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One Year Later, Zer01 Web Site Disappears 155

Posted by kdawson
from the perilously-close-to-ponzi dept.
alphadogg writes "Zer01 Mobile — making promises of flat rate, no contract, unlimited cell phone service — made its grand entrance at the annual CTIA wireless convention about a year ago, but now the company's Web site has disappeared. The site recently began redirecting visitors to Google.com. Zer01, which was lauded for its plans in the mainstream press, aligned itself with a multilevel marketing company called Global Verge (whose founder had earlier been convicted of securities fraud), and the two companies began recruiting salespeople who paid a monthly fee to be part of a sales program. (Since then, Global Verge and Zer01 parted ways and Global Verge filed a lawsuit against its former partner.) But no mobile service from Zer01 ever materialized. Salespeople were promised payment based on how many other salespeople they signed up to the program, although few appear to have received payment. But as late as the fall CTIA show in October, Zer01's CEO was still promising to launch the mobile service."
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One Year Later, Zer01 Web Site Disappears

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  • by Anonymous Coward on Tuesday March 16, 2010 @06:21PM (#31502284)

    So, based on no further information than that in the article... can you say Multi-level marketing scam? I knew you could

    • by Macrat (638047)
      Mod parent up..
    • Re: (Score:3, Funny)

      P-Py-Pyramid scheme? I guess AmWay was beat to the cell phone market by Zer01?
    • by L3370 (1421413) on Tuesday March 16, 2010 @07:06PM (#31502756)
      multi level, or network marketing is a legal scheme provided that there is a tangible product or service in the mix, like those herbal juices you see advertised on the back of peoples cars. Zer01 only sold the idea of a future product...vaporware. This doesn't seem to be an "MLM" type scam to me, but a full fledged 100% illegal pyramid scheme.
      • Re: (Score:2, Interesting)

        by MrNaz (730548)

        "like those herbal juices you see advertised on the back of peoples cars"

        You mean the ones that get sold with a pitch that makes them out to be some elixir of eternal youth? While the scheme may be legitimate, I've yet to see it being used in conjunction with a product that wasn't a load of horseshit.

      • by Khyber (864651) <techkitsune@gmail.com> on Tuesday March 16, 2010 @10:47PM (#31504332) Homepage Journal

        "multi level, or network marketing is a legal scheme provided that there is a tangible product or service in the mix,"

        Even if there is a tangible product, it's still a scam. See the Illinois rulings against Scentura Creations.

        http://en.wikipedia.org/wiki/Scentura [wikipedia.org]

        In fact, most MLMs are violating one or more various laws in individual states.

        The way MLMs are operated now is a violation of some state and some federal laws.

      • Re: (Score:3, Informative)

        by AndGodSed (968378)

        Actually, for a MLM to be legal in the US, it has to sell more than 50% (iirc) of its products to non members. Currently the most successful MLM in the us only sells about 17% of its products to non members.

        Too lazy to google, I looked it up a few days ago because someone tried to sucker me into going to a scamway meeting.

        • Re: (Score:3, Insightful)

          by Teancum (67324)

          I use this criteria for telling off a MLM distributor:

          If you can get me a better deal by buying your product through you as opposed to what I can buy at the local Wal-Mart or from other local retailers, I'll buy it from you.

          Sadly, I have yet to get a single MLM marketer to take me up on the offer. The truth is they can't compete except on sky high promises and on schemes that ultimately put so many hands into the profit stream that you can't get a reasonably priced product even if you tried. In fact, as a

          • by AndGodSed (968378)

            You hit the nail on the head with your 'dreams' comment.

            If you take a poll of the average person anywhere in the world and you ask them "would you like to have more of $dream in your life" 80% of them would answer yes to more than one of $dream, which could be TIME (a favourite of MLM's), money, posessions, even happiness or a bunch of others.

            MLM schemes promise the chance to let you realise that dream, "If you work hard now on your "Independent Business" you can be "financially free" or you can "have two h

      • by chris mazuc (8017)

        My old boss gave me a bottle of acai juice one time... not bad with Gosling's black seal rum. Just dilute the acai juice a bit first or its going to be really strong. Best use I could find for it. Personally, every time I see one of those MonaVie stickers on someone's car I mentally substitute the word idiot in its place.

      • Sorry, but there is no such thing as real MLM. It’s just a term, pyramid scheme criminal organizations use, to describe themselves, so they officially can stay legal. In reality, there is no difference between MLM and pyramid schemes. They are the same. Their purpose is fraud. Always. No exceptions.

