CHAPTER 7
SELLING THE DREAM
When Igor Alberts gets dressed each morning, every outfit is meticulously co-ordinated. One day it’s black-and-gold shoes, black-and-gold pleated suit, black-and-gold shirt, black-and-gold sunglasses, and a thick black-and-gold ring (all Dolce & Gabbana, except the ring). “When you look at my clothes, they are dis-ci-plined,” he says. If Igor Alberts puts on pink underwear, he walks up and down one of his walk-in wardrobes until he finds a pink shirt and pink trousers to match.
Igor didn’t always have walk-in wardrobes full of matching designer gear. He was brought up in an unremarkable Amsterdam suburb where his parents ran a garden center. Selling his mother’s flower arrangements was his first taste of sales, and, after finishing school in the mid-1980s, he stayed with the family business. By his early twenties, Igor was ready to start out on his own, and one day a friend told him about an MLM company called Amway.
All MLM firms are an offshoot of Amway: Its origins go back to that original 1940s Californian vitamin company that started the whole industry. Amway pioneered most of the recruitment techniques and compensation plans all MLMs now use. When Igor joined the company in 1987, it was already a billion-dollar operation with over one million distributors selling its health, beauty and cleaning products all over the world.1 The eighties were a golden era for the company: Most cities in America had a healthy-sized Amway network, and some of the top promoters were respected businessmen, philanthropists and even politicians. But even for a talented seller like Igor, his first taste of MLM was disappointing. That wasn’t unusual: Studies have consistently found that most newcomers to MLM only last a few months before they realize that constantly selling to people—and trying to encourage them to sell for you—is much harder than it looks. Although Igor struggled to get any momentum at Amway, he wasn’t discouraged. He loved being his own boss (in MLM parlance, every promoter is a “unique business”) and admired Amway legends like Dexter Yager, the multi-millionaire “father of MLM,” who was rumored to own 50 cars. And Igor’s outgoing personality and boundless ambition were well suited to an industry that thrived on positivity. Even his unconventional appearance helped: no one who met Igor ever forgot his cartoonish face and garish suits. He had the raw materials but not yet the craft to make it in MLM.
When Igor was 27 years old—that age when you first realize you won’t be young forever after all—he saved up and travelled to America to attend a seminar series by one of the MLM superstars of the time, Zig Ziglar. Zig was a proto-Tony Robbins: part salesman, part motivational speaker. People travelled from all over the world to attend Zig’s seminars, all hoping to learn “how to develop excellence in yourself and others.” Igor was blown away as Zig explained how he’d become the top seller in several organizations due to his philosophy. “Your attitude, not aptitude, will determine your altitude,” he used to say. As far as Zig saw it, selling was a spiritual endeavor and MLM demanded a life of endless self-improvement. It was the American dream boiled down and distilled, the one place where you could achieve anything with sufficient effort and self-belief. For a brief spell, Igor became Zig’s unpaid personal assistant, doing menial work in exchange for a free spot at one of his packed business classes. The experience changed Igor’s entire approach. What you’re selling, Zig explained, is not the product. It’s a lifestyle. A philosophy. A dream. The product is irrelevant. Zig’s stock phrase (“You can get everything you wish for out of life when you first help other people with what they wish for”) became Igor’s stock phrase too.
Igor returned to Amsterdam in the late 1990s with his head full of Zig’s you-can-do-it-if-you-believe philosophy and his prospects started to change. The secret to MLM was not selling vitamins or Tupperware; it was getting other people motived by the dream so they would sell it for you. That’s what the Zig mantra meant—help other people first, and you’ll make commission too. By 2012, Igor was a leading seller at the coffee MLM Organo Gold and had built a large and loyal downline of sellers. All big-time MLM sellers are showmen, but Igor was a pantomime act, and people loved it. Onstage he bought people free products and on one occasion proposed to his girlfriend. He created his own catchphrases, including “be the one you’re destined to be,” and told crowds they could become as rich as him if they followed his advice: Don’t sell the product, sell the dream! MLM is about personal development and changing your life! You can do it if you really want! He never told potential recruits that unless they were near the top of the pyramid they would almost certainly make no money. It just wouldn’t have been helping other people get what they wish for to direct them to the study of 350 MLM companies which found that 99 percent of people who join MLMs will most likely make nothing at all.2
In 2014, Igor’s personal life slowed his ascent. While pushing Organo Gold in Italy, he met an ambitious young promoter in her twenties with movie-star good looks called Andreea Cimbala who was running a small Organo Gold recruitment party—a “coffee club”—at her house. Igor “fell in love immediately” and told her as much. “I was direct—extremely Dutch,” he said later. He divorced his (fourth) wife, Maria, and moved in with Andreea. (Igor and Andreea were later married in a castle in the Netherlands, dressed up like a medieval king and queen.) Intra-team relationships were forbidden at Organo Gold, because it was thought to complicate loyalties and downlines, and, in mid-2014, the pair were forced to leave.
