marin and Rodriquez.

In most cases, Yager, InterNET, Setzer, and Setzer International have

refused to pay Plaintiffs anything for the volume of business support

materials purchased by D'Amico, Hayes, Marin and Rodriquez.

70.

Plaintiffs have notified Amway, Yager and Setzer that they do not consent to

Setzer's continued violation of Rule 4 and the distributors' implied

contracts, and that they do not consent to D'Amico, Hayes, Marin and

Rodriquez's involvement in Setzer's violations of these agreements. These

Defendants continue to ignore Plaintiffs' demands that Setzer, D'Amico,

Hayes, Marin and Rodriquez discontinue their wrongful actions.

71.

Yager, InterNET, Setzer, Setzer International, D'Amico, D'Amico

International, Hayes, Freedom Express, Marin, Marin & Associates, and

Rodriquez have not provided Plaintiffs with an accounting of the sales of

support materials to D'Amico, Hayes, Marin and Rodriquez and Plaintiffs

cannot determine the amount of compensation they are owed for Setzer and

Setzer International's actions.

Childers' Violations of Rule 4

72.

Upon information and belief, Yager, individually and on behalf of InterNET,

and Childers and TNT agreed that Childers and TNT would directly distribute

to certain distributors in the Hart Network -- in violation 6f Rule 4 and

Childers' other contractual duties -- business support materials that Yager

and InterNET previously had agreed would be sold through Plaintiffs and

their company, U-Can-II. The effect of this agreement was to circumvent the

Harts in violation of Rule 4. Childers and TNT represented that they would

provide invoice statements to Plaintiffs, which statements would show the

volume of materials these distributors purchased. In addition, these

Defendants represented that they would pay Plaintiffs compensation based on

the volume of materials that distributors in the Hart Network purchased.

Childers and TNT made these representations by, among other things, the

United States phone lines and the United States mail.

73.

Childers and TNT have been providing business support materials to Foley.

But, upon information and belief, Childers and TNT have misrepresented to U-

Can-II the volume of business support materials purchased by Foley. And,

based upon these misrepresentations, Childers and TNT have not paid

Plaintiffs the full amount of compensation for the volume of support

materials purchased by distributors in the Hart Network.

74.

Childers has purported to compensate Plaintiffs for selling business support

materials to Foley and Foley & Co. in violation of Rule 4 and the

distributors' implied agreements. On information and belief, Yager,

InterNET, Childers, TNT, Foley, and Foley & Co. have not, however, provided

Plaintiffs with an accounting of Childers' sales to Foley and Foley & Co. so

that Plaintiffs can determine the amount of money they are owed for

Childers' sales to Foley in violation of Rule 4 and the distributors'

implied agreements.

Childers' Major Functions

75.

Childers, individually and on behalf of TNT, holds major functions

throughout the country, drawing tens of thousands of Amway distributors.

76.

Plaintiffs have marketed and promoted Childers' major functions, encouraging

the distributors in the Hart Network to attend. In addition, Plaintiffs have

sold tickets to Childers' major functions to the distributors in the Hart

Network.

77.

In violation of a course of dealing that has arisen through the past

business practices between high-level distributors who sponsor major events

-- including Childers -- and other distributors who have achieved at least

the Diamond level in Amway -- including the Harts -- Childers has refused to

properly compensate Plaintiffs for the number of distributors in the Hart

Network that Plaintiffs have sent to Childers' major functions.

Amway

78.

Plaintiffs repeatedly have notified Amway of the Distributor Defendants'

violations of Rule 4 of Section B of the Rules of Conduct of Amway

Distributors. Yet, Amway has refused to enforce Rule 4.

79.

On information and belief, Amway refuses to enforce Rule 4 against the

Distributor Defendants for fear that Yager and his down-line distributors

will leave the Amway System, which would significantly harm Amway.

Conspiracy Among Distributor Defendants

80.

Setzer and Childers conspired to cut Plaintiffs out of the Amway-related

business support materials business by engaging in improper, fraudulent or

illegal conduct.

81.

On information and belief, in furtherance of and as part of their

conspiracy, Setzer and Childers developed business relations with, among

others, D'Amico, Hayes, Foley, Marin and Rodriquez -- all of whom are in the

Hart Network -- and invited, among others, D'Amico, Hayes, Marin and

Rodriquez, to join their conspiracy to cut Plaintiffs out of the Amway-

related business support materials business.

82.

On information and belief, in furtherance of and as part of the conspiracy,

Setzer, Setzer International, Childers and TNT misrepresented to Plaintiffs

the volume of materials that Childers and Setzer were directly distributing

to distributors in the Hart Network.

83.

In furtherance of and as part of the conspiracy, Setzer, Setzer

International, Childers and TNT misrepresented to Plaintiffs the amount of

profits they were making on business support materials, and specifically on

materials Setzer and Childers directly distributed to distributors

in the Hart Network.

84.

In furtherance of and as part of the conspiracy, Childers induced Plaintiffs

to allow TNT to directly distribute business support materials to

distributors in the Hart Network in exchange for purported compensation that

was to be based upon the volume of business support materials that TNT

supplied to distributors in the Hart Network.