    • by Adrian Lopez (2615) on Tuesday March 16, 2010 @07:08PM (#31502786) Homepage

      Scam is right. Multilevel marketing makes it almost seem legitimate, which apparently it wasn't.

      BTW - I'm using the word "apparently" in the "please don't sue me" sense of the word.

      • What? Are you scared? Of a bunch of criminals?
        There I said it: MLM = pyramid scheme = fraud/scam = criminals. Always. Period.
        It‘s the whole and only point. And they not only know it, but that’s the whole and only reason they did it. Also always. Also Period.

        Come and try to sue me, fuckers. I’ll rip your balls off trough your throat!

    • by PopeRatzo (965947) * on Tuesday March 16, 2010 @07:54PM (#31503206) Homepage Journal

      From the summary:

      began recruiting salespeople who paid a monthly fee to be part of a sales program

      What more do you need to know?

      • by Zerth (26112)

        From the summary:

        began recruiting salespeople who paid a monthly fee to be part of a sales program

        What more do you need to know?

        What other kind of place that charges you to work comes to mind? Strip clubs.

        Any others?

  • Salespeople were promised payment based on how many other salespeople they signed up to the program, although few appear to have received payment.

    Seriously? How people ever think this sort of plan makes fiscal sense and isn't at all dodgy I will never understand.

    • by SomeJoel (1061138) on Tuesday March 16, 2010 @06:37PM (#31502440)
      Most people are bad at math and logical reasoning. The sooner you accept that, the sooner the world will suddenly make sense.
      • by interkin3tic (1469267) on Tuesday March 16, 2010 @06:48PM (#31502576)

        Most people are bad at math and logical reasoning.

        Compared to what? The average person? That's impossible. The top 5% of people at math and logical reasoning? Well, they would be by definition. Compared with the level of math proficiency and logical reasoning -you- think they should be at? If that's the case, I'd argue you have unrealistic expectations. Compared to you?

        • by jim_v2000 (818799)
          Compared to smart people, duh.
        • by KahabutDieDrake (1515139) on Tuesday March 16, 2010 @07:42PM (#31503094)
          Compared with the vast majority of slashdotters (for instance) that saw this as a scam from the very get go. I think my point here would be that you are "bad at math and logical reasoning" if you can't spot a pyramid scam the second someone shows it to you. Even real MLMs are only just barely not scams, and it doesn't take a genius to work out just how stupid this entire scheme was.

          I'm not implying that I expect the majority of people to be "good" at math and logic, I just expect them to not be retarded either. Clearly I'm going to have to work on my expectations, as they are off a bit.
          • by retchdog (1319261)

            It's rational to join an MLM if you're high enough on the pyramid. Speaking for my self, the reason I don't join these things is that 1. I "know" (or believe that I know) I am very low on the chain; 2. I'm a bad salesperson anyways because I have trouble buying into lies.

            I've never even bothered to compute my expected payoff, mostly because of the uncertainty associated with point 1., supra.

        • Most people are bad at math and logical reasoning.

          Compared to what?

          Thank you for providing that excellent example of how most people are bad at logical reasoning.

        • In the same way that most people are bad at flying, jumping over the grand canyon, time travel, and teleportation. You determine a set of objective critera to form a test and see what the mean score is. If the mean score is above 50%, then most people are good at that task.

          Now, if you'll excuse me I have some tests to administer to some subjects in Arizona.

        • by houghi (78078)

          I think what he means to say is that about half the people is below the 50% avarage. That is a lot.

          • by Teancum (67324)

            Well, 50% of the population has below average intelligence, by definition. What is even scarier to think about is that they vote too (in places with elected representatives).

            The problems with most geeks is that they tend to hang out in circles where there are substantial social filters to weed out those with lower intelligence, and you tend to think that average intelligence is somebody who can do a derivative in their sleep and understands the concept of a coefficient of friction from a mathematical viewp

      • by Jer (18391) on Tuesday March 16, 2010 @07:49PM (#31503162) Homepage

        Most people are bad at math and logical reasoning. The sooner you accept that, the sooner the world will suddenly make sense.

        Meh. Many people are greedy fools who think they're smarter than average and can't be easily tricked. Con artists have time-tested, good methods to exploit these attributes. Pyramid schemes are actually a great tool for exploiting people who think they're smarter than average - after all they only have to con X other people into the scam and then they're set. Clearly they're going to be able to find X other people who are dumber than they are that they can exploit and get money out of. And the X other people they con into the scam? Who cares - they're idiots and shouldn't have let themselves get conned into a pyramid scheme...

