Embezzlement and MLM Fraud
Embezzlement is when a cooperation, company, or individual fraudulently uses money given to them for something other than the intended purpose. An example how this can be incorporated into an mlm company is through start up fees. Some often wonder why an mlm company has start up fees in the first place. Well this money is usually supposed to be used for manufacturing costs and maintenance of the companies products.
What is Embezzlement
If the president of an mlm company decides to use some of the start up fees to purchase a new home, car and a private jet for personal use without authorization or permission, they could have taken the money. In most mlm companies, the president doesn’t need to take the money because the compensation plans are usually sufficient enough. However, a sufficient compensation plan doesn’t deter someone from greediness.
An independent rep by the name of Jennings-Fossum was accused of embezzling approximately $190,000 from the Tax Association in Milwaukee. They used the money to fund the mlm company they were involved in. The charges are serious if one is caught doing this. The particular situation mentioned above carried a fine of up to $90,000 and 27 years in prison. There are many cases of embezzling that took place over the years that involved many companies. Embezzling could also include falsification of documents to hide the activities.
Some individuals take one large sum while more successful embezzlers take very small consistent amounts over a length of time. Special attention needs to be paid to this method.