That summer, just as Igor was looking for a new product to push, an old colleague from Organo Gold called Juha Parhiala phoned him with a proposition. “We are going to build a cryptocurrency,” Juha explained, and asked Igor if he’d be willing to help him write the compensation plan. Igor knew nothing about cryptocurrency and politely declined.
He tried an e-cigarette company, which didn’t really work out. Another venture involving perfume sales also didn’t take off.
Word gets around when a successful seller like Igor is free. A few months later, another former Organo Gold colleague called Aron Steinkeller phoned him. Aron was one of three brothers, who were all rising young stars in the MLM world. He’d joined a new company too, and it turned out to be the same one Juha had pitched.3 Aron invited Igor and Andreea to the next big OneCoin event called “Gold Rush” in Dubai on May 15, 2015. Still looking for the next opportunity, they agreed.
Dubai, May 2015
There are two types of MLM events. There are the small-scale sales pitches that take place every day—a gruelling cycle of local meet-ups, coffee clubs, online seminars and Tupperware parties that are put on by promoters in order to sell products and recruit new people. (Books on the subject advise new sellers to use a mixture of flattery and promise to get people to attend. Eric Worre’s bestseller Go Pro—7 Ways to Becoming a Network Marketing Professional explains, “When you start with urgency and a compliment, it becomes very difficult for a person to react negatively to your invitation.… This simple step will literally double your invitation results.”4) But there are also lavish set-piece corporate events, which are organized by the company itself. They drive sales too, but the purpose is to bring the company’s promoters together, get them worked up, and send them back out into the world with renewed hunger. Corporates are the fun part of the job. They are champagne, loud music, bright lights, on-your-feet-cheering events, a cross between an AGM and a rock concert.
When Igor and Andreea arrived at the luxurious Madinat Jumeirah resort in Dubai, they struggled to force their way through the stampede at the entrance. However, when he listened to the boilerplate pitch from Sebastian about “changing your life” and “the rise of an empire,” Igor wondered what the fuss was about: He’d heard the same lines a thousand times about coffee and cleaning products. But then Igor saw Ruja.
It wasn’t like the MLM talks Igor was used to. As Ruja calmly patrolled the enormous stage in a gold dress and red earrings, lecturing the hall about growth, payments and blockchains, it was more like a lecture than a sales pitch. And yet the crowd was bewitched. When she announced that OneExchange was going to be replaced with an independent exchange site called xcoinx, which had agreed to buy and sell OneCoin on its platform alongside Bitcoin with a starting price of €1 per coin, the hall erupted. Once xcoinx is open, she explained, they would be able to “cash out” their coins on an open, independent marketplace. And the company’s growth was incredible. They already had 100,000 members, who between them had invested €16.7 million in January 2015 when the blockchain was switched on; then €65 million in March; then €80 million in April. Something big was happening.