        Nobody in a pyramid scheme thinks they're going to be left holding the bag at the end. That's how pyramid schemes work. They work great even if all of the participants are fully aware of the fact that they're in a pyramid scheme because everyone at every level is convinced that it's only the suckers below them who are going to lose their shirts and that their own risk is minimal. Even if everyone has awesome logical reasoning skills if they start from a faulty premise (i.e. I'm too smart to be left holding the bag at the end of this scam) they're going to reach a faulty conclusion.

      • Posting to remove accidental mod.
      • Don't forget Greed. See the mortgage collapse. A majority of those people were good at math and reasoning, but they were greedy. They thought they could cut a few corners and make it big.

      • Re: (Score:3, Insightful)

        by sorak (246725)

        People in financial trouble tend to get desperate and throw all logic out the door. I got taken for an incredibly stupid scam, once. It was one of those "The post office is hiring. Pay us for the training kit" scams, and I cannot stress hard enough that it was stupid. But, I had an unemployed wife and a baby to support, and I had just lost my job.

        Things seemed desperate, and in those situations, people tend to throw logic out the door. So, the problem isn't just that most people are stupid, and some of us a

    • Re: (Score:3, Insightful)

      by Anachragnome (1008495)

      Greed is probably the greatest foe of common-sense.

      I say "probably" only because I think religion is neck-and-neck.

      Combine the two, and, well...you end up with the likes of the Trinity Broadcast Network and Joel Osteen.

  • People never learn (Score:5, Insightful)

    by cytoman (792326) on Tuesday March 16, 2010 @06:24PM (#31502316)
    A simple adage - "If it's too good to be true, it probably is". People never seem to learn it. Always falling for scams. I'm not surprised.
    • But maybe the next one is real.

    • Bah. Next thing you'll say is that lotteries are a waste of money, and horoscopes aren't real.

      Bet you don't visit church on Sundays, either.

      • by siloko (1133863)

        Bah. Next thing you'll say is that lotteries are a waste of money . . .

        Depends what your expectations are. I don't expect to win but can't help the excited anticipation which I get when I check the numbers. That excitement cost me one pound. Good investment if you ask me.

    • by vux984 (928602) on Tuesday March 16, 2010 @08:47PM (#31503586)

      A simple adage - "If it's too good to be true, it probably is". People never seem to learn it. Always falling for scams. I'm not surprised.

      it -probably- is. Even you hedged your wording, because even you know sometimes it just really is as good as the promise. Lots of stuff seems too good to be true, but delivers. Enough that its often hard for even a fairly intelligent and rational person to really know.

      I mean, who'd believe linux, or bsd, or asterix, or postgresql, or apache, ... were all free. I've met people who were skeptical, who wanted to know what the catch was...

      • I mean, who'd believe linux, or bsd, or asterix, or postgresql, or apache, ... were all free

        They aren't, they're just part of the most subtle pyramid scheme ever...they've even hooked you!
      • by dkf (304284)

        I mean, who'd believe linux, or bsd, or asterix, or postgresql, or apache, ... were all free. I've met people who were skeptical, who wanted to know what the catch was...

        The catch is that they typically require some effort and expertise on your part to make them useful. They're not generally fully-productized turnkey solutions.

        Some of us like it that way by comparison with the alternatives, but the catch is there.

    • by dcollins (135727)

      "People never seem to learn it. Always falling for scams. I'm not surprised."

      Even if people did learn it, there are new suckers being born every minute. See also: Construction in earthquake/flood areas, regulations on financial industries, international bodies to avoid war, etc.

  • by Sparkycat (1703438) on Tuesday March 16, 2010 @06:36PM (#31502436) Homepage

    "Salespeople were promised payment based on how many other salespeople they signed up to the program, although few appear to have received payment."

    The only newsworthy part of this is that Slashdot and others thought this business model was newsworthy in the first place.

    It's a Pyramid Scheme with the phrase "Cell Phone" tacked on, anyone who bought into this deserved what they got.

    • by Macrat (638047)
      It works for Amway.
      • Amway actually sells products. They're a bit odd, but for a lonely bachelor or housewife, having a sales person turn up at your door and let you know about deals on things you actually use like plates and dishes and paper towels can be helpful. And for a _modest_ percentage of households, it can be a few hours of work a week that feeds that fourth kid.

        It's the high pressure "make your friends into salespeople, that makes you money" that makes them an addictive and much hated pyramid scheme. But they've mana

        • And for a _modest_ percentage of households, it can be a few hours of work a week that feeds that fourth kid.