85.

On information and belief, in furtherance of and as part of the conspiracy,

Childers and TNT provided false and incomplete invoice statements to the

Plaintiffs, which statements understated the volume of business support

materials purchased by the distributors in the Hart Network.

86.

On information and belief, in furtherance of and as part of the conspiracy,

D'Amico, Hayes, Marin and Rodriquez also misrepresented to and/or concealed

from Plaintiffs the volume of business support materials purchased by

certain distributors in the Hart Network.

87.

By utilizing the business and personal relationships developed through their

direct provision of business support materials to distributors in the Hart

Network, Setzer and Childers, implicitly and explicitly conspired with one

another and with, among others, D'Amico, Hayes, Marin and Rodriquez to

boycott Plaintiffs' business support materials business by agreeing that

Setzer and Childers would cut Plaintiffs out of the Amway-related business

support materials market by refusing to provide Plaintiffs with business

support materials and/or by engaging in unfair business practices with the

purpose of misappropriating the Hart Network for the sale of business

support materials.

88.

On information and belief, Setzer and Childers may have enlisted in some way

Yager and InterNET's assistance in furthering the Distributor Defendants'

conspiracy.

COUNT I VIOLATION OF CIVIL RICO BY THE DISTRIBUTOR DEFENDANTS



89.

Plaintiffs reallege and incorporate by reference Paragraphs I through 88 

above as if they were set forth fully herein.



90. Setzer, Childers, D'Amico, Hayes, Marin and Rodriquez are "persons" as 

that term is defined in 18 U.S.C. § 1961.



91.

The association-in-fact of Setzer International, TNT, D'Amico International, 

Freedom Express, Marin & Associates, and the company operated by Rodriquez, 

in the business support materials line of distribution in the Amway Network 

is an "enterprise" as that term is defined in 18 U.S.C. § 1961. This 

enterprise is engaged in and affects interstate commerce.



92.

In violation of 18 U.S.C. § 1962(c), Setzer, Childers, D'Amico, Hayes, Marin 

and Rodriquez as persons associated with an enterprise participated in the 

affairs of the enterprise through a pattern of racketeering activity 

consisting of wire fraud (18 U.S.C. § 1343) and mail fraud (18 U.S.C. § 

1341). On information and belief, these Defendants' participation in the

affairs of the enterprise consisted of -- among other things to be proven at 

trial -- the following:



    a. guiding, managing, directing or otherwise exercising control over the 

affairs of the enterprise;



    b. fraudulently misrepresenting to, and/or concealing from, Plaintiffs the 

volume of business support materials that Setzer and Childers directly 

provided to distributors in the Hart Network so as to further the 

enterprise's purpose of misappropriating Plaintiffs' Amway-related

materials business;



    c. using the United States telephone system to communicate false and 

misleading information to Plaintiffs in order to further the purposes of the 

enterprise; and 



    d. using the United States mail system to communicate false and 

misleading information to Plaintiffs in order to further the purposes of the 

enterprise.



93.

On information and belief, the pattern of racketeering activity that Setzer, 

Childers, D'Amico, Hayes, Marin and Rodriquez have engaged in consists of 

wire fraud (18 U.S.C. § 1343) and mail fraud (18 U.S.C. § 1341). The 

Distributor Defendants have perpetrated the fraud through direct telephone 

communications, the Amvox telephone voice mail system, and the United States 

mail system, pursuant to and for the purpose of executing these Defendants'

scheme to defraud the Plaintiffs by communicating false and fraudulent 

information, including but not limited to the following:



    a. statements that fraudulently represented that the Distributor 

Defendants were abiding by the prohibition -- in Rule 4 of Section B of the 

Rules of Conduct for Amway distributors as applied by the distributors 

through their implied agreements -- against selling business support 

materials to any Amway "Diamond" distributor who is not directly below the

Defendants in the distribution line;



    b. statements that fraudulently represented that certain payments made 

by TNT and Setzer International were proper compensation for the volume of 

business support materials that these Defendants were directly distributing 

to certain distributors in the Hart Network;



    c. statements that fraudulently represented the profits Setzer, Setzer 

International, Childers, and TNT were making on the distribution of certain 

business support materials so as to conceal the Distributor Defendants' 

scheme to cut Plaintiffs out of the network by directly distributing 

business support materials to distributors in the Hart Network; and



d. statements and omissions made by all Distributor Defendants that 

fraudulently represented and/or concealed the volume of business support 

materials that Setzer International, and TNT provided to certain 

distributors in the Hart Network.



94.