All corporate events finish with the “recognitions.” If a seller hits a certain monthly sales target, they receive a title and a gift. Every MLM company has their own ranking system to incentivize this way. (Amway’s is based on precious metals and stones. There are 22 ranks from the lowly Silver Producer up to the mighty Crown Ambassador.) The bigger the downline, the higher the rank and commission, and the better the freebies. When Igor first topped $50,000 monthly sales at Organo Gold in 2012, he was made an “Organo Gold Knight” in front of thousands of screaming promoters and ceremoniously handed a sword. If a OneCoin promoter made €7,000 worth of sales a month in their downline, they became a “Sapphire.” €40,000 worth of sales—no mean feat—made Ruby. Diamonds were the big league, responsible for a downline that sold at least €200,000 worth of OneCoin packages a month. The Black Diamonds had downlines generating €1.5 million a month, and for that they received a free Rolex on top of several hundred thousand Euros in commission. The top of the pile, the Crown Diamonds, the Cristiano Ronaldos of the company, were earning close to a million Euros a month, with downlines pulling in at least €8 million. The Dubai recognitions seemed to last forever. The company was only a few months old and there were already 6,633 Rubies; over a hundred Diamonds, who could barely fit on the stage when they were invited up; seven Black Diamonds each received a gold Rolex; three Crown Diamonds… OneCoin spent €800,000 at this event just on the recognition gifts.
Three Crown Diamonds already?! Organo Gold, even Amway, couldn’t match this kind of momentum.
Before he left for Amsterdam, Igor met up with Juha. Igor had always been the more successful of the pair in the MLM world. But this was a different Juha—he was top of the OneCoin sales network, a Crown Diamond. And each time one of the tens of thousands of promoters below him made a sale, he received a small cut. There were so many cuts coming his way that Juha was becoming extremely rich. As a goodwill gesture, and a tempter to join, Juha gave Igor a load of free OneCoin—coins that he could soon turn into real money on the xcoinx exchange site. (Although Igor insisted on paying for them.) Igor could sell anything to anyone, but blockchains and mining and genesis blocks were from a world he didn’t understand, and it made him uncharacteristically nervous. Igor thanked Juha but didn’t join OneCoin. It wasn’t long before he regretted that decision.
Igor, equally impressed and baffled by what he had witnessed in Dubai, was a dead end, but Ruja pressed ahead with her plan to recruit the best MLM sellers she could find, especially after the president Nigel Allan quit over a pay dispute. Kari Wahlroos agreed to join (“after a ten-minute conversation with Ruja,” Kari later said). Kari was a former contestant on Finland’s Gladiators program and professional hype-man who would run onstage with his own theme music shouting, “Do you know why I wear shades? It’s because the future looks so bright!” Kari was installed as European ambassador.5 Ed Ludbrook, a more measured pro from New Zealand, also signed up along with some other former Amway and Organo Gold promoters.
The arrival of people like Ed Ludbrook and Kari Wahlroos, who were now armed with a blockchain and exchange site, helped drive sales through the roof. By the summer of 2015, the €5,000 Tycoon Trader package wasn’t enough to meet the growing demand. In July, OneCoin introduced the €12,500 “Premium Trader” package. The press release declared it “a serious must-have package for all members, realizing where the coin is heading in the future and who want as many coins as possible.” The Premium Trader package came with all five levels of education and roughly 40,000 OneCoin, each worth €1.
Warren Buffett, the world’s most famous and successful investor, has managed 20 percent return a year. In comparison, the Premium Trader package offered an almost immediate return of 300 percent: Invest €12,500 and get €40,000 back. Was it too good to be true? At that point, a single bitcoin was selling on the cryptocurrency exchange sites for around $600. Three years earlier it was $9. Everything seemed possible. There were teething problems of course: Some investors found that they couldn’t always cash out on xcoinx as Ruja had promised because there were daily withdrawal limits and glitches on the newly built site. But OneCoin was booming.
With the Premium Trader package, OneCoin smashed MLM monthly earning records and quickly reached 175 countries. In August 2015, income was over €150 million and rising. When Igor went to see Ruja again at the next corporate event in Macau in September 2015, the Dubai Gold Rush just four months earlier seemed tame by comparison. There must have been 5,000 attendees, all gripped by a sales fever whose symptoms included making a OneCoin hand gesture (a “0” with the thumb and index finger) and talking feverishly about “the future of money.” Lamborghinis were parked out front. A handful of hardcore fans even paid $10,000 each to meet Ruja backstage in person.
OneCoin was transforming from an exciting start-up to a global powerhouse and Ruja was changing with it. The slightly awkward, standoffish consultant was now gone, replaced by Dr. Ruja, the crypto-genius visionary behind a multi-million-dollar business: a Steve Jobs, a Mark Zuckerberg. Her clothes were now designed by top London tailors and she was tracked everywhere by a personal make-up artist and camera crew. She hired a security team, who lingered quietly in the background scanning the room for any sign of trouble or over-excited fans. In her home city of Sofia, word about the home-grown tech pioneer was spreading too: between the Dubai and Macau events, Ruja hosted the famous Russian ball in Sofia and her 35th birthday party made the local papers.