          It's the high pressure "make your friends into salespeople, that makes you money" that makes them an addictive and much hated pyramid scheme. But they've managed to stay in business because they actually sell a useful set of products, and they don't engage in the wholesale fraud of the "laundry balls" or the "Mangosteen Juice" or "Scientology E-Meters".

          Feeds the fourth kid? Not hardly. A few m

  • by cosm (1072588) <thecosm3@@@gmail...com> on Tuesday March 16, 2010 @06:40PM (#31502484)
    If you market to people's hopes & dreams, you will always find suckers for your hollow ploys.

    Cosmetics are generally useless from a utilitarian standpoint, and yet mass marketing pushes that shit out to the female demographic as if they would evaporate without it, and now we're stuck with the fucking Barbie generation. Give somebody the hope that you can fulfill their dream, and you will have their wallet.
    • Re: (Score:3, Informative)

      by radish (98371)

      Cosmetics have been a part of human life for a lot longer than Estee Lauder. From the Ancient Egyptians [king-tut.org.uk] to the Greeks [fjkluth.com], to the Native Americans [ethnicpaintings.com] - the idea of applying colour to your face or other parts of your body for one reason or another has been prevalent for thousands of years. Typically it's done to influence others' view of you - to find you attractive, or scary, or powerful. You may not consider that utilitarian, but do you dress entirely in hessian sack cloth? No? Then are your clothes strictly util

      • by evilviper (135110)

        but do you dress entirely in hessian sack cloth? No? Then are your clothes strictly utilitarian?

        My T-Shirts and Jeans, made in Pakistan / China, are cheaper than a sack... In fact I've been considering the price of coin-operated laundry, and how close we are to the point that buying new clothes every week becomes cheaper than washing them...

        Of course we've far since gone past that point when you count full-service laundry, particularly that found in hotels...

  • They were just copying Equinox's business plan [npros.com]. You'd think people would know better by now.
  • by troll -1 (956834) on Tuesday March 16, 2010 @06:44PM (#31502536)

    Salespeople were promised payment based on how many other salespeople they signed up to the program.

    And were those other people promised payment based on how many others they signed up? Was the payment structure a hierarchical top down system like a pyramid?

  • Our Old Friend (Score:5, Insightful)

    by cosm (1072588) <thecosm3@@@gmail...com> on Tuesday March 16, 2010 @06:48PM (#31502584)
    Is that you Amway? [amway.com]
    • by ls671 (1122017)

      Damn the link you provided requires Flash, I am so sorry to miss important opportunities... ;-(

    • by dubbreak (623656)

      Is that you Amway? [amway.com]

      Or maybe Quixtar [quixtar.com]?

      I had a girlfriend trick me into going to a quixtar meeting when they first started it up (forget the ploy she used, but she definitely wasn't up front about where we were going). Part way into the opening pitch I click, "WTF, you brought me to a amway meeting?!"

      Her: "No, it's quixtar. It's totally different."

      Me: "Ah.... no. It's not."

      She was an english major so I forgave her for being tricked into joining a MLM scam.

  • by MarkvW (1037596) on Tuesday March 16, 2010 @07:01PM (#31502708)

    Post makes the point that Global Verge is suing Zer01.

    Don't infer hostility!!!!!

    Collusive (friendly) lawsuits are a fraudulent way one person can transfer money to another person (himself?), thereby dodging legitimate creditors.

    Fyi.

  • Need more coops (Score:2, Interesting)

    by porter235 (413926)

    Instead of multi tier marketing schemes, we just need more cooperatives: owned and run by members, for the benefit of the members!

  • by houghi (78078) on Tuesday March 16, 2010 @07:19PM (#31502908)

    recruiting salespeople who paid a monthly fee to be part of a sales program. [...] Salespeople were promised payment based on how many other salespeople they signed up to the program,

    That has pyramid scheme written all over it. I wonder why it took so long and why no legal action was taken against them. Or are these scams legal in the US?

    The moment somebody comes to me and tells me I can earn a lot of money, but first I need to pay a bit up front will NOT be my new employer. The will NOT be my business partner. They will be sorted under scammer. If I need to recruit people and payed on basis of how many people I can enlist, I will NOT work for that company (unless I am HR.)

    Why were they not closed sooner? Even without the links to other dubious companies, this sounds like a first class pyramid scam.

    • by tomhudson (43916)

      The (sic) will NOT be my business partner.