On information and belief, the pattern of wire and mail fraud that Setzer, 

Childers, D'Amico, Hayes, Marin and Rodriquez have engaged in includes, 

among other things, the following:



    a. direct telephone communications to Plaintiffs and their agents, made 

by and caused to be made by Setzer and Childers, regarding their compliance 

with Rule 4 of Section B of the Rules of Conduct for Amway distributors and 

the distributors' implied contracts regarding adherence to Rule 4 on a 

Diamond-to-Diamond basis;



    b. numerous mailings of InterNET's business support materials to the 

Hart Network of Amway distributors, which mailings were made by and caused 

to be made by Setzer, Setzer International, Childers, and TNT;



    c. numerous mailings to Plaintiffs and their agents, which mailings were 

made by and caused to be made by Setzer, Setzer International, Childers, and 

TNT, regarding the volume of Amway-related business support materials that 

these Defendants were directly distributing to certain distributors in the 

Hart Network; and



    d. numerous direct telephone communications to Plaintiffs and their 

agents, made by and caused to be made by the Distributor Defendants, 

regarding the volume of Amway-related business support materials that 

Setzer, Setzer International, Childers, and TNT were directly distributing 

to certain distributors in the Hart Network.



95.

The Distributor Defendants' participation in the affairs of the enterprise 

through a pattern of racketeering activity have continued throughout the 

relevant time period, and threatens to continue into the future with the 

same pattern of repetition, posing a threat of continuing harm to 

Plaintiffs' business and property.



96.

Plaintiffs have been injured and continue to be injured in their business 

and property -- both in their Amway business and in their Amway-related 

business support materials distribution business -- by reason of the 

Distributor Defendants' foregoing pattern of racketeering activity in 

violation of 18 U.S.C. § 1962(c) in an amount exceeding $50,000,000.00. 

Plaintiffs are entitled to recover this sum, additional damages proven at 

trial of this matter, treble the amount of these damages, plus costs, 

interest and reasonable attorneys' fees from the Distributor Defendants for 

their RICO violations.

COUNT II CONSPIRACY TO VIOLATE CIVIL RICO BY THE DISTRIBUTOR DEFENDANTS



97.

Plaintiffs reallege and incorporate by reference Paragraphs 1 through 96 

above as if they were set forth fully herein.



98.

On information and belief, in violation of 18 U.S.C. § 1962(d), Setzer, 

Setzer International, Childers, TNT, D'Amico, D'Amico International, Hayes, 

Freedom Express, Marin, Marin & Associates, and Rodriquez conspired to 

violate 18 U.S.C. § 1962(c). Specifically, these Defendants agreed to commit 

predicate acts of mail and wire fraud described in 11 9394 of this Complaint 

with knowledge that such arts were part of a pattern of racketeering 

activity.



99.

On information and belief, the RICO conspiracy was composed of Setzer, 

Setzer International, Childers, TNT, D'Amico, D'Amico International, Hayes, 

Freedom Express, Marin, Marin & Associates, and Rodriquez, and had as its 

objective the destruction of Plaintiffs' Amway-related business support 

materials business and the misappropriation of the Hart Network of Amway 

distributors so that these Defendants could continue and perpetuate the

conspiracy for their own financial gain.



100.

On information and belief, in furtherance of the RICO conspiracy, Setzer, 

Setzer International, Childers, TNT, D'Amico, D'Amico International, Hayes, 

Freedom Express, Marin, Marin & Associates, and Rodriquez communicated to 

Plaintiffs and their agents false and fraudulent information and/or failed 

to disclose and omitted material information, including but not limited to 

the following:



    a. statements that fraudulently represented that the Distributor 

Defendants were abiding by the prohibition -- in Rule 4 of Section B of the 

Rules of Conduct for Amway distributors as applied by the distributors 

through their implied agreements -- against selling business support 

materials to any Amway "Diamond" distributor who is not directly below the

Defendants in the distribution line;



    b. statements that fraudulently represented that certain payments made 

by Setzer, Setzer International, Childers, and TNT were proper compensation 

for the volume of business support materials that these Defendants were 

directly distributing to certain distributors in the Hart Network;



    c. statements that fraudulently represented the amount of profits 

Setzer, Setzer International, Childers, and TNT were making on the 

distribution of business support materials so as to conceal their scheme to 

cut Plaintiffs out of the network by directly distributing business

support materials to distributors in the Hart Network; and



    d. statements and omissions made by the Distributor Defendants that 

fraudulently represented and/or concealed the volume of business support 

materials that InterNET, Setzer International, and TNT provided to the 

distributors in the Hart Network.



101.

The RICO conspiracy threatens to continue into the future with a threat of 

repetition, posing a threat of continuing harm to Plaintiffs' business and 

property.



102.

Plaintiffs have been injured and continue to be injured in their business 

and property -- both in their Amway business and in their Amway-related 

business support materials distribution business -- by reason of the 

Distributor Defendants' foregoing RICO conspiracy in violation of 18 U.S.C.  

§ 1962(d) in an amount exceeding $50,000,000.00. Plaintiffs are entitled to 

recover this sum, additional damages proven at trial of this matter, treble 

the amount of these damages, plus costs, interest and reasonable attorneys' 

fees from the Distributor Defendants for their RICO violations.

COUNT III BREACH OF CONTRACT



103.

Plaintiffs reallege and incorporate by reference Paragraphs I through 102 

above as if they were set forth fully herein.





First Claim Against Setzer



104.

Pursuant to the various agreements between Setzer and A