The dramatic growth of the company—and her own profile—forced Ruja to bring in outside help. She hired a blockchain auditor to publish monthly reports about their tech and a “search engine optimization” team to improve her PR. Her new-found wealth also made her think carefully about her reputation and security. When OneCoin hit serious numbers in mid-2015, Ruja contacted a man called Frank Schneider and hired him to run a “security and reputational risk audit.” Frank was a former director of operations at the Luxembourg intelligence agency, SREL, where he investigated financial fraud. When he left in 2008, Frank set up a private intelligence firm called Sandstone.6 With his contacts and experience, Frank was a useful man for rich and powerful people. A buttoned-up, thoughtful and well-spoken spook, he was a refreshing change from Ruja’s bombastic MLM promoters. Over time, he would become one of her most trusted advisers.
Igor had been watching OneCoin’s growth, wondering if he’d made a terrible mistake. Former colleagues who’d been struggling were suddenly swimming in OneCoin money. He decided to travel to Macau for the big event, to take a second look. He spotted Ruja in the middle of a large crowd of fans, wearing a green designer dress and a diamond necklace that was rumored to have cost a million dollars. “She looked like a queen,” Igor said later. “She was dominant.” The pair spoke briefly in the VIP room, where she gave an impromptu lecture about the problems with banking, payments, interest rates and asked again whether he would join OneCoin. The offer was still open.
Later, as he sat through more talks and announcements, all Igor could think was how much better he was than the speakers up onstage. For example, good MLM sellers know the optimum room temperature for sales is 18 degrees—any hotter and potential buyers tend to switch off. You check and double-check! Igor sometimes talked to the building maintenance people beforehand, just to be sure. In Macau, it was 27 degrees at least. Igor looked at Andreea and said: “We are not too late. We can [sur]pass everyone.”
When he got back to Amsterdam, Igor’s head was spinning. True, there was some uncertainty about how exactly OneCoin’s “price”—which was by now €2.45 per coin—was set. Originally Ruja had said it was a market rate. But now she said it was based on a complex algorithm that factored in how many coins were bought, the mining difficulty, electricity costs and the transaction volume. (Later OneCoin would claim it was based on trading activity on their e-commerce site, Dealshaker.) Then there were the online critics, who appeared as the company hit momentum. One specialist website in particular, called BehindMLM, infuriated Ruja. It was run by a mysterious MLM critic known only as “Oz.” Within weeks of OneCoin’s formal launch in Helsinki, Oz had posted a lengthy article describing the company as a get-rich-quick scam that “functions no differently to any other Ponzi points-based scheme, only they pretend to be involved in crypto-currencies.”7 Everyone who worked in MLM knew about Oz. Ever since he’d set up BehindMLM in 2010 as a one-stop-shop guide to the latest opportunities, his ruthless dissection of MLM products and comp plans was a constant irritant.
Most promoters thought Oz was just another internet “hater” who labelled legitimate MLM firms as “scams” too. After all, Amway was sometimes described as a pyramid scheme by internet critics, and that was listed on the New York Stock Exchange. Excited by the company’s obvious momentum but still uncertain, Igor had an idea. He logged into the OneCoin website and found the coins Juha had given him back in Dubai. The value of those coins had increased from €1,000 to €2,500 just as Juha had predicted. He then logged on to xcoinx.com, which looked like other forex trading sites he’d used before. Because of the platform’s daily trading limits, Igor could only sell a few percent of his total holdings each day, but, over the next few weeks, he traded some of his coins for real, physical money. Money he could spend in the shops, use to pay his staff, buy more clothes. That was proof enough.
OneCoin made sense to him at last. Cryptocurrency plus MLM created synergy. Use the network to drive up the price of the coin, and use the price of the coin to help grow the network—a virtuous cycle of growth and sales, sales and growth. He called the senior members of his downline, the people he’d worked with at Organo Gold and elsewhere and told them: we’re now promoting OneCoin.