      So you expect to go into partnership with someone without putting in any equity? If you don't put something in, you're not a partner -you're an employee.

      • by nedlohs (1335013)

        That's not true at all.

        If you have the skills/contacts/whatever that someone wants they could employ you or the could offer you an equity stake and some control over the company.

        You don't have to actually put money down to be a business partner. It's the usual case of course, but there's no requirement for it.

        • by tomhudson (43916)

          If you have the skills/contacts/whatever that someone wants they could employ you or the could offer you an equity stake and some control over the company.

          Taking a partner on for their customer or vendor contact lists opens you up to a lawsuit, and to having to basically turn over your company to their former employer. Do you really want to engineer your own liquidation?

          Taking them on as an employee is only slightly less risky.

          This isn't just the case in high tech. From industrial rubber products to f

          • by nedlohs (1335013)

            Doesn't matter if it's a stupid move or an unlikely move, it's a possibility and hence your "If you don't put something [equity] in, you're not a partner -you're an employee" isn't true

            • by tomhudson (43916)
              If it's not legal, then you're a partner in crime - not exactly the same thing. If that's what floats your boat, that's your problem, not mine. We could also claim that you can never have to work a day in your life - just commit 3 felonies in a "3 strikes" state. Somehow, I don't think people would buy that as a valid argument.
              • by nedlohs (1335013)

                Huh?

                So now you are claiming it is illegal to be a partner in a business without putting money up front into the business?

                Your statement: "If you don't put something [equity] in, you're not a partner -you're an employee" is simply 100% false, incorrect, a lie.

                Seriously, you want to stick by that claim? Do you have a legal reference for it???

                [Note I wasn't thinking vendor/client lists when I said "contacts" you invented that.]

                • by tomhudson (43916)
                  A contract has several parts:

                  Two parties legally capable of formulating a contract

                  The object of the contract

                  The consideration ("thing given") by each side;

                  A contract that is one-sided (that you don't put anything into, or that is disproportionate to the benefits) is easily voidable, and WILL be voided by outside parties in, say, a bankruptcy, where the legal presumption will be that it was made to defraud the estate of the bankrupt. It will also be voided by your "partner" should they decide that they

          • by dkf (304284)

            Taking a partner on for their customer or vendor contact lists opens you up to a lawsuit, and to having to basically turn over your company to their former employer. Do you really want to engineer your own liquidation?

            I'd have thought that you'd generally only be at risk if you poached someone from another employer. If they're no longer employed by them (and there's no enforceable non-compete agreement in place) then there's really no comeback by the ex-employer. After all, if they really wanted to keep their former employee's expertise then they would still be employing them.

            • by tomhudson (43916)

              Even with no formal non-compete, the former employee is not allowed to use the previous employers customer and supplier lists. They are not the employee's property - they're part of the "work-for-hire" product.

              Hope this clears it up a bit. It's a land-mine out there, and nowhere near as simple as things used to be.

    • Well, pyramid schemes are not legal. However, a multi-level marketing "scheme" is, as there's actually product being delivered through the network of people tricked into selling it and/or getting people to sell it for them. Since no product ended up being produced in this case, this was a pyramid, and is illegal. It's a fairly fine distinction here in the states.
    • by sorak (246725)

      The problem is that, if they had come up with a viable product, then they would be a legitimate business and the people scammed would be either investors, or retailers. The only difference between them and a hot dog vendor, or a guy who sells cellphones at the mall, would be the location.

  • ZERO1MOBILE.COM
    Registrar: ENOM, INC.
    Whois Server: whois.enom.com
    Referral URL: http://www.enom.com/ [enom.com]
    Name Server: NS1.PARKED.COM
    Name Server: NS2.PARKED.COM
    Status: clientTransferProhibited
    Updated Date: 07-mar-2010
    Creation Date: 13-mar-2009
    Expiration Date: 13-mar-2011

    The only difference is that it's O1 (the letter 'O'), not 01

    Seems to me that, to add insult to injury, the typo-squatter picked the better domain name to begin with...

  • ...and the two companies began recruiting salespeople who paid a monthly fee to be part of a sales program.

    Any time that you're required to pay money to work - and I mean this outside of regular expenses such as supplies and travel, etc. - it's probably a good idea to turn around and run as far away as you can. A monthly fee to be part of a sales program? This is even worse than the typical MLM such as Primerica or Quixtar. At least those programs offer some sort of good or service in return, despite having an initial start-up cost.

    But to collect money like that on a monthly basis and to vanish?

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